<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1995
NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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COMSTOCK RESOURCES, INC.
(Exact name of registrant as specified in its charter)
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NEVADA 94-1667468
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5005 LBJ FREEWAY M. JAY ALLISON
SUITE 1000 PRESIDENT AND CHIEF EXECUTIVE OFFICER
DALLAS, TEXAS 75244 5005 LBJ FREEWAY, SUITE 1000
(214) 701-2000 DALLAS, TEXAS 75244
(ADDRESS, INCLUDING ZIP CODE, AND (214) 701-2000
telephone number, including area code COPIES TO: (Name, Address, including zip
of Registrant's principal executive offices) Guy H. Kerr, Esq. code, and telephone number, including area
Locke Purnell Rain Harrell code, of agent for service)
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
(214) 740-8000
</TABLE>
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Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following.
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If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following. X
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CALCULATION OF REGISTRATION FEE
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Proposed
Amount Proposed Maximum
Title of Each Class to be Maximum Aggregate
of Securities Registered Offering Price Offering Price Amount of
to be Registered (1) Per Share (2) (2) Registration Fee
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Common Stock, par value $.50 per
share...................... 925,000 $4.1875 $3,873,438 $1,336
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</TABLE>
(1) Represents the number of shares estimated by the Registrant to be issued
or issuable through June 30, 1997 in lieu of the payment of cash dividends
on the Registrant's Series 1995 Convertible Preferred Stock.
(2) Estimated solely for the purpose of calculating the registration fee based
upon closing sales price of a share of Common Stock on July 24, 1995 as
quoted on the Nasdaq National Market.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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<PAGE> 2
PROSPECTUS
COMSTOCK RESOURCES, INC.
13,804 Shares of Common Stock
The 13,804 shares of common stock, par value $.50 per share (the "Common
Stock"), of Comstock Resources, Inc. (together with its subsidiaries, the
"Company") covered by this Prospectus are being or will be offered by certain
selling security holders (the "Selling Security Holders"). See "Selling
Security Holders." The shares were issued in lieu of cash dividends on the
Company's Series 1995 Convertible Preferred Stock. See "Description of Capital
Stock - Preferred Stock." The Company will not receive any proceeds from the
sale of Common Stock offered hereby.
The Selling Security Holders may offer their shares of Common Stock through
broker transactions or directly to prospective purchasers. Such shares will be
offered at the market price or at prices that may be negotiated by the Selling
Security Holders. Brokers or dealers will receive commissions or discounts
from the Selling Security Holders in amounts to be negotiated immediately prior
to sale. See "Plan of Distribution."
The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol CMRE. On July 24, 1995, the last sale price of the Common Stock, as
reported on the Nasdaq National Market, was $4.1875 per share. The shares of
Common Stock offered hereby include preferred stock purchase rights. See
"Description of Capital Stock - Stockholders' Rights Plan."
The Company has agreed to register the shares of Common Stock offered and to
pay the expenses of such registration. Such expenses, including legal and
accounting fees, are estimated to be $5,000. The Company intends to keep the
registration statement, of which this Prospectus is a part, effective for a
period of twenty-four months or, if earlier, until all the shares of Common
Stock offered hereby have been sold or the Company is no longer obligated to
maintain such effectiveness.
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PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE MATTERS SET FORTH UNDER "RISK FACTORS" HEREIN.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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AUGUST ___, 1995
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and/or information statements
and other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission in Washington, D.C.,
and at certain of the regional offices of the Commission. The addresses of the
facilities are: Midwest Regional Office, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and New York Regional Office, 7 World Trade Center,
New York, New York 10048. In addition, copies of such material can be obtained
from the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Company shall provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request by such person, a copy of
any and all of the information that is incorporated by reference in this
Prospectus (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that the Prospectus incorporates). These documents are
available upon request directed to: Comstock Resources, Inc., 5005 LBJ
Freeway, Suite 1000, Dallas, Texas 75244; telephone number (214) 701-2000,
Attention: Secretary.
TABLE OF CONTENTS
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PAGE
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Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . 7
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . 13
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . 14
Incorporation of Certain Information By Reference . . . . . . . . . . . 15
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information appearing elsewhere or incorporated by reference in this
Prospectus.
THE COMPANY
Comstock Resources, Inc. is primarily engaged in the acquisition,
development and production of oil and gas reserves in the United States. The
Company owns interests in oil and gas wells located primarily in Arkansas,
Louisiana (on and offshore), Nebraska, Oklahoma, and Texas.
The Company was originally organized as a Delaware corporation in 1919
under the name Comstock Tunnel and Drainage Company for the primary purpose of
conducting gold and silver mining operations in and around the Comstock Lode in
Nevada. In 1983, the Company was reincorporated under the laws of the State of
Nevada. In November 1987, the Company changed its name to Comstock Resources,
Inc.
The executive offices of the Company are located at 5005 LBJ Freeway,
Suite 1000, Dallas, Texas 75244 and its telephone number is (214) 701-2000.
THE OFFERING
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Common Stock Offered by the Selling Security Holders . . . . 13,804 shares(1)
Common Stock Outstanding at July 24, 1995 . . . . . . . . 12,578,168 shares(2)
Nasdaq National Market Symbol . . . . . . . . . . . . . . . . . . . . CMRE
</TABLE>
_________________
(1) Represents shares issued to the Selling Security Holders in lieu of
the payment of cash dividends on the Company's Series 1995 Convertible
Preferred Stock.
(2) At July 24, 1995, an additional 8,347,450 shares of Common Stock
are reserved for issuance upon exercise of outstanding stock options and
warrants and the conversion of the Series 1994 Convertible Preferred Stock, the
1994 Series B Convertible Preferred Stock and the Series 1995 Convertible
Preferred Stock.
RISK FACTORS
Prior to making an investment decision, prospective investors should
consider fully, together with the other information contained in or
incorporated into this Prospectus, the following factors:
RISK OF OIL AND GAS OPERATIONS
The Company must continually acquire or explore for and develop new oil
and gas reserves to replace those being depleted by production. Without
acquisitions or successful drilling, the Company's assets, properties and
revenues will decline over time. The Company's acquisition program assumes that
major and independent oil companies and individuals will continue to divest
many of their domestic oil and natural gas properties. There can be no
assurance that such divestitures will continue or that the
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<PAGE> 5
Company will be able to acquire such properties on acceptable terms or have
capital available to fund such acquisitions. To the extent the Company engages
in drilling activities, such activities carry the risk that no commercially
viable oil or gas production will be obtained. The cost of drilling,
completing and operating wells is often uncertain. Moreover, drilling may be
curtailed, delayed or canceled as a result of many factors, including weather
conditions and shortages of or delays in delivery of equipment.
The availability of a ready market for the Company's oil and gas
production depends on numerous factors beyond its control, including the demand
for and supply of oil and gas, the proximity of the Company's gas reserves to
pipelines, the capacity of such pipelines, fluctuation in seasonal demand, the
effects of inclement weather and government regulations.
The oil and gas business is subject to numerous operating hazards such
as explosions, blowouts, oil spills and other disasters which could result in
substantial loss to the Company. Offshore oil and gas operations are subject
to the additional hazards of marine operations, such as capsizing, collision
and adverse weather and seas. Any of these could result in damage or
destruction of drilling rigs, oil and gas wells or producing facilities,
suspension of operations or damage or injury to property and persons. As is
customary in the industry, the Company maintains insurance against some, but
not all, of these risks.
VOLATILITY OF OIL AND NATURAL GAS PRICES
The Company's revenues, cash flow from operations and reserve valuations
are significantly affected by the prices received for its oil and gas
production. Historically, the markets for oil and natural gas have been
volatile and are likely to continue to be volatile in the future. Prices for
oil and natural gas are subject to wide fluctuation in response to market
uncertainty, changes in supply and demand and a variety of additional factors,
all of which are beyond the control of the Company. These factors include
political conditions in the Middle East, the foreign supply of oil and natural
gas, the price of foreign imports of oil, the level of consumer and industrial
demand, weather conditions, domestic and foreign government relations, the
price and availability of alternative fuels and overall economic conditions.
The Company's ability to acquire oil and gas properties at prices and upon
terms acceptable to the Company is significantly impacted by the recent
volatility of prices for oil and gas. Generally, during periods of depressed
or falling prices, the Company encounters resistance from potential sellers to
sell oil and gas leases or interests at then prevailing market prices.
Conversely, during periods of escalating prices, the Company encounters
increased competition in its efforts to acquire oil and gas properties having
geologic merit and at reasonable prices.
CONFLICTS OF INTEREST
The Company and certain of its affiliates, including certain officers
and directors of the Company, have historically participated in various related
party transactions. To the extent that the Company and its affiliates continue
to participate in such related party transactions in the future, certain
potential conflicts of interest may arise. The Company's board of directors
has adopted a policy providing that any transactions between the Company and
its officers, directors, principal shareholders or affiliates will be on terms
no less favorable to the Company than could have been obtained from
unaffiliated third parties on an arms-length basis and such transactions, if
any, will be approved by a majority of the Company's disinterested directors.
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REGULATION
The Company's operations are regulated by certain federal and state
agencies. In particular, oil and natural gas production and operations are or
have been subject to price controls, taxes and other laws relating to the oil
and natural gas industry. The Company cannot predict how existing laws and
regulations may be interpreted by enforcement agencies or court rulings,
whether additional laws and regulations will be adopted, or the effect such
changes may have on its business or financial condition.
The Company's operations are subject to extensive federal, state and
local laws and regulations relating to the generation, storage, handling,
emission, transportation and discharge of materials into the environment.
Permits are required for various of the Company's operations, and these permits
are subject to revocation, modification and renewal by issuing authorities.
Governmental authorities have the power to enforce compliance with their
regulations, and violations are subject to fines, injunctions or both. It is
possible that increasingly strict requirements will be imposed by environmental
laws and enforcement policies thereunder. The Company does not anticipate that
it will be required in the near future to expend amounts that are material to
the Company's financial position or results of operations by reason of
environmental laws and regulations, but because such laws and regulations are
frequently changed, the Company is unable to predict the ultimate cost of such
compliance.
The Company believes that the oil and gas industry may experience
increasing liabilities and risks under the Comprehensive Environmental
Response, Compensation and Liability Act, as well as other federal, state and
local environmental laws, as a result of increased enforcement of environmental
laws by various regulatory agencies. As an "owner" or "operator" of property
where hazardous materials may exist or be present, the Company, like all others
engaged in the oil and gas industry, could be liable for the release of any
hazardous substances. Although the Company has not been subject to the
imposition of "clean-up" orders by the government, the potential for sudden and
unpredictable liability for environmental problems is a consideration of
increasing importance to the Company and the oil and gas industry as a whole.
PROVISIONS RELATING TO CONTROL OF THE COMPANY
Although not intended to interfere with bona fide offers to acquire
control of the Company in transactions which would benefit all stockholders,
the Company has in place certain measures which affect the control of the
Company. These measures are summarized below.
Classified Board
At present, the Company's Board of Directors is divided into three
classes, with the term of office of one class expiring each year. The
existence of a classified board, which is designed to provide continuity and
longer-term participation on the Board of Directors, has a potentially
discouraging effect on a takeover bid since it tends to impair a bidder's
ability to obtain control of the Board of Directors, and ultimately the
management, in a relatively short period of time. Because only one class of
directors, which consists of one-third of the total number of directors, stands
for election at each annual meeting, it would take two annual meetings, instead
of one, to change a majority of the directors. This would be true even if a
stockholder held more than a majority of the shares entitled to vote at an
annual meeting. Since the Company's Common Stock does not have cumulative
voting rights, the holders of a majority of shares voting for the election of
directors can elect all members of the class voted upon at each annual meeting.
The provisions of the Company's Bylaws creating the classified board may not be
amended without the approval of the holders of at least two-thirds of the
Common Stock outstanding and entitled to vote on any such change. See
"Description of Capital Stock - Preferred Stock" for rights of the holders of
Series 1994 Convertible Preferred Stock, the 1994 Series B Convertible
Preferred Stock and the Series 1995 Convertible Preferred Stock to elect
directors under limited circumstances.
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Stockholders' Rights Plan
The Board adopted a stockholders' rights plan (the "Rights Plan") on
December 4, 1990 in order to deter coercive or unfair takeover tactics and to
prevent a purchaser from gaining control of the Company without offering a fair
price to all stockholders. The Rights Plan was not adopted in response to any
specific effort to obtain control of the Company. Although intended to
preserve for the Company's stockholders the long-term value of the Company, the
Rights Plan may make it more difficult for the stockholders of the Company to
benefit from certain transactions which are opposed by the incumbent board.
See "Description of Capital Stock - Stockholders' Rights Plan."
Preferred Stock
In the event of any takeover attempt of the Company through tender
offer, merger, proxy contest or otherwise, the Board could issue shares of its
authorized preferred stock which could dilute the voting power of existing
stockholders. Moreover, since the Board may, without stockholder approval, fix
the voting powers, designations and preferences and other rights,
qualifications, limitations and restrictions on its authorized but unissued
shares of preferred stock, any preferred stock issued by the Board could be
structured so as to impede or prevent any proposed undesired takeover. For
these reasons, the ability of the Board of Directors of the Company to cause
the issuance of one or more series of preferred stock could discourage hostile
tender offers, mergers and other business combinations, proxy contests, and the
removal of incumbent management. The Board's rights to authorize the issuance
of any preferred stock are limited by the terms of the currently outstanding
series of preferred stock. See "Description of Capital Stock - Preferred
Stock."
Severance Benefits
Effective July 1, 1995, the Company entered into employment agreements
with M. Jay Allison, the President and Chief Executive Officer of the Company,
and Roland O. Burns, Senior Vice President, Chief Financial Officer, Secretary
and Treasurer of the Company. Under the agreements, the Company agreed to
employ each of Messrs. Allison and Burns for a period of twelve months at a
minimum base rate of $245,000, and $128,000 per annum, respectively. Each of
the agreements provides for the payment of severance benefits in an amount
equal to three times the existing annual base salary of the employee upon a
change in control followed by the occurrence of certain specified events,
including the assignment of the employee to duties inconsistent with his
position immediately prior to the change in control, a reduction in the
employee's salary, requiring the employee to be relocated, failure of a
purchaser to assume the obligations of the Company under the agreement, failure
of the Company to re-elect the employee to the offices held by him immediately
prior to a change in control and a breach by the Company (or any successor) of
any provisions of the agreement. The severance benefit payments are payable in
cash in equal payments (without interest over a period not to exceed twelve
months). As defined in the agreements, a "change in control" is deemed to have
taken place if (a) without the approval or recommendation of a majority of the
then existing Board of Directors of the Company, a third person causes or
brings about the removal or resignation of the then existing members of the
Board or if a third person causes or brings about an increase in the size of
the Board such that the then existing members of the Board thereafter represent
a minority of the total number of persons comprising the entire Board; (b) a
third person, including a group, becomes the beneficial owner of shares of any
class of the Company's stock having 30 percent or more of the total number of
votes that may be cast for the election of directors of the Company; (c) any
shares or any class of the Company's stock are purchased pursuant to a tender
or exchange offer (other than an offer by the Company); or (d) the Company's
stockholders approve a merger or other business combination of the Company with
or into another corporation pursuant to which the Company will not survive or
will survive only as a subsidiary of another corporation, or the sale or other
disposition of all or substantially all of the assets of the Company, or any
combination of the foregoing.
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As a result of the severance benefit payments that could become payable
to Messrs. Allison and Burns, and based on the base compensation currently in
effect, a total of $1,119,000 would presently be required to be paid to them
upon a change in control followed by one of the events triggering payment of
the severance benefits. Accordingly, the employment agreements would have the
effect of substantially increasing the cost of acquiring control of the
Company, thereby possibly discouraging any such attempted acquisition of
control.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 30,000,000
shares of Common Stock and 5,000,000 shares of preferred stock, $10.00 par
value (the "Preferred Stock"). At July 3, 1995, there were issued and
outstanding 12,578,168 shares of Common Stock and 3,100,000 shares of Preferred
Stock, of which 600,000 shares are designated as the Series 1994 Convertible
Preferred Stock, 1,000,000 shares are designated as the 1994 Series B
Convertible Preferred Stock and 1,500,000 shares are designated as the Series
1995 Convertible Preferred Stock. Options and warrants to purchase 1,634,307
shares of Common Stock were also outstanding and exercisable at that date. In
the aggregate, 8,347,450 shares of Common Stock have been reserved for issuance
pursuant to the exercise of stock options and warrants currently outstanding
and the conversion of the Series 1994 Convertible Preferred Stock, the 1994
Series B Convertible Preferred Stock and the Series 1995 Convertible Preferred
Stock.
COMMON STOCK
Subject to the prior rights of the Series 1994 Convertible Preferred
Stock, the 1994 Series B Convertible Preferred Stock, the Series 1995
Convertible Preferred Stock and any other shares of Preferred Stock that may be
issued, and except as otherwise set forth below, the shares of Common Stock of
the Company (1) are entitled to such dividends as may be declared by the Board
of Directors, in its discretion, out of funds legally available therefor; (2)
are entitled to one vote per share on matters voted upon by the stockholders
and have no cumulative voting rights; (3) have no preemptive or conversion
rights; (4) are not subject to, or entitled to the benefits of, any redemption
or sinking fund provision; and (5) are entitled, upon liquidation, to receive
the assets of the Company remaining after the payment of corporate debts and
the satisfaction of any liquidation preferences of the Series 1994 Convertible
Preferred Stock, the 1994 Series B Convertible Preferred Stock, the Series 1995
Convertible Preferred Stock and any other Preferred Stock, if issued. Although
the Company's Articles of Incorporation do not deny preemptive rights to
stockholders, under Nevada law no stockholders have preemptive rights with
respect to shares that, upon issuance, are registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Common
Stock is currently registered under the Exchange Act.
The Common Stock presently issued and outstanding, including the shares
being offered by the Selling Security Holders, is validly issued, fully paid
and nonassessable.
Because the shares of Common Stock do not have cumulative voting rights,
the holders of a majority of the shares voting for the election of directors
can elect all members of the class of the Company's classified Board of
Directors that are to be elected at a meeting of the stockholders, subject to
any rights of the holders of Series 1994 Convertible Preferred Stock, the 1994
Series B Convertible Preferred Stock and the Series 1995 Convertible Preferred
Stock. See "Description of Capital Stock - Preferred Stock."
The Company's Common Stock is quoted on the Nasdaq National Market. The
Transfer Agent and Registrar for the Common Stock of the Company is Bank One
Texas, N.A.
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STOCKHOLDERS' RIGHTS PLAN
General
As part of its long-term strategy to maximize, preserve and protect the
long-term value of the Company for the benefit of all stockholders, the Board
of Directors of the Company considered, and on December 4, 1990, adopted, a
stockholders' rights plan. The basic objective of the Rights Plan is to
encourage prospective purchasers to negotiate with the board, whose ability to
negotiate effectively with a potential purchaser, on behalf of all
stockholders, is significantly greater than that of the stockholders
individually. In the board's view, some attempted takeovers can pressure
stockholders into disposing of their equity investment in the Company at less
than full value and can result in the unfair treatment of minority
stockholders, especially considering that prospective purchasers typically are
interested in acquiring targets as cheaply as they can. The rights are
designed to deter abusive takeover tactics, such as (i) accumulations of the
Company's stock by a prospective purchaser who through open market or private
purchases may achieve a position of substantial influence or control without
paying to selling or remaining stockholders a fair "control premium", (ii)
coercive two-tier, front-end loaded or partial offers which may not offer fair
value to all stockholders, (iii) accumulations of the Company's stock by a
prospective purchaser who lacks the financing to complete an offer and is only
interested in putting the Company "in play", without concern as to how its
activities may affect the business of the Company, and (iv) self-dealing
transactions by or with prospective purchasers who may seek to acquire the
Company at less than full value or upon terms that may be detrimental to
minority stockholders. Equally important, offers left open only a short time
might prevent management and the board from considering all alternatives to
maximize the value of the Company - including, if appropriate, a search for
competing bidders. The board believes that the specific benefits derived by
the stockholders of the Company as a result of having the rights plan in place
include:
o providing disincentives to potential purchasers who are not willing
or able to make and complete a fully financed offer to all
stockholders at a fair price;
o providing the board and management the time to consider available
alternatives and act in the best interests of all stockholders in
the event of an offer;
o protecting against abusive takeover tactics; and
o increasing the bargaining power of the board.
The Rights Plan was not adopted by the board in response to any specific
effort to obtain control of the Company.
Description of Rights Plan
On December 4, 1990, the Company declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share of Common
Stock, payable on December 17, 1990 (the "Record Date") to stockholders of
record at that date. Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series A Junior Participating
Preferred Stock, $10.00 par value per share, at an exercise price of $15.00
(the "Purchase Price") per one one-hundredth of a share of Preferred Stock,
subject to adjustment. The description and terms of the Rights are set forth
in a Rights Agreement (the "Rights Agreement") between the Company and the Bank
One, Texas, N.A., as successor Rights Agent.
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The Rights are initially evidenced by the Common Stock certificates as
no separate Rights Certificates were distributed. The Rights separate from the
Common Stock and a "Distribution Date" will occur at the close of business on
the earliest of (i) the tenth business day following a public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
has acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding shares of Common Stock (the "Stock Acquisition Date"),
(ii) the tenth business day (or such later date as may be determined by action
of the Board of Directors) following the commencement of a tender offer or
exchange offer that would result in a person or group beneficially owning 20%
or more of the outstanding shares of Common Stock or (iii) the tenth business
day after the Board of Directors of the Company determines that any individual,
firm, corporation, partnership or other entity (each a "Person"), alone or
together with its affiliates and associates, has become the beneficial owner of
an amount of Common Stock which a majority of the continuing directors who are
not officers of the Company determines to be substantial (which amount shall in
no event be less than 10% of the shares of Common Stock outstanding) and at
least a majority of the continuing directors who are not officers of the
Company, after reasonable inquiry and investigation, including consultation
with such Person as such directors shall deem appropriate, shall determine that
(a) such beneficial ownership by such Person is intended to cause the Company
to repurchase the Common Stock beneficially owned by such Person or to cause
pressure on the Company to take action or enter into a transaction or series of
transactions intended to provide such Person with short-term financial gain
under circumstances where such directors determine that the best long-term
interests of the Company and its stockholders would not be served by taking
such action or entering into such transaction or series of transactions at that
time or (b) such beneficial ownership is causing or is reasonably likely to
cause a material impact (an "Adverse Person").
The Rights are not exercisable until the Distribution Date and will
expire at the close of business on December 17, 2000, unless earlier redeemed
by the Company.
If (i) a Person becomes the beneficial owner of 20% or more of the then
outstanding shares of Common Stock (except (a) pursuant to certain offers for
all outstanding shares of Common Stock approved by at least a majority of the
continuing directors who are not officers of the Company or (b) solely due to a
reduction in the number of shares of Common Stock outstanding as a result of
the repurchase of shares of Common Stock by the Company) or (ii) the Board of
Directors determines that a Person is an Adverse Person, each holder of a Right
will thereafter have the right to receive, upon exercise, Common Stock (or, in
certain circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the Right. However,
Rights are not exercisable following the occurrence of either of the events set
forth in this paragraph until such time as the Rights are no longer redeemable
by the Company as set forth below. Notwithstanding any of the foregoing,
following the occurrence of either of the events set forth in this paragraph,
all Rights that are, or (under certain circumstances specified in the Rights
Agreement) were beneficially owned by any Acquiring Person or Adverse Person
will be null and void.
If at any time following the Stock Acquisition Date, (i) the Company is
acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation, or in which the Company is the
surviving corporation, but its Common Stock is changed or exchanged (other than
a merger which follows an offer described in clause (i)(a) of the preceding
paragraph), or (ii) more than 50% of the Company's assets, cash flow or earning
power is sold or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter have the right
to receive upon exercise, Common Stock of the acquiring company having a value
equal to two times the exercise price of the Right.
At any time after the earlier to occur of (i) an Acquiring Person
becoming such or (ii) the date on
-9-
<PAGE> 11
which the Board of Directors of the Company declares an Adverse Person to be
such, the Board of Directors may cause the Company to exchange the Rights
(other than Rights owned by the Adverse Person or Acquiring Person, as the case
may be, which will have become null and void), in whole or in part, at an
exchange ratio of one share of Common Stock per Right (subject to adjustment).
Notwithstanding the foregoing, no such exchange may be effected at any time
after any Person becomes the beneficial owner of 50% or more of the outstanding
Common Stock.
The Purchase Price payable, and the number of shares of Preferred Stock
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are granted certain
rights or warrants to subscribe for Preferred Stock or convertible securities
at less than the current market price of the Preferred Stock, or (iii) upon the
distribution to holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights
or warrants (other than those referred to above).
At any time until the close of business on the earlier of the tenth day
following the Stock Acquisition Date or the tenth business day following the
date on which the Board of Directors first declares a person to be an Adverse
Person, the Company may redeem the Rights in whole, but not in part, at a price
of $0.01 per Right. Under certain circumstances set forth in the Rights
Agreement, the decision to redeem shall require the concurrence of a majority
of the continuing directors (as defined in the Rights Agreement).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the
right to vote or to receive dividends.
The Rights Plan has certain anti-takeover effects including making it
prohibitively expensive for a raider to try to control or take over the Company
unilaterally and without negotiation with the Board. Although intended to
preserve for the stockholders the long term value of the Company, the Rights
Plan may make it more difficult for stockholders of the Company to benefit from
certain transactions which are opposed by the incumbent board. See "Risk
Factors - Provisions Relating to Control of the Company."
PREFERRED STOCK
The Board of Directors is empowered, without approval of the
stockholders, to cause shares of its authorized Preferred Stock to be issued in
one or more classes or series, from time to time, with the number of shares of
each class or series and the rights, preferences and limitations of each class
or series to be determined by it. Among the specific matters that may be
determined by the Board of Directors are the rate of dividends, redemption and
conversion prices, terms and amounts payable in the event of liquidation and
voting rights. Shares of Preferred Stock may, in the board's sole
determination, be issued with voting rights greater than one vote per share.
Issuance of shares of Preferred Stock could involve dilution of the equity of
the holders of Common Stock and further restrict the rights of such
stockholders to receive dividends.
On January 6, 1994, the Board of Directors created a new series of
Preferred Stock consisting of 600,000 shares designated as the Series 1994
Convertible Preferred Stock (the "Series 1994 Preferred"). On January 7, 1994,
the Company issued and sold 600,000 shares of the Series 1994 Preferred in a
private placement for $6 million. The Series 1994 Preferred was purchased by
certain investors and investment funds represented or managed by Trust Company
of the West.
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<PAGE> 12
On July 21, 1994, the Board of Directors created a new series of
Preferred Stock consisting of 1,500,000 shares designated as the 1994 Series B
Convertible Preferred Stock (the "1994 Series B Preferred"). On July 22, 1994,
the Company exchanged 1,000,000 shares of the 1994 Series B Preferred and
$10,150,000 in cash to re-acquire certain production payments previously
conveyed by the Company to Enron Reserve Acquisition Corp. ("Enron").
On June 16, 1995, the Board of Directors created a new series of the
Company's preferred stock ($10.00 par value) consisting of 1,500,000 shares
designated as the Series 1995 Convertible Preferred Stock (the "Series 1995
Preferred"). On June 19, 1995, the Company sold 1,500,000 shares in a private
placement for $15 million to certain investors and investment funds represented
or managed by Trust Company of the West.
The Series 1994 Preferred and the Series 1995 Preferred pay quarterly
dividends at the rate of 22 1/2c. on each outstanding share and is payable
when, as and if declared on each March 31, June 30, September 30, and December
31. Dividends on the Series 1994 Preferred and the Series 1995 Preferred are
cumulative from the date of original issue. Unpaid dividends bear interest at
a rate of 9% per annum, compounded quarterly. The Company, at its option, can
pay the dividend in cash or in shares of Common Stock valued at 75%, in the
case of the Series 1994 Preferred, or 80% in the case of the Series 1995
Preferred, of the lower of the Common Stock's 5 day or 30 day average closing
price.
The 1994 Series B Preferred bears quarterly dividends at the rate of 15
5/8c. on each outstanding share and is payable when, as and if declared by the
Board of Directors on April 1, July 1, October 1 and January 1, of each year.
Dividends on the 1994 Series B Preferred are cumulative from the date of
issuance. The Company can elect to pay the dividends in cash or in shares of
stock. If the dividends are to be paid in shares of stock, the holder may
elect to receive either additional shares of the 1994 Series B Preferred
(valued at $10.00 per share) or Common Stock (valued at 85% of the 15 trading
day average closing price) or a combination thereof.
On January 1, 1999 and on each January 1 thereafter, so long as any
shares of the Series 1994 Preferred are outstanding, the Company is obligated
to redeem 120,000 shares of the Series 1994 Preferred at $10.00 per share plus
accrued and unpaid dividends thereon. On June 30, 2000 and on each June 30,
thereafter, so long as any shares of the Series 1995 Preferred are outstanding,
the Company is obligated to redeem 300,000 shares of the Series 1995 Preferred
at $10.00 per share plus accrued and unpaid dividends thereon. The mandatory
redemption price may be paid either in cash or in shares of Common Stock, at
the option of the Company. If the Company elects to pay the mandatory
redemption price in shares of Common Stock, the Common Stock will be valued at
75%, in the case of the Series 1994 Preferred, or 80%, in the case of the
Series 1995 Preferred, of the lower of the Common Stock's 5 day or 30 day
average closing price (immediately prior to the date of redemption). There is
no mandatory redemption required for the 1994 Series B Preferred.
The respective holders of the Series 1994 Preferred, the 1994 Series B
Preferred and the Series 1995 Preferred have the right, at their option and at
any time, to convert all or any part of such shares into shares of Common
Stock. The initial Common Stock conversion prices are $4.00 per share for the
Series 1994 Preferred, $5.00 per share for the 1994 Series B Preferred and
$5.25 per share for the Series 1995 Preferred. If the holders of the Series
1994 Preferred, 1994 Series B Preferred and the Series 1995 Preferred elected
to convert all such shares into Common Stock at the initial conversion prices,
the holders would own approximately 11%, 14% and 19%, respectively, of the
Company's issued and outstanding shares of Common Stock as of July 3, 1995.
The Company has the option to redeem the shares of Series 1994 Preferred and
the Series 1995 Preferred at a price that would provide the holder with a
specified rate of return on their original investment. The Company has the
option to redeem the shares of 1994 Series B Preferred at any time at the rate
of $14.00 per share as increased by 7 1/2% per annum compounded monthly from
the date of issuance.
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<PAGE> 13
In the event of dissolution, liquidation or winding-up of the Company,
the holders of the Series 1994 Preferred, the 1994 Series B Preferred and the
Series 1995 Preferred, after payments of all amounts payable to the holders of
Preferred Stock senior to such series of Preferred Stock, to receive out of the
assets remaining $10.00 per share, together with all dividends thereon accrued
or in arrears, whether or not earned or declared, before any payment is made or
assets set apart for payment to the holders of the Common Stock.
The holders of the Series 1994 Preferred, the 1994 Series B Preferred
and the Series 1995 Preferred are each entitled to vote with the holders of
Common Stock on all matters submitted for a vote of the holders of shares of
Common Stock on an "as converted" basis. Upon the occurrence of an event of
noncompliance with the terms of the Series 1994 Preferred, the 1994 Series B
Preferred and/or the Series 1995 Preferred as set forth therein, the holders of
each such series of Preferred Stock have the right (for so long as such event
of noncompliance continues) to elect two additional directors to the Board of
Directors of the Company. Accordingly, up to six additional directors could be
elected pursuant to the terms of the Series 1994 Preferred, the 1994 Series B
Preferred and the Series 1995 Preferred.
The Company may not, so long as any of the Series 1994 Preferred, the
1994 Series B Preferred or the Series 1995 Preferred is outstanding, alter any
of the rights, preferences or powers of the Series 1994 Preferred, 1994 Series
B Preferred and the Series 1995 Preferred or issue any shares of stock ranking
on a parity with or senior to each series of outstanding Preferred Stock unless
the requisite number of the holders have consented thereto. Holders of each
such series of Preferred Stock also have the right to approve (1) a merger of
the Company where the Company is not the surviving corporation; (2) the
issuance of more than 20% of the Company's Common Stock in connection with a
merger or acquisition; (3) the sale or disposition of substantially all of the
Company's assets; (4) payment of any dividend or distribution, on or for the
redemption of Common Stock of the Company in excess of $50,000 a year; or (5)
an increase in the number of shares of Common Stock issuable under the
Company's 1991 Long-term Incentive Plan.
In addition to the Series 1994 Preferred, the 1994 Series B Preferred
and the Series 1995 Preferred and in connection with the Stockholders' Rights
Plan as described under "Description of Capital Stock - Stockholders' Rights
Plan", the Company has designated and reserved for issuance 150,000 shares of
Preferred Stock, $10.00 par value per share, which, under the Rights Plan, may
be issued in units consisting of one one-hundredth of a share (each, a "Unit").
Each Unit, if and when issued, will be entitled to receive a cumulative
quarterly cash dividend equal to the greater of $0.375 or the amount of the
dividend or distribution paid per share of Common Stock for the applicable
quarter. Such Preferred Stock dividend rights are senior to the rights of
holders of Common Stock to receive any dividend or distribution. Each Unit, if
and when issued, will be entitled to one vote, voting together with the Common
Stock, on all matters submitted to the holders of the Common Stock. Upon
liquidation, dissolution or winding up of the Company, each Unit issued will be
entitled to the greater of $15.00 plus accrued but unpaid dividends or the
amount to be distributed in respect of each share of Common Stock, with such
Preferred Stock liquidation rights being senior to those of the holders of the
Common Stock. The Company has the option to redeem, in whole or in part, the
Preferred Stock, if issued, at any time for a per Unit price equal to the
greater of $15.00 or the current market price per share of Common Stock at the
time of redemption, in each case together with accrued but unpaid dividends.
-12-
<PAGE> 14
SELLING SECURITY HOLDERS
The following table sets forth certain information as of July 24, 1995
with respect to the Common Stock beneficially owned by the Selling Security
Holders.
<TABLE>
<CAPTION>
Number of Before After
Name and Address of Shares Number Offering Offering
Selling Security Beneficially of Shares Percentage of Percentage of
Holder Owned Offered (4) Common Stock Common Stock (1)
- ------------------------------------ ---------------- -------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Trust Company of the West, 279,267(2)(3) 910 2.17% 2.17%
as Trustee of the TCW Debt and
Royalty Fund IVA
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Trust Company of the West, 746,100(2)(3) 2,432 5.60% 5.59%
as Custodial Agent for TCW Debt
and Royalty Fund IVB
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Trust Company of the West, 216,451 (3) 1,041 1.69% 1.68%
as Custodial Agent for TCW Debt
and Royalty Fund IVC
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Harris Trust and Saving Bank, 186,172(2)(3) 607 1.46% 1.45%
as Trustee for Delta Master Trust
865 South Figueroa, Suite 1800
Los Angeles, California 90017
The Chase Manhattan Bank 465,440(2)(3) 1,517 3.57% 3.56%
as Custodian for
Leland Stanford Junior University
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Trust Company of the West, 232,727(2)(3) 759 1.82% 1.81%
as Custodian for Columbia University
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Harris Trust and Savings Bank, 349,076(2)(3) 1,138 2.70% 2.69%
as Custodian for
Searle Trusts Limited Partnership X
865 South Figueroa, Suite 1800
Los Angeles, California 90017
</TABLE>
-13-
<PAGE> 15
<TABLE>
<CAPTION>
Number of Before After
Name and Address of Shares Number Offering Offering
Selling Security Beneficially of Shares Percentage of Percentage of
Holder Owned Offered (4) Common Stock Common Stock (1)
- ----------------------------------- -------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Harris Trust and Savings Bank, 139,633(2)(3) 455 1.10% 1.09%
as Custodian for John G. Searle
Charitable Trusts Partnership
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Trust Company of the West, as 71,429 (3) 343 .56% .56%
Custodian for The City and
County Employee's Retirement
System of San Francisco
865 South Figueroa, Suite 1800
Los Angeles, California 90017
Trust Company of the West, as 1,729,315(2)(3) 4,602 12.11% 12.08%
Investment Manager and Custodian for
General Mills, Inc.
865 South Figueroa, Suite 1800
Los Angeles, California 90017
---------- --------
4,415,610 13,804
========== ========
</TABLE>
__________________________
(1) Assumes the sale by Selling Security Holders of all shares offered
hereby.
(2) Includes shares issuable pursuant to conversion of the Series 1994
Preferred.
(3) Includes shares issuable pursuant to conversion of the Series 1995
Preferred.
(4) Represents shares issued in lieu of the payment of cash dividends on the
Series 1995 Preferred.
TRANSACTIONS WITH SELLING SECURITY HOLDERS
On January 7, 1994, the Company sold 600,000 shares of its Series 1994
Preferred in a private placement for $6 million to certain investors and
investment funds represented or managed by Trust Company of the West.
On June 19, 1995, the Company sold 1,500,000 shares of its Series 1995
Preferred in a private placement for $15 million to certain investors and
investment funds represented or managed by Trust Company of the West, including
certain holders of the Series 1994 Preferred.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby are being sold for the
respective account of each Selling Security Holder. The shares may be sold
from time to time by each Selling Security Holder, or by its pledges, donees,
transferees or other successors in interest. Such sales may be made on the
Nasdaq National Market, or otherwise, at prices and at terms then prevailing or
at prices related to the then current market price, or in negotiated
transactions. The shares may be sold by one or more of the following: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
shares as
-14-
<PAGE> 16
agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal
and resale by such broker or dealer for its account pursuant to this
Prospectus; and (c) ordinary brokerage transactions and transactions in which
the broker solicits purchasers. In effecting sales, brokers or dealers engaged
by the Selling Security Holders may arrange for other brokers or dealers to
participate. Brokers or dealers will receive commissions or discounts from the
Selling Security Holders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or dealers
may be deemed to be "underwriters" within the meaning of the Securities Act of
1933, as amended, in connection with such sales. In addition, any securities
covered by this Prospectus which qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates the following documents into this
Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. The Company's Proxy Statement dated April 25, 1995 in
connection with the Annual Meeting of Stockholders of the
Company held on May 23, 1995.
3. The Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1995.
4. The Company's Current Report on Form 8-K dated May 16, 1995.
5. The Company's Current Report on Form 8-K dated June 19, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock offered hereby
shall be deemed to be incorporated by reference into this Prospectus.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon
for the Company by Locke Purnell Rain Harrell (A Professional Corporation),
Dallas, Texas.
EXPERTS
The consolidated financial statements and schedules of the Company
incorporated by reference in this Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included therein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
-15-
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses of the offering are estimated (except as indicated) as to
be as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee (actual) . . . . $ 1,336
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . 2,500
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . . . 1,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,000
=========
</TABLE>
All of the above expenses will be borne by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of the Nevada General Corporation Law permits a
corporation to indemnify any person who was, or is, or is threatened to be made
a party in a completed, pending or threatened proceeding, whether civil,
criminal, administrative or investigative (except an action by or in the right
of the corporation), by reason of being or having been an officer, director,
employee or agent of the corporation or serving in certain capacities at the
request of the corporation. Indemnification may include attorneys' fees,
judgments, fines and amounts paid in settlement. The person to be indemnified
must have acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to
any criminal action, such person must have had no reasonable cause to believe
his conduct was unlawful.
With respect to actions by or in the right of the corporation,
indemnification may not be made for any claim, issue or matter as to which such
a person has been finally adjudged by a court of competent jurisdiction to be
liable to the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action was brought or
other court of competent jurisdiction determines upon application that in view
of all circumstances the person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
Unless indemnification is ordered by a court, the determination to pay
indemnification must be made by the stockholders, by a majority vote of a
quorum of the Board of Directors who were not parties to the action, suit or
proceeding, or in certain circumstances by independent legal counsel in a
written opinion. Section 78.751 permits the Articles of Incorporation or
Bylaws to provide for payment to an indemnified person of the expenses of
defending an action as incurred upon receipt of an undertaking to repay the
amount if it is ultimately determined by a court of competent jurisdiction that
the person is not entitled to indemnification.
Section 78.751 also provides that to the extent a director, officer,
employee or agent has been successful on the merits or otherwise in the defense
of any such action, he must be indemnified by the corporation against expenses,
including attorneys' fees, actually and reasonably incurred in connection with
the defense.
Article VI, "Indemnification of Directors, Officers, Employees and
Agents", of the Registrant's Bylaws provides as follows with respect to
indemnification of the Registrant's directors, officers, employees and agents:
II-1
<PAGE> 18
Section 1. To the fullest extent allowed by Nevada law, any director of
the Corporation shall not be liable to the corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article VI does not eliminate or limit the liability
of a director for:
(a) an act or omission which involves intentional misconduct,
fraud or a knowing violation of law; or
(b) the payment of dividends in violation of N.R.S. 78.300.
Section 2. The Corporation shall indemnify each director, officer,
employee and agent, now or hereafter serving the Corporation, each former
director, officer, employee and agent, and each person who may now or hereafter
serve or who may have heretofore served at the Corporation's request as a
director, officer, employee or agent of another corporation or other business
enterprise, and the respective heirs, executors, administrators and personal
representatives of each of them against all expenses actually and reasonably
incurred by, or imposed upon, him in connection with the defense of any claim,
action, suit or proceeding, civil or criminal, against him by reason of his
being or having been such director, officer, employee or agent, except in
relation to such matters as to which he shall be adjudged by a court of
competent jurisdiction after exhaustion of all appeals therefrom in such
action, suit or proceeding to be liable for gross negligence or willful
misconduct in the performance of duty. For purposes hereof, the term
"expenses" shall include but not be limited to all expenses, costs, attorneys'
fees, judgements (including adjudications other than on the merits), fines,
penalties, arbitration awards, costs of arbitration and sums paid out and
liabilities actually and reasonably incurred or imposed in connection with any
suit, claim, action or proceeding, and any settlement or compromise thereof
approved by the Board of Directors as being in the best interests of the
Corporation. However, in any case in which there is no disinterested majority
of the Board of Directors available, the indemnification shall be made: (1)
only if the Corporation shall be advised in writing by counsel that in the
opinion of counsel (a) such officer, director, employee or agent was not
adjudged or found liable for gross negligence or willful misconduct in the
performance of duty as such director, officer, employee or agent or the
indemnification provided is only in connection with such matters as to which
the person to be indemnified was not so liable, and in the case of settlement
or compromise, the same is in the best interests of the Corporation; and (b)
indemnification under the circumstances is lawful and falls within the
provisions of these Bylaws; and (2) only in such amount as counsel shall advise
the Corporation in writing is, in his opinion, proper. In making or refusing
to make any payment under this or any other provision of these Bylaws, the
Corporation, its directors, officers, employees and agents shall be fully
protected if they rely upon the written opinion of counsel selected by, or in
the manner designated by, the Board of Directors.
Section 3. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in these Bylaws.
Section 4. The Corporation may indemnify each person, though he is not
or was not a director, officer, employee or agent of the Corporation, who
served at the request of the Corporation on a committee created by the Board of
Directors to consider and report to it in respect of any matter. Any such
indemnification may be made under the provisions hereof and shall be subject to
the limitations hereof, except that (as indicated) any such committee member
need not be nor have been a director, officer, employee or agent of the
Corporation.
II-2
<PAGE> 19
Section 5. The provisions hereof shall be applicable to actions, suits
or proceedings (including appeals) commenced after the adoption hereof, whether
arising from acts or omissions to act occurring before or after the adoption
hereof.
Section 6. The indemnification provisions herein provided shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, or by law or statute, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 7. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, and persons described in Section 4 of this
Article above, against any liability asserted against him and incurred by him
in any such capacity or arising out of his status, as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of these Bylaws.
ITEM 16. EXHIBITS.
Exhibit No. Description
- ----------- ---------------------------------------------------------------
4.1 Specimen Common Stock Certificate (incorporated herein by
reference to Exhibit 4.1 to Registrant's Registration
Statement on Form S-3 dated November 30, 1992).
4.2 Rights Agreement dated as of December 10, 1990, by and between
the Registrant and Society National Bank, as Rights Agent
(incorporated herein by reference to Exhibit 1 to Registrant's
Registration Statement on Form 8-A, dated December 14, 1990).
5.1 * Opinion of Locke Purnell Rain Harrell (A Professional
Corporation).
23.1 Consent of Counsel (Included in Exhibit 5.1).
23.2 * Consent of Independent Public Accountants.
24.1 Power of Attorney (Included on the Signature Page of the
Prospectus).
__________________________________
* Filed herewith.
II-3
<PAGE> 20
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Company pursuant
to Section 13 or Section 15 (d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post- effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the Company's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
II-4
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on July 24, 1995.
COMSTOCK RESOURCES, INC.
By: /s/ M. JAY ALLISON
-------------------------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission and any state or other securities authority,
granting unto each said attorney-in-fact and agent full power and authority to
do and perform each and every act in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or either of them or their or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ M. JAY ALLISON President, Chief Executive Officer, and July 24, 1995
- ------------------------------------- Director (Principal Executive
M. Jay Allison Officer)
/s/ ROLAND O. BURNS Senior Vice President, Chief Financial July 24, 1995
- ------------------------------------- Officer, Secretary, and Treasurer
Roland O. Burns (Principal Financial and Accounting
Officer)
/s/ HAROLD R. LOGAN Chairman of the Board of Directors July 24, 1995
- -------------------------------------
Harold R. Logan
/s/ RICHARD S. HICKOK Director July 24, 1995
- -------------------------------------
Richard S. Hickok
/s/ FRANKLIN B. LEONARD Director July 24, 1995
- -------------------------------------
Franklin B. Leonard
/s/ CECIL E. MARTIN, JR. Director July 24, 1995
- -------------------------------------
Cecil E. Martin, Jr.
/s/ HERBERT C. PELL, III Director July 24, 1995
- -------------------------------------
Herbert C. Pell, III
</TABLE>
II-5
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ----------- ----------------------------------------------------------------------
<S> <C>
4.1 Specimen Common Stock Certificate (incorporated herein by reference
to Exhibit 4.1 to Registration Statement on Form S-3 dated October
30, 1992).
4.2 Rights Agreement dated as of December 10, 1990, by and between the
Registrant and Society National Bank, as Rights Agent (incorporated
herein by reference to Exhibit 1 to Registrant's Registration
Statement on Form 8-A, dated December 14, 1990).
5.1 * Opinion of Locke Purnell Rain Harrell (A Professional Corporation).
23.1 Consent of Counsel (Included in Exhibit 5.1).
23.2 * Consent of Independent Public Accountants.
24.1 Power of Attorney (Included on the Signature Page of the Propectus).
</TABLE>
_______________________________
* Filed herewith.
<PAGE> 1
EXHIBIT NO. 5.1
<PAGE> 2
(214) 740-8553
July 24, 1995
Comstock Resources, Inc.
5005 LBJ Freeway
Suite 1000
Dallas, Texas 75244
Re: Registration of 925,000 shares of Common Stock pursuant to a
Registration Statement on Form S-3
Gentlemen:
We have acted as counsel for Comstock Resources, Inc., a Nevada
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement on Form S-3 (the "Registration Statement"), of 925,000
shares of Common Stock, $.50 par value, of the Company (the "Common Stock")
previously issued or to be issued in the future to certain selling shareholders
(the "Selling Shareholders") identified in the Registration Statement.
We have made such inquiries and examined such documents as we have
considered necessary or appropriate for the purpose of giving the opinion
hereinafter set forth. We have assumed the genuineness and authenticity of all
signatures on all original documents, the authenticity of all documents
submitted to us as originals, the conformity to originals of all documents
submitted to us as copies and the due authorization, execution, delivery or
recordation of all documents where due authorization, execution or recordation
are prerequisites to the effectiveness thereof.
Based upon the foregoing, having regard for such legal considerations as
we deem relevant, and assuming, with respect to the shares of Common Stock
hereafter to be issued to the Selling Shareholders (i) the legal existence of
the Company and the availability of a sufficient number of shares of Common
Stock authorized by the Company's Articles of Incorporation then in effect, and
(ii) no change occurs in applicable law or the pertinent facts, we are of the
opinion that the 925,000 shares of Common Stock that have been or may hereafter
be issued to and sold by the Selling Shareholders, as described in the
Registration Statement, have been, or to the extent applicable, will, upon
declaration, issuance and delivery as contemplated by the Registration
Statement in lieu of the payment of cash dividends declared on the Company's
Series 1995 Convertible Preferred Stock, be duly authorized and legally issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. By so
consenting, we do not thereby admit that our firm's consent is required by
Section 7 of the Securities Act.
Very truly yours,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By: /s/ JACK E. JACOBSEN
--------------------------------
Jack E. Jacobsen
<PAGE> 1
EXHIBIT NO. 23.2
<PAGE> 2
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated March
24, 1995, included in Comstock Resources, Inc.'s Form 10-K for the year ended
December 31, 1994, and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas
July 24, 1995
