(Mark One) | ||
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2004 | ||
OR | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Nevada
|
94-1667468 | |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification Number) |
(Title of Class) | (Name of Exchange on Which Registered) | |
Common Stock, $.50 Par Value
Preferred Stock Purchase Rights |
New York Stock Exchange
New York Stock Exchange |
1
| the potential for future or undiscovered reserves; | |
| the availability of exploration and development opportunities; | |
| amount, nature and timing of capital expenditures; | |
| amount and timing of future production of oil and natural gas; | |
| the number of anticipated wells to be drilled after the date hereof; | |
| our financial or operating results; | |
| cash flow and anticipated liquidity; | |
| operating costs such as finding and development costs, lease operating expenses, administrative costs and other expenses; | |
| our business strategy; and | |
| other plans and objectives for future operations. |
| the timing and success of our drilling activities; | |
| the volatility of prices and supply of, and demand for, oil and natural gas; | |
| the numerous uncertainties inherent in estimating quantities of oil and natural gas reserves and actual future production rates and associated costs; | |
| our ability to successfully identify, execute or effectively integrate future acquisitions; | |
| the usual hazards associated with the oil and natural gas industry, including fires, well blowouts, pipe failure, spills, explosions and other unforeseen hazards; | |
| our ability to effectively market our oil and natural gas; | |
| the availability of rigs, equipment, supplies and personnel; | |
| our ability to discover or acquire additional reserves; | |
| our ability to satisfy future capital requirements; | |
| changes in regulatory requirements; | |
| general economic and competitive conditions; | |
| our ability to retain key members of our senior management and key employees; and | |
| continued hostilities in the Middle East and other sustained military campaigns and acts of terrorism or sabotage. |
2
3
4
5
ITEMS 1. AND 2. | BUSINESS AND PROPERTIES |
Reserves at December 31, 2004 | 2004 Daily Production | ||||||||||||||||||||||||||||||||
% of | % of | ||||||||||||||||||||||||||||||||
Oil | Gas | Total | Total | Oil | Gas | Total | Total | ||||||||||||||||||||||||||
(MMBbls) | (Bcf) | (Bcfe) | (MBbls/d) | (MMcf/d) | (MMcfe/d) | ||||||||||||||||||||||||||||
Gulf of
Mexico
(1)
|
11.2 | 115.5 | 182.8 | 29 | % | 3.0 | 19.6 | 37.7 | 32 | % | |||||||||||||||||||||||
East Texas/ North Louisiana
|
0.8 | 195.9 | 200.6 | 32 | % | 0.2 | 26.7 | 28.1 | 24 | % | |||||||||||||||||||||||
Southeast Texas
|
2.6 | 96.9 | 112.6 | 18 | % | 0.6 | 26.9 | 30.5 | 26 | % | |||||||||||||||||||||||
South Texas
|
1.0 | 45.4 | 51.4 | 8 | % | 0.2 | 11.5 | 12.7 | 11 | % | |||||||||||||||||||||||
Other Regions
|
0.3 | 79.9 | 81.4 | 13 | % | 0.2 | 7.1 | 8.0 | 7 | % | |||||||||||||||||||||||
Total
|
15.9 | 533.6 | 628.8 | 100 | % | 4.2 | 91.8 | 117.0 | 100 | % | |||||||||||||||||||||||
(1) | Includes our 59.9% ownership in Bois dArc Energy, which was formed on July 16, 2004. |
6
7
Net Oil | Net Gas | |||||||||||||||||||||||||
(MBbls) | (MMcf) | MMcfe | % | PV 10 Value (1) | % | |||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Offshore Gulf of Mexico
|
||||||||||||||||||||||||||
Ship Shoal 113 Unit
|
3,068 | 23,024 | 41,430 | 7 | % | $ | 127,426 | 8 | % | |||||||||||||||||
South Pelto 5 and South Timbalier 9, and 16
|
1,387 | 23,134 | 31,459 | 5 | % | 112,983 | 7 | % | ||||||||||||||||||
Ship Shoal 66, 67, 68, 69 and South Pelto 1
|
2,308 | 6,952 | 20,802 | 3 | % | 67,695 | 5 | % | ||||||||||||||||||
Vermilion 51 and South Marsh Island 220
|
169 | 14,045 | 15,057 | 2 | % | 50,820 | 3 | % | ||||||||||||||||||
Vermilion 87 and 122
|
529 | 7,387 | 10,560 | 2 | % | 47,369 | 3 | % | ||||||||||||||||||
Other
|
3,754 | 40,971 | 63,496 | 10 | % | 190,461 | 13 | % | ||||||||||||||||||
Total Offshore
|
11,215 | 115,513 | 182,804 | 29 | % | 596,754 | 39 | % | ||||||||||||||||||
8
Net Oil
Net Gas
(MBbls)
(MMcf)
MMcfe
%
PV 10 Value
(1)
%
(In thousands)
77
63,084
63,547
10
%
$
120,708
8
%
199
41,598
42,792
7
%
85,277
5
%
34
34,421
34,624
6
%
50,553
3
%
33
14,817
15,016
2
%
44,256
3
%
74
5,213
5,657
1
%
13,974
1
%
165
6,836
7,828
1
%
13,863
1
%
51
4,755
5,060
1
%
13,711
1
%
155
25,188
26,117
4
%
53,912
4
%
788
195,912
200,641
32
%
396,254
26
%
2,413
88,087
102,565
16
%
257,651
17
%
81
7,820
8,308
2
%
15,545
1
%
132
977
1,770
%
6,136
%
2,626
96,884
112,643
18
%
279,332
18
%
149
13,991
14,883
2
%
44,920
3
%
16,525
16,525
3
%
38,401
3
%
657
1,564
5,504
1
%
14,381
1
%
199
13,266
14,463
2
%
36,111
2
%
1,005
45,346
51,375
8
%
133,813
9
%
5,615
5,615
1
%
12,460
1
%
81
23,672
24,157
4
%
48,892
3
%
81
29,287
29,772
5
%
61,352
4
%
30,605
30,605
5
%
42,742
3
%
36
16,498
16,715
2
%
17,905
1
%
130
3,509
4,286
1
%
9,616
%
166
50,612
51,606
8
%
70,263
4
%
4,666
418,041
446,037
71
%
941,014
61
%
15,881
533,554
628,841
100
%
$
1,537,768
100
%
(1) | The PV 10 Value excludes future income taxes related to the future net cash flows. The standardized measure of future net cash flows at December 31, 2004 was $1.1 billion (see note 1 on page 15 for a discussion of our PV 10 Value and our standardized measure of discounted future net cash flows). |
9
Ship Shoal 113 Unit |
South Pelto 5/ South Timbalier 9, 11, 16 |
Ship Shoal 66, 67, 68, 69 and South Pelto 1 |
10
Vermilion 51 and South Marsh Island 220 |
Vermilion 87 and 122 |
Beckville |
Gilmer |
11
Blocker |
Logansport |
Longwood |
Waskom |
Lisbon |
Double A Wells |
12
Sugar Creek |
North Markham |
J.C. Martin |
East White Point |
Acquisition Strategy |
13
Major Property Acquisitions |
14
Oil
Gas
Total
PV 10 Value
(1)
(MBbls)
(MMcf)
(MMcfe)
(000s)
4,355
228,444
254,572
$
597,632
7,027
125,123
167,286
482,084
4,499
179,987
206,983
458,052
15,881
533,554
628,841
1,537,768
(453,646
)
$
1,084,122
(1) | The PV 10 Value represents the discounted future net cash flows attributable to our proved oil and gas reserves before income tax, discounted at 10%. Although it is a non-GAAP measure, we believe that the presentation of the PV 10 Value is relevant and useful to our investors because it presents the discounted future net cash flows attributable to our proved reserves prior to taking into account corporate future income taxes and our current tax structure. We use this measure when assessing the potential return on investment related to our oil and gas properties. The standardized measure of discounted future net cash flows represents the present value of future cash flows attributable to our proved oil and natural gas reserves after income tax, discounted at 10%. |
15
Year Ended December 31,
2002
2003
2004
Gross
Net
Gross
Net
Gross
Net
1
0.6
26
10.7
31
19.2
44
20.0
1
1.0
4
2.8
1
0.3
27
11.7
35
22.0
46
20.9
2
0.8
1
0.3
4
1.9
13
4.5
13
5.0
9
3.6
5
2.3
4
2.1
11
4.5
20
7.6
18
7.4
24
10.0
47
19.3
53
29.4
70
30.9
Oil | Gas | ||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||
Arkansas
|
| | 11 | 5.8 | |||||||||||||
Federal Offshore
|
40 | 14.0 | 47 | 19.2 | |||||||||||||
Kansas
|
| | 12 | 4.5 | |||||||||||||
Kentucky
|
| | 93 | 83.5 | |||||||||||||
Louisiana
|
17 | 8.3 | 180 | 82.4 | |||||||||||||
Mississippi
|
1 | 0.1 | 1 | 0.2 | |||||||||||||
New Mexico
|
| | 82 | 11.9 | |||||||||||||
Oklahoma
|
3 | 0.5 | 136 | 19.4 | |||||||||||||
Texas
|
66 | 41.2 | 637 | 293.5 | |||||||||||||
Wyoming
|
| | 30 | 2.2 | |||||||||||||
Total Wells
|
127 | 64.1 | 1,229 | 522.6 | |||||||||||||
16
Developed
Undeveloped
Gross
Net
Gross
Net
1,280
684
6,400
4,064
15,864
12,373
7,263
6,682
78,807
56,905
5,793
341
1,360
210
8,400
1,260
155,285
68,325
148,777
64,539
142,401
83,845
38,080
5,707
232,285
146,657
39,981
16,072
13,440
927
544,693
293,326
350,723
175,265
17
18
19
20
21
22
Name
Age
Position with Company
49
President, Chief Executive Officer and Chairman of the Board of
Directors
45
Senior Vice President, Chief Financial Officer, Secretary,
Treasurer and Director
54
Chief Operating Officer
55
Vice President of Marketing
50
Vice President of Land
44
Vice President of Accounting and Controller
51
Vice President of Corporate Development
50
Director
63
Director
48
Director
53
Director
Executive Officers |
23
Outside Directors |
ITEM 3. | LEGAL PROCEEDINGS |
24
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
High | Low | |||||||
2003 First Quarter
|
$ | 10.65 | $ | 8.95 | ||||
Second
Quarter
|
$ | 14.50 | $ | 9.40 | ||||
Third
Quarter
|
$ | 15.20 | $ | 12.10 | ||||
Fourth
Quarter
|
$ | 19.94 | $ | 13.30 | ||||
2004 First Quarter
|
$ | 20.88 | $ | 16.60 | ||||
Second
Quarter
|
$ | 24.45 | $ | 17.84 | ||||
Third
Quarter
|
$ | 21.34 | $ | 16.61 | ||||
Fourth
Quarter
|
$ | 23.34 | $ | 19.63 |
Number of | ||||||||||||
Number of | Weighted | Securities | ||||||||||
Securities to be | Average | Authorized for | ||||||||||
Issued upon | Exercise Price | Future Issuance | ||||||||||
Exercise of | of Outstanding | under Equity | ||||||||||
Outstanding Options | Options | Compensation Plans | ||||||||||
Equity compensation plans approved by stockholders
|
2,734,870 | $ | 9.02 | 378,171 | (1) | |||||||
Equity compensation plans not approved by stockholders
|
| | | |||||||||
Total
|
2,734,870 | $ | 9.02 | 378,171 | (1) | |||||||
(1) | Plus 1% of the number of shares of common stock outstanding as of January 1, 2005 and increased each year by 1% of the number of shares outstanding on each subsequent January 1. |
25
ITEM 6. | SELECTED FINANCIAL DATA |
Year Ended December 31, | ||||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||
Oil and gas sales
|
$ | 168,084 | $ | 166,118 | $ | 142,085 | $ | 235,102 | $ | 261,647 | ||||||||||||
Operating expenses:
|
||||||||||||||||||||||
Oil and gas
operating
(1)
|
29,277 | 31,855 | 33,499 | 45,746 | 52,068 | |||||||||||||||||
Exploration
|
3,505 | 6,611 | 5,479 | 4,410 | 15,610 | |||||||||||||||||
Depreciation, depletion and amortization
|
43,264 | 47,429 | 53,155 | 61,169 | 63,879 | |||||||||||||||||
Impairment
|
| 1,400 | | 4,255 | 1,648 | |||||||||||||||||
General and administrative, net
|
3,537 | 4,351 | 5,113 | 7,006 | 14,569 | |||||||||||||||||
Total operating expenses
|
79,583 | 91,646 | 97,246 | 122,586 | 147,774 | |||||||||||||||||
Income from operations
|
88,501 | 74,472 | 44,839 | 112,516 | 113,873 | |||||||||||||||||
Other income (expenses):
|
||||||||||||||||||||||
Interest income
|
230 | 196 | 62 | 73 | 1,207 | |||||||||||||||||
Other income
|
122 | 272 | 8,027 | 223 | 166 | |||||||||||||||||
Interest expense
|
(25,819 | ) | (22,098 | ) | (31,252 | ) | (29,860 | ) | (21,182 | ) | ||||||||||||
Formation costs
|
| | | | (1,101 | ) | ||||||||||||||||
Gain (loss) from derivatives
|
| 243 | (2,326 | ) | (3 | ) | (155 | ) | ||||||||||||||
Loss on early extinguishment of debt
|
| | | | (19,599 | ) | ||||||||||||||||
(25,467 | ) | (21,387 | ) | (25,489 | ) | (29,567 | ) | (40,664 | ) | |||||||||||||
Income from continuing operations before income taxes
|
63,034 | 53,085 | 19,350 | 82,949 | 73,209 | |||||||||||||||||
Provision for income taxes
|
(22,061 | ) | (18,579 | ) | (6,773 | ) | (29,682 | ) | (26,342 | ) | ||||||||||||
Net income from continuing operations
|
40,973 | 34,506 | 12,577 | 53,267 | 46,867 | |||||||||||||||||
Discontinued operations including loss on disposal, net of
income taxes
|
227 | 396 | (1,072 | ) | | | ||||||||||||||||
Cumulative effect of change in accounting principle
|
| | | 675 | | |||||||||||||||||
Net income
|
41,200 | 34,902 | 11,505 | 53,942 | 46,867 | |||||||||||||||||
Preferred stock dividends
|
(2,471 | ) | (1,604 | ) | (1,604 | ) | (573 | ) | | |||||||||||||
Net income attributable to common stock
|
$ | 38,729 | $ | 33,298 | $ | 9,901 | $ | 53,369 | $ | 46,867 | ||||||||||||
Basic net income per share:
|
||||||||||||||||||||||
From continuing operations
|
$ | 1.46 | $ | 1.13 | $ | 0.38 | $ | 1.65 | $ | 1.37 | ||||||||||||
Discontinued operations
|
0.01 | 0.02 | (0.04 | ) | | | ||||||||||||||||
Cumulative effect of change in accounting principle
|
| | | 0.02 | | |||||||||||||||||
$ | 1.47 | $ | 1.15 | $ | 0.34 | $ | 1.67 | $ | 1.37 | |||||||||||||
Diluted net income per share:
|
||||||||||||||||||||||
From continuing operations
|
$ | 1.20 | $ | 1.00 | $ | 0.37 | $ | 1.51 | $ | 1.29 | ||||||||||||
Discontinued operations
|
| 0.01 | (0.03 | ) | | | ||||||||||||||||
Cumulative effect of change in accounting principle
|
| | | 0.02 | | |||||||||||||||||
$ | 1.20 | $ | 1.01 | $ | 0.34 | $ | 1.53 | $ | 1.29 | |||||||||||||
Weighted average shares outstanding:
|
||||||||||||||||||||||
Basic
|
26,290 | 29,030 | 28,764 | 31,964 | 34,187 | |||||||||||||||||
Diluted
|
34,219 | 34,552 | 33,901 | 35,275 | 36,252 | |||||||||||||||||
(1) | Includes lease operating costs and production and ad valorem taxes. |
26
As of December 31,
2000
2001
2002
2003
2004
(In thousands)
$
7,105
$
6,122
$
1,682
$
5,343
$
2,703
434,065
636,274
664,208
698,686
827,761
489,082
680,769
711,053
746,356
941,476
234,101
372,464
366,272
306,623
403,150
17,573
17,573
17,573
$
161,735
$
195,668
$
208,427
$
289,656
$
355,853
ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
27
28
29
30
31
32
33
34
35
Year Ended December 31,
2002
2003
2004
1,303
1,615
1,534
33,171
34,320
33,519
40,986
44,009
42,722
$
24.95
$
30.70
$
39.86
$
3.30
$
5.41
$
5.98
$
3.47
$
5.34
$
6.12
$
0.82
$
1.04
$
1.22
$
1.29
$
1.37
$
1.46
(1)
Includes lease operating costs and production and ad valorem
taxes.
(2)
Represents depreciation, depletion and amortization of oil and
gas properties only.
Year Ended December 31, 2004 Compared to Year Ended
December 31, 2003
Table of Contents
Year Ended December 31, 2003 Compared to Year Ended
December 31, 2002
Table of Contents
Liquidity and Capital Resources
Table of Contents
Year Ended December 31,
2002
2003
2004
(In thousands)
$
11,435
$
4,805
$
62,712
4,268
4,447
5,082
98
481
1,079
7,414
12,836
16,611
4,867
5,227
8,268
22,893
28,254
68,616
31,074
34,829
47,015
1,332
2,051
407
$
83,381
$
92,930
$
209,790
Table of Contents
2005
2006
2007
2008
2009
Thereafter
Total
(In thousands)
$
$
$
$
228,000
$
$
$
228,000
175,000
175,000
150
150
21,493
21,493
21,493
13,608
12,031
26,068
116,186
747
817
820
823
833
3,341
7,381
5,420
5,420
5,348
2,315
7,663
$
33,158
$
24,625
$
22,313
$
242,431
$
12,864
$
204,409
$
539,800
(1)
Reflects our 59.9% of commitments made by Bois dArc Energy
as of December 31, 2004.
Table of Contents
Table of Contents
Table of Contents
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS |
36
Volume | Type of | Floor | Ceiling | |||||||||||||||||||
Period Beginning | Period Ending | MMBtu | Delivery Location | Instrument | Price | Price | ||||||||||||||||
January 1, 2005
|
December 31, 2005 | 3,072,000 | Henry Hub | Collar | $ | 4.50 | $ | 10.30 | ||||||||||||||
January 1, 2005
|
December 31, 2005 | 2,400,000 | Houston Ship Channel | Collar | $ | 4.50 | $ | 10.00 | ||||||||||||||
January 1, 2006
|
December 31, 2006 | 3,072,000 | Henry Hub | Collar | $ | 4.50 | $ | 9.02 | ||||||||||||||
January 1, 2006
|
December 31, 2006 | 2,400,000 | Houston Ship Channel | Collar | $ | 4.50 | $ | 8.25 |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
37
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
38
/s/ ERNST & YOUNG LLP |
39
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
1. The following consolidated financial statements are included on Pages F-1 to F-44 of this report. |
40
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-30
F-31
F-32
F-33
F-34
F-35
2. All financial statement schedules are omitted because they are not applicable, or are immaterial or the required information is presented in the consolidated financial statements or the related notes. |
Exhibit | ||||
No. | Description | |||
1 | .1 | Underwriting Agreement, dated as of February 18, 2004 between Comstock and Banc of America Securities LLC and Harris Nesbitt Corp., acting as representatives of the several underwriters, for the sale of $175,000,000 of Comstocks 6 7 / 8 % Senior Notes due 2012 (incorporated by reference to Exhibit 99.2 to our Current Report on Form 8-K dated February 19, 2004). | ||
3 | .1(a) | Restated Articles of Incorporation (incorporated by reference to Exhibit 3.1 to our 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 dated July 1, 1997 (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 1997). | ||
3 | .2 | Bylaws (incorporated by reference to Exhibit 3.2 to our Registration Statement on Form S-3, dated October 25, 1996). | ||
4 | .1 | 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 | .2 | Certificate of Designation, Preferences and Rights of Series B Junior Participating Preferred Stock (incorporated by reference to Exhibit 2 to our Registration Statement on Form 8-A dated January 11, 2001). | ||
4 | .3 | Indenture dated February 25, 2004, between Comstock, the guarantors and The Bank of New York Trust Company, N.A., Trustee for debt securities to be issued by Comstock Resources, Inc. (incorporated by reference to Exhibit 4.6 to our Annual Report on Form 10-K for the year ended December 31, 2003). | ||
4 | .4 | First Supplemental Indenture, dated February 25, 2004, between Comstock, the guarantors and The Bank of New York Trust Company, N.A., Trustee for the 6 7 / 8 % Senior Notes due 2012 (incorporated by reference to Exhibit 4.7 to our Annual Report on Form 10-K for the year ended December 31, 2003). |
41
Exhibit
No.
Description
4
.5
Second Supplemental Indenture dated March 11, 2004 between
Comstock, the guarantors and The Bank of New York Trust Company,
N.A., Trustee for the
6
7
/
8
% Senior
Notes due 2012 (incorporated by reference to Exhibit 4.1 to
our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004).
4
.6
Third Supplemental Indenture to the Indenture dated
July 16, 2004, between Comstock Resources, Inc., the
guarantors and The Bank of New York Trust Company, N.A., as
Trustee (incorporated by reference to Exhibit 4.1 to our
Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004).
10
.1
Amended and Restated Credit Agreement, dated February 25,
2004 among Comstock, as the borrower, the lenders from time to
time party thereto, Bank of Montreal, as administrative agent
and issuing bank, Bank of America, N.A., as syndication agent,
and Comerica Bank, Fortis Capital Corp., and Union Bank of
California, N.A. as co-documentation agents (incorporated by
reference to Exhibit 10.7 to our Annual Report on Form 10-K
for the year ended December 31, 2003).
10
.2
Amendment No. 1 dated March 31, 2004 to the Amended
and Restated Credit Agreement among Comstock, the lenders named
therein, Bank of Montreal, as administrative agent and issuing
bank (incorporated by reference to Exhibit 10.2 to our
Quarterly Report on Form 10-Q for the quarter ended
March 31, 2004).
10
.3
Amendment No. 2 dated July 16, 2004 to the Amended and
Restated Credit Agreement among Comstock, the lenders named
therein, and Bank of Montreal, as administrative agent and
issuing bank (incorporated by reference to Exhibit 10.1 to
our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2004).
10
.4#
Employment Agreement dated June 1, 2002, by and between
Comstock and M. Jay Allison (incorporated by reference to
Exhibit 10.1 to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002).
10
.5#
First Amendment to Employment Agreement dated July 16,
2004, by and between Comstock and M. Jay Allison (incorporated
by reference to Exhibit 10.8 to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004).
10
.6#
Employment Agreement dated June 1, 2002, by and between
Comstock and Roland O. Burns (incorporated by reference to
Exhibit 10.2 to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002).
10
.7#
First Amendment to Employment Agreement dated July 16,
2004, by and between Comstock and Roland O. Burns (incorporated
by reference to Exhibit 10.9 to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004).
10
.8#*
Comstock Resources, Inc. 1999 Long-term Incentive Plan, as
restated for Amendment No. 1 on April 1, 2001.
10
.9#
Amendment No. 2 dated April 7, 2004 to the Comstock
Resources, Inc. 1999 Long-term Incentive Plan (incorporated by
reference to Exhibit 10.1 to our Quarterly Report on Form
10-Q for the quarter ended March 31, 2004).
10
.10#
Form of Nonqualified Stock Option Agreement between Comstock and
certain officers and directors of Comstock (incorporated by
reference to Exhibit 10.2 to our Quarterly Report on Form
10-Q for the year ended June 30, 1999).
10
.11#
Form of Restricted Stock Agreement between Comstock and certain
officers of Comstock (incorporated by reference to
Exhibit 10.3 to our Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999).
10
.12
Exploration Agreement dated July 31, 2001 by and between
Comstock and Bois d Arc Offshore Ltd. (incorporated by
reference to Exhibit 10.2 to our Quarterly Report on Form
10-Q for the quarter ended June 30, 2001).
10
.13
Warrant Agreement dated July 31, 2001 by and between
Comstock and Gary W. Blackie and Wayne L. Laufer (incorporated
by reference to Exhibit 10.1 to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2001).
10
.14
Supplement to the 2001 Exploration Agreement dated
December 20, 2002 by and between Comstock and Bois d
Arc Offshore Ltd (incorporated by reference to
Exhibit 10.14 to our Annual Report on Form 10-K for the
year ended December 31, 2002).
42
Exhibit | ||||
No. | Description | |||
10 | .15 | Contribution Agreement dated July 16, 2004, among Bois dArc Energy, LLC, Bois dArc Properties, LP, Bois dArc Resources, Ltd., Wayne L. Laufer, Gary W. Blackie, Haro Investments LLC, such other persons listed on the signature pages thereto, Comstock Offshore, LLC, and Comstock Resources, Inc. (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). | ||
10 | .16 | Services Agreement dated July 16, 2004, between Comstock Resources, Inc. and Bois dArc Energy, LLC (incorporated by reference to Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). | ||
10 | .17 | Loan Agreement dated July 16, 2004, by and between Comstock Resources, Inc., as lender, and Bois dArc Energy, LLC, Bois dArc Properties, LP, and Bois dArc Offshore, Ltd., as borrower (incorporated by reference to Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). | ||
10 | .18* | First Amendment to the Loan Agreement dated December 31, 2004, by and between Comstock Resources, Inc., as lender, and Bois dArc Energy, LLC, Bois dArc Properties, LP, and Bois dArc Offshore, Ltd., as borrower. | ||
10 | .19 | Note made by Bois dArc Energy, LLC, Bois dArc Properties, LP, and Bois dArc Offshore, Ltd., as borrower, to Comstock Resources, Inc. (incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). | ||
10 | .20 | Amended and Restated Operating Agreement, dated as of August 23, 2004, to be effective July 16, 2004, of Bois dArc Energy, LLC (incorporated by reference to Exhibit 3.2 to the Registration statement on Form S-1 [ER STX][FileNo. 33-119511] filed by Bois dArc Energy, LLC on October 4, 2004). | ||
10 | .21 | First Amendment, dated September 29, 2004, to the Amended and Restated Operating Agreement of Bois dArc Energy, LLC (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 [FileNo. 333-119511] filed by Bois dArc Energy LLC on October 4, 2004). | ||
10 | .22* | Second Amendment, dated January 26, 2005 to the Amended and Restated Operating Agreement of Bois dArc Energy, LLC. | ||
10 | .23 | Transfer Restriction Agreement, dated as of July 16, 2004, of Bois dArc Energy, LLC (incorporated by reference to Exhibit 10.7 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2004). | ||
10 | .24* | Lease between Stonebriar I Office Partners, Ltd. and Comstock Resources, Inc. dated May 6, 2004. | ||
10 | .25 | Dealer Manager Agreement, dated as of February 10, 2004 between Comstock and Bank of America Securities LLC and Harris Nesbitt Corp. in connection with the tender offer for Comstocks 11 1 / 4 % Senior Notes due 2007 (incorporated by reference to Exhibit 99.1 to our Current Report on Form 8-K dated February 19, 2004). | ||
21 | * | Subsidiaries of the Company. | ||
23 | .1* | Consent of KPMG LLP. | ||
23 | .2* | Consent of Ernst & Young LLP. | ||
23 | .3* | Consent of Independent Petroleum Engineers. | ||
31 | .1* | Chief Executive Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002. | ||
31 | .2* | Chief Financial Officer certification under Section 302 of the Sarbanes-Oxley Act of 2002. | ||
32 | .1+ | Chief Executive Officer certification under Section 906 of the Sarbanes-Oxley Act of 2002. | ||
32 | .2+ | Chief Financial Officer certification under Section 906 of the Sarbanes-Oxley Act of 2002. |
* | Filed herewith. |
+ | Furnished herewith. |
# | Management contract or compensatory plan document. |
43
COMSTOCK RESOURCES, INC. |
By: | /s/ M. JAY ALLISON |
|
|
M. Jay Allison | |
President and Chief Executive Officer | |
(Principal Executive Officer) |
/s/
M. JAY ALLISON
|
President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) | March 17, 2005 | ||||
/s/
ROLAND O. BURNS
|
Senior Vice President, Chief Financial Officer, Secretary, Treasurer and Director (Principal Financial and Accounting Officer) | March 17, 2005 | ||||
/s/
DAVID K. LOCKETT
|
Director | March 17, 2005 | ||||
/s/
CECIL E.
MARTIN, JR.
|
Director | March 17, 2005 | ||||
/s/
DAVID W. SLEDGE
|
Director | March 17, 2005 | ||||
/s/
NANCY E. UNDERWOOD
|
Director | March 17, 2005 |
44
F-2
F-3
F-4
F-5
F-6
F-7
F-8
F-30
F-31
F-32
F-33
F-34
F-35
F-1
/s/ ERNST & YOUNG LLP |
F-2
/s/ KPMG LLP |
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-10
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
F-20
F-21
F-22
F-23
F-24
F-25
F-26
F-27
F-28
F-29
F-30
F-31
F-32
F-33
F-34
F-35
F-36
F-37
F-38
F-39
F-40
F-41
F-42
F-43
F-44
Table of Contents
2002
2003
2004
(In thousands, except per share
amounts)
$
142,085
$
235,102
$
261,647
33,499
45,746
52,068
5,479
4,410
15,610
53,155
61,169
63,879
4,255
1,648
5,113
7,006
14,569
97,246
122,586
147,774
44,839
112,516
113,873
62
73
1,207
8,027
223
166
(31,252
)
(29,860
)
(21,182
)
(19,599
)
(2,326
)
(3
)
(155
)
(1,101
)
(25,489
)
(29,567
)
(40,664
)
19,350
82,949
73,209
(6,773
)
(29,682
)
(26,342
)
12,577
53,267
46,867
(1,072
)
675
11,505
53,942
46,867
(1,604
)
(573
)
$
9,901
$
53,369
$
46,867
$
0.38
$
1.65
$
1.37
(0.04
)
0.02
$
0.34
$
1.67
$
1.37
$
0.37
$
1.51
$
1.29
(0.03
)
0.02
$
0.34
$
1.53
$
1.29
28,764
31,964
34,187
33,901
35,275
36,252
Table of Contents
Deferred
Accumulated
Additional
Compensation
Other
Common
Paid-In
Retained
Restricted
Comprehensive
Stock
Capital
Earnings
Stock Grants
Income
Total
(In thousands)
$
14,276
$
130,956
$
51,762
$
(1,187
)
$
(139
)
$
195,668
156
1,547
1,703
836
836
28
489
(300
)
217
(1,604
)
(1,604
)
11,505
11,505
102
102
11,607
14,460
133,828
61,663
(1,487
)
(37
)
208,427
287
4,697
4,984
2,197
15,376
17,573
4,907
4,907
210
7,434
(7,285
)
359
(573
)
(573
)
53,942
53,942
37
37
53,979
17,154
166,242
115,032
(8,772
)
289,656
532
12,579
13,111
(8,772
)
8,772
1,512
1,512
138
4,569
4,707
46,867
46,867
$
17,824
$
176,130
$
161,899
$
$
$
355,853
Table of Contents
2002
2003
2004
(In thousands)
$
11,505
$
53,942
$
46,867
(675
)
218
359
6,208
53,155
61,169
63,879
1,250
1,200
970
4,255
1,648
6,773
27,982
20,739
5,139
3,723
16,151
19,599
(119
)
155
1,395
(10,810
)
(10,450
)
5,584
4,740
(2,124
)
(1,735
)
11,191
14,404
(8,714
)
84,437
153,785
171,351
3,478
(83,381
)
(92,930
)
(209,790
)
(48,271
)
(79,903
)
(92,930
)
(258,061
)
31,736
23,402
272,673
75,000
175,000
(2,267
)
(5,963
)
(112,928
)
(83,051
)
(367,019
)
1,089
3,028
9,379
(1,604
)
(573
)
(8,974
)
(57,194
)
84,070
(4,440
)
3,661
(2,640
)
6,122
1,682
5,343
$
1,682
$
5,343
$
2,703
Table of Contents
(1)
Summary of Significant Accounting Policies
Basis of Presentation and Principles of
Consolidation
Formation of Bois dArc Energy
Table of Contents
Comstock
Bois dArc
Offshore
Participants
Combined
(In thousands)
$
6
$
17,024
$
17,030
21,992
21,992
362,959
119,738
482,697
(66,788
)
(66,788
)
(83,177
)
(83,177
)
(18,458
)
(7,985
)
(26,443
)
(12,742
)
(28,342
)
(41,084
)
$
248,588
$
55,639
$
304,227
Receivable from Bois dArc Energy
Table of Contents
Formation Costs
Reclassifications
Use of Estimates in the Preparation of Financial
Statements
Concentration of Credit Risk and Accounts
Receivable
Table of Contents
Fair Value of Financial Instruments
2003
2004
Carrying
Carrying
Value
Fair Value
Value
Fair Value
(In thousands)
$
306,623
$
321,198
$
403,150
$
408,400
Other Current Assets
As of December 31,
2003
2004
(In thousands)
$
4,279
$
1,689
2,100
523
2,755
$
4,802
$
6,544
Property and Equipment
Table of Contents
For the Year Ended December 31,
2002
2003
2004
$
7,794
$
16,677
$
19,174
(1,476
)
826
(875
)
1,870
8,682
4,787
88
(625
)
(685
)
(3,030
)
746
1,146
$
16,677
$
19,174
$
19,248
For the Year Ended
December 31,
2002
2003
(In thousands except
per share amounts)
$
11,505
$
53,942
(167
)
(675
)
$
11,338
$
53,267
$
0.34
$
1.67
$
0.34
$
1.65
$
0.34
$
1.53
$
0.33
$
1.51
Table of Contents
Other Assets
Stock Options
Year Ended
December 31,
2002
2003
(In thousands, except
per share amounts)
$
9,901
$
53,369
142
233
(1,066
)
(1,942
)
$
8,977
$
51,660
$
0.34
$
1.67
$
0.31
$
1.62
$
0.34
$
1.53
$
0.31
$
1.48
Table of Contents
Segment Reporting
Derivative Instruments and Hedging Activities
Major Purchasers
Revenue Recognition and Gas Balancing
General and Administrative Expenses
Other Income
Table of Contents
Income Taxes
Comprehensive Income
Earnings Per Share
Year Ended December 31,
2002
2003
2004
Per
Per
Per
Income
Shares
Share
Income
Shares
Share
Income
Shares
Share
(In thousands except per share data)
$
12,577
28,764
$
53,267
31,964
$
46,867
34,187
(1,604
)
(573
)
10,973
28,764
$
0.38
52,694
31,964
$
1.65
46,867
34,187
$
1.37
(1,072
)
28,764
(0.04
)
31,964
34,187
28,764
675
31,964
0.02
34,187
$
9,901
28,764
$
0.34
$
53,369
31,964
$
1.67
$
46,867
34,187
$
1.37
$
12,577
28,764
$
53,267
31,964
$
46,867
34,187
744
1,742
2,065
4,393
1,569
12,577
33,901
$
0.37
53,267
35,275
$
1.51
46,867
36,252
$
1.29
(1,072
)
33,901
(0.03
)
35,275
36,252
33,901
675
35,275
0.02
36,252
$
11,505
33,901
$
0.34
$
53,942
35,275
$
1.53
$
46,867
36,252
$
1.29
Table of Contents
2002
2003
2004
(In thousands except per share data)
2,737
790
28
$8.06 $14.00
$13.59 $14.00
$20.03
Statements of Cash Flows
Year Ended December 31,
2002
2003
2004
(In thousands)
$
$
17,573
$
$
1,286
$
7,549
$
2,326
$
28,987
$
29,115
$
20,477
$
$
$
7,954
New Accounting Standards
Table of Contents
(2)
Acquisitions
(3)
Oil and Gas Producing Activities
Capitalized Costs
As of December 31,
2003
2004
(In thousands)
$
18,075
$
14,811
644,294
727,436
408,270
521,587
(374,686
)
(438,711
)
$
695,953
$
825,123
Costs Incurred
For the Year Ended December 31,
2002
2003
2004
(In thousands)
$
4,268
$
4,447
$
5,082
11,435
4,805
62,712
35,272
46,798
94,574
31,414
35,516
46,477
8,884
3,227
1,554
$
91,273
$
94,793
$
210,399
Table of Contents
Results of Operations for Oil and Gas Producing
Activities
For the Year Ended December 31,
2002
2003
2004
(In thousands)
$
142,085
$
235,102
$
261,647
(33,499
)
(45,746
)
(52,068
)
(5,479
)
(4,410
)
(15,610
)
(52,869
)
(60,867
)
(63,523
)
(4,255
)
(1,648
)
50,238
119,824
128,798
(17,583
)
(41,938
)
(46,367
)
32,655
77,886
82,431
(1,072
)
$
31,583
$
77,886
$
82,431
(4)
Long-Term Debt
As of December 31,
2003
2004
(In thousands)
$
86,000
$
228,000
220,000
175,000
623
150
306,623
403,150
(623
)
(150
)
$
306,000
$
403,000
Table of Contents
2005
2006
2007
2008
2009
Thereafter
Total
(In thousands)
$
$
$
$
228,000
$
$
$
228,000
175,000
175,000
150
150
$
150
$
$
$
228,000
$
$
175,000
$
403,150
Table of Contents
(5)
Commitments and Contingencies
Lease Commitments
(In thousands)
$
747
817
820
823
833
3,341
$
7,381
Contingencies
(6)
Stockholders Equity
Table of Contents
Stock Options
Number of
Weighted Average
Number of
Options
Remaining Life
Options
Exercise Price
Outstanding
(Years)
Exercisable
622,500
3.5
622,500
434,250
4.1
172,500
9,500
4.4
9,500
10,000
1.6
10,000
30,000
2.4
30,000
226,750
4.5
226,750
222,870
4.0
222,870
614,000
1.0
614,000
33,500
3.0
21,000
30,000
3.4
30,000
283,000
2.0
283,000
50,000
4.4
50,000
140,500
5.0
1,500
28,000
6.0
2,734,870
3.1
2,293,620
Table of Contents
Number of
Weighted Average
Options
Exercise Price
Exercise Price
4,389,650
$ 2.50 to $12.38
$
7.89
303,750
$ 8.70 to $ 9.20
$
9.15
(313,875
)
$ 2.50 to $ 6.69
$
3.55
(209,000
)
$ 9.63 to $11.94
$
10.52
4,170,525
$ 3.44 to $12.38
$
8.18
170,500
$12.15 to $18.20
$
17.14
(576,025
)
$ 3.44 to $12.38
$
5.26
(215,750
)
$12.38
$
12.38
3,549,250
$ 3.44 to $18.20
$
8.83
78,000
$18.17 to $20.03
$
18.84
(892,380
)
$ 3.44 to $12.38
$
9.09
2,734,870
$ 3.88 to $20.03
$
9.02
2,293,620
$ 3.88 to $18.20
$
8.62
Restricted Stock Grants
(7)
Exploration Venture
Table of Contents
Number of
Weighted Average
Number of
Warrants
Remaining Life
Warrants
Exercise Price
Outstanding
(Years)
Exercisable
44,500
7.0
44,500
267,000
7.0
267,000
177,999
7.0
177,999
178,000
7.0
178,000
360,000
7.0
360,000
600,000
3.0
600,000
300,000
7.0
300,000
240,000
7.0
240,000
2,167,499
5.9
2,167,499
Table of Contents
Number of
Weighted Average
Warrants
Exercise Price
Exercise Price
960,000
$7.32 $14.00
$
11.50
240,000
$6.48 $ 7.51
$
7.25
1,200,000
$6.48 $14.00
$
10.65
900,000
$7.51 $18.70
$
14.02
2,100,000
$6.48 $18.70
$
12.09
240,000
$19.46
$
19.46
(172,501
)
$6.48 $ 9.26
$
7.34
2,167,499
$6.48 $19.46
$
13.29
(8)
Retirement Plan
(9)
Income Taxes
2003
2004
(In thousands)
$
(91,715
)
$
(117,782
)
815
15,939
18,685
(8,043
)
(8,043
)
2,190
6,874
$
(81,629
)
$
(99,451
)
2002
2003
2004
(In thousands)
$
$
1,700
$
5,603
6,773
27,982
20,739
$
6,773
$
29,682
$
26,342
Table of Contents
Years of
Expiration
Types of Carryforward
Carryforward
Amounts
(In thousands)
20172023
$53,386
Unlimited
6,874
(10)
Derivatives and Hedging Activities
Volume
Type of
Floor
Ceiling
Period Beginning
Period Ending
MMBtu
Delivery Location
Instrument
Price
Price
December 31, 2005
3,072,000
Henry Hub
Collar
$
4.50
$
10.30
December 31, 2005
2,400,000
Houston Ship Channel
Collar
$
4.50
$
10.00
December 31, 2006
3,072,000
Henry Hub
Collar
$
4.50
$
9.02
December 31, 2006
2,400,000
Houston Ship Channel
Collar
$
4.50
$
8.25
Table of Contents
(11)
Discontinued Operations
Year Ended
December 31,
2002
(In thousands)
$
390
(264
)
(1,778
)
(1,652
)
580
$
(1,072
)
(12)
Supplementary Quarterly Financial Data (Unaudited)
First
Second
Third
Fourth
Total
(In thousands, except per share amounts)
$
68,576
$
57,161
$
56,866
$
52,499
$
235,102
$
39,160
$
29,361
$
27,158
$
16,837
$
112,516
$
20,157
$
13,965
$
12,920
$
5,652
$
52,694
$
20,832
$
13,965
$
12,920
$
5,652
$
53,369
$
0.70
$
0.44
$
0.38
$
0.17
$
1.65
$
0.60
$
0.40
$
0.36
$
0.16
$
1.51
$
0.72
$
0.44
$
0.38
$
0.17
$
1.67
$
0.62
$
0.40
$
0.36
$
0.16
$
1.53
Table of Contents
First
Second
Third
Fourth
Total
(In thousands, except per share amounts)
$
60,761
$
66,508
$
63,202
$
71,176
$
261,647
$
25,830
$
33,645
$
25,047
$
29,351
$
113,873
$
25
$
18,666
$
12,318
$
15,858
$
46,867
$
$
0.55
$
0.36
$
0.46
$
1.37
$
$
0.52
$
0.34
$
0.43
$
1.29
(13)
Oil and Gas Reserves Information (Unaudited)
2002
2003
2004
Oil
Gas
Oil
Gas
Oil
Gas
(MBbls)
(MMcf)
(MBbls)
(MMcf)
(MBbls)
(MMcf)
17,348
462,085
20,849
488,784
19,189
501,778
(11
)
(5,182
)
(2,098
)
(6,718
)
(568
)
4,818
2,360
39,467
961
46,614
1,086
30,979
2,637
29,651
1,103
7,613
74
40,568
(182
)
(4,066
)
(11
)
(195
)
(2,366
)
(11,070
)
(1,303
)
(33,171
)
(1,615
)
(34,320
)
(1,534
)
(33,519
)
20,849
488,784
19,189
501,778
15,881
533,554
12,212
315,779
13,937
319,155
13,206
332,668
13,937
319,155
13,206
332,668
11,382
353,567
(1)
Net change in reserves related to the formation of Bois
dArc Energy.
Table of Contents
2003
2004
(In thousands)
$
3,831,134
$
3,796,257
(748,399
)
(860,569
)
(218,017
)
(250,729
)
(860,196
)
(795,319
)
2,004,522
1,889,640
(806,857
)
(805,518
)
$
1,197,665
$
1,084,122
2002
2003
2004
(In thousands)
$
447,273
$
921,115
$
1,197,665
590,290
309,775
(128,486
)
35,272
41,090
68,617
(11,636
)
(53,933
)
3,303
54,068
128,029
170,908
(12,052
)
(6,894
)
(39,611
)
(58,022
)
(43,177
)
(164,971
)
150,317
196,275
113,012
105,206
47,229
62,112
(5,243
)
(256
)
(46,612
)
(108,586
)
(189,356
)
(209,579
)
(265,772
)
(152,232
)
57,764
$
921,115
$
1,197,665
$
1,084,122
(1)
Net change in reserves related to the formation of Bois
dArc Energy.
Table of Contents
2002
2003
2004
$
30.07
$
31.19
$
42.17
$
5.04
$
6.44
$
5.86
Table of Contents
/s/
ERNST & YOUNG
LLP
Table of Contents
(In thousands)
ASSETS
$
2,416
9,140
5,558
1,476
18,590
291,227
8,566
444,403
(233,243
)
510,953
524
516
$
530,583
LIABILITIES AND EQUITY
$
20,103
14,676
34,779
148,066
28,253
10
304,227
15,248
319,485
$
530,583
Table of Contents
(In thousands)
$
72,721
16,602
12,040
21,761
2,641
53,044
19,677
74
(2,665
)
(1,838
)
(4,429
)
$
15,248
Table of Contents
Class A
Class B
Retained
Units
Units
Earnings
Total
(In thousands)
$
$
304,227
$
$
304,227
10
10
15,248
15,248
$
10
$
304,227
$
15,248
$
319,485
Table of Contents
(In thousands)
$
15,248
21,761
10,892
2,506
7,282
(1,464
)
(6,776
)
49,449
(24,054
)
(59,703
)
(83,757
)
64,889
(28,175
)
10
36,724
2,416
$
2,416
$
2,665
Table of Contents
(1)
Organization
Table of Contents
Contributed to
Bois dArc
Energy
$
17,030
21,992
482,697
521,719
(66,788
)
(83,177
)
(26,443
)
(176,408
)
345,311
(41,084
)
$
304,227
(2)
Summary of Significant Accounting Policies
Principles of Consolidation
Table of Contents
Use of Estimates in the Preparation of Financial
Statements
Concentration of Credit Risk and Accounts
Receivable
Fair Value of Financial Instruments
Property and Equipment
Table of Contents
Segment Reporting
Major Purchasers
Revenue Recognition and Gas Balancing
General and Administrative Expense
Equity-based Compensation
Income Taxes
Table of Contents
Comprehensive Income
Statements of Cash Flows
Asset Retirement Obligations
(In thousands)
$
26,443
835
1,566
(591
)
$
28,253
New Accounting Standards
Table of Contents
(3)
Payable to Parent Company
(4)
Members Equity
(5)
Long-term Incentive Plan
Number of Options
Weighted Average
Granted and
Remaining Life
Number of Options
Exercise Price
Outstanding
(Years)
Exercisable
2,800,000
9.5
(1)
(1)
The options vest over five years with service to the Company.
Table of Contents
(7)
Commitments and Contingencies
Guarantees of Comstock Debt
Contingencies
Table of Contents
Lease Commitments
(In thousands)
$
226
343
348
353
369
894
$
2,533
(8)
Related Party Transactions
(9)
Oil and Gas Producing Activities
Capitalized Costs as of December 31, 2004
(In thousands)
$
735,630
8,566
(233,243
)
$
510,953
Table of Contents
Costs Incurred for the Period from Inception
(July 16, 2004) to December 31, 2004
(In thousands)
$
120
29,890
30,261
975
$
61,246
(In thousands)
$
72,721
(16,602
)
(12,040
)
(21,623
)
$
22,456
(10)
Oil and Gas Reserves Information (Unaudited)
Oil
Gas
(MBbls)
(MMcf)
18,436
183,887
(624
)
2,880
1,689
12,076
(778
)
(5,908
)
18,723
192,935
14,214
161,297
14,278
167,730
Table of Contents
(In thousands)
$
1,949,678
(331,887
)
(124,121
)
1,493,670
(496,946
)
$
996,724
(In thousands)
$
993,124
29,256
19,523
(3,119
)
49,656
(11,274
)
(114,416
)
90,093
(56,119
)
$
996,724
Exhibit 10.8
COMSTOCK RESOURCES, INC.
I. GENERAL
1. Purpose . The COMSTOCK RESOURCES, INC. 1999 Long-Term Incentive Plan (the 1999 Plan) has been established by COMSTOCK RESOURCES, INC. (the Company) to:
(a) | attract and retain key executive and managerial employees; | |||
(b) | motivate participating employees, by means of appropriate incentive, to achieve long-range goals; | |||
(c) | attract and retain well-qualified individuals to serve as members of the Companys Board of Directors; | |||
(d) | provide incentive compensation opportunities which are competitive with those of other public corporations; and | |||
(e) | further identify Participants interests with those of the Companys other stockholders through compensation alternatives based on the Companys common stock; |
and thereby promote the long-term financial interest of the Company and its Subsidiaries, including the growth in value of the Companys equity and enhancement of long-term shareholder return.
2. Effective Date . Subject to the approval of the holders of a majority of the Stock of the Company present, or represented and entitled to vote at the Companys 1999 annual meeting of its stockholders, the 1999 Plan shall be effective as of April 1, 1999, provided, however, that awards made under the 1999 Plan prior to such approval of the 1999 Plan by stockholders of the Company are contingent on such approval of the 1999 Plan by the stockholders of the Company and shall be null and void if such approval of the stockholders of the Company is withheld. Further, in addition to any other restrictions on transferability set forth herein, no Participant shall have any right to sell, assign, transfer, pledge or place any encumbrance on any award or Stock underlying an award prior to such stockholder approval of this 1999 Plan. The 1999 Plan shall be unlimited in duration; provided, however , that no awards of Incentive Stock Options may be made under the 1999 Plan after ten (10) years from the earlier of the date of its adoption by the Board or the date of its approval by the stockholders of the Company.
3. Definitions . The following definitions are applicable to the 1999 Plan.
Board means the Board of Directors of the Company.
Code means the Internal Revenue Code of 1986, as amended.
Committee means the Compensation Committee of the Board.
Disability means the inability of a Participant, by reason of a physical or mental impairment, to engage in any substantial gainful activity, of which the Board shall be the sole judge.
Effective Date means April 1, 1999.
Fair Market Value of any Stock means, as of any date, the last sale price for such Stock as reported by the National Association of Securities Dealers, Inc. Automated Quotation System - National Market System (or by the principal consolidated transaction reporting system for any other national securities exchange which is the principal exchange on which the stock is listed or accepted for trading) on the date or, if Stock is not traded on that date, on the next preceding date on which Stock was traded.
Non-employee Director means each member of the Board who is not a full-time employee of the Company.
Option Date means, with respect to any Stock Option, the date on which the Stock Option is awarded under the 1999 Plan.
Participant means (i) any employee of the Company or any Subsidiary who is selected by the Board or Committee to participate in the 1999 Plan; and (ii) to the extent provided in paragraphs I.5(b) and III.2, any Non-employee Director, to the extent provided in paragraph I.5(b).
Performance Unit shall have the meaning ascribed to it in Part V.
Permitted Transferees means members of the immediate family of the Participant, trusts for the benefit of such immediate family members, and partnerships in which substantially all of the interests are held by the Participant and members of his or her immediate family. An immediate family member shall mean any descendant (children, grandchildren and more remote descendants), including step-children and relationships arising from legal adoption, and any spouse of a Participant or a Participants descendant.
Related Company means any corporation during any period in which it is a Subsidiary, or during any period in which it directly or indirectly owns 50% or more of the total combined voting power of all classes of stock of the Company that are entitled to vote.
Restricted Period has the meaning ascribed to it in Part IV.
Restricted Stock has the meaning ascribed to it in Part IV.
Retirement means (i) termination of employment in accordance with the retirement procedures set by the Company from time to time; (ii) an employees termination of employment or a Non-employee Directors ceasing to serve as a member of the Board because of Disability; or (iii) an employees termination of employment or a Non-employee Directors ceasing to serve as a member of the Board voluntarily with the consent of the Company (of which the Committee shall be the sole judge).
Stock means the Companys common stock, $.50 par value per share.
-2-
Stock Option means the right of a Participant to purchase Stock pursuant to an Incentive Stock Option or Non-Qualified Option awarded pursuant to the provisions of the 1999 Plan.
Subsidiary means any corporation during any period of which 50% or more of the total combined voting power of all classes of stock entitled to vote is owned, directly or indirectly, by the Company.
4. Administration . The authority to manage and control the operation and administration of the 1999 Plan shall be vested in the Committee. Subject to the provisions of the 1999 Plan, the Committee will have authority to select employees to receive awards of Stock Options, Restricted Stock and/or Performance Units, to determine the time or times of receipt, to determine the types of awards and the number of shares covered by the awards, to establish the terms, conditions, performance criteria, restrictions, and other provisions of such awards, to determine the number and value of Performance Units awarded and earned, and to cancel or suspend awards. In making such award determinations, the Committee may take into account the nature of services rendered by the employee, his or her present and potential contribution to the Companys success and such other factors as the Committee deems relevant. The Committee is authorized to interpret the 1999 Plan, to establish, amend, and rescind any rules and regulations relating to the 1999 Plan, to determine the terms and provisions of any agreements made pursuant to the 1999 Plan, and to make all other determinations that may be necessary or advisable for the administration of the 1999 Plan.
A majority of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, or acts approved in writing by all members of the Committee, shall be the acts of the Committee, unless provisions to the contrary are embodied in the Companys Bylaws or resolutions duly adopted by the Board. All actions taken and decisions and determinations made by the Board or the Committee pursuant to the Plan shall be binding and conclusive on all persons interested in the 1999 Plan. No member of the Board or the Committee shall be liable for any action or determination taken or made in good faith with respect to the 1999 Plan.
Notwithstanding the foregoing, all authority to exercise discretion with respect to the participation in the 1999 Plan of persons who are officers within the meaning of the applicable Securities and Exchange Commission rules relating to Section 16 of the Securities Exchange Act of 1934, as amended, and/or directors of the Company, or the timing, pricing and amounts of awards granted under the 1999 Plan to such officers and directors, shall be vested in (a) the Board, or (b) the Committee, if consisting of two or more directors each of whom is a non-employee director within the meaning ascribed to such term in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or within any successor definition or any successor rule.
5. Participation . (a) Employees . Subject to the terms and conditions of the 1999 Plan, the Committee shall determine and designate, from time to time, the key executives and managerial employees of the Company and/or its Subsidiaries who will participate in the 1999 Plan. In the discretion of the Committee, an eligible employee may be awarded Stock Options, Restricted Stock or Performance Units or any combination thereof, and more than one award may be granted to a Participant. Except as otherwise agreed to by the Company and the Participant, any
-3-
award under the 1999 Plan shall not affect any previous award to the Participant under the 1999 Plan or any other plan maintained by the Company or its Subsidiaries.
(b) Non-employee Directors . Each Non-employee Director shall be granted without further action by the Board or the Committee a Non-Qualified Stock Option to purchase 10,000 shares of Stock at the close of business of each annual meeting of stockholders of the Company. An individual who is first elected and commences serving as a Non-employee Director shall also be granted without further action by the Board or the Committee a Non-Qualified Stock Option for 10,000 shares of Stock on the date of such election as a director.
The Non-Qualified Stock Options shall be fully vested and exercisable by each Non-employee Director after the Director has completed six continuous months of service as a member of the Board after the Option Date (unless his service terminates during such period by reason of death or Disability). The term of each Non-Qualified Stock Option shall be five (5) years from the Option Date, and the exercise price shall be 100% of the Fair Market Value of a share of Stock as of the Option Date. The full purchase price of each share of Stock purchased upon exercise of a Non-Qualified Stock Option shall be paid in the manner set forth in Article III, paragraph 3 hereof. All outstanding options become 100% vested and exercisable if service as a member of the Board terminates by reason of death, Disability or Retirement.
6. Shares Subject to the 1999 Plan . The shares of Stock with respect to which awards may be made under the 1999 Plan shall be either authorized and unissued shares or authorized and issued shares held in the treasury by the Company (including, in the discretion of the Committee, shares purchased in the market).
(a) Awards to Employees. Subject to the provisions of paragraph I.10, the number of shares of Stock available under the 1999 Plan for the grant of Stock Options, Performance Units and Restricted Stock to key executive and managerial employees shall not exceed 1,200,000 shares in the aggregate. The number of shares of Stock available under the 1999 Plan for the grant of non-qualified stock options, Performance Units and Restricted Stock shall be increased, as of the first day of each fiscal year commencing January 1, 2000, , by one percent (1%) of the then current number of shares of Stock outstanding. In addition, shares of Stock available under the 1991 Long-Term Incentive Plan (the 1991 Plan) which remain available at the Effective Date of the 1999 Plan (58,630 shares) shall be available for grant under the 1999 Plan. If, for any reason, any award under the 1999 Plan or the 1991 Plan otherwise distributable in shares of Stock, or any portion of the award, shall expire, terminate or be forfeited or canceled, or be settled in cash pursuant to the terms of the 1999 Plan or the 1991 Plan and, therefore, any such shares are no longer distributable under the award, such shares of Stock shall again be available for award under the 1999 Plan.
(b) Awards to Non-Employee Directors . Subject to the provisions of paragraph I.10, the number of shares of Stock available under the 1999 Plan for the grant of Options to Non-employee Directors shall not exceed 225,000 shares, which includes 170,000 shares remaining available from the 1991 Plan for grant to Non-employee Directors at the Effective Date. The number of shares of Stock available under the 1999 Plan for the grant of Options to Non-employee Directors shall be increased, as of the first day of each fiscal year commencing January 1, 2000, by 50,000 shares. If, for any reason, any Option award to a Non-employee Director under the 1999 Plan or the 1991 Plan, or any portion of such award, shall expire, terminate or be forfeited or canceled, or be settled in cash pursuant to the
-4-
terms of the 1999 Plan or the 1991 Plan and, therefore, any such shares are no longer distributable under the award, such shares of Stock shall again be available for award to Non-employee Directors under the 1999 Plan.
(c) Annual Limit on Grants to Employees . Subject to the provisions of paragraph I.10, the number of shares of Stock with respect to which Options under the 1999 Plan may be granted in any calendar year to any employee shall not exceed 1,000,000 shares.
7. Compliance With Applicable Laws and Withholding of Taxes . Notwithstanding any other provision of the 1999 Plan, the Company shall have no liability to issue any shares of Stock under the 1999 Plan unless such issuance would comply with all applicable laws and the applicable requirements of any securities exchange or similar authority. Prior to the issuance of any shares of Stock under the 1999 Plan, the Company may require a written statement that the recipient is acquiring the shares for investment and not for the purpose or with the intention of distributing as amended, the shares. In the case of a Participant who is subject to Section 16(a) and 16(b) of the Securities Exchange Act of 1934, as amended, the Committee may, at any time, add such conditions and limitations to any election to satisfy tax withholding obligations through the withholding or surrender of shares of Stock as the Committee, in its sole discretion, deems necessary or desirable to comply with Section 16(a) or 16(b) and the rules and regulations thereunder or to obtain any exemption therefrom. All awards and payments under the 1999 Plan to employees are subject to withholding of all applicable taxes, which withholding obligations may be satisfied, with the consent of the Committee, through the surrender of shares of Stock which the Participant already owns, or to which a Participant is otherwise entitled under the 1999 Plan.
8. Transferability . Incentive Stock Options, Performance Units, and, during the period of restriction, Restricted Stock awarded under the 1999 Plan are not transferable except as designated by the Participant by will or by the laws of descent and distribution. Incentive Stock Options may be exercised during the lifetime of the Participant only by the Participant or his guardian or legal representative. If expressly permitted by the terms of the stock option agreement, Non-Qualified Stock Options may be transferred by a Participant to Permitted Transferees, provided that there is not any consideration for the transfer.
9. Employment and Stockholder Status . The 1999 Plan does not constitute a contract of employment, and selection as a Participant will not give any employee the right to be retained in the employ of the Company or any Subsidiary. The 1999 Plan does not constitute or serve as evidence of an agreement or understanding, express or implied, that the Company will retain a director for any period of time. Subject to the provisions of paragraph IV.3(a), no award under the 1999 Plan shall confer upon the holder thereof any right as a stockholder of the Company prior to the date on which he fulfills all service requirements and other conditions for receipt of shares of Stock. If the redistribution of shares is restricted pursuant to paragraph I.7, certificates representing such shares may bear a legend referring to such restrictions.
10. Adjustments to Number of Shares Subject to the 1999 Plan . In the event of any change in the outstanding shares of Stock of the Company by reason of any stock dividend, split, spinoff, recapitalization, merger, consolidation, combination, exchange of shares or other similar change, the aggregate number of shares of Stock with respect to which awards may be made under the 1999 Plan, the terms and the
-5-
number of shares of any outstanding Stock Options, Performance Units, or Restricted Stock, and the purchase price of a share of Stock under Stock Options, may be equitably adjusted by the Committee in its sole discretion.
11. Change in Control . Notwithstanding any other provision of the 1999 Plan, in the event of a change in control, all outstanding Stock Options and Restricted Stock will automatically become fully exercisable and/or vested, and Performance Units may be paid out in such manner and amounts as determined by the Committee. For purposes of this paragraph 11, a Change in Control of the Company shall be deemed to have taken place if, without the approval or recommendation of a majority of the then existing Board of the Company:
(a) | a third person shall cause or bring about (through solicitation of proxies or otherwise) the removal or resignation of a majority of the then existing members of the Board or if a third person causes or brings about (through solicitation of proxies or otherwise) an increase in the size of the Board such that the then existing members of the Board thereafter represent a minority of the total number of persons comprising the entire Board; | |||
(b) | a third person, including a group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes the beneficial owner of shares of any class of the Companys stock having 20% or more of the total number of votes that may be cast for the election of directors of the Company; | |||
(c) | the stockholders of the Company approve a definitive agreement for the merger or other business combination of the Company with or into another corporation pursuant to which the Company will not survive or will survive only as a subsidiary of another corporation, for the sale or other disposition of all or substantially all of the assets of the Company, or any combination of the foregoing. |
For purposes hereof, a person will be deemed to be the beneficial owner of any voting securities of the Company which it would be considered to beneficially own under Securities and Exchange Commission Rule 13d-3 (or any similar or superseding statute or rule from time to time in effect).
12. Agreement With Company . At the time of any awards under the 1999 Plan, the Committee will require a Participant to enter into an agreement with the Company in a form specified by the Committee, agreeing to the terms and conditions of the 1999 Plan and to such additional terms and conditions, not inconsistent with the 1999 Plan, as the Committee may, in its sole discretion, prescribe.
-6-
13. Amendment and Termination of 1999 Plan . Subject to the following provisions of this paragraph 13, the Board may at any time and in any way amend, suspend or terminate the 1999 Plan. No amendment of the 1999 Plan and, except as provided in paragraph I.10, no action by the Board shall, without further approval of the stockholders of the Company, materially increase the total number of shares of Stock with respect to which awards may be made under the 1999 Plan, materially increase the benefits accruing to Participants under the 1999 Plan or materially modify the requirements as to eligibility for participation in the 1999 Plan, if stockholder approval of such amendment is a condition to the availability of the exemption provided by Securities and Exchange Commission Rule 16b-3 or of the Code at the time such amendment is adopted. Further, the formula provisions of paragraph I.5 may be amended no more than once every twelve months, other than to comport with changes in the Code. No amendment, suspension or termination of the 1999 Plan shall alter or impair any Stock Option, share of Restricted Stock or Performance Unit previously awarded under the 1999 Plan without the consent of the holder thereof.
II. INCENTIVE STOCK OPTIONS
1. Definition . The award of an Incentive Stock Option under the 1999 Plan entitles the Participant to purchase shares of Stock at a price fixed at the time the option is awarded, subject to the following terms of this Part II.
2. Eligibility . The Committee shall designate the Participants to whom Incentive Stock Options, as described in section 422A(b) of the Code or any successor section thereto, are to be awarded under the 1999 Plan and shall determine the number of option shares to be offered to each of them. Incentive Stock Options shall be awarded only to key employees of the Company, and no Non-employee Director shall be eligible to receive an award of an Incentive Stock Option. In no event shall the aggregate Fair Market Value (determined at the time the option is awarded) of Stock with respect to which Incentive Stock Options are exercisable for the first time by an individual during any calendar year (under all plans of the Company and all Related Companies) exceed $100,000.
3. Price . The purchase price of a share of Stock under each Incentive Stock Option shall be determined by the Committee, provided, however, that in no event shall such price be less than the greater of (a) 100% of the Fair Market Value of a share of Stock as of the Option Date (or 110% of such Fair Market Value if the holder of the Incentive Stock Option owns stock possessing more than 10% of the combined voting power of all classes of stock of the Company or any Related Company) or (b) the par value of a share of Stock on such date. To the extent provided by the Committee, the full purchase price of each share of Stock purchased upon the exercise of any Incentive Stock Option shall be paid in cash or in shares of Stock (valued at Fair Market Value as of the day of exercise), or in any combination thereof, at the time of such exercise and, as soon as practicable thereafter, a certificate representing the shares so purchased shall be delivered to the person entitled thereto.
4. Exercise . No Incentive Stock Option may be exercised by a Participant after the Expiration Date (as defined in paragraph II.5 below) applicable to that option. Each Option shall become and be exercisable at such time or times and during such period or periods, in full or in such installments as may be determined by the Committee at the Option Date.
5. Option Expiration Date . The Expiration Date with respect to an Incentive Stock Option or any portion thereof awarded to a Participant under the 1999 Plan means the earliest of:
-7-
(a) | the date that is 10 years after the date on which the Incentive Stock Option is awarded; | |||
(b) | the date established by the Committee at the time of the award; | |||
(c) | the date that is one year after the Participants employment with the Company and all Related Companies is terminated because of death or permanent and total disability; as defined in Code Section 22(e)(3); or | |||
(d) | the date that is three months after the date the Participants employment with the Company and all Related Companies is terminated for reasons other than death or permanent and total disability. |
III. NON-QUALIFIED STOCK OPTIONS
1. Definition . The award of a Non-Qualified Stock Option under the 1999 Plan entitles the Participant to purchase shares of Stock at a price fixed at the time the option is awarded, subject to the following terms of this Part III.
2. Eligibility . The Committee shall designate the Participants to whom Non-Qualified Stock Options are to be awarded under the 1999 Plan and shall determine the number of option shares to be offered to each of them. No Non-employee Director shall be eligible to receive an award of a Non-Qualified Stock Option except to the extent granted pursuant to the formula set forth in Paragraph I.5(b) above.
3. Price . The purchase price of a share of Stock under each Non-Qualified Stock Option shall be determined by the Committee; provided, however, that in no event shall such price be less than the greater of (a) 100% of the Fair Market Value of a share of Stock as of the Option Date or (b) the par value of a share of such Stock on such date. To the extent provided by the Committee, the full purchase price of each share of Stock purchased upon the exercise of any Non-Qualified Stock Option shall be paid in cash or by tendering, by either actual delivery of shares or by attestation, shares of Stock (valued at Fair Market Value as of the day of exercise), or in any combination thereof, at the time of such exercise. Shares of Stock acquired pursuant to the exercise of a Non-Qualified Stock Option shall be subject to such conditions, restrictions and contingencies as the Committee may establish in the award agreement. If the Company shall have a class of its Stock registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended, an option holder may also make payment at the time of exercise of a Non-Qualified Stock Option by delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker approved by the Company, that upon such brokers sale of shares of Stock with respect to which such option is exercised, it is to deliver promptly to the Company the amount of sale proceeds necessary to satisfy the option exercise price and any required withholding taxes.
4. Exercise . No Non-Qualified Stock Option may be exercised by a Participant after the Expiration Date applicable to that option. Unless otherwise specified herein, each Option shall become and be exercisable at such time or times and during such period or periods, in full or in such installments as may be determined by the Committee at the Option Date.
-8-
5. Option Expiration Date . The Expiration Date with respect to a Non-Qualified Stock Option or any portion thereof awarded to a Participant under the 1999 Plan means the earliest of:
(a) | the date established by the Committee at the time of the award or set forth in paragraph I.5(b), as applicable; | |||
(b) | the date that is three months after the employee Participants employment with the Company and all Subsidiaries or the Non-employee Director Participants service as a member of the Board is terminated for reasons other than Retirement or death; or | |||
(c) | the date that is three years after the date the employee Participants employment with the Company and all Subsidiaries or the Non-employee Director Participants service as a member of the Board is terminated by reason of Retirement or death. |
IV. RESTRICTED STOCK
1. Definition . Restricted Stock awards are grants of Stock to Participants, the vesting of which is subject to a required period of employment and any other conditions established by the Committee or by the terms of this 1999 Plan.
2. Eligibility . The Committee shall designate the Participants to whom Restricted Stock is to be awarded and the number of shares of Stock that are subject to the award. Restricted Stock shall be awarded only to key employees of the Company, and no Non-employee Director shall be eligible to receive an award of Restricted Stock.
3. Terms and Conditions of Awards . All shares of Restricted Stock awarded to Participants under the 1999 Plan shall be subject to the following terms and conditions and to such other terms and conditions, not inconsistent with the 1999 Plan, as shall be prescribed by the Committee in its sole discretion and as shall be contained in the agreement referred to in paragraph I.12.
(a) | Restricted Stock awarded to Participants may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, for a period of ten years or such shorter period as the Committee may determine, but no less than three years, after the time of the award of such stock (the Restricted Period). Such restrictions shall lapse as to the Restricted Stock in accordance with the time(s) and number(s) of shares as to which the Restricted Period expires, as set forth in the Agreement with the Participant. Except for such restrictions, the Participant as owner of such shares shall have all the rights of a stockholder, including but not limited to the right to vote such shares and, except as otherwise provided by the Committee, the right to receive all dividends paid on such shares. | |||
(b) | The Committee may in its discretion, at any time after the date of the award of Restricted Stock, adjust the length of the Restricted Period to account for individual circumstances of a Participant or group of Participants, but in no case shall the length of the Restricted Period be less than three years. |
-9-
(c) | Except as otherwise determined by the Committee in its sole discretion, an employee Participant whose employment with the Company and all Subsidiaries terminates prior to the end of the Restricted Period for any reason shall forfeit all shares of Restricted Stock remaining subject to any outstanding Restricted Stock award which have not then vested in accordance with the agreement entered into under paragraph I.12. | |||
(d) | Each certificate issued in respect of shares of Restricted Stock awarded under the 1999 Plan shall be registered in the name of the Participant and, at the discretion of the Committee, each such certificate may be deposited in a bank designated by the Committee. Each such certificate shall bear the following (or a similar) legend: | |||
The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) contained in the COMSTOCK RESOURCES, INC. 1999 Long-Term Incentive Plan and an agreement entered into between the registered owner and COMSTOCK RESOURCES, INC. A copy of such plan and agreement is on file in the office of the Secretary of COMSTOCK RESOURCES, INC., 5005 LBJ Freeway, Suite 1150, Dallas, Texas 75244 or, if the Company changes its principal office, at the address of such new principal office. | ||||
(e) | As the Restricted Period for Restricted Stock expires and such restrictions lapse, such Restricted Stock shall be held by a Participant (or his or her legal representative, beneficiary or heir) free of all restrictions imposed by the 1999 Plan and the Agreement. Such shares shall nevertheless continue to be subject to any restriction imposed under applicable securities laws. |
V. PERFORMANCE UNITS
1. Definition . Performance Units are awards to Participants who may receive value for the units at the end of a Performance Period. The number of units earned, and value received for them, will be contingent on the degree to which the performance measures established at the time of the initial award are met.
2. Eligibility . The Committee shall designate the Participants to whom Performance Units are to be awarded, and the number of units to be the subject of such awards. Performance Units shall be awarded only to key employees of the Company, and no Non-employee Director shall be eligible to receive an award of a Performance Unit.
3. Terms and Conditions of Awards . For each Participant, the Committee will determine the timing of awards; the number of units awarded; the value of units, which may be stated either in cash or in shares of Stock; the performance measures used for determining whether the Performance Units are earned; the performance period during which the performance measures will apply; the relationship between the level of achievement of the performance measures and the degree to which Performance Units are earned; whether, during or after the performance period, any revision to the performance measures or performance period should be made to reflect significant events or changes that occur during the performance period; and the number of earned Performance Units that will be paid in cash and/or shares of Stock.
-10-
4. Payment . The Committee will compare the actual performance to the performance measures established for the performance period and determine the number of units to be paid and their value. Payment for units earned shall be wholly in cash, wholly in Stock or in a combination of the two, in a lump sum or installments, and subject to vesting requirements and such other conditions as the Committee shall determine. The Committee will determine the number of earned units to be paid in cash and the number to be paid in Stock. For Performance Units awarded in shares of Stock, one share of Stock will be paid for each unit earned, or cash will be paid for each unit earned equal to either (a) the Fair Market Value of a share of Stock at the end of the Performance Period or (b) the Fair Market Value of a share of Stock averaged for a number of days determined by the Committee. For Performance Units awarded in cash, the value of each unit earned will be paid in its initial cash value, or shares of Stock will be distributed based on the cash value of the units earned divided by (a) the Fair Market Value of a share of Stock at the end of the Performance Period or (b) the Fair Market Value of a share of Stock averaged for a number of days determined by the Committee.
5. Retirement, Death or Termination . A Participant whose employment with the Company and all Subsidiaries terminates during a performance period because of Retirement or death shall be entitled to the prorated value of earned Performance Units, issued with respect to that performance period, at the conclusion of the performance period based on the ratio of the months employed during the period to the total months of the performance period. If a Participants employment with the Company and all Subsidiaries terminates during a performance period for any reason other than Retirement or death, the Performance Units issued with respect to that performance period will be forfeited on the date such Participants employment terminates. Notwithstanding the foregoing provisions of this Part V, if a Participants employment with the Company and all Subsidiaries terminates before the end of the Performance Period with respect to any Performance Units awarded to him, the Committee may determine that the Participant will be entitled to receive all or any portion of the units that he or she would otherwise receive, and may accelerate the determination and payment of the value of such units or make such other adjustments as the Committee, in its sole discretion, deems desirable.
-11-
Exhibit 10.18
FIRST AMENDMENT TO
This First Amendment to Loan Agreement is dated as of December 31, 2004 by and among Comstock Resources, Inc. (Lender) and Bois dArc Energy, LLC, Bois dArc Properties, LP and Bois dArc Offshore, Ltd. (collectively, the Borrower).
A. The Lender and Borrower are parties to the Loan Agreement dated as of July 16, 2004 (the Loan Agreement).
B. The parties desire to extend the maturity date set forth in the Loan Agreement.
In consideration of the mutual covenants and agreements contained herein, the parties hereto covenant and agree as follow:
1. Capitalized Terms . Capitalized terms not defined herein shall have the meaning set forth in the Loan Agreement.
2. Amendment to Maturity Date . The definition of Maturity Date is hereby amended to read in its entirety as follows:
Maturity Date means (a) April 1, 2006 or (b) such earlier date upon which (i) the Commitment may be terminated in accordance with the terms hereof or (ii) the CRI Credit Facility is terminated.
3. Miscellaneous .
(a) Loan Documents . This Amendment shall constitute a Loan Document.
(b) References . Any reference to the Loan Agreement contained in any document, instrument or agreement executed in connection with the Loan Agreement shall be deemed to be a reference to the Loan Agreement as modified by this Amendment.
(c) Counterparts . This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
(d) Ratification . Except as expressly modified and superceded by this Amendment, the terms and provisions of the Loan Agreement are ratified and confirmed and shall continue in full force and effect and represent the valid, enforceable and collectible obligations of the Borrower.
(e) Governing Law . This Amendment shall be governed by and shall be construed and enforced in accordance with the internal laws of the State of Texas, without regard to conflict of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed as of the date first above written.
LENDER : | ||||||||
|
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COMSTOCK RESOURCES, INC. | ||||||||
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By: | /s/ ROLAND O. BURNS | |||||||
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Name: | Roland O. Burns | ||||||
|
Title: | Senior Vice President, Chief Financial Officer | ||||||
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BOIS DARC ENERGY, LLC | ||||||||
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||||||||
By: | /s/ WAYNE L. LAUFER | |||||||
|
Name: | Wayne L. Laufer | ||||||
|
Title: | Chief Executive Officer | ||||||
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BOIS DARC PROPERTIES, LP | ||||||||
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|
By: |
Bois dArc Holdings, LLC,
its general partner |
||||||
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||||||||
By: | /s/ WAYNE L. LAUFER | |||||||
|
Name: | Wayne L. Laufer | ||||||
|
Title: | Chief Executive Officer | ||||||
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BOIS D ARC OFFSHORE, LTD. | ||||||||
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||||||||
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By: | Bois dArc Oil and Gas Company, LLC, its general partner | ||||||
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||||||||
By: | /s/ WAYNE L. LAUFER | |||||||
|
Name: | Wayne L. Laufer | ||||||
|
Title: | Chief Executive Officer |
-2-
Exhibit 10.22
SECOND AMENDMENT TO
AMENDED AND RESTATED
OPERATING AGREEMENT
OF
BOIS DARC ENERGY, LLC
This Second Amendment (this Amendment) to the Amended and Restated Operating Agreement of Bois dArc Energy, LLC is dated as of January 26, 2005. Capitalized terms used herein for which a definition is not provided herein shall have the same meanings as assigned to such terms in the Operating Agreement (as hereinbelow defined).
WHEREAS, effective July 16, 2004, an Amended and Restated Operating Agreement was executed for Bois dArc Energy, LLC (the Company), which agreement was amended by that certain First Amendment (the Operating Agreement);
WHEREAS, pursuant to the First Amendment to the Operating Agreement, Section 17.7 of the Operating Agreement currently provides that certain actions shall be taken if the Company does not consummate a Financing Transaction by February 28, 2005 (or such later date as shall be determined by a unanimous vote of the Board of Managers); and
WHEREAS, the parties hereto desire to further amend the date referenced in Section 17.7.
NOW, THEREFORE, it is agreed:
1. Section 17.7 of the Operating Agreement is hereby amended by deleting the reference to February 28, 2005 and replacing it with May 1, 2005.
2. Except as provided herein, the Operating Agreement shall remain unmodified and in full force and effect.
3. This instrument may be executed by the parties hereto individually or in combination, in one or more counterparts, each of which shall be an original and all of which shall together constitute one in the same instrument.
1
EXECUTED to be effective as of the date written above.
MEMBERS | ||||||
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COMSTOCK OFFSHORE, LLC | ||||||
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By: | /s/ M. JAY ALLISON | ||||
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|||||
|
M. Jay Allison | |||||
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President and Chief Executive Officer | |||||
|
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Pursuant to the authority granted to the Chief Executive Officer in Section 19.8 of the Operating Agreement, the Chief Executive Officer has executed this Amendment on behalf of all other Members. | ||||||
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/s/ WAYNE L. LAUFER | ||||||
Wayne L. Laufer |
2
Exhibit 10.24
BASIC LEASE INFORMATION
May 6, 2004
Comstock Resources, Inc.
5300 Town & Country Blvd.
Suite 500
Frisco, Texas 75034
Dan Presley Telephone: (972) 668-8800
Stonebriar I Office Partners, Ltd.
5300 Town & Country Blvd.
Suite 260
Frisco, Texas 75034
Suite No. 500, consisting of approximately 20,046 square feet (the
Previously Leased Premises
), and
Suite No. 300, consisting of approximately 7,150 square feet (the
New Premises
) in the office building
(the
Building
) in Frisco, Collin County, Texas, whose street address is 5300 Town & Country Blvd.,
Frisco, Texas 75034 (the
Land
). The Previously Leased Premises and the New Premises shall be referred
to collectively as the
Premises
. The Premises contain a total of 27,196 rentable square feet and are
outlined on the plans attached to the Lease as Exhibit A.
One hundred twenty (120) months,
commencing on the date (the
Commencement Date
) that is the date upon
which the New Premises are ready for occupancy by the Tenant. The Lease Term shall expire at 5:00 p.m.
on the last day of the 120
th
month of the Lease Term, subject to earlier termination as
provided in the Lease.
The Basic Rental shall be $50,992.50 per month. Basic Rental includes all services provided for in
Section 7(a) hereof, including, without limitation, electricity.
$20,000.00, receipt of which by Landlord is hereby acknowledged, to be returned to Tenant as provided in
Section 6 of the Lease.
Basic Rental, Tenant's share of Excess, and all other sums that Tenant may owe to Landlord under the
Lease.
General Office
25.033% which is the percentage obtained by dividing (a) the 27,196 rentable square feet in the Premises
by (b) the 108,640 rentable square feet in the Building.
2004 Base Year.
$1,000,000.
Landlord shall provide to Tenant a total of seventeen (17) reserved parking spaces in the parking garage
for the Previously Leased Premises, and two (2) reserved parking spaces in the parking garage for the
New Premises, all as shown on Exhibit E-1. There is no additional charge for these parking spaces.
The foregoing Basic Lease Information is incorporated into and made a part of the Lease identified above. If any conflict exists between any Basic Lease Information and the Lease, then the Lease shall control.
LANDLORD: | STONEBRIAR I OFFICE PARTNERS, LTD., | |||||
A Texas limited partnership | ||||||
|
||||||
By: | Stonebriar Partners, LLC, its general Partner | |||||
|
||||||
|
By: | /s/ P. RYAN OCONNOR | ||||
|
||||||
|
P. Ryan OConnor, Manager | |||||
|
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TENANT: | COMSTOCK RESOURCES, INC. , | |||||
A Nevada corporation | ||||||
|
||||||
|
By: | /s/ M. JAY ALLISON | ||||
|
||||||
|
M. Jay Allison, President |
TABLE OF CONTENTS
Page No. | ||||
1.
|
DEFINITIONS AND BASIC PROVISIONS | 1 | ||
|
||||
2.
|
LEASE GRANT | 1 | ||
|
||||
3.
|
TERM | 1 | ||
|
||||
4.
|
RENT | 1 | ||
|
||||
5.
|
DELINQUENT PAYMENT; HANDLING CHARGES | 1 | ||
|
||||
6.
|
SECURITY DEPOSIT | 1 | ||
|
||||
7.
|
LANDLORDS OBLIGATIONS | 2 | ||
|
(a) Services | 2 | ||
|
(b) Excess Utility Use | 2 | ||
|
(c) Discontinuance | 2 | ||
|
(d) Restoration of Services; Abatement | 2 | ||
|
||||
8.
|
IMPROVEMENTS; ALTERATIONS; REPAIRS; MAINTENANCE | 3 | ||
|
(a) Improvements; Alterations | 3 | ||
|
(b) Repairs; Maintenance | 3 | ||
|
(c) Performance of Work | 3 | ||
|
(d) Mechanics Liens | 3 | ||
|
(e) Landlords Obligations | 3 | ||
|
||||
9.
|
USE | 3 | ||
|
||||
10.
|
ASSIGNMENT AND SUBLETTING | 4 | ||
|
(a) Transfers; Consent | 4 | ||
|
(b) Cancellation | 4 | ||
|
(c) Additional Compensation | 4 | ||
|
||||
11.
|
INSURANCE; WAIVERS; SUBROGATION; INDEMNITY | 4 | ||
|
(a) Insurance | 4 | ||
|
(b) Waiver of Negligence Claims; No Subrogation | 5 | ||
|
(c) Indemnity | 5 | ||
|
(d) Landlords Insurance | 5 | ||
|
||||
12.
|
SUBORDINATION ATTORNMENT; NOTICE TO LANDLORDS MORTGAGEE | |||
|
(a) Subordination | 5 | ||
|
(b) Attornment | 5 | ||
|
(c) Notice to Landlords Mortgagee | 5 | ||
|
||||
13.
|
RULES AND REGULATIONS | 5 | ||
|
||||
14.
|
CONDEMNATION | 5 | ||
|
(a) Taking - Landlords and Tenants Rights | 5 | ||
|
(b) Taking - Landlords Rights | 6 | ||
|
(c) Award | 6 | ||
|
||||
15.
|
FIRE OR OTHER CASUALTY | 6 | ||
|
(a) Repair Estimate | 6 | ||
|
(b) Landlords and Tenants Rights | 6 | ||
|
(c) Landlords Rights | 6 | ||
|
(d) Repair Obligation | 6 | ||
|
||||
16.
|
TAXES | 6 | ||
|
||||
17.
|
DEFAULT | 6 | ||
|
||||
18.
|
REMEDIES | 7 | ||
|
||||
19.
|
PAYMENT BY TENANT; NON-WAIVER | 7 | ||
|
(a) Payment by Tenant | 7 | ||
|
(b) No Waiver | 8 | ||
|
||||
20.
|
LANDLORDS LIEN | 8 |
Page No.
SURRENDER OF PREMISES
8
HOLDING OVER
8
CERTAIN RIGHTS RESERVED BY LANDLORD
8
MISCELLANEOUS
9
(a) Landlord Transfer
9
(b) Landlords Liability
9
(c) Force Majeure
9
(d) Estoppel Certificates
9
(e) Approval of
Landlords Mortgagee
9
(f) Notices
9
(g) Separability
9
(h) Amendments; and Binding Effect
9
(i) Quiet Enjoyment
9
(j) Joint and Several Liability
9
(k) Captions
9
(1) No Merger
9
(m) No Offer
9
(n) Exhibits
10
(o) Entire Agreement
10
(p) Waiver of Right to Trial by Jury
10
(q) Recordation
10
(r) Governing Law
10
(s) Number and Gender of Words
10
SPECIAL PROVISIONS
10
(a) Removal of Antenna
10
(b) Right of First Refusal
10
(c) Signage
10
(d) Prior Lease
10
LEASE
THIS LEASE (this Lease ) is entered into as of May 6, 2004, between STONEBRIAR I OFFICE PARTNERS, LTD., a Texas limited partnership ( Landlord ), and COMSTOCK RESOURCES, INC., a Nevada corporation ( Tenant ).
1. DEFINITIONS AND BASIC PROVISIONS. The definitions and basic provisions set forth in the Basic Lease Information (the Basic Lease Information ) executed by Landlord and Tenant contemporaneously herewith are incorporated herein by reference for all purposes.
2. LEASE GRANT. Subject to the terms of this Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Premises.
3. TERM. If the Commencement Date is not the first day of a calendar month, then the Term shall be extended by the time between the Commencement Date and the first day of the next month. The Commencement Date shall be three days following notice from Landlord that the Work (as defined in Exhibit D) in the New Premises is substantially complete. Landlord shall use its best efforts to deliver actual possession of the New Premises to Tenant with Landlords Work substantially complete by no later than 45-60 days after such New Premises have been vacated, which is scheduled to be June 11, 2004. In the event the Commencement Date has not occurred by August 11, 2004 for reasons other than delays caused by Tenant or Force Majeure (specifically including all delays resulting from governmental inaction or action with respect to all required approvals, but not including the failure by Landlord to regain possession of the New Premises from the existing tenant of that space), Tenant shall receive a day for day abatement of Rent applicable to the New Premises (computed on a square foot basis) for each day from and after August 11, 2004 until the delivery of possession actually occurs. Further, if such delivery of possession has not occurred by October 11, 2004 for any reason other than Tenant caused delays, and the Commencement Date does not thereafter occur within fifteen (15) days after written notice from Tenant, Tenant may, at its sole option and by written notice to Landlord, terminate this Lease as to the New Premises or elect to continue to receive a day-for-day abatement of Rent applicable to the New Premises until such delivery of possession occurs. In the event of any such delayed Commencement Date, and except as otherwise expressly provided above, Landlord shall not be in default hereunder or be liable for damages therefor, and Tenant shall accept possession of the Premises when Landlord tenders possession thereof to Tenant. By occupying the Premises, Tenant shall be deemed to have accepted the Premises in their condition as of the date of such occupancy, subject to the performance of punch-list items that remain to be performed by Landlord, if any. Tenant shall execute and deliver to Landlord, within ten (10) days after Landlord has delivered to Tenant an executed form thereof, a letter confirming (1) the Commencement Date, (2) that Tenant has accepted the Premises, and (3) that Landlord has performed all of its obligations with respect to the Premises (except for punch-list items specified in such letter).
4. RENT. Tenant shall timely pay to Landlord the Basic Rental and all additional sums to be paid by Tenant to Landlord under this Lease, including the amounts set forth in Exhibit C , without deduction or set off, at Landlords Address (or such other address as Landlord may from time to time designate in writing to Tenant). Basic Rental, adjusted as herein provided, shall be payable monthly in advance. The first full monthly installment of Basic Rental shall be payable on the Commencement Date. Basic Rental for any fractional month at the beginning of the Term shall be prorated based on 1/365 of the current annual Basic Rental for each day of the partial month this Lease is in effect, and shall also be due on the Commencement Date; thereafter monthly installments of Basic Rental shall be due on the first day of the second full calendar month of the Term and continuing on the first day of each succeeding calendar month during the Term.
5. DELINQUENT PAYMENT; HANDLING CHARGES. All payments required of Tenant hereunder that are not received by Landlord within ten (10) days after their due date shall bear interest from the date due until paid at the maximum lawful rate. Alternatively Landlord may charge Tenant a fee equal to 5% of the delinquent payment to reimburse Landlord for its cost and inconvenience incurred as a consequence of Tenants delinquency. In no event, however, shall the charges permitted under this Section 5 or elsewhere in this Lease, to the extent the same are considered to be interest under applicable law, exceed the maximum lawful rate of interest. Landlord shall provide written notice to Tenant a maximum of two times in any twelve-month period of the non-receipt of any required payment on the due date, and, notwithstanding Section 17.A(1), Tenant shall not be in default if it pays such required amount within ten business days following receipt of the notice. Such notice shall not, however, modify the time at which Landlord shall be entitled to charge interest as hereinabove provided, but the late fee shall be applicable only following default.
6. SECURITY DEPOSIT. Contemporaneously with the execution of this Lease, Tenant shall pay to Landlord, in immediately available funds, the Security Deposit, which shall be held by Landlord without liability for interest and as security for the performance by Tenant of its obligations under this Lease. The Security Deposit is not an advance payment of Rent or a measure or limit of Landlords damages upon an Event of Default (defined below). Landlord may, from time to time and without prejudice to any other remedy, use all or a part of the Security Deposit to perform any obligation which Tenant was obligated, but failed, to perform hereunder. Following any such application of the Security Deposit, Tenant shall pay to Landlord on demand the amount so applied in order to restore the Security Deposit to its original amount. If Landlord transfers its interest in the Premises, then Landlord may assign the Security Deposit to the transferee and Landlord thereafter shall have no further liability for the return of the Security Deposit. Within a reasonable time after the Term ends, provided Tenant has performed all of its obligations hereunder, Landlord shall return to Tenant the balance of the Security Deposit not applied to satisfy Tenants obligations. Notwithstanding anything herein to the contrary, provided there is no uncured default by Tenant under this Lease, the Landlord shall
Lease-Page 1
refund one-half of the Security Deposit to Tenant on the first day of the 12 th full month of the Term, and the Landlord shall refund the remaining one-half of the Security Deposit to Tenant on the first day of the 13 th full month of the Term.
7. LANDLORDS OBLIGATIONS.
(a) Services . Provided no Event of Default exists, Landlord shall use all reasonable efforts to furnish to Tenant (1) water (hot and cold) at those points of supply provided for general use of tenants of the Building; (2) heated and refrigerated air conditioning as appropriate, at such times as Landlord normally furnishes these services to all tenants of the Building, and at such temperatures and in such amounts as are reasonably considered by Landlord to be standard; (3) janitorial service to the Premises on weekdays other than holidays for Building-standard installations (Landlord reserves the right to bill Tenant separately for extra janitorial service required for non-standard installations) and such window washing as may from time to time in Landlords judgment be reasonably required; (4) elevators for ingress and egress to the floor on which the Premises are located, in common with other tenants, provided that Landlord may reasonably limit the number of elevators to be in operation at times other than during customary business hours and on holidays; (5) replacement of Building-standard light bulbs and fluorescent tubes, provided that Landlords standard charge for such bulbs and tubes shall be paid by Tenant; and (6) electrical current during normal business hours other than for computers, electronic data processing equipment, special lighting, equipment that requires more than 110 volts, or other equipment whose electrical energy consumption exceeds normal office usage. Landlord shall maintain the common areas of the Building in reasonably good order and condition, except for damage occasioned by Tenant, or its employees, agents or invitees. If Tenant desires any of the services specified in this Section 7(a) at any time other than times herein designated, such services shall be supplied to Tenant upon the written request of Tenant delivered to Landlord before 3:00 p.m. on the business day preceding such extra usage, and Tenant shall pay to Landlord the cost of such services within ten (10) days after Landlord has delivered to Tenant an invoice therefor. The regular business hours shall be 7:00 a.m. to 6:00 p.m. Monday through Friday and 7:00 a.m. to 1:00 p.m. on Saturday, excluding any holidays for which the national banks are officially closed for business. For heating or air conditioning after regular business hours, the service charge shall be $25.00 per hour with a minimum of 2 hours, to be increased from time to time based on proportionate increases in the costs of electricity.
(b) Excess Utility Use . Landlord shall use reasonable efforts to furnish electrical current for computers, electronic data processing equipment, special lighting, equipment that requires more than 110 volts, or other equipment whose electrical energy consumption exceeds normal office usage through the then-existing feeders and risers serving the Building and the Premises, and Tenant shall pay to Landlord the cost of such service within ten (10) days after Landlord has delivered to Tenant an invoice therefor. Landlord may determine the amount of such additional consumption and potential consumption by either or both: (1) a survey of standard or average tenant usage of electricity in the Building performed by a reputable consultant selected by Landlord and paid for by Tenant; or (2) a separate meter in the Premises installed, maintained, and read by Landlord, at Tenants expense. Tenant shall not install any electrical equipment requiring special wiring or requiring voltage in excess of 110 volts or otherwise exceeding Building capacity unless approved in advance by Landlord. The use of electricity in the Premises shall not exceed the capacity of existing feeders and risers to or wiring in the Premises. Any risers or wiring required to meet Tenants excess electrical requirements shall, upon Tenants written request, be installed by Landlord, at Tenants cost, if, in Landlords sole and absolute judgment, the same are necessary and shall not cause permanent damage or injury to the Building or the Premises, cause or create a dangerous or hazardous condition, entail excessive or unreasonable alterations, repairs, or expenses, or interfere with or disturb other tenants of the Building. If Tenant uses machines or equipment (other than general office machines, excluding computers and electronic data processing equipment) in the Premises which affect the temperature otherwise maintained by the air conditioning system or otherwise overload any utility, Landlord may install supplemental air conditioning units or other supplemental equipment in the Premises, and the cost thereof, including the cost of installation, operation, use, and maintenance, shall be paid by Tenant to Landlord within ten (10) days after Landlord has delivered to Tenant an invoice therefor.
(c) Discontinuance . Landlords obligation to furnish services under Section 7(a) shall be subject to the rules and regulations of the supplier of such services and governmental rules and regulations. Landlord may, upon not less than thirty (30) days prior written notice to Tenant, discontinue any such service to the Premises, provided Landlord first arranges for a direct connection thereof through the supplier of such service.
(d) Restoration of Services; Abatement Landlord shall use reasonable efforts to restore any service that becomes unavailable; however, such unavailability shall not render Landlord liable for any damages caused thereby, be a constructive eviction of Tenant, constitute a breach of any implied warranty or, except as provided in the next sentence, entitle Tenant to any abatement of Tenants obligations hereunder. However, if Tenant is prevented from making commercially reasonable use of the Premises for more than twenty-five (25) consecutive days because of the unavailability of any such service, or five (5) consecutive business days in the event such unavailability of service shall have been directly caused by Landlord, Tenant shall, as its exclusive remedy therefor, be entitled to a day-for-day abatement of Rent for each consecutive day (after such twenty-five (25) or five (5) day period, as applicable) that Tenant is so prevented from making reasonable use of the Premises.
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8. IMPROVEMENTS; ALTERATIONS; REPAIRS; MAINTENANCE.
(a) Improvements; Alterations . Exclusive of the Work, as defined in Exhibit D attached to this Lease, improvements to the Premises shall be installed at the expense of Tenant only in accordance with plans and specifications which have been previously submitted to and approved in writing by Landlord. After the initial Tenant improvements are made, no alterations or physical additions in or to the Premises may be made without Landlords prior written consent. Tenant shall not paint or install lighting or decorations, signs, window or door lettering, or advertising media of any type on or about the Premises without the prior written consent of Landlord. All alterations, additions, or improvements (whether temporary or permanent in character, and including without limitation all air-conditioning equipment and all other equipment that is in any manner connected to the Buildings plumbing system) made in or upon the Premises either by Landlord or Tenant (exclusive of Tenants trade fixtures, non-affixed equipment, furniture and other removable personal property), shall be Landlords property at the end of the Term and shall remain on the Premises without compensation to Tenant. Approval by Landlord of any of Tenants drawings and plans and specifications prepared in connection with any improvements in the Premises shall not constitute a representation or warranty of Landlord as to the adequacy or sufficiency of such drawings, plans and specifications, or the improvements to which they relate, for any use, purpose, or condition, but such approval shall merely be the consent of Landlord as required hereunder. Landlord shall cause the Work described in Exhibit D to comply with all requirements of the Americans with Disabilities Act of 1990, as amended, and all rules, regulations, and guidelines promulgated thereunder. Notwithstanding anything in this Lease to the contrary, after the Commencement Date, and except for the Work, Tenant shall be responsible for the cost of all work required to comply with the retrofit requirements of the Americans with Disabilities Act of 1990, and all rules, regulations, and guidelines promulgated thereunder, as the same may be amended from time to time, necessitated by any installations, additions, or alterations made in or to the Premises at the request of or by Tenant or by Tenants use of the Premises. Landlord shall be responsible for the compliance of the common areas with the Americans with Disabilities Act of 1990, and all rules, regulations, and guidelines promulgated thereunder, as the same may be amended from time to time.
(b) Repairs; Maintenance . Tenant shall maintain the Premises in a clean, safe, operable, attractive condition, and shall not permit or allow to remain any waste or damage to any portion of the Premises. Tenant shall repair or replace, subject to Landlords direction and supervision, any damage to the Building caused by Tenant or Tenants agents, contractors, or invitees. If Tenant fails to make such repairs or replacements within fifteen (15) days after the occurrence of such damage, then Landlord may make the same at Tenants cost. In lieu of having Tenant repair any such damage outside of the Premises, Landlord may repair such damage at Tenants cost. The cost of any repair or replacement work performed by Landlord under this Section 8 shall be paid by Tenant to Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor.
(c) Performance of Work . All work described in this Section 8 shall be performed only by Landlord or by contractors and subcontractors approved in writing by Landlord. Tenant shall cause all contractors and subcontractors to procure and maintain insurance coverage against such risks, in such amounts, and with such companies as Landlord may reasonably require, and to procure payment and performance bonds reasonably satisfactory to Landlord covering the cost of the work. All such work shall be performed in accordance with all legal requirements and in a good and workmanlike manner so as not to damage the Premises, the primary structure or structural qualities of the Building, or plumbing, electrical lines, or other utility transmission facility. All such work which may affect the HVAC, electrical system, or plumbing must be approved by the Buildings engineer of record.
(d) Mechanics Liens . Tenant shall not permit any mechanics liens to be filed against the Premises or the Building for any work performed, materials furnished, or obligation incurred by or, excepting the Work, at the request of Tenant. If such a lien is filed, then Tenant shall, within ten (10) days after Landlord has delivered notice of the filing to Tenant, either pay the amount of the lien or diligently contest such lien and deliver to Landlord a bond or other security reasonably satisfactory to Landlord. If Tenant fails to timely take either such action, then Landlord may pay the lien claim without inquiry as to the validity thereof, and any amounts so paid, including expenses and interest, shall be paid by Tenant to Landlord within ten days after Landlord has delivered to Tenant an invoice therefor.
(e) Landlords Obligation . Landlord shall maintain in reasonably good order and condition and make all necessary repairs and replacements to the Buildings common areas (defined to mean all areas of the Building designated for the common use of all tenants and inclusive of all garages, driveways, parking areas and landscaped areas) and the Buildings foundation, exterior walls, structural components and roof, unless any such damage is caused in whole or in part by acts of omissions of Lessee, or Lessees agents, employees, or invitees, in which event Lessee shall bear the cost of such repairs, subject, however, to Section 11(b).
9. USE . Tenant shall continuously occupy and use the Premises only for the Permitted Use and shall comply with all laws, orders, rules, and regulations relating to the use, condition, and occupancy of the Premises. The Premises shall not be used for any use which is illegal, disreputable or creates extraordinary fire hazards or results in an increased rate of insurance on the Building or its contents or the storage of any hazardous materials or substances. If, because of Tenants acts, the rate of insurance on the Building or its contents increases, then such acts shall be an Event of Default, Tenant shall pay to Landlord the amount of such increase on demand, and acceptance of such payment shall not constitute a waiver of any of Landlords other rights. Tenant shall conduct its business and control its agents, employees, and invitees in such a manner as not to create any nuisance or interfere with other tenants or Landlord in its management of the Building. Notwithstanding any provision of this Lease to the contrary, Tenant shall not be required to
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make any repairs or alterations to the New Premises to cure any violation of any law, regulation, rule, ordinance or order that existed on the Commencement Date.
10. ASSIGNMENT AND SUBLETTING.
(a) Transfers; Consent . Tenant shall not, without the prior written consent of Landlord (which Landlord shall not unreasonably withhold or delay), (1) assign, transfer, or encumber this Lease or any estate or interest herein, whether directly or by operation of law, (2) if Tenant is an entity other than a corporation whose stock is publicly traded, permit the transfer of an ownership interest in Tenant so as to result in a change in the current control of Tenant, (3) sublet any portion of the Premises, (4) grant any license, concession, or other right of occupancy of any portion of the Premises, or (5) permit the use of the Premises by any parties other than Tenant unless it is a Permitted Transfer (any of the events listed in Sections 10(a)(2) through 10(a)(6) being a Transfer ). If Tenant requests Landlords consent to a Transfer, then Tenant shall provide Landlord with a written description of all terms and conditions of the proposed Transfer, copies of the proposed documentation, and the following information about the proposed transferee: name and address; reasonably satisfactory information about its business and business history; its proposed use of the Premises (except in the case of public companies); banking, financial, and other credit information; and general references sufficient to enable Landlord to determine the proposed transferees creditworthiness and character (except in the case of public companies). Tenant shall reimburse Landlord for its attorneys fees and other expenses incurred in connection with considering any request for its consent to a Transfer, which shall in no event be less than $500 nor more than $1,000. except with the prior consent of Tenant. If Landlord consents to a proposed Transfer, then the proposed transferee shall deliver to Landlord a written agreement whereby it expressly assumes the Tenants obligations hereunder; however any transferee of less than all of the space in the Premises shall be liable only for obligations under this Lease that are properly allocable to the space subject to the Transfer, and only to the extent of the rent it has agreed to pay Tenant therefor. Landlords consent to a Transfer shall not release Tenant from performing its obligations under this Lease, but rather Tenant and its transferee shall be jointly and severally liable therefor. Landlords consent to any Transfer shall not waive Landlords rights as to any subsequent Transfers. If an Event of Default occurs while the Premises, or any part thereof, are subject to a Transfer, then Landlord, in addition to its other remedies, may collect directly from such transferee all rents becoming due to Tenant and apply such rents against Rent. Tenant authorizes its transferees to make payments of rent directly to Landlord upon receipt of notice from Landlord to do so. Tenant shall be permitted to sublet the Premises and/or assign this Lease without the consent of Landlord to a parent company, subsidiary, successor entity, or a related corporate entity of Tenant, whether related by merger or consolidation, or to an entity which acquires all or substantially all of the assets of Tenants business, provided Tenant remains liable for all obligations hereunder (such transfer referred to herein as a Permitted Transfer .
(b) Cancellation . Landlord may, within twenty (20) days after submission of Tenants written request for Landlords consent to a Transfer, cancel this Lease (or, as to a subletting or assignment, cancel as to the portion of the Premises proposed to be sublet or assigned, provided that in the event of such election Landlord shall give Tenant written notice of its intention to do so following which Tenant may within five (5) business days of receipt of such notice, withdraw its request) as of the date the proposed Transfer was to be effective. If Landlord cancels this Lease as to any portion of the Premises, then this Lease shall cease for such portion of the Premises and Tenant shall pay to Landlord all Rent accrued through the cancellation date relating to the portion of the Premises covered by the proposed Transfer and all brokerage commissions paid or payable by Landlord in connection with this Lease that are allocable to such portion of the Premises. Thereafter, Landlord may lease such portion of the Premises to the prospective transferee (or to any other person) without liability to Tenant.
(c) Additional Compensation . Tenant shall pay to Landlord, immediately upon receipt thereof, all compensation received by Tenant for a Transfer that exceeds the Basic Rental and Tenants share of Excess allocable to the portion of the Premises covered thereby.
11. INSURANCE; WAIVERS; SUBROGATION; INDEMNITY.
(a) Insurance . Tenant shall, at its expense, procure and maintain throughout the Term the following insurance policies: (1) comprehensive general liability insurance in amounts of not less than a combined single limit of $1,000,000 (the Initial Liability Insurance Amount ) or such other amounts as Landlord may from time to time reasonably require, insuring Tenant, Landlord, Landlords agents and their respective affiliates against all liability for injury to or death of a person or persons or damage to property arising from the use and occupancy of the Premises, (2) contractual liability insurance coverage sufficient to cover Tenants indemnity obligations hereunder, (3) insurance covering the full value of Tenants property and improvements, and other property (including property of others), in the Premises, (4) workmans compensation insurance, containing a waiver of subrogation endorsement reasonably acceptable to Landlord, and (5) business interruption insurance. Tenants insurance shall provide primary coverage to Landlord when any policy issued to Landlord provides duplicate or similar coverage, and in such circumstance Landlords policy will be excess over Tenants policy. Tenant shall furnish certificates of such insurance and such other evidence satisfactory to Landlord of the maintenance of all insurance coverages required hereunder and Tenant shall obtain a written obligation on the part of each insurance company to notify Landlord at least thirty (30) days before cancellation or a material change of any such insurance. All such insurance policies shall be in form, and issued by companies, reasonably satisfactory to Landlord. The term affiliate shall mean any person or entity which, directly or indirectly controls, is controlled by, or is under common control with the party in question.
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(b) Waiver of Negligence Claims; No Subrogation . Neither Landlord nor Tenant shall be liable to the other or those claiming by, through, or under such other for any injury to or death of any person or persons or the damage to or theft, destruction, loss, or loss of use of any property or inconvenience (a Loss ) caused by casualty theft, fire, third parties, or any other matter (including Losses arising through repair or alteration of any part of the Building, or failure to make repairs, or from any other cause), regardless of whether the negligence (including the sole negligence) in whole or in part, to the extent such loss is required to be insured hereunder and the insurance policy does not prevent a waiver of subrogation . Landlord and Tenant each waives any claim it might have against the other for any such loss to the extent the same is required to be insured against under any insurance policy that covers the Building, the Premises, Landlords or Tenants fixtures, personal property, leasehold improvements, or business, regardless of whether the negligence or fault of the other party caused such loss; however, Landlords waiver shall not include any deductible amounts permitted under its loan documents covering the Buildings financing on insurance policies carried by Landlord or apply to any coinsurance penalty which Landlord might sustain . Each party shall seek to cause its insurance carrier to endorse all applicable policies waiving the carriers rights of recovery under subrogation or otherwise against the other party.
(c) Indemnity . Subject to Section 11(b) , Tenant shall defend, indemnify, and hold harmless Landlord and its agents from and against all claims, demands, liabilities, causes of action, suits, judgments, and expenses (including attorneys fees) for any Loss arising from any occurrence on the Premises or in the Building or on the Land or from Tenants failure to perform its obligations under this Lease (other than a Loss arising from the negligence of Landlord or its agents). The foregoing shall not prevent either party seeking damages from the other in cases of joint negligence. This indemnity provision shall survive termination or expiration of this Lease.
(d) Landlords Insurance . Landlord shall at all times during the Term maintain in full force and effect special form causes of loss property insurance covering the replacement cost of the Building and all other improvements in such amounts and with such coinsurance provisions as Landlords lender may permit.
12. SUBORDINATION, ATTORNMENT, NOTICE TO LANDLORDS MORTGAGEE
(a) Subordination . This Lease shall be subordinate to any deed of trust, mortgage, or other security instrument (a Mortgage ), or any ground lease, master lease, or primary lease (a Primary Lease ), that now or hereafter covers all or any part of the Premises (the mortgagee under any Mortgage or the lessor under any Primary Lease is referred to herein as Landlords Mortgagee ), provided that Landlord shall exercise reasonable efforts to deliver to Tenant a Non-Disturbance Agreement from Landlords mortgagee in form customary for such agreements in the DFW Metroplex: Landlords delivery of such a Non-Disturbance Agreement from its present lender shall be a condition to the effectiveness of this Lease.
(b) Attornment . Tenant shall attorn to any party succeeding to Landlords interest in the Premises, whether by purchase, foreclosure, deed in lieu of foreclosure, power of sale, termination of lease, or otherwise, upon such partys request, and shall execute such agreements confirming such attornment as such party may reasonably request.
(c) Notice to Landlords Mortgagee . Tenant shall not seek to enforce any remedy it may have for any default on the part of the Landlord without first giving written notice by certified mail, return receipt requested, specifying the default in reasonable detail, to any Landlords Mortgagee whose address has been given to Tenant, and affording such Landlords Mortgagee a reasonable opportunity to perform Landlords obligations hereunder.
13. RULES AND REGULATIONS . Tenant shall comply with the rules and regulations of the Building which are attached hereto as Exhibit B . Landlord may, from time to time, change such rules and regulations for the safety, care, or cleanliness of the Building and related facilities, provided that such changes are applicable to all tenants of the Building and will not unreasonably interfere with Tenants use of the Premises. Tenant shall be responsible for the compliance with such rules and regulations by its employees, agents, and invitees.
14. CONDEMNATION .
(a) Taking Landlords and Tenants Rights . If any part of the Building or Land is taken by right of eminent domain or conveyed in lieu thereof (a Taking ) and such Taking prevents Tenant from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such Taking, then Landlord may, at its expense, relocate Tenant to office space reasonably comparable to the Premises, provided that Landlord notifies Tenant of its intention to do so within thirty (30) days after the Taking and that such relocation right shall not extend to more than twenty-five percent (25%) of the Premises. Such relocation may be for a portion of the remaining Term or the entire Term. Landlord shall complete any such relocation within one hundred eighty (180) days after Landlord has notified Tenant of its intention to relocate Tenant. If Landlord does not elect to relocate Tenant following such Taking, or if such relocation would be with respect to more than twenty-five percent (25%) of the Premises, then Tenant may terminate this Lease as of the date of such Taking by giving written notice to Landlord within sixty (60) days after the Taking, and Rent shall be apportioned as of the date of such Taking. If Landlord does not relocate Tenant and Tenant does not terminate this Lease, then Rent shall be abated on a reasonable basis as to that portion of the Premises rendered untenantable by the Taking.
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(b) Taking Landlords Rights . If any material portion, but less than all, of the Building becomes subject to a Taking, or if Landlord is required to pay any of the proceeds received for a Taking to Landlords Mortgagee, then this Lease, at the option of Landlord, exercised by written notice to Tenant within thirty (30) days after such Taking, shall terminate and Rent shall be apportioned as of the date of such Taking. If Landlord does not so terminate this Lease and does not elect to relocate Tenant, as provided above, then this Lease will continue, but if any portion of the Premises has been taken, Basic Rental shall abate as provided in the last sentence of Section 14(a) .
(c) Award . If any Taking occurs, then Landlord shall receive the entire award or other compensation for the Land, the Building, and other improvements taken, and Tenant may separately pursue a claim against the condemning authority for the value of Tenants personal property which Tenant is entitled to remove under this Lease, moving costs, loss of business, and other claims it may have.
15. FIRE OR OTHER CASUALTY .
(a) Repair Estimate . If the Premises or the Building are damaged by fire or other casualty (a Casualty ), Landlord shall, within sixty (60) days after such Casualty, deliver to Tenant a good faith estimate (the Damage Notice ) of the time needed to repair the damage caused by such Casualty.
(b) Landlords and Tenants Rights . If a material portion of the Premises or the Building is damaged by Casualty such that Tenant is prevented from conducting its business in the Premises in a manner reasonably comparable to that conducted immediately before such Casualty and Landlord estimates that the damage caused thereby cannot be repaired within one hundred fifty (150) days after the commencement of repair, then Landlord may, at its expense, relocate Tenant to office space reasonably comparable to the Premises, provided that Landlord notifies Tenant of its intention to do so in the Damage Notice and that such relocation right shall not extend to more than twenty-five percent (25%) of the Premises. Such relocation may be for a portion of the remaining Term or the entire Term. Landlord shall complete any such relocation within one hundred eighty (180) days after Landlord has delivered the Damage Notice to Tenant. If Landlord does not elect to relocate Tenant following such Casualty, or if such relocation would be with respect to more than twenty-five percent (25%) of the Premises, then Tenant may terminate this Lease by delivering written notice to Landlord of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant. If Landlord does not relocate Tenant and Tenant does not terminate this Lease, then (subject to Landlords rights under Section 15(c) ) Landlord shall repair the Building or the Premises, as the case may be, as provided below, and Rent for the portion of the Premises rendered untenantable by the damage shall be abated on a reasonable basis from the date of damage until the completion of the repair, provided in cases where Tenant caused such damage, the damage is covered by and recovered from insurance and was not the result of an intentional act.
(c) Landlords Rights . If a Casualty damages a material portion of the Building, and Landlord makes a good faith determination that restoring the Premises would be uneconomical, or if Landlord is required to pay any insurance proceeds arising out of the Casualty to Landlords Mortgagee, then Landlord may terminate this Lease by giving written notice of its election to terminate within thirty (30) days after the Damage Notice has been delivered to Tenant, and Basic Rental hereunder shall be abated as of the date of the Casualty.
(d) Repair Obligation . If neither party elects to terminate this Lease following a Casualty then Landlord shall, within a reasonable time after such Casualty commence to repair the Building and the Premises and shall proceed with reasonable diligence to restore the Building and Premises to substantially the same condition as they existed immediately before such Casualty; however, Landlord shall not be required to repair or replace any part of the furniture, equipment, fixtures, and other improvements which may have been placed by or at the request of, Tenant or other occupants in the Building or the Premises, and Landlords obligation to repair or restore the Building or Premises shall be limited to the extent of the insurance proceeds actually received by Landlord, plus the deductible amount, for the Casualty in question.
16. TAXES . Tenant shall be liable for all taxes levied or assessed against personal property, furniture, or fixtures placed by Tenant in the Premises. If any taxes for which Tenant is liable are levied or assessed against Landlord or Landlords property and Landlord elects to pay the same, or if the assessed value of Landlords property is increased by inclusion of such personal property, furniture or fixtures and Landlord elects to pay the taxes based on such increase, then Tenant shall pay to Landlord, upon demand, that part of such taxes for which Tenant is primarily liable hereunder.
17. DEFAULT .
A. DEFAULT BY TENANT Each of the following occurrences shall constitute an Event of Default :
(1) Tenants failure to pay Rent, or any other sums due from Tenant to Landlord under the Lease (or any other lease executed by Tenant for space in the Building), when due and such failure continues for ten (10) days thereafter;
(2) Tenants failure to perform, comply with, or observe any other agreement or obligation of Tenant under this Lease, (or any other lease executed by Tenant for space in the Building) other than failure to pay Rent, and such failure continues for thirty (30) days after Landlord has sent Tenant written notice thereof, unless such failure
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cannot reasonably be performed in such thirty (30) day period, then Tenant shall have sixty (60) days to cure such default;
(3) the filing of a petition by or against Tenant (the term Tenant shall include, for the purpose of this Section 17A(4) , any guarantor of the Tenants obligations hereunder) (1) in any bankruptcy or other insolvency proceeding; (2) seeking any relief under any state or federal debtor relief law; (3) for the appointment of a liquidator or receiver for all or substantially all of Tenants property or for Tenants interest in this Lease; or (4) for the reorganization or modification of Tenants capital structure; or
(4) the admission by Tenant that it cannot meet its obligations as they become due or the making by Tenant of an assignment for the benefit of its creditors.
B. DEFAULT BY LANDLORD . In the event of any default by Landlord, Tenants exclusive remedy shall be an action for damages (Tenant hereby waiving the benefit of any laws granting it a lien upon the property of Landlord and/or upon rent due Landlord), but prior to any such action Tenant will give Landlord written notice specifying such default with particularity, and Landlord shall thereupon have thirty (30) days in which to cure any such default. Unless and until Landlord fails to so cure any default after such notice, Tenant shall not have any remedy or cause of action by reason thereof. All obligations of Landlord hereunder will be construed as covenants not conditions, and all such obligations will be binding upon Landlord only during the period of its possession of the Building and not thereafter. For the purposes of this Section 17B the term Landlord shall mean only the owner for the time being of the Building, and in the event of the transfer by such owner of its interest in the Building, such owner shall thereupon be released and discharged from all covenants and obligations of the Landlord thereafter accruing, but such covenants and obligations shall be binding during the lease term upon each new owner for the duration of such owners ownership. Notwithstanding any other provision hereof, no individual, corporation or entity which is or has been Landlord hereunder at any time, shall have any personal liability hereunder. In the event of any breach or default by Landlord of any term or provision of this Lease, Tenant agrees to look solely to the equity or interest then owned by Landlord in the land and improvements which constitute the Building and the Land, however in no event shall any deficiency judgment or any money judgment of any kind be sought or obtained against any individual, corporation or entity which is or has been Landlord at any time under this Lease. Any claim, demand, right or defense by Tenant that arises out of this Lease or the negotiations preceding it, shall be barred unless Tenant commences an action thereon, or interposes a defense by reason thereof, within nine (9) months after the date of the inaction, omission, event or action that gave rise to such claim, demand, right or defense, Tenant hereby acknowledging that the purpose of this provision is to shorten the period Tenant would otherwise have had to raise such claims, demands, rights or defenses under applicable laws.
18. REMEDIES . Upon any Event of Default, Landlord may, in addition to all other rights and remedies afforded Landlord hereunder or by law or equity, take any of the following actions:
(a) Terminate this Lease by giving Tenant written notice thereof, in which event, Tenant shall pay to Landlord the sum of (1) all Rent accrued hereunder through the date of termination, (2) all amounts due under Section 19(a) , and (3) an amount equal to (A) the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to the Prime Rate as published on the date this Lease is terminated by The Wall Street Journal, Southwest Edition, in its listing of Money Rates, minus (B) the then present fair rental value of the Premises for such period, similarly discounted; or
(b) Terminate Tenants right to possession of the Premises without terminating this Lease by giving written notice thereof to Tenant, in which event Tenant shall pay to Landlord (1) all Rent and other amounts accrued hereunder to the date of termination of possession, (2) all amounts due from time to time under Section 19(a) , and (3) all Rent and other sums required hereunder to be paid by Tenant during the remainder of the Term, diminished by any net sums thereafter received by Landlord through reletting the Premises during such period. Landlord shall use reasonable efforts to relet the Premises on such terms and conditions as Landlord in its reasonable discretion may determine (including a term different from the Term, rental concessions, and alterations to, and improvement of, the Premises); however, Landlord shall not be obligated to relet the Premises before leasing other portions of the Building. Landlord shall not be liable for, nor shall Tenants obligations hereunder be diminished because of, Landlords failure to relet the Premises or to collect rent due for such reletting. Tenant shall not be entitled to the excess of any consideration obtained by reletting over the Rent due hereunder. Re-entry by Landlord in the Premises shall not affect Tenants obligations hereunder for the unexpired Term; rather, Landlord may, from time to time, bring actions against Tenant to collect amounts due by Tenant, without the necessity of Landlords waiting until the expiration of the Term. Unless Landlord delivers written notice to Tenant expressly stating that it has elected to terminate this Lease, all actions taken by Landlord to exclude or dispossess Tenant of the Premises shall be deemed to be taken under this Section 18(b) . If Landlord elects to proceed under this Section 18(b) , it may at any time elect to terminate this Lease under Section 18(a) .
Additionally, without notice, Landlord may alter locks or other security devices at the Premises to deprive Tenant of access thereto, and Landlord shall not be required to provide a new key or right of access to Tenant, except in accordance with applicable laws.
19. PAYMENT BY TENANT; NON-WAIVER .
(a) Payment by Tenant . Upon any Event of Default, Tenant shall pay to Landlord all costs incurred by Landlord (including court costs and reasonable attorneys fees and expenses) in (1) obtaining possession of the Premises, (2) removing and storing Tenants or any other occupants property, (3) repairing, restoring, altering,
Lease-Page 7
remodeling, or otherwise putting the Premises into condition acceptable to a new tenant, (4) if Tenant is dispossessed of the Premises and this Lease is not terminated, reletting all or any part of the Premises (including brokerage commissions, cost of tenant finish work, and other costs incidental to such reletting), (5) performing Tenants obligations which Tenant failed to perform, and (6) enforcing, or advising Landlord of, its rights, remedies, and recourses arising out of the Event of Default.
(b) No Waiver . Landlords acceptance of Rent following an Event of Default shall not waive Landlords rights regarding such Event of Default. No waiver by Landlord or Tenant of any violation or breach of any of the terms contained herein shall waive such partys rights regarding any future violation of such term or violation of any other term.
20. LANDLORDS LIEN . In addition to the statutory landlords lien, Tenant grants to Landlord, to secure performance of Tenants obligations hereunder, a security interest in all equipment, fixtures, furniture, improvements, and other personal property of Tenant now or hereafter situated on the Premises, and all proceeds therefrom (the Collateral ), and the Collateral shall not be removed from the Premises without the consent of Landlord until all obligations of Tenant have been fully performed. Upon the occurrence of an Event of Default, Landlord may in addition to all other remedies, without notice or demand except as provided below, exercise the rights afforded a secured party under the Uniform Commercial Code of the State in which the Building is located (the UCC ). In connection with any public or private sale under the UCC, Landlord shall give Tenant five (5) days prior written notice of the time and place of any public sale of the Collateral or of the time after which any private sale or other intended disposition thereof is to be made, which is agreed to be a reasonable notice of such sale or other disposition. Tenant grants to Landlord a power of attorney to execute and file any financing statement or other instrument necessary to perfect Landlords security interest under this Section 20 , which power is coupled with an interest and shall be irrevocable during the Term. Landlord may also file a copy of this Lease as a financing statement to perfect its security interest in the Collateral.
21. SURRENDER OF PREMISES . No act by Landlord shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept a surrender of the Premises shall be valid unless the same is made in writing and signed by Landlord. At the expiration or termination of this Lease, Tenant shall deliver to Landlord the Premises with all improvements located thereon in good repair and condition, reasonable wear and tear (and condemnation and fire or other casualty damage) excepted, (provided that any such fire or casualty damage caused by Tenant shall be excepted only to the extent the same was not intentional, and is covered by and recovered from insurance), and shall deliver to Landlord all keys to the Premises. Provided that Tenant has performed all of its obligations hereunder Tenant may remove all unattached trade fixtures, furniture, and personal property placed in the Premises by Tenant (but Tenant shall not remove any such item which was paid for, in whole or in part, by Landlord). Additionally, Tenant shall remove such alterations, additions, improvements, trade fixtures, equipment, wiring, and furniture as Landlord may request, provided that, if Landlords written consent was obtained at the time of alternation, Landlord made the removal thereof a condition of its consent. Tenant shall repair all damage caused by such removal. All items not so removed shall be deemed to have been abandoned by Tenant and may be appropriated, sold, stored, destroyed, or otherwise disposed of by Landlord without notice to Tenant and without any obligation to account for such items. The provisions of this Section 21 shall survive the end of the Term.
22. HOLDING OVER . If Tenant fails to vacate the Premises at the end of the Term, then Tenant shall be a tenant at will and, in addition to all other damages and remedies to which Landlord may be entitled for such holding over, Tenant shall pay, in addition to the other Rent, a daily Basic Rental equal to 150% of the daily Basic Rental payable during the last month of the Term.
23. CERTAIN RIGHTS RESERVED BY LANDLORD . Provided that the exercise of such rights does not unreasonably interfere with Tenants occupancy of the Premises, Landlord shall have the following rights:
(a) to decorate and to make inspections, repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Building, or any part thereof; for such purposes, to enter upon the Premises upon reasonable notice to the Tenant (however no notice is required in the event of an emergency) and, during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building; to interrupt or temporarily suspend Building services and facilities; and to change the arrangement and location of entrances or passageways, doors, and doorways, corridors, elevators, stairs, restrooms, or other public parts of the Building;
(b) to take such reasonable measures as Landlord deems advisable for the security of the Building and its occupants, including without limitation searching all persons entering or leaving the Building; evacuating the Building for cause, suspected cause, or for drill purposes; temporarily denying access to the Building; and closing the Building after normal business hours and on Saturdays, Sundays, and holidays, subject, however to Tenants right to enter when the Building is closed after normal business hours under such reasonable regulations as Landlord may prescribe from time to time, which may include by way of example, but not of limitation, that persons entering or leaving the Building, whether or not during normal business hours, identify themselves to a security officer by registration or otherwise and that such persons establish their right to enter or leave the Building; and
(c) to enter the Premises at all reasonable hours to show the Premises to prospective purchasers, lenders, or tenant.
24. MISCELLANEOUS
Lease-Page 8
(a) Landlord Transfer . Landlord may transfer, in whole or in part, the Building and any of its rights under this Lease. If Landlord assigns its rights under this Lease, then Landlord shall thereby be released from any further obligations hereunder.
(b) Landlords Liability . The liability of Landlord to Tenant for any default by Landlord under the terms of this Lease shall be limited to Tenants actual direct, but not consequential, damages therefor and shall be recoverable from the interest of Landlord in the Building and the Land, and Landlord shall not be personally liable for any deficiency. This section shall not be deemed to limit or deny any remedies which Tenant may have in the event of default by Landlord hereunder which do not involve the personal liability of Landlord.
(c) Force Majeure . Other than for Tenants monetary obligations under this Lease and obligations which can be cured by the payment of money (e.g., maintaining insurance), whenever a period of time is herein prescribed for action to be taken by either party hereto, such party shall not be liable or responsible for, and there shall be excluded from the computation for any such period of time, any delays due to strikes, riots, acts of God, shortages of labor or materials, war, governmental laws, regulations, or restrictions, or any other causes of any kind whatsoever which are beyond the control of such party.
(d) Estoppel Certificates . From time to time, Tenant shall furnish to any party designated by Landlord, within ten (10) days after Landlord has made a request therefor, a certificate signed by Tenant confirming and containing such factual certifications and representations as to this Lease as Landlord may reasonably request.
(e) Approval of Landlords Mortgagee . This Lease is expressly subject to and conditioned upon the approval of Landlords Mortgagee. Landlord shall exercise reasonable efforts to obtain such consent within fourteen (14) days from the effective date of this Lease.
(f) Notices . All notices and other communications given pursuant to this Lease shall be in writing and shall be (1) mailed by first class, United States Mail, postage prepaid, certified, with return receipt requested, and addressed to the parties hereto at the address specified in the Basic Lease Information, (2) hand delivered to the intended address, or (3) sent by prepaid telegram, cable, facsimile transmission, or telex followed by a confirmatory letter. Notices sent by certified mail, postage prepaid, shall be effective three (3) business days after being deposited in the United States Mail; all other notices shall be effective upon delivery to the address of the addressee. The parties hereto may change their addresses by giving notice thereof to the other in conformity with this provision.
(g) Separability . If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws, then the remainder of this Lease shall not be affected thereby and in lieu of such clause or provision, there shall be added as a part of this Lease a clause or provision as similar in terms to such illegal, invalid, or unenforceable clause or provision as may be possible and be legal, valid, and enforceable.
(h) Amendments; and Binding Effect . This Lease may not be amended except by instrument in writing signed by Landlord and Tenant. No provision of this Lease shall be deemed to have been waived by Landlord unless such waiver is in writing signed by Landlord, and no custom or practice which may evolve between the parties in the administration of the terms hereof shall waive or diminish the right of Landlord to insist upon the performance by Tenant in strict accordance with the terms hereof. The terms and conditions contained in this Lease shall inure to the benefit of and be binding upon the parties hereto, and upon their respective successors in interest and legal representatives, except as otherwise herein expressly provided. This Lease is for the sole benefit of Landlord and Tenant, and, other than Landlords Mortgagee, no third party shall be deemed a third party beneficiary hereof.
(i) Quiet Enjoyment . Provided Tenant has performed all of the terms and conditions of this Lease to be performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the Premises for the Term, without hindrance from Landlord or any party claiming by through, or under Landlord, subject to the terms and conditions of this Lease.
(j) Joint and Several Liability . If there is more than one Tenant, then the obligations hereunder imposed upon Tenant shall be joint and several. If there is a guarantor of Tenants obligations hereunder, then the obligations hereunder imposed upon Tenant shall be the joint and several obligations of Tenant and such guarantor, and Landlord need not first proceed against Tenant before proceeding against such guarantor nor shall any such guarantor be released from its guaranty for any reason whatsoever.
(k) Captions . The captions contained in this Lease are for convenience of reference only and do not limit or enlarge the terms and conditions of this Lease.
(1) No Merger . There shall be no merger of the leasehold estate hereby created with the fee estate in the Premises or any part thereof if the same person acquires or holds, directly or indirectly this Lease or any interest in this Lease and the fee estate in the leasehold Premises or any interest in such fee estate.
(m) No Offer . The submission of this Lease to Tenant shall not be construed as an offer, nor shall Tenant have any rights under this Lease unless Landlord executes a copy of this Lease and delivers it to Tenant.
(n)
Exhibits
. All exhibits and attachments attached hereto are incorporated herein by
this reference.
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Exhibit A -
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Outline of Premises | |
Exhibit B -
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Building Rules and Regulations | |
Exhibit C -
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Operating Expense Escalator | |
Exhibit D -
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Tenant Finish-Work | |
Exhibit E -
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Parking | |
Exhibit F -
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Extension Options | |
Exhibit G -
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Right of First Refusal |
(o) Entire Agreement . This Lease constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all oral statements and prior writings relating thereto. Except for those set forth in this Lease, no representations, warranties, or agreements have been made by Landlord or Tenant to the other with respect to this Lease or the obligations of Landlord or Tenant in connection therewith. The normal rule of construction that any ambiguities be resolved against the drafting party shall not apply to the interpretation of this Lease or any Exhibits or amendments hereto.
(p) WAIVER OF RIGHT TO TRIAL BY JURY. TENANT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, OR COUNTERCLAIM THAT RELATES TO OR ARISES OUT OF THIS LEASE OR THE ACTS OR FAILURE TO ACT OF OR BY LANDLORD IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS LEASE.
(q) Recordation . Tenant agrees not to record this Lease, but each party hereto agrees, on request of the other, to execute a short form lease in form recordable and complying with applicable Texas laws. In no event shall such documents set forth the rental or other charges payable by Tenant under this Lease; and any such document shall expressly state that it is executed pursuant to the provision contained in this Lease and is not intended to vary the terms and conditions of this Lease.
(r) Governing Law . This Lease and the rights and obligations of the parties hereto shall be interpreted, construed, and enforced in accordance with the laws of the State of Texas.
(s) Number and Gender of Words . All personal pronouns used in this Lease shall include the other gender, whether used in the masculine, feminine, or neuter gender, and the singular shall include the plural whenever and as often as may be appropriate.
25. SPECIAL PROVISIONS .
(a) Removal of Antenna . Landlord shall remove the large antenna stationed on top of the Building on or before December 31, 2004. Landlord shall not permit any antennas that are greater than 20 feet 9 inches in height to be stationed on top of the Building during the Term, without the prior written consent of Tenant, which shall not be unreasonably withheld or delayed. In the event the existing antenna is not removed as required, Tenant may, following thirty (30) days written notice to Landlord, arrange for its removal, subject to providing Landlord with an indemnification for damage to persons or property, and may forward the third-party invoice for such removal to Landlord. In the event such invoice shall not be paid within ten (10) days following its receipt, Tenant may offset the amount of the invoice against rent next due.
(b) Right of First Refusal . As long as Tenant is not in default hereunder, Tenant shall have a right of first refusal for additional space as set forth in Exhibit G.
(c) Signage . Tenant shall have the exclusive rights to the signage on the top of the Building in the dimensions and of the type as in place under the Prior Lease. Tenant shall not make any changes to the dimensions or type of the signage, including any changes to the aesthetics of the signage, without the prior written consent of Landlord.
(d) Prior Lease . The parties hereby agree that effective on the Commencement Date of this Lease the Office Lease Agreement between the Landlord and Tenant dated August 12, 1997, as amended by that certain First Amendment to Office Lease Agreement dated November 1, 2000 (as amended, the Prior Lease) shall terminate and be of no further force and effect. Upon the request of the either party, the parties shall execute an instrument acknowledging that the Prior Lease has terminated.; provided that neither Landlord nor Tenant shall be released from any obligations that have accrued but have not been fully performed under the Prior Lease through its date of termination or from provisions under the Prior Lease which by their terms survive termination or which can only be performed after termination ( e.g. , reconciliations).
Lease-Page 10
DATED as of the date first written above.
LANDLORD: | STONEBRIAR I OFFICE PARTNERS, LTD., | |||||
A Texas limited partnership | ||||||
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By: | Stonebriar Partners, LLC, its general Partner | |||||
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By: | /s/ P. RYAN OCONNOR | ||||
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P. Ryan OConnor, Manager | |||||
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TENANT: | COMSTOCK RESOURCES, INC., | |||||
a Nevada corporation | ||||||
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By: | /s/ M. JAY ALLISON | ||||
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M. Jay Allison, President |
Lease-Page 11
Exhibit 21
SUBSIDIARIES OF COMSTOCK RESOURCES, INC.
Name | Incorporation | Business Name | ||
Comstock Oil & Gas GP, LLC
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Nevada | Comstock Oil & Gas GP, LLC | ||
|
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Comstock Oil & Gas Investments, LLC
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Nevada | Comstock Oil & Gas Investments, LLC | ||
|
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Comstock Oil & Gas, LP
(1)
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Nevada | Comstock Oil & Gas, LP | ||
|
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Comstock Oil & Gas Holdings, Inc.
(2)
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Nevada | Comstock Oil & Gas Holdings, Inc. | ||
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Comstock Oil & Gas Louisiana, LLC
(3)
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Nevada | Comstock Oil & Gas Louisiana, LLC | ||
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Comstock Offshore, LLC
(4)
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Nevada | Comstock Offshore, LLC | ||
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Bois dArc Energy, LLC
(5)
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Texas | Bois dArc Energy, LLC | ||
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Bois dArc Oil & Gas Company, LLC
(6)
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Nevada | Bois dArc Oil & Gas Company, LLC | ||
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Bois dArc Holdings, LLC
(6)
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Texas | Bois dArc Holdings, LLC | ||
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Bois dArc Offshore, Ltd.
(7)
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Nevada | Bois dArc Offshore, Ltd. | ||
|
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Bois dArc Properties, LP
(8)
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Nevada | Bois dArc Properties, LP |
(1) | Comstock Oil & Gas GP, LLC is the general partner and Comstock Oil & Gas Investments, LLC is the limited partner of this partnership | |
(2) | 100% owned by Comstock Oil & Gas, GP LLC | |
(3) | Subsidiary of Comstock Oil & Gas Holdings, Inc. | |
(4) | Subsidiary of Comstock Oil & Gas Louisiana, LLC | |
(5) | 59.9% owned by Comstock Offshore, LLC | |
(6) | Subsidiary of Bois dArc Energy, LLC | |
(7) | Bois dArc Oil & Gas Company, LLC is the general partner and Bois dArc Energy LLC is the limited partner of this partnership | |
(8) | Bois dArc Holdings, LLC is the general partner and Bois dArc Energy is the limited partner of this partnership |
Exhibit 23.1
CONSENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
We consent to the incorporation by reference in the Registration Statement Nos. 33-20981 and
33-88962 filed on Form S-8 and Nos. 333-111237 and 333-112100 filed on Form S-3 of Comstock
Resources, Inc. of our report dated March 19, 2003, with respect to the consolidated statements of
operations, stockholders equity and comprehensive income, and cash flows of Comstock Resources,
Inc. and subsidiaries for the year ended December 31, 2002, which report appears in the December
31, 2004 Annual Report on Form 10-K of Comstock Resources, Inc.
/s/ KPMG LLP
Comstock Resources, Inc.
Dallas, Texas
March 17, 2005
Exhibit 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statements Nos. 33-20981 and
33-88962 filed on Form S-8 and Nos. 333-111237 and 333-112100 filed on Form S-3 of Comstock
Resources, Inc. and the related Prospectuses of our reports dated
March 17, 2005 with respect to
the consolidated financial statements of Comstock Resources, Inc., Comstock Resources, Inc.s
managements assessment of the effectiveness of internal control over financial reporting, and the
effectiveness of internal control over financial reporting of Comstock Resources, Inc. included in
this Annual Report (Form 10-K) for the year ended December 31, 2004.
/s/ ERNST & YOUNG LLP
Dallas, Texas
March 17, 2005
Exhibit 23.3
CONSENT OF INDEPENDENT PETROLEUM ENGINEERS
We consent to the incorporation by reference in the Registration Statement Nos. 33-20981 and
33-88962 filed on Form S-8 and Nos. 333-111237 and 333-112100 filed on Form S-3 of Comstock
Resources, Inc. and the related Prospectuses of the reference of our firm and to the reserve
estimates as of December 31, 2004 and our report thereon in the Annual Report on Form 10-K for the
year ended December 31, 2004 of Comstock Resources, Inc., filed with the Securities and Exchange
Commission.
/s/ LEE KEELING AND ASSOCIATES, INC.
Tulsa, Oklahoma
March 17, 2005
Exhibit 31.1
Section 302 Certification
I, M. Jay Allison, certify that:
1.
I have reviewed this December 31, 2004 Form 10-K of Comstock Resources, Inc;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c)
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d)
Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter
(the registrants fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrants
internal control over financial reporting; and
5.
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and report financial
information; and
(b)
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
/s/ M. JAY ALLISON
President and Chief Executive Officer
Exhibit 31.2
Section 302 Certification
I, Roland O. Burns, certify that:
1.
I have reviewed this December 31, 2004 Form 10-K of Comstock Resources, Inc;
2.
Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
4.
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f))for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrants disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrants internal
control over financial reporting that occurred during the registrants most recent
fiscal quarter (the registrants fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially
affect, the registrants internal control over financial reporting; and
5.
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and report financial
information; and
(b)
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal control over
financial reporting.
/s/ ROLAND O. BURNS
Sr. Vice President and Chief Financial Officer
Exhibit 32.1
CERTIFICATION PURSUANT TO
In connection with the Annual Report of Comstock Resources, Inc. (the Company) on Form 10-K
for the year ending December 31, 2004 as filed with the Securities and Exchange Commission on the
date hereof (the Report), I, M. Jay Allison, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ M. JAY ALLISON
M. Jay Allison
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company.
Chief Executive Officer
March 17, 2005
Exhibit 32.2
CERTIFICATION PURSUANT TO
In connection with the Annual Report of Comstock Resources, Inc. (the Company) on Form 10-K
for the year ending December 31, 2004 as filed with the Securities and Exchange Commission on the
date hereof (the Report), I, Roland O. Burns, Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
/s/ ROLAND O. BURNS
Roland O. Burns
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company.
Chief Financial Officer
March 17, 2005