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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): March 7, 2002
COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
STATE OF NEVADA 000-16741 94-1667468
(State or other (Commission of File Number) (I.R.S. Employer
jurisdiction incorporation) Identification Number)
5300 Town And Country Boulevard
Suite 500
Frisco, Texas 75034
(Address of principal executive offices)
(972) 668-8800
(Registrant's Telephone No.)
Item 5. Other Events.
On March 7, 2002, Comstock Resources, Inc. ("Comstock") closed the sale in
a private placement of $75.0 million ("Additional Notes") of its 11 1/4% Senior
Notes due 2007 (the "Senior Notes") at a net price to Comstock of 97.25% after
the placement agents' discount. After the closing of this transaction, there is
now $220.0 million of aggregate principal amount of Senior Notes outstanding.
Interest on the Senior Notes is payable semiannually on May 1 and November 1,
commencing on November 1, 2001. Because interest on the Additional Notes began
to accrue on November 1, 2001, each purchaser of the Notes paid a premium for
the Additional Notes that was equal to the amount of interest that accrued from
November 1, 2001 to March 7, 2002 so that each purchaser of the Additional Notes
will be owed and paid a full interest payment on May 1, 2002 just the same as
all other holders of the Senior Notes. In connection with the issuance of the
Additional Notes, Comstock entered into a Registration Rights Agreement with the
placement agents, a copy of which is attached hereto as Exhibit 10.2. The
Placement Agreement between Comstock and the placement agents is attached hereto
as Exhibit 10.1.
The net proceeds were used by Comstock to reduce amounts outstanding under
Comstock's bank credit facility. The borrowing base under Comstock's bank credit
facility was reduced to $240.0 million in connection with this transaction. The
Senior Notes are unsecured obligations of Comstock and are guaranteed by all of
Comstock's subsidiaries.
In connection with this transaction, Comstock entered into that certain
First Supplemental Indenture, dated March 7, 2002, which sets forth the pricing
terms of the Additional Notes and also adds Comstock's new subsidiaries as
guarantors of the Senior Notes. A copy of the First Supplemental Indenture is
attached hereto as Exhibit 4.1.
Item 7. Financial Statements and Exhibits
- -----------------------------------------
(c) Exhibits
4.1 First Supplemental Indenture, dated March 7, 2002, by and between Comstock
Resources, Inc., the Subsidiary Guarantors thereto and U.S. Trust Company
of Texas, N.A., Trustee, to the Indenture, dated as of April 29, 1999 for
the 11 1/4% Senior Notes due 2007.
10.1 Placement Agreement, dated February 28, 2002, by and between Comstock
Resources, Inc. and Morgan Stanley & Co. Incorporated, TD Securities (USA),
Inc. and BMO Nesbitt Burns Corp.
10.2 Registration Rights Agreement, dated March 7, 2002, by and between Comstock
Resources, Inc. and Morgan Stanley & Co. Incorporated, TD Securities (USA),
Inc. and BMO Nesbitt Burns Corp.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
COMSTOCK RESOURCES, INC.
Dated: March 7, 2002 By: /s/ M. Jay Allison
-----------------------
M. Jay Allison
President and Chief Executive Officer
EXHIBIT INDEX
Item
Number Description
------ -----------
4.1 First Supplemental Indenture, dated March 7, 2002, by and between
Comstock Resources, Inc., the Subsidiary Guarantors thereto and U.S.
Trust Company of Texas, N.A., Trustee, to the Indenture, dated as of
April 29, 1999 for the 11 1/4% Senior Notes due 2007.
10.1 Placement Agreement, dated February 28, 2002, by and between Comstock
Resources, Inc. and Morgan Stanley & Co. Incorporated, TD Securities
(USA), Inc. and BMO Nesbitt Burns Corp.
10.2 Registration Rights Agreement, dated March 7, 2002, by and between
Comstock Resources, Inc. and Morgan Stanley & Co. Incorporated, TD
Securities (USA), Inc. and BMO Nesbitt Burns Corp.
Exhibit 4.1
------------------------------------------------------------------------------
COMSTOCK RESOURCES, INC.
SUBSIDIARY GUARANTORS
NAMED HEREIN
and
U.S. TRUST COMPANY OF TEXAS, N.A.
Trustee
----------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of March 7, 2002
----------------------
Supplementing the Indenture
Dated as of April 29, 1999
----------------------
$75,000,000
11 1/4% Senior Notes due 2007
------------------------------------------------------------------------------
This FIRST SUPPLEMENTAL INDENTURE, dated as of March 7, 2002, is between
COMSTOCK RESOURCES, INC., a Nevada corporation (the "Company"), COMSTOCK OIL &
GAS, INC., COMSTOCK OIL & GAS- LOUISIANA, LLC, COMSTOCK OFFSHORE, LLC, COMSTOCK
OIL & GAS HOLDINGS, INC. ("Comstock Holdings"), DEVX ENERGY, INC., a Delaware
corporation ("DevX Delaware"), DEVX ENERGY, INC., a Nevada corporation ("DevX
Nevada"), DEVX OPERATING COMPANY, a Nevada corporation ("DevX Operating"), and
U.S. TRUST COMPANY OF TEXAS, N.A. as Trustee (the "Trustee"). Capitalized terms
used herein but not otherwise defined shall have the meanings ascribed to them
in the Original Indenture (as defined below).
WHEREAS, the Company, certain Subsidiaries of the Company and the Trustee
entered into an Indenture, dated as of April 29, 1999 (the "Original Indenture"
and, together with this First Supplemental Indenture, the "Indenture") providing
for the issuance by the Company from time to time, and the establishment of the
terms of, the Company's 11 1/4% Senior Notes due 2007;
WHEREAS, Section 2.1 of the Original Indenture provides that the aggregate
principal amount of Securities Outstanding at any one time may not exceed
$225,000,000;
WHEREAS, on April 29, 1999, the Company issued $150,000,000 aggregate
principal amount of 11 1/4% Senior Notes due 2007 (the "Existing Notes"), of
which $145,000,000 aggregate principal amount is currently outstanding;
WHEREAS, Section 2.1 of the Original Indenture provides, among other
things, that the Company may issue additional Securities pursuant to a
resolution of the Board of Directors or pursuant to one or more indentures
supplemental to the Original Indenture;
WHEREAS, the Company, in the exercise of the power and authority conferred
upon and reserved to it under the provisions of the Original Indenture and
pursuant to appropriate resolutions of the Board of Directors, has duly
determined to make, execute and deliver to the Trustee this First Supplemental
Indenture in order to issue an additional aggregate principal amount of
$75,000,000 of the Senior Notes due 2007 (the "Additional Notes" and, together
with the Existing Notes, the "Notes");
WHEREAS, Section 9.12 of the Original Indenture provides that each
Restricted Subsidiary that becomes, or comes into existence as, a Restricted
Subsidiary after the date of the Original Indenture and has assets, businesses,
divisions, real property or equipment with a Fair Market Value in excess of
$5,000,000 will execute and deliver a supplemental indenture agreeing to be
bound by the terms of the Original Indenture applicable to a Subsidiary
Guarantor and providing for a Subsidiary Guarantee of the Securities;
WHEREAS, on December 17, 2001, the Company completed the acquisition (the
"Acquisition") of DevX Delaware, pursuant to which DevX Delaware became a
wholly-owned indirect subsidiary of the Company; and
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WHEREAS, pursuant to the Acquisition, DevX Delaware, DevX Nevada, and DevX
Operating (together with Comstock Holdings, the "Additional Guarantors") have
become Restricted Subsidiaries and desire to execute this First Supplemental
Indenture for the purpose of agreeing to be bound by the terms of the Original
Indenture applicable to a Subsidiary Guarantor and providing for a Subsidiary
Guarantee of the Securities;
NOW, THEREFORE, for the purposes stated herein and for and in consideration
of the premises and covenants contained in the Original Indenture and in this
First Supplemental Indenture and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, it is mutually
covenanted and agreed as follows:
ARTICLE I
Section 1.1 Title of Securities.
The Additional Notes shall be combined with the Existing Notes to form a
single series of Securities designated the "11 1/4% Senior Notes due 2007."
Section 1.2 Amount and Denominations.
The aggregate principal amount of the Additional Notes which shall be
authenticated and delivered under the Indenture is $75,000,000 (except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities of the same series pursuant to
Section 2.7, 2.8, 2.9, 9.15, 9.16 or 10.6 or Appendix A of the Original
Indenture, and except for Securities which, pursuant to Section 2.3 of the
Original Indenture, are deemed never to have been authenticated and delivered
under the Indenture).
Section 1.3 Issuance and Pricing.
The Additional Notes shall be issued by the Company on March 7, 2002, at a
price to the public equal to 98.875% of the principal amount plus accrued
interest from November 1, 2001.
Section 1.4 Interest.
The Company will pay interest on the Additional Notes semiannually on May 1
and November 1 of each year, beginning May 1, 2002. Interest on the Additional
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from November 1, 2001.
Section 1.5 Form and Other Terms of Additional Notes.
The Additional Notes which are sold to QIBs pursuant to Rule 144A of the
Securities Act will initially be in the form of one or more Global Securities
and will be deposited with the Trustee, as custodian for The Depositary Trust
Company ("DTC"). The Additional Notes which are sold in offshore transactions in
reliance on Regulation S, if any, will initially be in the form of one or more
Global Securities and will also be deposited with the Trustee, as custodian for
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DTC. Such Global Securities shall be substantially in the form of Exhibit 1
to Appendix A of the Original Indenture, which exhibit is incorporated
by reference herein.
ARTICLE II
Section 2.1 Additional Guarantors.
(a) From the date of this First Supplemental Indenture, in accordance with
Section 9.12, each of the Additional Guarantors shall be subject to the
provisions, and agrees to be bound by the terms, of the Indenture applicable to
a Subsidiary Guarantor; and each of the Additional Guarantors hereby
unconditionally, jointly and severally, guarantees to each Holder of Securities
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, the full and prompt performance of the Company's obligations under
the Indenture and the Securities.
(b) Notwithstanding the foregoing and the other provisions of the
Indenture, the Subsidiary Guarantees of the Additional Guarantors shall be
automatically and unconditionally released and discharged upon the terms and
conditions set forth in Section 12.3 of the Original Indenture.
ARTICLE III
Section 3.1 Ratification of Indenture.
As supplemented by this First Supplemental Indenture, the Original
Indenture is in all respects ratified and confirmed, and the Original Indenture
as supplemented by this First Supplemental Indenture shall be read, taken and
construed as one and the same instrument.
Section 3.2 Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this First Supplemental
Indenture by any provision of the Trust Indenture Act, such required provisions
shall control.
Section 3.3 Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
Section 3.4 Governing Law.
This First Supplemental Indenture, the Subsidiary Guarantees contained
herein and the Additional Notes shall be governed by, and construed and enforced
in accordance with, the laws of the State of New York but without giving effect
to applicable principles of conflicts of law to the extent that the application
of the laws of another jurisdiction would be required thereby.
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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the day and year first above written.
ISSUER:
COMSTOCK RESOURCES, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
SUBSIDIARY GUARANTORS:
COMSTOCK OIL & GAS, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS-LOUISIANA, LLC
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President, CEO and Manager
------------------------------
COMSTOCK OFFSHORE, LLC
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: Manager
------------------------------
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ADDITIONAL GUARANTORS:
DEVX ENERGY, INC. (DELAWARE)
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
DEVX ENERGY, INC. (NEVADA)
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
DEVX OPERATING COMPANY
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS HOLDINGS, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
TRUSTEE:
U.S. TRUST COMPANY OF TEXAS, N.A.
By: /s/ Bill Barber
-----------------------
Name: Bill Barber
-------------------
Title: Vice President
--------------------
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$75,000,000
COMSTOCK RESOURCES, INC.
11 1/4% SENIOR NOTES DUE 2007
PLACEMENT AGREEMENT
February 28, 2002
February 28, 2002
Morgan Stanley & Co. Incorporated
TD Securities (USA) Inc.
BMO Nesbitt Burns Corp.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Comstock Resources, Inc., a Nevada corporation (the "Company"), proposes to
issue and sell to the several purchasers named in Schedule I hereto (the
"Placement Agents") $75,000,000 principal amount of its 11 1/4% Senior Notes due
2007 (the "Securities") to be issued pursuant to the provisions of a
Supplemental Indenture to be dated as of March 7, 2002 (the "Supplemental
Indenture") among the Company, the Guarantors (as defined below) and U.S. Trust
Company of Texas, N.A., as Trustee (the "Trustee"), to the Indenture dated as of
April 29, 1999 (the "Indenture") among the Company, the Guarantors and Trustee.
The Securities will be guaranteed (the "Subsidiary Guarantees") by each of the
entities listed on Schedule II hereto (each, a "Guarantor" and collectively the
"Guarantors").
The Securities will be offered without being registered under the Securities Act
of 1933, as amended (the "Securities Act"), to qualified institutional buyers in
compliance with the exemption from registration provided by Rule 144A under the
Securities Act and in offshore transactions in reliance on Regulation S under
the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees will be entitled
to the benefits of a Registration Rights Agreement to be dated as of March 7,
2002 between the Company, the Guarantors and the Placement Agents (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company has prepared an
offering memorandum (the "Memorandum") including or incorporating by reference a
description of the terms of the Securities, the terms of the offering and a
description of the Company. As used herein, the term "Memorandum" shall include
in each case the documents incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein with respect to the
Memorandum shall include all documents deemed to be incorporated by reference in
1
the Memorandum that are filed subsequent to the date of such Memorandum with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1. Representations and Warranties. The Company and the Guarantors
jointly and severally represent and warrant to, and agree with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Memorandum
complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the
Commission thereunder and (ii) the Memorandum, in the form used by the
Placement Agents to confirm sales and on the Closing Date (as defined
in Section 4), will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in the
Memorandum based upon information relating to any Placement Agent
furnished to the Company in writing by such Placement Agent through
you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Memorandum
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly organized, is
validly existing as a corporation or limited liability company in good
standing under the laws of the jurisdiction of its organization, has
the corporate power and authority to own its property and to conduct
its business as described in the Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole; all of the issued shares of capital stock or other ownership
interest of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly, or indirectly through one of the other subsidiaries, by the
Company, free and clear of all liens, encumbrances, equities or
claims, except for pledges of such shares or ownership interest
pursuant to the Company's bank credit facility described in the
Memorandum.
2
(d) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
(e) All of the shares of common stock, par value $.50 per share
("Common Stock"), of the Company that are outstanding have been duly
authorized and are validly issued, fully paid and non-assessable.
(f) The Securities have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture
and the Supplemental Indenture and delivered to and paid for by the
Placement Agents in accordance with the terms of this Agreement, will
be valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity, and will be entitled to the benefits of
the Indenture, the Supplemental Indenture and the Registration Rights
Agreement pursuant to which such Securities are to be issued.
(g) Each Subsidiary Guarantee to be endorsed on the Securities by
each Guarantor has been duly authorized by such Guarantor and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Placement Agents in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Guarantors, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the
Supplemental Indenture and the Registration Rights Agreement pursuant
to which such Subsidiary Guarantees are to be issued.
(h) Each of the Indenture, the Supplemental Indenture and the
Registration Rights Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company and
each of the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and
except as rights to indemnification and contribution under the
Registration Rights Agreement may be limited under applicable law.
(i) The Securities, the Subsidiary Guarantees, the Indenture, the
Supplemental Indenture and the Registration Rights Agreement will
conform in all material respects to the respective statements relating
thereto contained in the Memorandum and will be in substantially the
respective forms previously delivered to the Placement Agents.
(j) The execution and delivery by the Company and the Guarantors,
as the case may be, of, and the performance by the Company and the
3
Guarantors, as the case may be, of their obligations under, this
Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities and the Subsidiary Guarantees will
not contravene any provision of applicable law or the certificate or
articles of incorporation or by-laws or other organizational documents
of the Company or any of the Guarantors or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company or any of the Guarantors of its obligations under this
Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities or the Subsidiary Guarantors, except
such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Securities
and by Federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Memorandum.
(l) Subsequent to the respective dates as of which information is
given in the Memorandum, (1) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course
of business; (2) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock other than ordinary and
customary dividends; and (3) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company
and its subsidiaries, except in each case as described in the
Memorandum.
(m) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in the Memorandum and
proceedings that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or
ability of the Company and the Guarantors to perform their obligations
under this Agreement, the Indenture, the Supplemental Indenture, the
Registration Rights Agreement, the Securities or the Subsidiary
Guarantees or to consummate the transactions contemplated by the
Memorandum.
(n) Neither the Company nor any of its subsidiaries is in
violation of its certificate or articles of incorporation or by-laws,
or other organizational documents, or of any law, ordinance,
4
administrative or governmental rule or regulation applicable to the
Company or any of its subsidiaries or of any judgement, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any of its subsidiaries, or in default in any
material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any material agreement, indenture, lease or
other instrument to which the Company or any of its subsidiaries is a
party or by which any of them or any of their respective properties
may be bound.
(o) The accountants, Arthur Andersen LLP, who have certified or
shall certify the financial statements included in the Memorandum, are
independent public accountants as required by the Securities Act.
(p) Lee Keeling and Associates, Inc. are independent petroleum
consultants with respect to the Company and its subsidiaries.
(q) The consolidated historical financial statements, together
with related schedules and notes, included in the Memorandum comply as
to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Securities Act. Such
historical financial statements present fairly the consolidated
financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated in
the Memorandum at the respective dates or for the respective periods
to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved,
except as disclosed therein. The other financial and statistical
information and data included in the Memorandum are accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company and its
subsidiaries.
(r) The pro forma financial statements included or incorporated
by reference in the Memorandum have been prepared on a basis
consistent with the historical financial statements of the Company and
its subsidiaries and give effect to assumptions used in the
preparation thereof on a reasonable basis and in good faith and
present fairly the transactions described therein; and such pro forma
financial statements comply as to form in all material respects with
the requirements applicable to pro forma financial statements included
in registration statements on Form S-1 under the Securities Act. The
other pro forma financial and statistical information and data
included or incorporated by reference in the Memorandum are, in all
material respects, accurately presented and prepared on a basis
consistent with the pro forma financial statements.
(s) The Company and each of its subsidiaries has (1) generally
satisfactory title to all its interests in its oil and gas properties,
title investigations having been carried out by the Company and each
5
of its subsidiaries in accordance with the general practice in the oil
and gas industry, (2) good and marketable title in fee simple to all
other real property owned by it and (3) good and marketable title to
all personal property owned by it, in each case free and clear of all
liens, encumbrances, claims, security interests, subleases and defects
except such as are described in the Memorandum or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company
and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be
made of such property and buildings of the Company and its
subsidiaries.
(t) None of the Company or its subsidiaries has violated any
environmental safety or similar law or regulation applicable to its
business relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permits, licenses or
other approvals required of them under applicable Environmental Laws
to own, lease and operate their respective properties and to conduct
their business in the manner described in the Memorandum, is violating
any terms and conditions of any such permit, license or approval or
has permitted to occur any event that allows, or after notice or lapse
of time would allow, revocation or termination of any such permit,
license or approval or result in any other impairment of their rights
thereunder, which in each case would have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(u) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only
in accordance with management's general or specific authorization; and
(4) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(v) The Company and each of its subsidiaries have filed all
material tax returns required to be filed, which returns are complete
and correct in all material respects, and neither the Company nor any
of its subsidiaries is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect
thereto.
(w) The Company and its subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Memorandum as being owned by them
6
or any of them or necessary for the conduct of their respective
businesses, and the Company is not aware of any claim to the contrary
or any challenge by any other person to the rights of the Company and
its subsidiaries with respect to the foregoing.
(x) The Company and its subsidiaries are insured by the insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied
for; and neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole, except as
described in the Memorandum.
(y) The Company is not, and after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Memorandum, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended.
(z) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of
the Company has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or
(ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities, (as
those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(aa) None of the Company, its Affiliates or any person acting on
its or their behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the
Securities and the Company and its Affiliates and any person acting on
its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S, except no representation,
warranty or agreement is made by the Company in this paragraph with
respect to the Placement Agents.
(bb) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents in the manner
contemplated by this Agreement to register the Securities and the
Subsidiary Guarantees under the Securities Act or to qualify the
Supplemental Indenture or the Indenture under the Trust Indenture Act
of 1939, as amended.
7
(cc) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Placement Agents, and each Placement Agent, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth in Schedule I
hereto opposite its name at a purchase price of 97.25 % of the principal amount
thereof (the "Purchase Price") plus accrued interest, if any, to the Closing
Date.
The Company hereby agrees that, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the Placement Agents, it will not,
during the period beginning on the date hereof and continuing to and including
the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt
of the Company or warrants to purchase debt of the Company substantially similar
to the Securities (other than the sale of the Securities under this Agreement).
3. Terms of Offering. You have advised the Company that the Placement
Agents will make an offering of the Securities purchased by the Placement Agents
hereunder on the terms to be set forth in the Memorandum, as soon as practicable
after this Agreement is entered into as in your judgment is advisable.
4. Payment and Delivery. Payment for the Securities shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Securities for the respective accounts of the several Placement
Agents at 10:00 a.m., New York City time, on March 7, 2002, or at such other
time on the same or such other date, not later than March 14, 2002, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date."
Certificates for the Securities shall be in definitive form or global form, as
specified by you, and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date. The certificates evidencing the Securities shall be delivered to
you on the Closing Date for the respective accounts of the several Placement
Agents, with any transfer taxes payable in connection with the transfer of the
Securities to the Placement Agents duly paid, against payment of the Purchase
Price therefor plus accrued interest, if any, to the date of payment and
delivery.
5. Conditions to the Placement Agents' Obligations. The several obligations
of the Placement Agents to purchase and pay for the Securities on the Closing
Date are subject to the following conditions:
8
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities or in the rating outlook for the Company by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the manner
contemplated in the Memorandum.
(b) The Placement Agents shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company and each of the Guarantors, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of the
Company and the Guarantors contained in this Agreement are true and correct
as of the Closing Date and that the Company and the Guarantors have
complied with all of the agreements and satisfied all of the conditions on
their part to be performed or satisfied hereunder on or before the Closing
Date.
The officers signing and delivering such certificates may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing Date an
opinion of Locke Liddell & Sapp LLP, outside counsel for the Company and
the Guarantors, dated the Closing Date, to the effect set forth in Exhibit
A. Such opinion shall be rendered to the Placement Agents at the request of
the Company and the Guarantors and shall so state therein.
(d) The Placement Agents shall have received on the Closing Date an
opinion of Baker Botts L.L.P., counsel for the Placement Agents, dated the
Closing Date, to the effect set forth in Exhibit B.
(e) The Placement Agents shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Placement Agents, from Arthur Andersen LLP, independent public accountants,
9
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Memorandum; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(f) The Placement Agents shall have received a counterpart, conformed
as executed, of the Supplemental Indenture which shall have been entered
into by the Company, the Guarantors and the Trustee.
(g) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Placement Agents shall have received
an original copy thereof, duly executed by the Company and the Guarantors.
6. Covenants of the Company. In further consideration of the agreements of
the Placement Agents contained in this Agreement, the Company and the Guarantors
covenant with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many
copies of the Memorandum, any documents incorporated by reference therein
and any supplements and amendments thereto as you may reasonably request.
(b) Before amending or supplementing the Memorandum, to furnish to you
a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date
on which all of the Securities shall have been sold by the Placement
Agents, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Memorandum in order to make the
statements therein, in the light of the circumstances when the Memorandum
is delivered to a purchaser, not misleading, or if, in the opinion of the
Placement Agents, it is necessary to amend or supplement the Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to the
Memorandum so that the statements in the Memorandum as so amended or
supplemented will not, in the light of the circumstances when the
Memorandum is delivered to a purchaser, be misleading or so that the
Memorandum, as amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
10
request, provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(e) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of their obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's and the Guarantors' counsel and the Company's and the Guarantors'
accountants in connection with the issuance and sale of the Securities and
all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies thereof
to the Placement Agents, in the quantities herein above specified, (ii) all
costs and expenses related to the transfer and delivery of the Securities
to the Placement Agents, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection with
the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Placement
Agents in connection with such qualification and in connection with the
Blue Sky or legal investment memorandum, (iv) any fees charged by rating
agencies for the rating of the Securities, (v) all document production
charges and expenses of counsel to the Placement Agents (but not including
their fees for professional services) in connection with the preparation of
this Agreement, (vi) the fees and expenses, if any, incurred in connection
with the admission of the Securities for trading in PORTAL or any
appropriate market system, (vii) the costs and charges of the Trustee and
any transfer agent, registrar or depositary, (viii) the cost of the
preparation, issuance and delivery of the Securities, (ix) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(x) all other cost and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which provision
is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 8, and the last paragraph of
Section 10, the Placement Agents will pay all of their costs and expenses,
including fees and disbursements of their counsel, travel and lodging
11
expenses of representatives of the Placement Agents, transfer taxes payable
on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(h) While any of the Securities remain "restricted securities" within
the meaning of the Securities Act, to make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section 13
or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to
the Securities, and the Company and its Affiliates and each person acting
on its or their behalf (other than the Placement Agents) will comply with
the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
7. Offering of Securities; Restrictions on Transfer. (a) Each Placement
Agent, severally and not jointly, represents and warrants that such Placement
Agent is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
12
and will offer such Securities only to, persons that it reasonably believes to
be (A) in the case of offers inside the United States, QIBs and (B) in the case
of offers outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) in reliance upon Regulation S
under the Securities Act that, in each case, in purchasing such Securities are
deemed to have represented and agreed as provided in the Memorandum under the
caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly, represents, warrants,
and agrees with respect to offers and sales outside the United States that:
(i) such Placement Agent understands that no action has been or will
be taken in any jurisdiction by the Company that would permit a public
offering of the Securities, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Securities or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Rule 144A or
Regulation S under the Securities Act or pursuant to another exemption from
the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Securities and will offer
and sell the Securities (A) as part of their distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on its
or their behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities, and
any such Placement Agent, its Affiliates and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and will not
offer or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 or the Financial Services Act 1986; (B) complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect
13
to anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and (C) only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Securities have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees not to
offer or sell, directly or indirectly, any Securities in Japan or for the
account of any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to confirmation of
sales of the Securities, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and the
closing date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company and the Guarantors, jointly
and severally, agree to indemnify and hold harmless each Placement Agent and
each person, if any, who controls any Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Memorandum (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in the light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
14
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use
therein.
(b) Each Placement Agent agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Guarantors, their directors, its officers and
each person, if any, who controls the Company or any Guarantor within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company and the
Guarantors to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use in the Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
15
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Placement Agents on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause 8(d)(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors on the one hand
and of the Placement Agents on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Placement
Agents on the other hand in connection with the offering of the Securities shall
be deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the Company
and the Guarantors and the total discounts and commissions received by the
Placement Agents, in each case as set forth in the Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company
and the Guarantors on the one hand and of the Placement Agents on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Guarantors or by the Placement Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Placement Agents' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of Securities they have purchased hereunder, and not
joint.
(e) The Company, the Guarantors and the Placement Agents agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Placement Agents were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
16
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities resold by
it in the initial placement of such Securities were offered to investors exceeds
the amount of any damages that such Placement Agent has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Placement Agent or any person controlling any Placement
Agent or by or on behalf of the Company, or any Guarantor, their officers or
directors or any person controlling the Company or any Guarantor and (iii)
acceptance of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner contemplated in the
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Placement Agents shall fail
or refuse to purchase Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Placement Agent or Placement Agents agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of
17
Securities to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Placement
Agent has agreed to purchase pursuant to this Agreement be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to you
and the Company for the purchase of such Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Placement Agent or of the Company and the Guarantors. In
any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Placement Agent from liability in respect of any default
of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents, or any of them,
because of any failure or refusal on the part of the Company or any Guarantor to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company or any Guarantor shall be unable to perform its
obligations under this Agreement, the Company and the Guarantors will reimburse
the Placement Agents or such Placement Agents as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Placement Agents in connection with this Agreement or the offering
contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
18
Very truly yours,
COMSTOCK RESOURCES, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS HOLDINGS, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS-LOUISIANA, LLC
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President, CEO and Manager
------------------------------
COMSTOCK OFFSHORE, LLC
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: Manager
------------------------------
DEVX ENERGY, INC. (DELAWARE)
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
19
DEVX ENERGY, INC. (NEVADA)
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
DEVX OPERATING COMPANY
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
20
Accepted as of the date hereof.
Morgan Stanley & Co. Incorporated
TD Securities (USA) Inc.
BMO Nesbitt Burns Corp.
Acting severally on behalf of themselves and
the several Placement Agents named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ Bryan Andrzejewski
------------------------
Name: Bryan Andrzejewski
------------------
Title: E.D.
-----------------
21
SCHEDULE I
Principal Amount
of Securities to
Placement Agents ........................................... be Purchased
Morgan Stanley & Co. Incorporated.............................$ 60,000.000
TD Securities (USA) Inc. ..................................... 11,250,000
BMO Nesbitt Burns Corp. ...................................... 3,750,000
-------------
Total ................................................$ 75,000,000
=============
SCHEDULE II
Guarantors
Comstock Oil & Gas, Inc.
Comstock Oil & Gas Holdings, Inc.
Comstock Oil & Gas - Louisiana, LLC
Comstock Offshore, LLC
DevX Energy, Inc., a Delaware corporation
DevX Energy, Inc., a Nevada corporation
DevX Operating Company
EXHIBIT A
OPINION OF LOCKE LIDDELL & SAPP LLP
The opinion of the counsel for the Company and the Guarantors, to be
delivered pursuant to Section 5(c) of the Placement Agreement shall be to the
effect that:
A. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
B. Each Guarantor has been duly incorporated, is validly existing as a
corporation or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its organization, has the corporate power
and authority to own its property and to conduct its business as described in
the Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock or other ownership interest of each of
the Guarantors have been duly and validly authorized and issued, are fully paid
and non-assessable, and are owned by the Company directly, or indirectly through
one of the other subsidiaries of the Company, to the best knowledge of such
counsel free and clear of all liens, encumbrances, equities or claims, except
for pledges of such shares or ownership interest pursuant to the Company's bank
credit facility described in the Memorandum.
C. The Placement Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
D. The authorized and outstanding capital stock of the Company is as set
forth under the caption "Capitalization" in the Memorandum and all outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, and are fully paid and nonassessable.
E. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Placement Agents in accordance with the
A-1
terms of the Placement Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
general principles of equity, and will be entitled to the benefits of the
Indenture, the Supplemental Indenture and the Registration Rights Agreement
pursuant to which such Securities are to be issued.
F. The Subsidiary Guarantees have been duly authorized by the Guarantors
and, when the Securities are executed and authenticated in accordance with the
provisions of the Indenture and the Supplemental Indenture and delivered to and
paid for by the Placement Agents in accordance with the terms of the Placement
Agreement, will be valid and binding obligations of the Guarantors, enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the Supplemental
Indenture and the Registration Rights Agreement pursuant to which such
Subsidiary Guarantees are to be issued.
G. Each of the Indenture, the Supplemental Indenture and the Registration
Rights Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, the Company and each of the Guarantors,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity and except as rights to indemnification and contribution
under the Registration Rights Agreement may be limited under applicable law.
H. The execution and delivery by the Company and the Guarantors of, and the
performance by the Company and the Guarantors of their obligations under, the
Placement Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities and the Subsidiary Guarantees will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or the Guarantors or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any of its subsidiaries, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is required for
the performance by the Company or the Guarantors of their obligations under the
Placement Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities, or the Subsidiary Guarantees except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and by Federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement.
I. To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
A-2
any of its subsidiaries is subject other than proceedings fairly summarized in
all material respects in the Memorandum and proceedings which such counsel
believes are not likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company and
the Guarantors to perform their obligations under the Placement Agreement, the
Indenture, the Supplemental Indenture, the Registration Rights Agreement, the
Securities or the Subsidiary Guarantees or to consummate the transactions
contemplated by the Memorandum.
J. To the best of such counsel's knowledge, neither the Company nor any of
its subsidiaries is in violation of its respective certificate of incorporation
or by-laws, or other organizational documents, or is in default in the
performance of any material obligation, agreement or condition contained in any
bond, debenture, note or other evidence of indebtedness, except as may be
disclosed in the Memorandum.
K. To the best knowledge of such counsel, neither the Company nor any of
its subsidiaries is in violation of any law (including, without limitation, any
Environmental Laws), ordinance, administrative or governmental rule or
regulation applicable to the Company or any of its subsidiaries or of any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any of its subsidiaries except for such
violations which in the aggregate would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
L. The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Memorandum, will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
M. The statements in the Memorandum under the captions "Risk Factors -
Risks Related to Our Business - We are subject to extensive governmental
regulation," "Description of Notes", and "Transfer Restrictions", insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred to
therein.
N. The statements in the Memorandum under the caption "Certain United
States Federal Tax Considerations," insofar as such statements constitute a
summary of the United States federal tax laws referred to therein, are accurate
and fairly summarize in all material respects the United States federal tax laws
referred to therein.
O. Such counsel (i) is of the opinion that each document incorporated by
reference in the Memorandum (except for financial statements and schedules, pro
forma and other financial and statistical data included therein as to which such
counsel need not express any opinion), complied as to form when filed with the
Commission in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder and (ii) has no reason to believe that
(except for financial statements and schedules, pro forma and other financial
A-3
and statistical data as to which such counsel need not express any belief) the
Memorandum when issued contained, or as of the date such opinion is delivered
contains, any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
P. Based upon the representations, warranties and agreements of the Company
in Sections 1(z), 1(aa), 1(bb), 1(cc), 6(f), 6(g) and 6(j) of the Placement
Agreement and of the Placement Agents in Section 7 of the Placement Agreement,
it is not necessary in connection with the offer, sale and delivery of the
Securities to the Placement Agents under the Placement Agreement or in
connection with the initial resale of such Securities by the Placement Agents in
accordance with Section 7 of the Placement Agreement to register the Securities
under the Securities Act of 1933 or to qualify the Indenture or the Supplemental
Indenture under the Trust Indenture Act of 1939, it being understood that no
opinion is expressed as to any subsequent resale of any Security.
With respect to paragraph O(ii) above, counsel may state that his or her
opinion and belief are based upon his or her participation in the preparation of
the Memorandum (and any amendments or supplements thereto) and review and
discussion of the contents thereof and review of the documents incorporated by
reference therein, but are without independent check or verification except as
specified.
A-4
EXHIBIT B
OPINION OF BAKER BOTTS L.L.P.
The opinion of Baker Botts L.L.P. to be delivered pursuant to Section 5(d)
of the Purchase Agreement shall be to the effect that:
A. The Purchase Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
B. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and the Supplemental Indenture and delivered to and paid for by the Placement
Agents in accordance with the terms of the Placement Agreement, will be valid
and binding obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will be
entitled to the benefits of the Indenture and the Registration Rights Agreement
pursuant to which such Securities are to be issued.
C. The Subsidiary Guarantees have been duly authorized by the Guarantors
and, when the Securities are executed and authenticated in accordance with the
provisions of the Indenture and the Supplemental Indenture and delivered to and
paid for by the Placement Agents in accordance with the terms of the Placement
Agreement, will be valid and binding obligations of the Guarantors, enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the Supplemental
Indenture and the Registration Rights Agreement pursuant to which such
Subsidiary Guarantees are to be issued.
D. Each of the Indenture, the Supplemental Indenture and the Registration
Rights Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, the Company, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.
E. The statements in the Memorandum under the captions "Description of
Notes" and "Transfer Restrictions", insofar as such statements constitute
summaries of the legal matters and documents referred to therein, fairly
summarize the matters referred to therein.
F. Such counsel has no reason to believe that (except for financial
statements and schedules, pro forma and other financial and statistical data as
to which such counsel need not express any belief) the Memorandum when issued
contained, or as of the date such opinion is delivered contains, any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
B-1
G. Based upon the representations, warranties and agreements of the Company
in Sections 1(z), 1(aa), 1(cc), 6(f), 6(g) and 6(j) of the Placement Agreement
and of the Placement Agents in Section 7 of the Placement Agreement, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Placement Agents under the Placement Agreement or in connection with the
initial resale of such Securities by the Placement Agents in accordance with
Section 7 of the Placement Agreement to register the Securities under the
Securities Act of 1933, it being understood that no opinion is expressed as to
any subsequent resale of any Security.
With respect to paragraph F above, Baker Botts L.L.P. may state that their
opinion and belief are based upon their participation in the preparation of the
Memorandum (and any amendments or supplements thereto) and review and discussion
of the contents thereof (including the review of, but not participation in the
preparation of, the incorporated documents), but are without independent check
or verification except as specified.
B-2
-------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated March 7, 2002
among
COMSTOCK RESOURCES, INC.,
COMSTOCK OIL & GAS, INC.,
COMSTOCK OIL & GAS HOLDINGS, INC.,
COMSTOCK OIL & GAS - LOUISIANA, LLC.,
COMSTOCK OFFSHORE, LLC,
DEVX ENERGY, INC.,
DEVX ENERGY, INC.,
DEVX OPERATING COMPANY
and
MORGAN STANLEY & CO. INCORPORATED
-------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into March 7, 2002, among COMSTOCK RESOURCES, INC., a Nevada corporation (the
"Company"), COMSTOCK OIL & GAS, INC., a Nevada corporation, COMSTOCK OIL & GAS
HOLDINGS, INC., a Nevada corporation, COMSTOCK OIL & GAS - LOUISIANA, LLC, a
Nevada limited liability company, COMSTOCK OFFSHORE, LLC, a Nevada limited
liability company, DEVX ENERGY, INC., a Delaware corporation, DEVX ENERGY, INC.,
a Nevada corporation, and DEVX OPERATING COMPANY, a Nevada corporation (each, a
"Guarantor," and collectively, the "Guarantors"), and MORGAN STANLEY & CO.
INCORPORATED, TD SECURITIES (USA) INC. and BMO NESBITT BURNS CORP. (each a
"Placement Agent," and collectively, the "Placement Agents").
This Agreement is made pursuant to the Placement Agreement dated February
28, 2002, among the Company, the Guarantors and the Placement Agents (the
"Placement Agreement"), which provides for the sale by the Company to the
Placement Agents of an aggregate of $75,000,000 principal amount of the
Company's 11 1/4% Senior Notes due 2007 (the "Securities"). In order to induce
the Placement Agents to enter into the Placement Agreement, the Company and the
Guarantors here agreed to provide to the Placement Agents and their direct and
indirect transferees the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Placement
Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from time
to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
"Closing Date" shall mean the Closing Date as defined in the Placement
Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
2
"Exchange Offer" shall mean the exchange offer by the Company and the
Guarantors of Exchange Securities for Registrable Securities pursuant to
Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the 1933
Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Exchange Securities" shall mean securities issued by the Company (and
guaranteed by the Guarantors) under the Indenture containing terms
identical to the Securities (except that (i) interest thereon shall accrue
from the last date on which interest was paid on the Securities or, if no
such interest has been paid, from the Closing Date and (ii) the Exchange
Securities will not contain restrictions on transfer) and to be offered to
Holders of Securities in exchange for Securities pursuant to the Exchange
Offer.
"Holder" shall mean the Placement Agents, for so long as they own any
Registrable Securities, and each of their successors, assigns and direct
and indirect transferees who become registered owners of Registrable
Securities under the Indenture; provided that for purposes of Sections 4
and 5 of this Agreement, the term "Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
"Indenture" shall mean the Indenture relating to the Securities dated
as of April 29, 1999 among the Company, the Guarantors and U.S. Trust
Company of Texas, N.A., as trustee, as amended and supplemented by the
First Supplemental Indenture, dated as of March 7, 2002, among the Company,
the Guarantors and U.S. Trust Company of Texas, N.A., as trustee, and as
the same may be amended from time to time in accordance with the terms
thereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of outstanding Registrable Securities; provided
that whenever the consent or approval of Holders of a specified
percentage of Registrable Securities is required hereunder, Registrable
Securities held by the Company or any of its affiliates (as such term is
defined in Rule 405 under the 1933 Act) (other than the Placement Agents or
subsequent Holders of Registrable Securities if such subsequent holders are
deemed to be such affiliates solely by reason of their holding of such
Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage or
amount.
3
"Person" shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"Placement Agents" shall have the meaning set forth in the preamble.
"Placement Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Shelf Registration
Statement, and by all other amendments and supplements to such prospectus,
and in each case including all material incorporated by reference therein.
"Registrable Securities" shall mean the Securities; provided, however,
that the Securities shall cease to be Registrable Securities (i) when a
Registration Statement with respect to such Securities shall have been
declared effective under the 1933 Act and such Securities shall have been
disposed of pursuant to such Registration Statement, (ii) when such
Securities have been sold to the public pursuant to Rule 144(k) (or any
similar provision then in force, but not Rule 144A) under the 1933 Act or
(iii) when such Securities shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Guarantors with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with
blue sky qualification of any of the Exchange Securities or Registrable
Securities), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any
underwriting agreements, securities sales agreements and other documents
relating to the performance of and compliance with this Agreement, (iv) all
rating agency fees, (v) all fees and disbursements relating to the
qualification of the Indenture under applicable securities laws, (vi) the
fees and disbursements of the Trustee and its counsel, (vii) the fees and
disbursements of counsel for the Company and the Guarantors and, in the
case of a Shelf Registration Statement, the fees and disbursements of one
counsel for the Holders (which counsel shall be selected by the Majority
Holders and which counsel may also be counsel for the Placement Agent) and
(viii) the fees and disbursements of the independent public accountants of
4
the Company and the Guarantors, including the expenses of any special
audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding fees and expenses of counsel to
the underwriters (other than fees and expenses set forth in clause (ii)
above) or the Holders and underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Registrable
Securities by a Holder.
"Registration Statement" shall mean any registration statement of the
Company and the Guarantors that covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Guarantors pursuant to the provisions of
Section 2(b) of this Agreement which covers all of the Registrable
Securities (but no other securities unless approved by the Holders whose
Registrable Securities are covered by such Shelf Registration Statement) on
an appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Securities under
the Indenture.
"Underwriter" shall have the meaning set forth in Section 3 hereof.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Registrable Securities are sold to an Underwriter for
reoffering to the public.
2. Registration Under the 1933 Act.
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the Staff of the SEC, the Company and the Guarantors shall use
their best efforts to cause to be filed an Exchange Offer Registration Statement
covering the offer by the Company to the Holders to exchange all of the
Registrable Securities for Exchange Securities and to have such Registration
Statement remain effective until the closing of the Exchange Offer. The Company
5
and the Guarantors shall commence the Exchange Offer promptly after the Exchange
Offer Registration Statement has been declared effective by the SEC and use
their best efforts to have the Exchange Offer consummated not later than 60 days
after such effective date. The Company and the Guarantors shall commence the
Exchange Offer by mailing the related exchange offer Prospectus and accompanying
documents to each Holder stating, in addition to such other disclosures as are
required by applicable law:
(i) that the Exchange Offer is being made pursuant to this Registration
Rights Agreement and that all Registrable Securities validly tendered will be
accepted for exchange;
(ii) the dates of acceptance for exchange (which shall be a period of at
least 20 business days from the date such notice is mailed) (the "Exchange
Dates");
(iii) that any Registrable Security not tendered will remain outstanding
and continue to accrue interest, but will not retain any rights under this
Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Security exchanged
pursuant to the Exchange Offer will be required to surrender such Registrable
Security, together with the enclosed letters of transmittal, to the institution
and at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the last Exchange
Date; and
(v) that Holders will be entitled to withdraw their election, not later
than the close of business on the last Exchange Date, by sending to the
institution and at the address (located in the Borough of Manhattan, The City of
New York) specified in the notice a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Registrable Securities delivered for exchange and a statement that such Holder
is withdrawing his election to have such Registrable Securities exchanged.
As soon as practicable after the last Exchange Date, the Company shall:
(i) accept for exchange Registrable Securities or portions thereof tendered
and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for cancellation all
Registrable Securities or portions thereof so accepted for exchange by the
Company and issue, and cause the Trustee to promptly authenticate and mail to
each Holder, an Exchange Security equal in principal amount to the principal
amount of the Registrable Securities surrendered by such Holder.
The Company and the Guarantors shall use their best efforts to complete the
Exchange Offer as provided above and shall comply with the applicable
requirements of the 1933 Act, the 1934 Act and other applicable laws and
6
regulations in connection with the Exchange Offer. The Exchange Offer shall not
be subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the Staff of the SEC.
The Company shall inform the Placement Agents of the names and addresses of the
Holders to whom the Exchange Offer is made, and the Placement Agents shall have
the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Securities in the Exchange Offer.
(b) In the event that (i) the Company and the Guarantors determine that the
Exchange Offer Registration provided for in Section 2(a) above is not available
or may not be consummated as soon as practicable after the last Exchange Date
because it would violate applicable law or the applicable interpretations of the
Staff of the SEC, (ii) the Exchange Offer is not for any other reason
consummated by September 3, 2002 or (iii) the Exchange Offer has been completed
and in the opinion of counsel for the Placement Agents a Registration Statement
must be filed and a Prospectus must be delivered by the Placement Agents in
connection with any offering or sale of Registrable Securities, the Company and
the Guarantors shall use their best efforts to cause to be filed as soon as
practicable after such determination, date or notice of such opinion of counsel
is given to the Company, as the case may be, a Shelf Registration Statement
providing for the sale by the Holders of all of the Registrable Securities and
to have such Shelf Registration Statement declared effective by the SEC. In the
event the Company and the Guarantors are required to file a Shelf Registration
Statement solely as a result of the matters referred to in clause (iii) of the
preceding sentence, the Company and the Guarantors shall use their best efforts
to file and have declared effective by the SEC both an Exchange Offer
Registration Statement pursuant to Section 2(a) with respect to all Registrable
Securities and a Shelf Registration Statement (which may be a combined
Registration Statement with the Exchange Offer Registration Statement) with
respect to offers and sales of Registrable Securities held by the Placement
Agents after completion of the Exchange Offer. The Company and the Guarantors
agree to use their best efforts to keep the Shelf Registration Statement
continuously effective until the expiration of the period referred to in Rule
144(k) with respect to the Registrable Securities or such shorter period that
will terminate when all of the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company and the Guarantors further agree to supplement or amend
the Shelf Registration Statement if required by the rules, regulations or
instructions applicable to the registration form used by the Company and the
Guarantors for such Shelf Registration Statement or by the 1933 Act or by any
other rules and regulations thereunder for shelf registration or if reasonably
requested by a Holder with respect to information relating to such Holder, and
to use its best efforts to cause any such amendment to become effective and such
Shelf Registration Statement to become usable as soon as thereafter practicable.
The Company and the Guarantors agree to furnish to the Holders of Registrable
Securities copies of any such supplement or amendment promptly after it is used
or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection with the
registration pursuant to Section 2(a) and Section 2(b). Each Holder shall pay
all underwriting discounts and commissions and transfer taxes, if any, relating
7
to the sale or disposition of such Holder's Registrable Securities pursuant to
the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section 2(a)
hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will
not be deemed to have become effective unless it has been declared effective by
the SEC; provided, however, that, if, after it has been declared effective, the
offering of Registrable Securities pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Registration Statement
will be deemed not to have become effective during the period of such
interference until the offering of Registrable Securities pursuant to such
Registration Statement may legally resume. In the event the Exchange Offer is
not consummated and the Shelf Registration Statement is not declared effective
on or prior to September 3, 2002, the interest rate on the Securities will be
increased by 0.5% per annum until the Exchange Offer is consummated or the Shelf
Registration Statement is declared effective by the SEC.
(e) Without limiting the remedies available to the Placement Agents and the
Holders, the Company and the Guarantors acknowledge that any failure by the
Company or any Guarantor to comply with their respective obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable injury
to the Placement Agents or the Holders for which there is no adequate remedy at
law, that it will not be possible to measure damages for such injuries precisely
and that, in the event of any such failure, the Placement Agents or any Holder
may obtain such relief as may be required to specifically enforce the Company's
and the Guarantors' obligations under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures.
In connection with the obligations of the Company and the Guarantors with
respect to the Registration Statements pursuant to Section 2(a) and Section 2(b)
hereof, the Company and the Guarantors shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by the
Company and (y) shall, in the case of a Shelf Registration, be available for the
sale of the Registrable Securities by the selling Holders thereof and (z) shall
comply as to form in all material respects with the requirements of the
applicable form and include all financial statements required by the SEC to be
filed therewith, and use its best efforts to cause such Registration Statement
to become effective and remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the applicable period and cause each
Prospectus to be supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to keep each
8
Prospectus current during the period described under Section 4(3) and Rule 174
under the 1933 Act that is applicable to transactions by brokers or dealers with
respect to the Registrable Securities or Exchange Securities;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, to counsel for the Placement Agents, to counsel for the
Holders and to each Underwriter of an Underwritten Offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in order
to facilitate the public sale or other disposition of the Registrable
Securities; and the Company and the Guarantors consent to the use of such
Prospectus and any amendment or supplement thereto in accordance with applicable
law by each of the selling Holders of Registrable Securities and any such
Underwriters in connection with the offering and sale of the Registrable
Securities covered by and in the manner described in such Prospectus or any
amendment or supplement thereto in accordance with applicable law;
(d) use its best efforts to register or qualify the Registrable Securities
under all applicable state securities or "blue sky" laws of such jurisdictions
as any Holder of Registrable Securities covered by a Registration Statement
shall reasonably request in writing by the time the applicable Registration
Statement is declared effective by the SEC, to cooperate with such Holders in
connection with any filings required to be made with the National Association of
Securities Dealers, Inc. and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the
disposition in each such jurisdiction of such Registrable Securities owned by
such Holder; provided, however, that neither the Company or any Guarantor shall
be required to (i) qualify as a foreign corporation or as a dealer in securities
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(d), (ii) file any general consent to service of process or (iii)
subject itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of Registrable
Securities, counsel for the Holders and counsel for the Placement Agents
promptly and, if requested by any such Holder or counsel, confirm such advice in
writing (i) when a Registration Statement has become effective and when any
post-effective amendment thereto has been filed and becomes effective, (ii) of
any request by the SEC or any state securities authority for amendments and
supplements to a Registration Statement and Prospectus or for additional
information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order
suspending the effectiveness of a Registration Statement or the initiation of
any proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable Securities
covered thereby, the representations and warranties of the Company and the
Guarantors contained in any underwriting agreement, securities sales agreement
or other similar agreement, if any, relating to the offering cease to be true
9
and correct in all material respects or if the Company or any Guarantor receives
any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation of any
proceeding for such purpose, (v) of the happening of any event during the period
a Shelf Registration Statement is effective which makes any statement made in
such Registration Statement or the related Prospectus untrue in any material
respect or which requires the making of any changes in such Registration
Statement or Prospectus in order to make the statements therein not misleading
and (vi) of any determination by the Company or any Guarantor that a
post-effective amendment to a Registration Statement would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment and provide immediate notice to each Holder of the withdrawal of
any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities, without charge, at least one conformed copy of each
Registration Statement and any post-effective amendment thereto (without
documents incorporated therein by reference or exhibits thereto, unless
requested);
(h) in the case of a Shelf Registration, cooperate with the selling Holders
of Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the Indenture) and registered
in such names as the selling Holders may reasonably request at least one
business day prior to the closing of any sale of Registrable Securities;
(i) in the case of a Shelf Registration, upon the occurrence of any event
contemplated by Section 3(e)(v) hereof, use its best efforts to prepare and file
with the SEC a supplement or post-effective amendment to a Registration
Statement or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, such Prospectus will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company and the Guarantors agree to
notify the Holders to suspend use of the Prospectus as promptly as practicable
after the occurrence of such an event, and the Holders hereby agree to suspend
use of the Prospectus until the Company and the Guarantors have amended or
supplemented the Prospectus to correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration Statement,
any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus or any document which is to be incorporated by
reference into a Registration Statement or a Prospectus after initial filing of
a Registration Statement, provide copies of such document to the Placement
Agents and their counsel (and, in the case of a Shelf Registration Statement,
10
the Holders and their counsel) and make such of the representatives of the
Company and the Guarantors as shall be reasonably requested by the Placement
Agents or their counsel (and, in the case of a Shelf Registration Statement, the
Holders or their counsel) available for discussion of such document, and shall
not at any time file or make any amendment to the Registration Statement, any
Prospectus or any amendment of or supplement to a Registration Statement or a
Prospectus or any document which is to be incorporated by reference into a
Registration Statement or a Prospectus, of which the Placement Agents and their
counsel (and, in the case of a Shelf Registration Statement, the Holders and
their counsel) shall not have previously been advised and furnished a copy or to
which the Placement Agents or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) shall object;
(k) cause all Exchange Securities or Registrable Securities, as the case
may be, to have the same CUSIP number as the $150,000,000 aggregate principal
amount of the Company's 11 1/4% Senior Notes due 2007 which were issued on April
29, 1999;
(l) cause the Indenture to be qualified under the Trust Indenture Act of
1939, as amended (the "TIA"), in connection with the registration of the
Exchange Securities or Registrable Securities, as the case may be, cooperate
with the Trustee and the Holders to effect such changes to the Indenture as may
be required for the Indenture to be so qualified in accordance with the terms of
the TIA and execute, and use its best efforts to cause the Trustee to execute,
all documents as may be required to effect such changes and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so
qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for inspection by a
representative of the Holders of the Registrable Securities, any Underwriter
participating in any disposition pursuant to such Shelf Registration Statement,
and attorneys and accountants designated by the Holders, at reasonable times and
in a reasonable manner, all financial and other records, pertinent documents and
properties of the Company and the Guarantors, and cause the respective officers,
directors and employees of the Company to supply all information reasonably
requested by any such representative, Underwriter, attorney or accountant in
connection with a Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts to cause all
Registrable Securities to be listed on any securities exchange or any automated
quotation system on which similar securities issued by the Company and the
Guarantors are then listed if requested by the Majority Holders, to the extent
such Registrable Securities satisfy applicable listing requirements;
(o) use its best efforts to cause the Exchange Securities or Registrable
Securities, as the case may be, to be rated by two nationally recognized
statistical rating organizations (as such term is defined in Rule 436(g)(2)
under the 1933 Act);
11
(p) if reasonably requested by any Holder of Registrable Securities covered
by a Registration Statement, (i) promptly incorporate in a Prospectus supplement
or post-effective amendment such information with respect to such Holder as such
Holder reasonably requests to be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as the Company has received notification of the matters to be incorporated in
such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith (including
those requested by the Holders of a majority of the Registrable Securities being
sold) in order to expedite or facilitate the disposition of such Registrable
Securities including, but not limited to, an Underwritten Offering and in such
connection, (i) to the extent possible, make such representations and warranties
to the Holders and any Underwriters of such Registrable Securities with respect
to the business of the Company and its subsidiaries, including the Guarantors,
the Registration Statement, Prospectus and documents incorporated by reference
or deemed incorporated by reference, if any, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested, (ii) obtain opinions of
counsel to the Company and the Guarantors (which counsel and opinions, in form,
scope and substance, shall be reasonably satisfactory to the Holders and such
Underwriters and their respective counsel) addressed to each selling Holder and
Underwriter of Registrable Securities, covering the matters customarily covered
in opinions requested in underwritten offerings, (iii) obtain "cold comfort"
letters from the independent certified public accountants of the Company and the
Guarantors (and, if necessary, any other certified public accountant of any
subsidiary of the Company, or of any business acquired by the Company or any
Guarantor for which financial statements and financial data are or are required
to be included in the Registration Statement) addressed to each selling Holder
and Underwriter of Registrable Securities, such letters to be in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with underwritten offerings, and (iv) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority in
principal amount of the Registrable Securities being sold or the Underwriters,
and which are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company and the
Guarantors made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company and the
Guarantors may require each Holder of Registrable Securities to furnish to the
Company and the Guarantors such information regarding the Holder and the
proposed distribution by such Holder of such Registrable Securities as the
Company and the Guarantors may from time to time reasonably request in writing.
In the case of a Shelf Registration Statement, each Holder agrees that,
upon receipt of any notice from the Company or any Guarantor of the happening of
any event of the kind described in Section 3(e)(v) hereof, such Holder will
forthwith discontinue disposition of Registrable Securities pursuant to a
12
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company or any Guarantor, such Holder will deliver to the
Company (at its expense) all copies in its possession, other than permanent file
copies then in such Holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such notice. If the
Company or any Guarantor shall give any such notice to suspend the disposition
of Registrable Securities pursuant to a Registration Statement, the Company and
the Guarantors shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Agreement by the number of days
during the period from and including the date of the giving of such notice to
and including the date when the Holders shall have received copies of the
supplemented or amended Prospectus necessary to resume such dispositions. The
Company and the Guarantors may give any such notice only twice during any 365
day period and any such suspensions may not exceed 30 days for each suspension
and there may not be more than two suspensions in effect during any 365 day
period.
The Holders of Registrable Securities covered by a Shelf Registration
Statement who desire to do so may sell such Registrable Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers (the "Underwriters") that will
administer the offering will be selected by the Majority Holders of the
Registrable Securities included in such offering.
4. Participation of Broker-Dealers in Exchange Offer.
(a) The Staff of the SEC has taken the position that any broker-dealer that
receives Exchange Securities for its own account in the Exchange Offer in
exchange for Securities that were acquired by such broker-dealer as a result of
market-making or other trading activities (a "Participating Broker-Dealer"), may
be deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Securities.
The Company and the Guarantors understand that it is the Staff's position
that if the Prospectus contained in the Exchange Offer Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange
Securities, without naming the Participating Broker-Dealers or specifying the
amount of Exchange Securities owned by them, such Prospectus may be delivered by
Participating Broker-Dealers to satisfy their prospectus delivery obligation
under the 1933 Act in connection with resales of Exchange Securities for their
own accounts, so long as the Prospectus otherwise meets the requirements of the
1933 Act.
(b) In light of the above, notwithstanding the other provisions of this
Agreement, the Company and the Guarantors agree that the provisions of this
Agreement as they relate to a Shelf Registration shall also apply to an Exchange
Offer Registration to the extent, and with such reasonable modifications thereto
as may be, reasonably requested by the Placement Agents or by one or more
13
Participating Broker-Dealers, in each case as provided in clause (ii) below, in
order to expedite or facilitate the disposition of any Exchange Securities by
Participating Broker-Dealers consistent with the positions of the Staff recited
in Section 4(a) above; provided that:
(i) the Company and the Guarantors shall not be required to amend or
supplement the Prospectus contained in the Exchange Offer Registration
Statement, as would otherwise be contemplated by Section 3(i), for a period
exceeding 180 days after the last Exchange Date (as such period may be extended
pursuant to the penultimate paragraph of Section 3 of this Agreement) and
Participating Broker-Dealers shall not be authorized by the Company and the
Guarantors to deliver and shall not deliver such Prospectus after such period in
connection with the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth in
Section 3 of this Agreement to an Exchange Offer Registration, to the extent not
required by the positions of the Staff of the SEC or the 1933 Act and the rules
and regulations thereunder, will be in conformity with the reasonable request to
the Company by the Placement Agents or with the reasonable request in writing to
the Company by one or more broker-dealers who certify to the Placement Agents
and the Company in writing that they anticipate that they will be Participating
Broker-Dealers; and provided further that, in connection with such application
of the Shelf Registration procedures set forth in Section 3 to an Exchange Offer
Registration, the Company and the Guarantors shall be obligated (x) to deal only
with one entity representing the Participating Broker-Dealers, which shall be
Morgan Stanley & Co. Incorporated unless it elects not to act as such
representative, (y) to pay the fees and expenses of only one counsel
representing the Participating Broker-Dealers, which shall be counsel to the
Placement Agents unless such counsel elects not to so act and (z) to cause to be
delivered only one, if any, "cold comfort" letter with respect to the Prospectus
in the form existing on the last Exchange Date and with respect to each
subsequent amendment or supplement, if any, effected during the period specified
in clause (i) above.
(c) The Placement Agents shall have no liability to the Company, any
Guarantor or any Holder with respect to any request that it may make pursuant to
Section 4(b) above.
5. Indemnification and Contribution.
(a) The Company and the Guarantors agree, severally and jointly, to
indemnify and hold harmless the Placement Agents, each Holder and each Person,
if any, who controls any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent, any Holder or any such controlling or affiliated Person in connection
with defending or investigating any such action or claim) caused by any untrue
14
statement or alleged untrue statement of a material fact contained in any
Registration Statement (or any amendment thereto) pursuant to which Exchange
Securities or Registrable Securities were registered under the 1933 Act,
including all documents incorporated therein by reference, or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Prospectus (as amended or supplemented if the Company or any
Guarantor shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Placement
Agents or any Holder furnished to the Company or any Guarantor in writing by or
through Morgan Stanley & Co. Incorporated or any selling Holder expressly for
use therein. In connection with any Underwritten Offering permitted by Section
3, the Company and the Guarantors, severally and jointly, will also indemnify
the Underwriters, if any, selling brokers, dealers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of the
1933 Act and the 1934 Act) to the same extent as provided above with respect to
the indemnification of the Holders, if requested in connection with any
Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and hold
harmless the Company, the Guarantors, the Placement Agents and the other selling
Holders, and each of their respective directors, officers who sign the
Registration Statement and each Person, if any, who controls the Company, any
Guarantor, any Placement Agent and any other selling Holder within the meaning
of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same
extent as the foregoing indemnity from the Company and the Guarantors to the
Placement Agents and the Holders, but only with reference to information
relating to such Holder furnished to the Company or any Guarantor in writing by
such Holder expressly for use in any Registration Statement (or any amendment
thereto) or any Prospectus (or any amendment or supplement thereto).
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which indemnity may be sought
pursuant to either paragraph (a) or paragraph (b) above, such Person (the
"indemnified party") shall promptly notify the Person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
15
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
Persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company and the Guarantors, their respective directors, their respective
officers who sign the Registration Statement and each Person, if any, who
controls the Company or any Guarantor within the meaning of either such Section
and (c) the fees and expenses of more than one separate firm (in addition to any
local counsel) for all Holders and all Persons, if any, who control any Holders
within the meaning of either such Section, and that all such fees and expenses
shall be reimbursed as they are incurred. In such case involving the Placement
Agents and Persons who control the Placement Agents, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated. In such case
involving the Holders and such Persons who control Holders, such firm shall be
designated in writing by the Majority Holders. In all other cases, such firm
shall be designated by the Company. The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written consent but,
if settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party for such fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which such indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraph (a) or paragraph (b)
of this Section 5 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party or parties on the one hand and of the indemnified party or parties on the
other hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
16
considerations. The relative fault of the Company, the Guarantors and the
Holders shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and the Guarantors or by the Holders and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holders' respective obligations to contribute
pursuant to this Section 5(d) are several in proportion to the respective
principal amount of Registrable Securities of such Holder that were registered
pursuant to a Registration Statement.
(e) The Company, each Guarantor and each Holder agree that it would not be
just or equitable if contribution pursuant to this Section 5 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 5, no Holder shall be required to indemnify or
contribute any amount in excess of the amount by which the total price at which
Registrable Securities were sold by such Holder exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 5 are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any indemnified party at law or in equity.
The indemnity and contribution provisions contained in this Section 5 shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of the Placement
Agents, any Holder or any Person controlling any Placement Agent or any Holder,
or by or on behalf of the Company or any Guarantor, or their respective officers
or directors, or any Person controlling the Company or any Guarantor, (iii)
acceptance of any of the Exchange Securities and (iv) any sale of Registrable
Securities pursuant to a Shelf Registration Statement.
6. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the Guarantors have not
entered into, and on or after the date of this Agreement will not enter into,
any agreement which is inconsistent with the rights granted to the Holders of
Registrable Securities in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
17
conflict with and are not inconsistent with the rights granted to the holders of
the Company's or any Guarantor's other issued and outstanding securities under
any such agreements.
(b) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding Registrable Securities
affected by such amendment, modification, supplement, waiver or consent;
provided, however, that no amendment, modification, supplement, waiver or
consent to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Securities unless consented to in
writing by such Holder.
(c) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if
to a Holder, at the most current address given by such Holder to the Company by
means of a notice given in accordance with the provisions of this Section 6(c),
which address initially is, with respect to the Placement Agents, the address
set forth in the Placement Agreement; and (ii) if to the Company or any
Guarantor, initially at the Company's or the Guarantor's respective address set
forth in the Placement Agreement and thereafter at such other address, notice of
which is given in accordance with the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall be
concurrently delivered by the Person giving the same to the Trustee, at the
address specified in the Indenture.
(d) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors, assigns and transferees of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders; provided that nothing herein shall be
deemed to permit any assignment, transfer or other disposition of Registrable
Securities in violation of the terms of the Placement Agreement. If any
transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be
held subject to all of the terms of this Agreement, and by taking and holding
such Registrable Securities such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof. The
Placement Agents (in their capacity as Placement Agents) shall have no liability
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or obligation to the Company and the Guarantors with respect to any failure by a
Holder to comply with, or any breach by any Holder of, any of the obligations of
such Holder under this Agreement.
(e) Purchases and Sales of Securities. The Company and the Guarantors shall not, and shall
use their best efforts to cause their affiliates (as defined in Rule 405 under the 1933 Act) not to,
purchase and then resell or otherwise transfer any Securities.
(f) Third Party Beneficiary. The Holders shall be third party beneficiaries to the
agreements made hereunder between the Company and the Guarantors, on the one hand, and the Placement
Agents, on the other hand, and shall have the right to enforce such agreements directly to the extent it
deems such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder.
(g) Counterparts. This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. This Agreement shall be governed by the laws of the State of New York.
(j) Severability. In the event that any one or more of the provisions contained herein, or
the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COMSTOCK RESOURCES, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS HOLDINGS, INC.
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
COMSTOCK OIL & GAS-LOUISIANA, LLC
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President, CEO and Manager
------------------------------
COMSTOCK OFFSHORE, LLC
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: Manager
------------------------------
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DEVX ENERGY, INC. (DELAWARE)
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
DEVX ENERGY, INC. (NEVADA)
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
DEVX OPERATING COMPANY
By: /s/ M. Jay Allison
------------------------
Name: M. Jay Allison
----------------------
Title: President and CEO
---------------------
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Confirmed and accepted as of
the date first above written:
Morgan Stanley & Co. Incorporated
TD Securities (USA) Inc.
BMO Nesbitt Burns Corp.
Acting severally on behalf of themselves and
the several Placement Agents named in
Schedule I hereto.
By: Morgan Stanley & Co. Incorporated
By: /s/ Bryan Andrzejewski
------------------------
Name: Bryan Andrzejewski
------------------
Title: E.D.
-----------------
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