Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement.
[ ] Confidential,for use of the Commission only(as permitted by Rule
14a-6(e)(2)).
[ ] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12.
COMSTOCK RESOURCES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction: 5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offering fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of the filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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COMSTOCK RESOURCES, INC.
5005 LBJ Freeway
Suite 1000
Dallas, Texas 75244
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 23, 1999
To the Stockholders of Comstock Resources, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders of Comstock
Resources, Inc. will be held at the Westin Hotel at the Galleria, 13340 Dallas
Parkway, Dallas, Texas, on June 23, 1999 at 4:00 p.m., Dallas time, for the
following purposes:
1. To elect two Class B directors to serve terms of three years and one
Class C director to serve a term of one year and in each case until
their successors are duly elected and qualified;
2. To approve the 1999 Long-term Incentive Plan;
3. To approve the issuance of 1,052,000 shares of Series A 1999
Convertible Preferred Stock, par value $10.00 per share, and shares of
Common Stock related thereto.
4. To ratify the appointment of Arthur Andersen LLP as independent public
accountants for 1999; and
5. To transact such other business as may properly come before the meeting
and any adjournments thereof.
The Board of Directors has fixed the close of business on April 29, 1999 as
the record date for determining the stockholders entitled to notice and to vote
at the meeting or any adjournment thereof. A list of such stockholders will be
open to examination of any stockholder at the Company's offices at 5005 LBJ
Freeway, Suite 1000, Dallas, Texas, 75244, during ordinary business hours, for a
period of at least ten days prior to the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/S/ROLAND O. BURNS
------------------
ROLAND O. BURNS
SECRETARY
Dallas, Texas
April 30, 1999
IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE MARK, SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE.
NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE
MEETING AND WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY.
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COMSTOCK RESOURCES, INC.
5005 LBJ Freeway
Suite 1000
Dallas, Texas 75244
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 23, 1999
The Board of Directors of Comstock Resources, Inc., a Nevada corporation
(the "Company"), hereby solicits your proxy in the form enclosed for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the Westin
Hotel at the Galleria, 13340 Dallas Parkway, Dallas, Texas at 4:00 P.M., Dallas
time, on June 23, 1999, or at any adjournment thereof. The expenses of this
solicitation will be borne by the Company. Proxies may be solicited by mail,
personal interview, telegram and telephone by directors, officers, employees and
agents of the Company without compensation.
This Proxy Statement and the accompanying form of proxy are being mailed to
stockholders on or about April 30, 1999. The principal executive office of the
Company is located at 5005 LBJ Freeway, Suite 1000, Dallas, Texas 75244,
telephone (972) 701-2000.
Only stockholders of record at the close of business on April 29, 1999 are
entitled to notice and to vote at the Annual Meeting. On that date, there were
_________ shares of the Company's common stock, $.50 par value (the "Common
Stock"), outstanding. Included in the total outstanding shares are _______
shares reserved for conversion of shares which have not been tendered for
exchange subsequent to the Company's reincorporation in Nevada in 1981. Such
shares are not eligible to vote at the Annual Meeting. Accordingly, the
aggregate shares entitled to vote at the meeting are _________. Each share is
entitled to one vote.
You are encouraged to attend the Annual Meeting and vote in person.
Execution of the enclosed proxy will not in any way affect your right to do so.
A stockholder may revoke a proxy at any time prior to the voting thereof by
filing with the Secretary of the Company, prior to the stockholder vote, a
written revocation or duly executed form of proxy bearing a later date, or by
voting in person at the Annual Meeting.
Attendance at the Annual Meeting, either in person or by proxy, by the
record holders of a majority of the outstanding shares of the Common Stock
constitutes a quorum. Cumulative voting is not permitted. With regard to the
election of directors, votes may be cast in favor or withheld; votes that are
withheld will be excluded entirely from the vote and will have no effect, except
as it affects the total number of votes a nominee receives. With regard to
approval of the 1999 Long-term Incentive Plan and the issuance of the Series A
1999 Convertible Preferred Stock, votes may be cast in favor, against or
abstain. Abstentions may be specified on all proposals (but not on the election
of directors) and will be counted as present for purposes of the item on which
the abstention is noted. Under the rules of the New York Stock Exchange, Inc.
("NYSE"), brokers who hold shares in street name for customers have the
authority to vote on certain items when they have not received instructions from
beneficial owners. Brokers that do not receive instructions are entitled to vote
on the election of directors, the approval of the 1999 Long-term Incentive Plan,
the issuance of the Series A 1999 Convertible Preferred Stock and the
ratification of accountants. Under applicable Nevada law, a broker non-vote will
have no effect on the outcome of the election of directors, approval of the 1999
Long-term Incentive Plan, the issuance of the Series A 1999 Convertible
Preferred Stock or the ratification of accountants.
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SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL HOLDERS
The following table sets forth certain information, as of June 29, 1999,
with respect to the beneficial ownership of Common Stock by (i) each executive
officer of the Company named in the Summary Compensation Table set forth in this
Proxy Statement, (ii) each director and each nominee for director of the
Company, (iii) all directors and executive officers of the Company as a group
and (iv) each person known by the Company to be the beneficial owner of 5% or
more of the Common Stock.
Shares Beneficially
Owned
-----------------------
Name(1) Number(2) Percent
------- --------- -------
M. Jay Allison 1,567,204 6.1%
President, Chief Executive Officer and
Chairman of the Board of Directors
Roland O. Burns 392,750 1.6%
Senior Vice President, Chief Financial
Officer, Secretary and Treasurer
Richard S. Hickok 130,710 (3) *
Director
Franklin B. Leonard 163,429 (4) *
Director
Cecil E. Martin, Jr. 125,429 (5) *
Director
Richard G. Powers 76,500 *
Vice President of Land
David W. Sledge 55,632 *
Director
Michael W. Taylor 66,500 *
Vice President of Corporate Development
All Executive Officers and Directors
as a Group (11 Persons) 2,679,404 10.0%
Compression, Inc. 3,101,400 (6) 12.7%
Two West Second Street
Tulsa, Oklahoma 74103
Prudential Insurance Company of America 2,467,300 (7) 10.1%
751 Broad Street
Newark, New Jersey 07102
* Indicates less than one percent.
(1) Unless otherwise noted, the address of each beneficial owner is c/o
Comstock Resources, Inc., 5005 LBJ Freeway, Suite 1000, Dallas, Texas
75244.
(2) Includes shares issuable pursuant to stock options which are presently
exercisable or exercisable within 60 days in the following amounts:
Mr. Allison-1,465,000 shares; Mr. Burns-357,500 shares; Mr. Hickok-76,500
shares; Mr. Leonard-75,000 shares; Mr. Martin -50,500 shares; Mr.
Powers-76,500 shares; Mr. Sledge-40,000 shares; Mr. Taylor -66,500 shares;
and all executive officers and directors - 2,332,875.
(3) Includes 32,572 shares held by a corporation owned 90% by Mr. Hickok's wife
and 10% by Mr. Hickok's children.
(4) Includes 45,771 shares held by a trust for the benefit of Mr. Leonard's
wife.
(5) Includes options to purchase 42,875 shares held by Mr. Martin's wife.
(6) Ownership based on Schedule 13D filing dated October 19, 1998.
(7) Ownership based on Schedule 13G filing dated January 26, 1999, 1,213,900
shares of the reported ownership have shared voting and investment power.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of five members
comprised of three classes (Class A, B, and C). Directors are elected in classes
to serve terms of three years. The Class B directors, whose term expires at the
Annual Meeting, are M. Jay Allison and David W. Sledge. The Class C director,
whose term expires in 2000, is Richard S. Hickok. The Class A directors, whose
term expires in 2001, are Franklin B. Leonard and Cecil E. Martin, Jr. At the
Annual Meeting, two Class B directors will be elected, each for a term of three
years beginning in 1999 and one Class C director will be elected to fill a
vacancy on the Board of Directors, for a term of one year beginning in 1999, and
in each case until their successors are duly elected and qualified. The Board of
Directors has nominated M. Jay Allison and David W. Sledge to serve as the Class
B directors and Roland O. Burns to fill the vacancy of the Class C director.
Further information with respect to the nominees and the other directors
continuing in office is set forth below.
Nominees for Three-Year Terms
M. JAY ALLISON, (43) President, Chief Executive Officer and Chairman of the
Board of Directors
Mr. Allison has been a director of the Company since 1987, and President
and Chief Executive Officer of the Company since 1988. Mr. Allison was elected
Chairman of the Board of Directors in 1997. From 1987 to 1988, Mr. Allison
served as Vice President and Secretary of the Company. From 1981 to 1987, he was
a practicing oil and gas attorney with the firm of Lynch, Chappell & Alsup in
Midland, Texas. In 1983, Mr. Allison co-founded a private independent oil and
gas company, Midwood Petroleum, Inc., which was active in the acquisition and
development of oil and gas properties from 1983 to 1987. He received B.B.A.,
M.S. and J.D. degrees from Baylor University in 1978, 1980 and 1981,
respectively.
DAVID W. SLEDGE, (42) Director
Mr. Sledge was elected to the Board of Directors of the Company in 1996.
Mr. Sledge served as President of Gene Sledge Drilling Corporation, a privately
held contract drilling company based in Midland, Texas until its sale in October
1996. Mr. Sledge served Gene Sledge Drilling Corporation in various capacities
from 1979 to 1996. Mr. Sledge is a past director of the International
Association of Drilling Contractors and is a past chairman of the Permian Basin
chapter of this association. He received a B.B.A. degree from Baylor University
in 1979.
Nominee for One-Year Term
ROLAND O. BURNS, (39) Senior Vice President, Chief Financial officer, Secretary
and Treasurer
Mr. Burns has been Senior Vice President of the Company since 1994, Chief
Financial Officer and Treasurer since 1990 and Secretary since 1991. From 1982
to 1989, he was employed by the public accounting firm, Arthur Andersen, LLP.
During his tenure with Arthur Andersen LLP., Mr. Burns worked primarily in the
firm's oil and gas audit practice. Mr. Burns received B.A. and M.A. degrees from
the University of Mississippi in 1982 and is a Certified Public Accountant.
3
<PAGE>
Directors Continuing in Office
RICHARD S. HICKOK, (73) Director
Mr. Hickok has been a director of the Company since 1987. From 1948 to
1983, he was employed by the international accounting firm of Main Hurdman where
he retired as Chairman. From 1978 to 1980, Mr. Hickok served as a Trustee of the
Financial Accounting Foundation and has extensive involvement serving on various
committees of the American Institute of Certified Public Accountants. Mr. Hickok
holds a B.S. degree from the Wharton School of the University of Pennsylvania.
FRANKLIN B. LEONARD, (71) Director
Mr. Leonard has been a director of the Company since 1960. From 1961 to
1994, Mr. Leonard served as President of Crossley Surveys, Inc., a New York
based company which conducted statistical surveys. Mr. Leonard's family's
involvement in the Company spans four generations dating back to the 1880's when
Mr. Leonard's great grandfather was a significant shareholder of the Company.
Mr. Leonard holds a B.S. degree from Yale University.
CECIL E. MARTIN, JR., (57) Director
Mr. Martin has been a director of the Company since 1988. From 1973 to 1991
he served as Chairman of a public accounting firm in Richmond, Virginia. Mr.
Martin also serves as a director for CareerShop.com. Mr. Martin holds a B.B.A.
degree from Old Dominion University and is a Certified Public Accountant.
There are no family relationships among any of the officers or directors of
the Company.
Meetings of the Board of Directors and Committees
During 1998, the Board of Directors held five meetings, and each Director
participated in all of the meetings. The Company's Executive Committee is
authorized to act and acts during the intervals between the meetings of the
Board of Directors and has all of the powers and authority of the Board of
Directors in the management of the business and affairs of the Company, except
the power to declare dividends; to adopt, amend or repeal bylaws; to adopt an
agreement of merger or consolidation; to sell substantially all of the Company's
assets; to recommend a dissolution of the Company to the stockholders; or to
authorize the issuance of stock of the Company. The Executive Committee consists
of M. Jay Allison as Chairman, and Cecil E. Martin, Jr. and Richard S. Hickok as
members. The Executive Committee did not meet in 1998.
The Company's Audit Committee has responsibility for recommending retention
or change of the Company's independent auditors, reviewing with management and
the independent auditors the Company's financial statements, accounting and
financial policies and practices, audit scope and adequacy of the Company's
internal control structure. The Audit Committee consists of Richard S. Hickok as
Chairman, and Franklin B. Leonard and David W. Sledge as members. The Audit
Committee held two meetings during 1998 at which all members were present. In
addition, the Company's Senior Vice President, as well as the Company's
independent public accountants, consult regularly with the Audit Committee on an
informal basis to discuss various accounting related issues.
4
<PAGE>
The Company's Compensation Committee reviews and recommends to the Board of
Directors the compensation and promotion of officers of the Company, the terms
of any proposed employee benefit arrangements and the making of awards under
such arrangements. The Compensation Committee consists of Cecil E. Martin, Jr.,
as Chairman, Franklin B. Leonard and David W. Sledge as members. The
Compensation Committee held two meetings during 1998 at which all members were
present.
The Company has not established a formal nominating committee and
presently the full Board of Directors considers director nominations.
Compensation of Directors
The Company pays annual fees to directors who are not employees of the
Company and reimburses such directors for expenses in attending meetings. In
1998, the Company paid an annual fee of $30,000 to directors who chair
committees, and an annual fee of $25,000 to the remaining non-employee
directors. Beginning in 1999, the annual fee paid to directors who chair
committees was increased to $35,000 and the annual fee to the remaining
directors was increased to $30,000. The Company also pays Mr. Martin for
additional services provided to the Company under a consulting agreement which
provides for an annual payment of $18,000, which was increased to $25,000
beginning in 1999. Under a plan established by the Board of Directors, each
director can make an annual election to receive his director and consulting fees
in cash or in the equivalent number of shares of Common Stock at the then
current market price of Common Stock. In January 1998, the Company issued 10,089
shares of Common Stock, at its then current market price of $12.6875 per share,
to the non-employee directors, in full payment of director fees and amounts due
under the consulting agreement aggregating $128,000. In October 1998, the
Company issued 29,589 shares of Common Stock, at its then current market price
of $4.5625 per share, to the non-employee directors, in full payment of 1999
director fees and amounts due under the consulting agreement aggregating
$135,000.
Under the Company's 1991 Long-term Incentive Plan (the "1991 Plan"), each
non-employee director receives on the date of initial election or appointment to
the Board of Directors options to acquire 10,000 shares of Common Stock. In
addition, each non-employee director receives at each annual meeting of
stockholders, so long as such person remains a director, options to acquire
10,000 shares of Common Stock. The exercise price equals the fair market value
on the date of grant.
Under Nevada law, directors will be elected by a plurality vote and the
persons receiving the greatest number of votes will be elected as the Class B
Directors and the Class C Director.
Shares represented by proxies will be voted FOR the election of the Board
of Directors' nominees unless otherwise indicated on the proxy. If at the time
of the meeting, any of the nominees has become unavailable for any reason, the
persons entitled to vote the proxy shall vote for such substitute nominee or
nominees as they, in their discretion, may determine. The Company knows of no
reason why any nominee would be unavailable to serve.
5
<PAGE>
PROPOSAL NO. 2
APPROVE THE COMSTOCK RESOURCES, INC. 1999 LONG-TERM INCENTIVE PLAN
General
On March 25, 1999, the Board of Directors of the Company approved
submission of the 1999 Long- term Incentive Plan (the "1999 Plan") to the
stockholders for approval. The 1999 Plan is designed to replace the 1991 Plan.
The 1999 Plan is similar to the 1991 Plan in that it provides for the granting
of options, restricted shares of Common Stock and performance units to key
employees and non-employee directors of the Company. The 1999 Plan will become
effective upon stockholder approval, and no awards will be made under the 1999
Plan prior to stockholder approval. However, the remaining shares available for
award under the 1991 Plan are available for awards prior to stockholder approval
of the 1999 Plan. The full text of the 1999 Plan is attached to this Proxy
Statement as Appendix A, and the following description is qualified in its
entirety by reference to Appendix A.
Purpose of the 1999 Plan
The purpose of the 1999 Plan is to attract, retain and motivate key
participating employees and to attract and retain well-qualified members of the
Board of Directors through the use of incentives based upon the value of Common
Stock. Awards under the 1999 Plan are determined by the Compensation Committee
of the Board of Directors (the "Committee"), and may be made to key executives,
managerial employees and non-employee directors of the Company or one or more of
its subsidiaries.
Summary of the 1999 Plan
Administration of Plan
The 1999 Plan is administered by the Committee, each member of which must
be a non-employee director, as defined by Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended. Subject to the provisions of the 1999 Plan, the Committee has authority
to select employees to receive awards, to determine the time or times of
receipt, to determine the types of awards and the number of shares covered by
the awards, to establish the terms, conditions and provisions of such awards, to
determine the number and value of performance units awarded and earned and to
cancel or suspend awards. In making such award determinations, the Committee may
take into account the nature of services rendered by the employee, his or her
present and potential contribution to the Company's success and such other
factors as the Committee deems relevant. The Committee is authorized to
interpret the 1999 Plan, to establish, amend and rescind any rules and
regulations relating to the 1999 Plan, to determine the terms and provisions of
any agreements made pursuant to the 1999 Plan and to make all other
determinations that may be necessary or advisable for the administration of the
1999 Plan.
Eligibility Under the 1999 Plan
Key executives selected by the Committee would be eligible for awards, and
non-employee directors would be awarded non-qualified stock options for 10,000
shares per year, incident to each annual meeting of stockholders.
Duration of Plan
The 1999 Plan has an unlimited term. There is, however, a maximum 10-year
term during which awards of incentive stock options may be made under the 1999
Plan.
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Types of Awards
Awards under the 1999 Plan may be in the form of stock options (including
incentive stock options that meet the requirements of Section 422 of the
Internal Revenue Code and non-qualified options), restricted stock and
performance units.
Authorized Shares Available for Awards Under the 1999 Plan
The 1999 Plan authorizes awards to key employees of 1,200,000 shares of
Common Stock. An additional 1% of the Company's then outstanding Common Stock
will become available as of the beginning of each fiscal year commencing January
1, 2000 for awards of non-qualified stock options under the 1999 Plan. In
addition, the shares of Common Stock remaining available for grant (currently
58,630 shares) under the 1991 Plan, or that become available upon the lapse or
expiration of prior grants under the 1991 Plan or the 1999 Plan, will be
authorized for future grant under the 1999 Plan.
The 1999 Plan also authorizes 225,000 shares of Common Stock for awards to
non-employee directors, plus an additional 50,000 shares of Common Stock as of
the beginning of each fiscal year commencing January 1, 2000. In addition, the
shares of Common Stock under the 1991 Plan that become available upon the lapse
or expiration of prior grants under the 1991 Plan or the 1999 Plan will be
authorized for future grant under the 1999 Plan.
Stock Options
Stock options may be awarded under the 1999 Plan with an exercise price of
not less than one hundred percent (100%) of the market value of the Common Stock
on the date of the award or, if greater, the par value of the Common Stock. The
1999 Plan authorizes the award of both non-qualified stock options and incentive
stock options. Only employees of the Company are eligible to receive awards of
incentive stock options. The aggregate value (determined at the time of the
award) of the Common Stock with respect to which incentive stock options are
exercisable for the first time by any employee during any calendar year may not
exceed $100,000. The term of incentive stock options cannot exceed ten (10)
years.
Cashless Exercise Procedures. In addition to allowing an optionee to pay
cash to exercise options, or deliver stock certificates for previously-owned
shares of Company stock, the 1999 Plan will permit an optionee to use cashless
exercise procedures. These include broker-assisted cashless exercises (selling a
portion of the option shares to pay the exercise price and withholding taxes),
and an attestation procedure in a stock-for-stock cashless exercise, avoiding
the delays in requiring physical delivery of stock certificates.
Limited Transferability of Options. The 1999 Plan permits recipients of
non-qualified stock options (including non-employee directors) to transfer their
vested options by gift to family members (or trusts or partnerships of family
members). After transfer of an option, the optionee remains taxable upon the
exercise of the option, and the Company retains the right to claim a deduction
for compensation upon the exercise of the option.
Elections to Defer Recognition of Income. The 1999 Plan permits recipients
of non-qualified stock options to elect a voluntary deferral of their receipt of
option gain shares in a "stock-for-stock" exercise of an option.
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Non-employee Director Option Awards. The 1999 Plan provides that each
non-employee director automatically receives the following: (i) on the date of
initial election or appointment to the Board, the director receives
non-qualified options to purchase 10,000 shares of Common Stock, and (ii)
annually following each annual meeting of stockholders additional options to
acquire 10,000 shares of Common Stock. All options will be granted at an
exercise price equal to the fair market value of the Common Stock on the date of
grant, and are fully vested and exercisable six (6) months following grant. The
options have a term of five (5) years. The 1999 Plan also provides that upon a
non-employee director's death, disability or retirement from the Board, any
options previously granted to such director under the 1999 Plan will
automatically vest.
Restricted Stock
The 1999 Plan authorizes the Committee to grant to key employees shares of
restricted stock. An employee will become the holder of shares of restricted
stock free of all restrictions if he or she completes a required period of
employment following the award and satisfies any other conditions; otherwise,
the shares will be forfeited. The employee will have the right to vote the
shares of restricted stock and, unless the Committee determines otherwise, the
right to receive dividends on the shares. The employee may not sell or otherwise
dispose of restricted stock until the conditions imposed by the Committee have
been satisfied. The 1999 Plan requires a minimum restricted period of three (3)
years for awards of restricted shares.
Performance Units
The 1999 Plan authorizes the Committee to award performance units payable
in cash or shares of stock. Under the 1999 Plan, a number of performance units
is initially assigned by the Committee and the number of units actually earned
will be contingent on future performance of the Company over the performance
period in relation to the established performance measures. Although the
performance measures and performance period will be determined by the Committee
at the time of the award of performance units, they may be subject to such later
revision as the Committee deems appropriate to reflect significant events or
changes.
Change of Control Events
In the event of a change in control of the Company, as defined, all
outstanding stock options and restricted stock will automatically become fully
exercisable and/or vested, and performance units may be paid out in such manner
and amounts as determined by the Committee.
Federal Income Tax Consequences
Non-Qualified Stock Options. The grant of a non-qualified stock option does
not result in taxable income to the holder of such an option or in a deduction
by the Company. The tax consequences are determined generally at the time the
optionee exercises the non-qualified stock option. Upon the exercise of a
non-qualified stock option, the optionee generally recognizes ordinary income in
an amount equal to the difference between the fair market value of the common
stock on the date of exercise and the exercise price of the option. The Company
is entitled to a deduction for the year in which the optionee's tax year ends in
an amount equal to the amount that was includable in the optionee's gross
income. Upon exercise of options, shares can be withheld (or delivered to the
Company, in the case of previously-owned shares) to satisfy tax withholding
obligations.
If an optionee surrenders or delivers shares of common stock in whole or
partial payment of the exercise price, the optionee will not recognize taxable
income when the non-qualified stock option is exercised to the extent that the
number of shares so surrendered or delivered equals the number of shares
received upon the exercise of the option. The optionee will, however, recognize
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ordinary income with respect to the shares received in excess of the number of
shares so surrendered or delivered, in an amount equal to the excess of the fair
market value of such excess shares on the date the non-qualified stock option is
exercised over the amount of any cash paid.
An optionee's tax basis in the stock acquired pursuant to the exercise of a
non-qualified stock option for which the option price is paid solely in cash
will be equal to the amount of cash paid plus the amount of ordinary income that
the optionee recognizes upon exercise of the option. As to the stock acquired
pursuant to exercise of a non-qualified stock option for which an optionee
surrenders stock of the Company in payment of all or part of the aggregate
option price, the optionee's tax basis in the number of shares acquired in the
exchange which is equal to the number of surrendered shares shall be the same as
that of the surrendered shares. The holding period of these acquired shares
shall be the same as that of the surrendered shares. The optionee's tax basis in
any excess shares acquired in the exchange shall be zero, increased by the
amount of cash, if any, paid upon the exercise of the non-qualified stock option
and the amount of ordinary income that the optionee recognizes upon exercise of
the option. The holding period of these acquired shares shall begin as of the
date such stock is transferred to the optionee.
Incentive Stock Options. Under current law, the holder of an option will
not recognize taxable income on the grant or exercise of an incentive stock
option. However, the amount by which the fair market value of common stock on
the date the incentive stock option is exercised exceeds the exercise price of
such option will be treated as income for purposes of computing the optionee's
alternative minimum taxable income in the year the incentive stock option is
exercised.
If the shares of common stock acquired through the exercise of an
incentive stock option are held by an optionee through the later of (i) two
years from the date of the grant of the option or (ii) one year after the
transfer of such shares to the optionee pursuant to the exercise, the amount
received by the optionee upon the sale or other disposition of such shares in
excess of the optionee's tax basis in such shares will be taxable to such
optionee as a long-term capital gain in the year of such sale or disposition. An
optionee's tax basis in the shares of common stock acquired pursuant to the
exercise of an incentive stock option will be equal to the exercise price of
such options.
If the shares of common stock acquired through the exercise of an incentive
stock option are disposed of prior to the expiration of the two-year or one-year
holding periods, an amount equal to the difference between (i) the lesser of (a)
the amount realized on the sale or exchange, and (b) the fair market value of
the shares on the date the option was exercised, and (ii) the exercise price of
the option relating to the shares sold or exchanged will be taxable to the
optionee as ordinary income in the year of such disposition. In addition, if the
amount realized from the sale or exchange is greater than the fair market value
of the shares on the date the incentive stock option was exercised, the optionee
will also recognize gain in an amount equal to such difference. This gain will
be characterized as long-term or short-term capital gain, depending upon the
holding period of such shares. If common stock is disposed of by gift prior to
the expiration of the two-year or one-year holding periods, an amount equal to
the fair market value of the shares on the date of exercise less the exercise
price of the option relating to the shares disposed of will be taxable to the
optionee as ordinary income in the year of such disposition.
The grant or exercise of an incentive stock option will not result in any
federal income tax consequences to the Company. However, if Common Stock
acquired through the exercise of an incentive stock option is disposed of by the
optionee prior to the expiration of the two-year or one-year holding periods
described above, the Company will be allowed a deduction equal to the amount of
income includable in the optionee's gross income as a result of the disposition.
Restricted Shares. An employee normally will not realize taxable income and
the Company will not be entitled to a deduction upon the grant of restricted
shares. When the shares are no longer subject to a substantial risk of
forfeiture, the employee will realize taxable ordinary income in an amount equal
to the fair market value of such shares at such time, and the Company will be
entitled to a deduction in the same amount. An employee may make a special tax
election which affects the timing and measurement of income recognized in
connection with the grant of restricted shares, and the Company's deduction.
Dividends received by an employee on restricted shares during the restricted
9
<PAGE>
period are generally taxable to the employee as ordinary income and will be
deductible by the Company.
Performance Units. An employee receiving an award of a performance unit
will not realize taxable income until the performance unit is paid, in an amount
equal to the amount of cash received or the fair market value of shares received
in payment, and the Company will be entitled to a corresponding deduction at
such time.
The Board of Directors recommends that the stockholders vote FOR approval
of the 1999 Plan. Proxies solicited by the Board of Directors will be so voted
unless stockholders specify otherwise in their proxies. The affirmative vote of
the holders of a majority of the shares of Common Stock present or represented
and entitled to vote at the Annual Meeting is necessary for approval of the 1999
Plan.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer and the four other highest paid executive officers of
the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation ($) ------------
---------------------------------- Options
Name and Principal Position Year Salary Bonus Other(1)(2) Awards(#)
- --------------------------- ---- ------ ----- ----------- ----------
<S> <C> <C> <C> <C> <C>
M. Jay Allison, 1998 $ 245,000 $ 405,000 $ 39,900 460,000
President and Chief 1997 245,000 450,000 5,925 340,000
Executive Officer 1996 245,000 350,000 3,919 1,165,000
Roland O. Burns, 1998 140,000 100,800 15,474 115,000
Senior Vice President and 1997 132,500 112,000 3,970 85,000
Chief Financial Officer 1996 132,500 85,000 2,250 292,500
James L. Menke (3), 1998 115,000 10,000 5,058 25,000
Vice President 1997 100,000 65,000 2,246 18,000
of Operations 1996 93,200 50,000 1,846 102,500
Richard G. Powers (4), 1998 112,500 20,000 5,058 20,000
Vice President of Land 1997 90,000 50,000 1,797 20,000
Michael W. Taylor (4), 1998 115,000 25,000 5,058 25,000
Vice President of 1997 93,000 90,000 2,056 45,000
Corporate Development
<FN>
(1) The value of all perquisites provided to each executive officer by the
Company did not exceed the lesser of $50,000 or 10% of such officer's
salary and bonus for the year.
(2) Represents the Company's matching contributions under the Company's 401(k)
Profit Sharing Plan. Also amounts in 1998 include, in the case of Mr.
Allison and Mr. Burns, $34,842 and $10,416, respectively, representing the
present value of an interest free loan of the amounts paid by the Company
for premiums under a split-dollar life insurance arrangement between the
Company and Mr. Allison and Mr. Burns. The Company's split dollar insurance
program is designed for the Company to recover its aggregate premium cost.
(3) Mr.Menke resigned on February 24, 1999.
(4) Mr.Powers and Mr.Taylor were elected as executive officers in December
1997.
</FN>
</TABLE>
10
<PAGE>
The following table sets forth certain information regarding stock options
granted during 1998 to the named executive officers of the Company.
Option Grants
<TABLE>
<CAPTION>
Potential Realizable
Value
At Assumed Annual
Number of Percent of Rates of Stock Price
Securities Total Options Appreciation for
Underlying Granted To Exercise or Option Term
Options Employees in Base Price Expiration -----------------------------
Name Granted Fiscal Year Per Share Date 5% 10%
---- ------------- ----------------- ------------ -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
M. Jay Allison 120,000 15.7 $6.9375 1/1/2004 $ 230,004 $ 508,250
340,000 44.3 $3.4375 11/1/2007 644,364 1,587,101
----------- ----- ------------ ------------
460,000 60.0 $ 874,368 $ 2,095,351
----------- ----- ------------ ------------
Roland O. Burns 30,000 3.9 $6.9375 1/1/2004 $ 57,501 $ 127,062
85,000 11.1 $3.4375 11/1/2007 161,091 396,775
----------- ----- ------------ ------------
115,000 15.0 $ 518,592 $ 523,837
----------- ----- ------------ ------------
James L. Menke 25,000 3.3 $3.4375 11/1/2007 $ 47,380 $ 116,699
Richard G. Powers 20,000 2.6 $3.4375 11/1/2007 $ 37,904 $ 93,359
Michael W. Taylor 25,000 3.3 $3.4375 11/1/2007 $ 47,380 $ 116,699
</TABLE>
The following table sets forth certain information with respect to the
value of the named executive officers option exercises in 1998 and unexercised
options at December 31, 1998.
<TABLE>
<CAPTION>
Option Exercises/Options Held at Year End
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired on Value Options at Fiscal Year-End at Fiscal Year End(1)
Name Exercise Received Exercisable Unexercisable Exercisable Unexercisable
---- ------------- -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. Jay Allison 65,000 $283,025 1,015,000 1,300,000 $271,875 -
Roland O. Burns - - 245,000 335,000 44,844 10,625
James L. Menke - - 80,500 75,000 625 -
Richard G. Powers - - 58,500 55,000 - -
Michael W. Taylor - - 29,000 136,000 - -
<FN>
(1) The last sale price for a share of Common Stock as reported by the NYSE on
December 31, 1998 was $3.0625 and the exercise prices of the options in
this table ranged from $2.00 to $12.375 per share.
</FN>
</TABLE>
11
<PAGE>
Employment Agreements
Effective May 11, 1998 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 has agreed to employ
each of Mr. Allison and Mr. Burns for a period of 12 months at a minimum base
rate of $245,000, and $140,000 per annum, respectively. Each of the employment
agreements provides for the payment of severance benefits in an amount equal to
three times the sum of the existing annual base salary plus the annual bonus of
the employee upon (i) a change in control followed by (ii) 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 successor to the Company to assume the obligations of the Company
under the employment 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 employment agreement.
The severance benefit payments are payable as a single cash payment within 30
days of the employee's termination of employment. As defined in the employment
agreements, a "change in control" is deemed to have taken place if, without the
approval or recommendation of a majority of the then existing Board of Directors
of the Company, (a) a third person causes or brings about the removal or
resignation of a majority 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 20% or more of the total number of votes that may be cast
for the election of directors of the Company; or (c) 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.
Report of Compensation Committee on Executive Compensation
The duties of the Company's Compensation Committee's include the annual
review and approval of the Company's management compensation strategy, review
and determination of individual elements of compensation for the Company's
executive officers and oversight of the administration of the Company's 1991
Plan. The Compensation Committee has not established any specific criteria in
determining executive compensation. The goal of the Company's compensation
arrangements is to attract, retain and reward personnel critical to the
long-term success of the Company. To achieve this basic goal, the Compensation
Committee sets annual base salaries for the Chief Executive Officer and the
other executive officers and awards discretionary cash bonuses based on the
Company's financial performance during the prior year, as well as the
Compensation Committee's subjective assessment of an individual's own
performance and ability in the position held by that person.
Base Salaries. The Company's compensation policy is for the Compensation
Committee to annually review and set executive base salaries, including that of
the President and Chief Executive Officer, within a competitive range given the
Company's growth strategy. Once generally established, base salaries are
adjusted within the competitive range on an individual basis based on past
performance. In 1998, the Compensation Committee did not increase Mr. Allison's
base salary. In 1998, the Compensation Committee approved increases to base
salaries of the other named executive officers ranging from 6% to 25%.
12
<PAGE>
Discretionary Cash Bonuses. The Compensation Committee granted cash bonuses of
$590,800 in the aggregate to the Company's seven executive officers for 1998,
including $405,000 to Mr. Allison, for their performance with respect to the
Company's achievements in 1998. These achievements, in the opinion of the
Committee, substantially enhanced the long-term business and financial prospects
of the Company. The amount of each bonus was determined based upon the
Compensation Committee's subjective assessment of the contribution of each
executive officer. With respect to Mr. Allison, the Compensation Committee
primarily considered his role and performance in directing the Company's growth
and results in 1998.
Incentive Plan Awards. The Compensation Committee believes that a significant
portion of executive compensation should be dependent on value created for the
Company's stockholders. Through the 1991 Plan, stock options are granted to key
members of management to align the interests of management with the interests of
stockholders in working to increase the value of the Company's Common Stock. On
July 16, 1998, the committee awarded options under the 1991 Plan to purchase
120,000 shares and 30,000 shares of common stock at a exercise price of $6.9375
per share to Mr. Allison and Mr. Burns, respectively. On October 15, 1998, the
Compensation Committee granted options under the 1991 Plan to purchase 577,000
shares of Common Stock, at an exercise price of $3.4375 per share, to the
Company's executive officers and certain other key members of management. Of the
options granted, options to purchase 525,000 shares of Common Stock were granted
to executive officers and options to purchase 52,000 shares of Common Stock were
granted to other key employees. Of the options granted to executive officers,
options to purchase 340,000 shares of Common Stock were granted to Mr. Allison.
Both the size of grants and the proportion relative to the total number of
option shares granted generally increased as a function of the recipient's
higher level of responsibility within the Company and individual performance.
The factors upon which the Committee granted options, including the grants to
Mr. Allison, were the same as those considered in awarding discretionary cash
bonuses.
$1 Million Deduction Limit. Section 162(m) of the Internal Revenue Code
generally limits the corporate income tax deduction for compensation paid to
each executive officer shown in the summary compensation table in the proxy
statement of a public company to $1 million, unless the compensation is
"performance-based compensation" and qualifies under certain other exceptions.
The Committee considers the impact of the limits on deductibility of
compensation when determining executive officer compensation. Based on the
current level of executive officer base salaries and discretionary bonuses, the
Committee does not currently anticipate that any portion of the Company's
executive officer compensation would not be deductible under Section 162(m). The
Committee will continue to monitor whether the $1 million limit on deductibility
may impact its compensation policies.
The Compensation Committee
Cecil E. Martin, Jr., Chairman
Franklin B. Leonard
David W. Sledge
13
<PAGE>
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total stockholder return on the Company's Common Stock during the five years
ended December 31, 1998 with the cumulative return on the New York Stock
Exchange Index and index composed of all publicly traded oil and gas companies
within SIC Code 1311, consisting of 173 companies. The graph assumes that $100
was invested in each category on the last trading day of 1993 and that
dividends, if any, were reinvested.
Stock Performance Graph
[GRAPHIC OMITTED]
Value of $100 Investment:
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
The Company $108 $184 $424 $390 $100
New York Stock Exchange 98 127 153 202 240
Public Oil & Gas Producers 105 115 153 155 124
14
<PAGE>
PROPOSAL NO. 3
ISSUANCE OF SERIES A PREFERRED STOCK
AND SHARES OF COMMON STOCK RELATED THERETO
On April ___, 1999, pursuant to a Stock Purchase Agreement (the "Agreement
"), the Company consummated a private placement financing transaction (the
"Private Placement") resulting in gross proceeds to the Company of $30,000,000.
The Company issued an aggregate of 1,948,000 shares of the Company's Series A
1999 Convertible Preferred Stock (the "Series A Preferred Stock") and 1,052,000
shares of Series B 1999 Non-convertible Preferred Stock (the "Series B Preferred
Stock," and together with the Series A Preferred Stock, the "Preferred Stock")
in the Private Placement. Each share of Series A Preferred Stock is convertible
at any time at the option of the holders (the "Preferred Stockholders"), in
whole or in part, into Common Stock at a conversion price of $4.00 per share,
adjusted for any stock split, stock dividend, reorganization, reclassification
and certain other matters (the "Conversion Price"). The Series B Preferred Stock
is convertible at any time at the option of the Company, in whole but not in
part, into shares of Series A Preferred Stock on a share-for-share basis,
provided that all accumulated, unpaid dividends on the converted Series B
Preferred Stock are paid concurrently with such conversion. Each outstanding
share of Preferred Stock is entitled to receive quarterly dividends at the rate
of nine percent (9%) per annum, cumulative, payable in cash or shares of Common
Stock (valued at a 17.5% discount to the then prevailing market price).
The Company used all of the proceeds of the Private Placement to reduce
outstanding indebtedness under its bank credit facility. All of the securities
sold in the Private Placement were sold solely to accredited investors under the
Securities Act of 1933, as amended. Rules of the NYSE applicable to the Company
require that the Company obtain approval of its stockholders before the issuance
of common stock (or securities convertible into or exchangeable for common
stock) in excess of twenty percent (20%) of the number of shares of common stock
outstanding before such issuance. The number of shares of Common Stock issuable
as a result of the conversion of the Series A Preferred Stock (assuming the
Company converts the Series B Preferred Stock into shares of Series A Preferred
Stock) would be 7,500,000, which represents approximately 31% of the Common
Stock that was issued and outstanding before the Preferred Stock conversion. If
the stockholders approve this proposal, the Company intends to convert the
Series B Preferred Stock into shares of Series A Preferred Stock.
If the Company does not convert the Series B Preferred Stock into shares of
Series A Preferred Stock, which would occur only if this proposal is not
approved by the stockholders, the holders of the Series B Preferred Stock may
require the Company to purchase all or any portion of the outstanding Series B
Preferred Stock at any time on or after December 30, 1999 at a purchase price
equal to one Unit per share of Series B Preferred Stock. Each Unit shall be
comprised of (i) an amount equal to $10.00 per share of Series B Preferred Stock
plus all accrued and unpaid dividends (the "Non-SAR Amount") and (ii) 2.5 Share
Appreciation Rights ("SAR's") constituting the right to be paid by the Company
the difference (the "SAR Exercise Amount") between $3.75 per share and the fair
market value of a share of Common Stock on the date the SAR is exercised by such
holder. The Non-SAR Amount may be paid in cash or shares of Common Stock (valued
at the 17.5% discount), and the SAR Exercise Amount may be paid in cash or in
shares of Common Stock (valued at the 17.5% discount); provided, however, the
Company's ability to pay the Non-SAR Amount in shares of Common Stock or the SAR
Exercise Amount in shares in Common Stock may be limited by the rules of the
NYSE discussed herein. The Company's ability to make cash payments with respect
to the Non-SAR Amount and the SAR Exercise Amount will depend on its available
15
<PAGE>
cash at the time of a demand of the Company to repurchase the Series B Preferred
Stock or an exercise of the SAR's. The payment of such cash amounts instead of
the issuance of shares of Common Stock upon conversion may adversely affect the
liquidity and financial condition of the Company.
The Board of Directors recommends that the stockholders vote FOR approval
of the issuance of 1,052,000 shares of Series A Preferred Stock upon the
conversion of the Series B Preferred Stock and any shares of Common Stock issued
pursuant to the terms of the Preferred Stock. Proxies solicited by the Board of
Directors will be so voted unless stockholders specify in their proxies. The
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented and entitled to vote at the Annual Meeting is necessary
for approval of the issuance of the 1,052,000 shares of Series A Preferred Stock
upon the conversion of the Series B Preferred Stock into Series A Preferred
Stock and the shares of Common Stock issued pursuant to the terms of the
Preferred Stock.
16
<PAGE>
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed Arthur Andersen LLP as independent public accountants to audit the
consolidated financial statements of the Company for 1999. Stockholders are
being asked to ratify this appointment. Arthur Andersen LLP has served the
Company in this capacity since 1989. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if they desire to do so, and will be available to respond to
appropriate questions.
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented and entitled to vote at the Annual Meeting is
necessary for ratification of the appointment of the independent accountants.
The Board of Directors recommends that stockholders vote FOR such
ratification. Proxies solicited by the Board of Directors will be so voted
unless stockholders specify otherwise in their proxies.
STOCKHOLDER PROPOSALS
Any proposal which a stockholder intends to present at the Company's annual
meeting of stockholders in 2000 must be received by the Company by ___________,
1999, in order to be eligible for inclusion in the Company's proxy statement and
form of proxy relating to such meeting. Any such proposal must comply with the
federal proxy rules and state law. If a stockholder intends to present a
proposal at the Year 2000 annual meeting that is not included in the Company's
proxy statement, the Company shall have discretionary authority to vote against
such proposal unless the stockholder notifies the Company of such proposal no
later than 45 days before the Company first mailed its proxy materials for the
1999 Annual Meeting of Stockholders and certain other requirements are
satisfied.
ANNUAL REPORT
THE COMPANY'S 1998 ANNUAL REPORT TO STOCKHOLDERS (INCLUDING ITS ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998) IS BEING MAILED
TO STOCKHOLDERS OF RECORD TOGETHER HEREWITH.
OTHER BUSINESS
The Board of Directors is not aware of any matters other than those set
forth above which will be presented for action by the stockholders at the
meeting, but if any other matters should be presented, the persons named in the
proxy intend to vote such proxies in accordance with their best judgement,
unless otherwise restricted by law.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ROLAND O. BURNS
------------------
ROLAND O. BURNS
SECRETARY
Dallas, Texas
April 30, 1999
17
<PAGE>
APPENDIX A
PROPOSED COMSTOCK RESOURCES, INC.
1999 Long-Term Incentive Plan
I. GENERAL
1. Purpose. The COMSTOCK RESOURCES, INC. 1999 Long-Term Incentive Plan (the
"1999 Plan") has been established by COMSTOCK RESOURCES, INC. (the "Company")
to:
(a) attract and retain key executive and managerial employees;
(b) motivate participating employees, by means of appropriate incentive, to
achieve long-range goals;
(c) attract and retain well-qualified individuals to serve as members of
the Company's Board of Directors;
(d) provide incentive compensation opportunities which are competitive with
those of other public corporations; and
(e) further identify Participants' interests with those of the Company's
other stockholders through compensation alternatives based on the Company's
common stock;
and thereby promote the long-term financial interest of the Company and its
Subsidiaries, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
2. Effective Date. Subject to the approval of the holders of a majority of
the Stock of the Company present, or represented and entitled to vote at the
Company's 1999 annual meeting of its stockholders, the 1999 Plan shall be
effective as of April 1, 1999, provided, however, that awards made under the
1999 Plan prior to such approval of the 1999 Plan by stockholders of the Company
are contingent on such approval of the 1999 Plan by the stockholders of the
Company and shall be null and void if such approval of the stockholders of the
Company is withheld. Further, in addition to any other restrictions on
transferability set forth herein, no Participant shall have any right to sell,
assign, transfer, pledge or place any encumbrance on any award or Stock
underlying an award prior to such stockholder approval of this 1999 Plan. The
1999 Plan shall be unlimited in duration; provided, however, that no awards of
Incentive Stock Options may be made under the 1999 Plan after ten (10) years
from the earlier of the date of its adoption by the Board or the date of its
approval by the stockholders of the Company.
3. Definitions. The following definitions are applicable to the 1999 Plan.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation Committee of the Board.
"Disability" means the inability of a Participant, by reason of a physical
or mental impairment, to engage in any substantial gainful activity, of which
the Board shall be the sole judge.
"Effective Date" means April 1, 1999.
"Fair Market Value" of any Stock means, as of any date, the last sale price
for such Stock as reported by the National Association of Securities Dealers,
Inc. Automated Quotation System - National Market System (or by the principal
consolidated transaction reporting system for any other national securities
exchange which is the principal exchange on which the stock is listed or
accepted for trading) on the date or, if Stock is not traded on that date, on
the next preceding date on which Stock was traded.
18
<PAGE>
"Non-employee Director" means each member of the Board who is not a
full-time employee of the Company.
"Option Date" means, with respect to any Stock Option, the date on which
the Stock Option is awarded under the 1999 Plan.
"Participant" means (i) any employee of the Company or any Subsidiary who
is selected by the Board or Committee to participate in the 1999 Plan; and (ii)
to the extent provided in paragraphs I.5(b) and III.2, any Non-employee
Director, to the extent provided in paragraph I.5(b).
"Performance Unit" shall have the meaning ascribed to it in Part V.
"Permitted Transferees" means members of the immediate family of the
Participant, trusts for the benefit of such immediate family members, and
partnerships in which substantially all of the interests are held by the
Participant and members of his or her immediate family. An immediate family
member shall mean any descendant (children, grandchildren and more remote
descendants), including step-children and relationships arising from legal
adoption, and any spouse of a Participant or a Participant's descendant.
"Related Company" means any corporation during any period in which it is a
Subsidiary, or during any period in which it directly or indirectly owns 50% or
more of the total combined voting power of all classes of stock of the Company
that are entitled to vote.
"Restricted Period" has the meaning ascribed to it in Part IV.
"Restricted Stock" has the meaning ascribed to it in Part IV.
"Retirement" means (i) termination of employment in accordance with the
retirement procedures set by the Company from time to time; (ii) an employee's
termination of employment or a Non-employee Director's ceasing to serve as a
member of the Board because of Disability; or (iii) an employee's termination of
employment or a Non-employee Director's ceasing to serve as a member of the
Board voluntarily with the consent of the Company (of which the Committee shall
be the sole judge).
"Stock" means the Company's common stock, $.50 par value per share.
"Stock Option" means the right of a Participant to purchase Stock pursuant
to an Incentive Stock Option or NonQualified Option awarded pursuant to the
provisions of the 1999 Plan.
"Subsidiary" means any corporation during any period of which 50% or more
of the total combined voting power of all classes of stock entitled to vote is
owned, directly or indirectly, by the Company.
4. Administration. The authority to manage and control the operation and
administration of the 1999 Plan shall be vested in the Committee. Subject to the
provisions of the 1999 Plan, the Committee will have authority to select
employees to receive awards of Stock Options, Restricted Stock and/or
Performance Units, to determine the time or times of receipt, to determine the
types of awards and the number of shares covered by the awards, to establish the
terms, conditions, performance criteria, restrictions, and other provisions of
such awards, to determine the number and value of Performance Units awarded and
earned, and to cancel or suspend awards. In making such award determinations,
the Committee may take into account the nature of services rendered by the
employee, his or her present and potential contribution to the Company's success
and such other factors as the Committee deems relevant. The Committee is
authorized to interpret the 1999 Plan, to establish, amend, and rescind any
rules and regulations relating to the 1999 Plan, to determine the terms and
provisions of any agreements made pursuant to the 1999 Plan, and to make all
other determinations that may be necessary or advisable for the administration
of the 1999 Plan.
19
<PAGE>
A majority of the Committee shall constitute a quorum, and the acts of a
majority of the members present at any meeting at which a quorum is present, or
acts approved in writing by all members of the Committee, shall be the acts of
the Committee, unless provisions to the contrary are embodied in the Company's
Bylaws or resolutions duly adopted by the Board. All actions taken and decisions
and determinations made by the Board or the Committee pursuant to the Plan shall
be binding and conclusive on all persons interested in the 1999 Plan. No member
of the Board or the Committee shall be liable for any action or determination
taken or made in good faith with respect to the 1999 Plan.
Notwithstanding the foregoing, all authority to exercise discretion with
respect to the participation in the 1999 Plan of persons who are "officers"
within the meaning of the applicable Securities and Exchange Commission rules
relating to Section 16 of the Securities Exchange Act of 1934, as amended,
and/or directors of the Company, or the timing, pricing and amounts of awards
granted under the 1999 Plan to such officers and directors, shall be vested in
(a) the Board, or (b) the Committee, if consisting of two or more directors each
of whom is a non-employee director within the meaning ascribed to such term in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or
within any successor definition or any successor rule.
5. Participation. (a) Employees. Subject to the terms and conditions of the
1999 Plan, the Committee shall determine and designate, from time to time, the
key executives and managerial employees of the Company and/or its Subsidiaries
who will participate in the 1999 Plan. In the discretion of the Committee, an
eligible employee may be awarded Stock Options, Restricted Stock or Performance
Units or any combination thereof, and more than one award may be granted to a
Participant. Except as otherwise agreed to by the Company and the Participant,
any award under the 1999 Plan shall not affect any previous award to the
Participant under the 1999 Plan or any other plan maintained by the Company or
its Subsidiaries.
(b) Non-employee Directors. Each Non-employee Director shall be granted
without further action by the Board or the Committee a Non-Qualified Stock
Option to purchase 10,000 shares of Stock at the close of business of each
annual meeting of stockholders of the Company. An individual who is first
elected and commences serving as a Non-employee Director shall also be granted
without further action by the Board or the Committee a Non-Qualified Stock
Option for 10,000 shares of Stock on the date of such election as a director.
The Non-Qualified Stock Options shall be fully vested and exercisable by
each Non-employee Director after the Director has completed six continuous
months of service as a member of the Board after the Option Date (unless his
service terminates during such period by reason of death or Disability). The
term of each Non-Qualified Stock Option shall be five (5) years from the Option
Date, and the exercise price shall be 100% of the Fair Market Value of a share
of Stock as of the Option Date. The full purchase price of each share of Stock
purchased upon exercise of a Non-Qualified Stock Option shall be paid in the
manner set forth in Article III, paragraph 3 hereof. All outstanding options
become 100% vested and exercisable if service as a member of the Board
terminates by reason of death, Disability or Retirement.
20
<PAGE>
6. Shares Subject to the 1999 Plan. The shares of Stock with respect to
which awards may be made under the 1999 Plan shall be either authorized and
unissued shares or authorized and issued shares held in the treasury by the
Company (including, in the discretion of the Committee, shares purchased in the
market).
(a) Awards to Employees. Subject to the provisions of paragraph I.10, the
number of shares of Stock available under the 1999 Plan for the grant of Stock
Options, Performance Units and Restricted Stock to key executive and managerial
employees shall not exceed 1,200,000 shares in the aggregate. The number of
shares of Stock available under the 1999 Plan for the grant of non-qualified
stock options, Performance Units and Restricted Stock shall be increased, as of
the first day of each fiscal year commencing January 1, 2000, , by one percent
(1%) of the then current number of shares of Stock outstanding. In addition,
shares of Stock available under the 1991 Long-Term Incentive Plan (the "1991
Plan") which remain available at the Effective Date of the 1999 Plan (58,630
shares) shall be available for grant under the 1999 Plan. If, for any reason,
any award under the 1999 Plan or the 1991 Plan otherwise distributable in shares
of Stock, or any portion of the award, shall expire, terminate or be forfeited
or canceled, or be settled in cash pursuant to the terms of the 1999 Plan or the
1991 Plan and, therefore, any such shares are no longer distributable under the
award, such shares of Stock shall again be available for award under the 1999
Plan.
(b) Awards to Non-Employee Directors. Subject to the provisions of
paragraph I.10, the number of shares of Stock available under the 1999 Plan for
the grant of Options to Non-employee Directors shall not exceed 225,000 shares,
which includes 170,000 shares remaining available from the 1991 Plan for grant
to Non-employee Directors at the Effective Date. The number of shares of Stock
available under the 1999 Plan for the grant of Options to Non-employee Directors
shall be increased, as of the first day of each fiscal year commencing January
1, 2000, by 50,000 shares. If, for any reason, any Option award to a
Non-employee Director under the 1999 Plan or the 1991 Plan, or any portion of
such award, shall expire, terminate or be forfeited or canceled, or be settled
in cash pursuant to the terms of the 1999 Plan or the 1991 Plan and, therefore,
any such shares are no longer distributable under the award, such shares of
Stock shall again be available for award to Non-employee Directors under the
1999 Plan.
7. Compliance With Applicable Laws and Withholding of Taxes.
Notwithstanding any other provision of the 1999 Plan, the Company shall have no
liability to issue any shares of Stock under the 1999 Plan unless such issuance
would comply with all applicable laws and the applicable requirements of any
securities exchange or similar authority. Prior to the issuance of any shares of
Stock under the 1999 Plan, the Company may require a written statement that the
recipient is acquiring the shares for investment and not for the purpose or with
the intention of distributing as amended, the shares. In the case of a
Participant who is subject to Section 16(a) and 16(b) of the Securities Exchange
Act of 1934, as amended, the Committee may, at any time, add such conditions and
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limitations to any election to satisfy tax withholding obligations through the
withholding or surrender of shares of Stock as the Committee, in its sole
discretion, deems necessary or desirable to comply with Section 16(a) or 16(b)
and the rules and regulations thereunder or to obtain any exemption therefrom.
All awards and payments under the 1999 Plan to employees are subject to
withholding of all applicable taxes, which withholding obligations may be
satisfied, with the consent of the Committee, through the surrender of shares of
Stock which the Participant already owns, or to which a Participant is otherwise
entitled under the 1999 Plan.
8. Transferability. Incentive Stock Options, Performance Units, and, during
the period of restriction, Restricted Stock awarded under the 1999 Plan are not
transferable except as designated by the Participant by will or by the laws of
descent and distribution. Incentive Stock Options may be exercised during the
lifetime of the Participant only by the Participant or his guardian or legal
representative. If expressly permitted by the terms of the stock option
agreement, NonQualified Stock Options may be transferred by a Participant to
Permitted Transferees, provided that there is not any consideration for the
transfer.
9. Employment and Stockholder Status. The 1999 Plan does not constitute a
contract of employment, and selection as a Participant will not give any
employee the right to be retained in the employ of the Company or any
Subsidiary. The 1999 Plan does not constitute or serve as evidence of an
agreement or understanding, express or implied, that the Company will retain a
director for any period of time. Subject to the provisions of paragraph IV.3(a),
no award under the 1999 Plan shall confer upon the holder thereof any right as a
stockholder of the Company prior to the date on which he fulfills all service
requirements and other conditions for receipt of shares of Stock. If the
redistribution of shares is restricted pursuant to paragraph I.7, certificates
representing such shares may bear a legend referring to such restrictions.
10. Adjustments to Number of Shares Subject to the 1999 Plan. In the event
of any change in the outstanding shares of Stock of the Company by reason of any
stock dividend, split, spinoff, recapitalization, merger, consolidation,
combination, exchange of shares or other similar change, the aggregate number of
shares of Stock with respect to which awards may be made under the 1999 Plan,
the terms and the number of shares of any outstanding Stock Options, Performance
Units, or Restricted Stock, and the purchase price of a share of Stock under
Stock Options, may be equitably adjusted by the Committee in its sole
discretion.
11. Change in Control. Notwithstanding any other provision of the 1999
Plan, in the event of a change in control, all outstanding Stock Options and
Restricted Stock will automatically become fully exercisable and/or vested, and
Performance Units may be paid out in such manner and amounts as determined by
the Committee. For purposes of this paragraph 11, a Change in Control of the
Company shall be deemed to have taken place if, without the approval or
recommendation of a majority of the then existing Board of the Company:
(a) a third person shall cause or bring about (through solicitation of
proxies or otherwise) the removal or resignation of a majority of the then
existing members of the Board or if a third person causes or brings about
(through solicitation of proxies or otherwise) an increase in the size of the
Board such that the then existing members of the Board thereafter represent a
minority of the total number of persons comprising the entire Board;
(b) a third person, including a "group" as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended, becomes the beneficial owner of
shares of any class of the Company's stock having 20% or more of the total
number of votes that may be cast for the election of directors of the Company;
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(c) the stockholders of the Company approve a definitive agreement for the
merger or other business combination of the Company with or into another
corporation pursuant to which the Company will not survive or will survive only
as a subsidiary of another corporation, for the sale or other disposition of all
or substantially all of the assets of the Company, or any combination of the
foregoing.
For purposes hereof, a person will be deemed to be the beneficial owner of
any voting securities of the Company which it would be considered to
beneficially own under Securities and Exchange Commission Rule 13d-3 (or any
similar or superseding statute or rule from time to time in effect).
12. Agreement With Company. At the time of any awards under the 1999 Plan,
the Committee will require a Participant to enter into an agreement with the
Company in a form specified by the Committee, agreeing to the terms and
conditions of the 1999 Plan and to such additional terms and conditions, not
inconsistent with the 1999 Plan, as the Committee may, in its sole discretion,
prescribe.
13. Amendment and Termination of 1999 Plan. Subject to the following
provisions of this paragraph 13, the Board may at any time and in any way amend,
suspend or terminate the 1999 Plan. No amendment of the 1999 Plan and, except as
provided in paragraph I.10, no action by the Board shall, without further
approval of the stockholders of the Company, materially increase the total
number of shares of Stock with respect to which awards may be made under the
1999 Plan, materially increase the benefits accruing to Participants under the
1999 Plan or materially modify the requirements as to eligibility for
participation in the 1999 Plan, if stockholder approval of such amendment is a
condition to the availability of the exemption provided by Securities and
Exchange Commission Rule 16b-3 or of the Code at the time such amendment is
adopted. Further, the formula provisions of paragraph I.5 may be amended no more
than once every twelve months, other than to comport with changes in the Code.
No amendment, suspension or termination of the 1999 Plan shall alter or impair
any Stock Option, share of Restricted Stock or Performance Unit previously
awarded under the 1999 Plan without the consent of the holder thereof.
II. INCENTIVE STOCK OPTIONS
1. Definition. The award of an Incentive Stock Option under the 1999 Plan
entitles the Participant to purchase shares of Stock at a price fixed at the
time the option is awarded, subject to the following terms of this Part II.
2. Eligibility. The Committee shall designate the Participants to whom
Incentive Stock Options, as described in section 422A(b) of the Code or any
successor section thereto, are to be awarded under the 1999 Plan and shall
determine the number of option shares to be offered to each of them. Incentive
Stock Options shall be awarded only to key employees of the Company, and no
Non-employee Director shall be eligible to receive an award of an Incentive
Stock Option. In no event shall the aggregate Fair Market Value (determined at
the time the option is awarded) of Stock with respect to which Incentive Stock
Options are exercisable for the first time by an individual during any calendar
year (under all plans of the Company and all Related Companies) exceed $100,000.
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3. Price. The purchase price of a share of Stock under each Incentive Stock
Option shall be determined by the Committee, provided, however, that in no event
shall such price be less than the greater of (a) 100% of the Fair Market Value
of a share of Stock as of the Option Date (or 110% of such Fair Market Value if
the holder of the Incentive Stock Option owns stock possessing more than 10% of
the combined voting power of all classes of stock of the Company or any Related
Company) or (b) the par value of a share of Stock on such date. To the extent
provided by the Committee, the full purchase price of each share of Stock
purchased upon the exercise of any Incentive Stock Option shall be paid in cash
or in shares of Stock (valued at Fair Market Value as of the day of exercise),
or in any combination thereof, at the time of such exercise and, as soon as
practicable thereafter, a certificate representing the shares so purchased shall
be delivered to the person entitled thereto.
4. Exercise. No Incentive Stock Option may be exercised by a Participant
after the Expiration Date (as defined in paragraph II.5 below) applicable to
that option. Each Option shall become and be exercisable at such time or times
and during such period or periods, in full or in such installments as may be
determined by the Committee at the Option Date.
5. Option Expiration Date. The "Expiration Date" with respect to an
Incentive Stock Option or any portion thereof awarded to a Participant under the
1999 Plan means the earliest of:
(a) the date that is 10 years after the date on which the Incentive Stock
Option is awarded;
(b) the date established by the Committee at the time of the award;
(c) the date that is one year after the Participant's employment with the
Company and all Related Companies is terminated because of death or
permanent and total disability; as defined in Code Section 22(e)(3); or
(d) the date that is three months after the date the Participant's
employment with the Company and all Related Companies is terminated for
reasons other than death or permanent and total disability.
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III. NON-QUALIFIED STOCK OPTIONS
1. Definition. The award of a Non-Qualified Stock Option under the 1999
Plan entitles the Participant to purchase shares of Stock at a price fixed at
the time the option is awarded, subject to the following terms of this Part III.
2. Eligibility. The Committee shall designate the Participants to whom
Non-Qualified Stock Options are to be awarded under the 1999 Plan and shall
determine the number of option shares to be offered to each of them. No Non-
employee Director shall be eligible to receive an award of a Non-Qualified Stock
Option except to the extent granted pursuant to the formula set forth in
Paragraph I.5(b) above.
3. Price. The purchase price of a share of Stock under each Non-Qualified
Stock Option shall be determined by the Committee; provided, however, that in no
event shall such price be less than the greater of (a) 100% of the Fair Market
Value of a share of Stock as of the Option Date or (b) the par value of a share
of such Stock on such date. To the extent provided by the Committee, the full
purchase price of each share of Stock purchased upon the exercise of any
NonQualified Stock Option shall be paid in cash or by tendering, by either
actual delivery of shares or by attestation, shares of Stock (valued at Fair
Market Value as of the day of exercise), or in any combination thereof, at the
time of such exercise. Shares of Stock acquired pursuant to the exercise of a
Non-Qualified Stock Option shall be subject to such conditions, restrictions and
contingencies as the Committee may establish in the 22 award agreement. If the
Company shall have a class of its Stock registered pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended, an option holder may also make
payment at the time of exercise of a Non-Qualified Stock Option by delivering to
the Company a properly executed exercise notice together with irrevocable
instructions to a broker approved by the Company, that upon such broker's sale
of shares of Stock with respect to which such option is exercised, it is to
deliver promptly to the Company the amount of sale proceeds necessary to satisfy
the option exercise price and any required withholding taxes.
4. Exercise. No Non-Qualified Stock Option may be exercised by a
Participant after the Expiration Date applicable to that option. Unless
otherwise specified herein, each Option shall become and be exercisable at such
time or times and during such period or periods, in full or in such installments
as may be determined by the Committee at the Option Date.
5. Option Expiration Date. The "Expiration Date" with respect to a
Non-Qualified Stock Option or any portion thereof awarded to a Participant under
the 1999 Plan means the earliest of:
(a) the date established by the Committee at the time of the award or set
forth in paragraph I.5(b), as applicable;
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(b) the date that is three months after the employee Participant's
employment with the Company and all Subsidiaries or the Non-employee
Director Participant's service as a member of the Board is terminated
for reasons other than Retirement or death; or
(c) the date that is three years after the date the employee Participant's
employment with the Company and all Subsidiaries or the Non-employee
Director Participant's service as a member of the Board is terminated
by reason of Retirement or death.
IV. RESTRICTED STOCK
1. Definition. Restricted Stock awards are grants of Stock to Participants,
the vesting of which is subject to a required period of employment and any other
conditions established by the Committee or by the terms of this 1999 Plan.
2. Eligibility. The Committee shall designate the Participants to whom
Restricted Stock is to be awarded and the number of shares of Stock that are
subject to the award. Restricted Stock shall be awarded only to key employees of
the Company, and no Non-employee Director shall be eligible to receive an award
of Restricted Stock.
3. Terms and Conditions of Awards. All shares of Restricted Stock awarded
to Participants under the 1999 Plan shall be subject to the following terms and
conditions and to such other terms and conditions, not inconsistent with the
1999 Plan, as shall be prescribed by the Committee in its sole discretion and as
shall be contained in the agreement referred to in paragraph I.12.
(a) Restricted Stock awarded to Participants may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as hereinafter
provided, for a period of ten years or such shorter period as the
Committee may determine, but no less than three years, after the time
of the award of such stock (the "Restricted Period"). Such restrictions
shall lapse as to the Restricted Stock in accordance with the time(s)
and number(s) of shares as to which the Restricted Period expires, as
set forth in the Agreement with the Participant. Except for such
restrictions, the Participant as owner of such shares shall have all
the rights of a stockholder, including but not limited to the right to
vote such shares and, except as otherwise provided by the Committee,
the right to receive all dividends paid on such shares.
(b) The Committee may in its discretion, at any time after the date of the
award of Restricted Stock, adjust the length of the Restricted Period
to account for individual circumstances of a Participant or group of
Participants, but in no case shall the length of the Restricted Period
be less than three years.
(c) Except as otherwise determined by the Committee in its sole discretion,
an employee Participant whose employment with the Company and all
Subsidiaries terminates prior to the end of the Restricted Period for
any reason shall forfeit all shares of Restricted Stock remaining
subject to any outstanding Restricted Stock award which have not then
vested in accordance with the agreement entered into under paragraph
I.12.
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(d) Each certificate issued in respect of shares of Restricted Stock
awarded under the 1999 Plan shall be registered in the name of the
Participant and, at the discretion of the Committee, each such
certificate may be deposited in a bank designated by the Committee.
Each such certificate shall bear the following (or a similar) legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) contained in the COMSTOCK RESOURCES, INC. 1999 Long-Term Incentive
Plan and an agreement entered into between the registered owner and COMSTOCK
RESOURCES, INC. A copy of such plan and agreement is on file in the office of
the Secretary of COMSTOCK RESOURCES, INC., 5005 LBJ Freeway, Suite 1150, Dallas,
Texas 75244 or, if the Company changes its principal office, at the address of
such new principal office."
(e) As the Restricted Period for Restricted Stock expires and such
restrictions lapse, such Restricted Stock shall be held by a
Participant (or his or her legal representative, beneficiary or heir)
free of all restrictions imposed by the 1999 Plan and the Agreement.
Such shares shall nevertheless continue to be subject to any
restriction imposed under applicable securities laws.
V. PERFORMANCE UNITS
1. Definition. Performance Units are awards to Participants who may receive
value for the units at the end of a Performance Period. The number of units
earned, and value received for them, will be contingent on the degree to which
the performance measures established at the time of the initial award are met.
2. Eligibility. The Committee shall designate the Participants to whom
Performance Units are to be awarded, and the number of units to be the subject
of such awards. Performance Units shall be awarded only to key employees of the
Company, and no Non-employee Director shall be eligible to receive an award of a
Performance Unit.
3. Terms and Conditions of Awards. For each Participant, the Committee will
determine the timing of awards; the number of units awarded; the value of units,
which may be stated either in cash or in shares of Stock; the performance
measures used for determining whether the Performance Units are earned; the
performance period during which the performance measures will apply; the
relationship between the level of achievement of the performance measures and
the degree to which Performance Units are earned; whether, during or after the
performance period, any revision to the performance measures or performance
period should be made to reflect significant events or changes that occur during
the performance period; and the number of earned Performance Units that will be
paid in cash and/or shares of Stock.
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4. Payment. The Committee will compare the actual performance to the
performance measures established for the performance period and determine the
number of units to be paid and their value. Payment for units earned shall be
wholly in cash, wholly in Stock or in a combination of the two, in a lump sum or
installments, and subject to vesting requirements and such other conditions as
the Committee shall determine. The Committee will determine the number of earned
units to be paid in cash and the number to be paid in Stock. For Performance
Units awarded in shares of Stock, one share of Stock will be paid for each unit
earned, or cash will be paid for each unit earned equal to either (a) the Fair
Market Value of a share of Stock at the end of the Performance Period or (b) the
Fair Market Value of a share of Stock averaged for a number of days determined
by the Committee. For Performance Units awarded in cash, the value of each unit
earned will be paid in its initial cash value, or shares of Stock will be
distributed based on the cash value of the units earned divided by (a) the Fair
Market Value of a share of Stock at the end of the Performance Period or (b) the
Fair Market Value of a share of Stock averaged for a number of days determined
by the Committee.
5. Retirement, Death or Termination. A Participant whose employment with
the Company and all Subsidiaries terminates during a performance period because
of Retirement or death shall be entitled to the prorated value of earned
Performance Units, issued with respect to that performance period, at the
conclusion of the performance period based on the ratio of the months employed
during the period to the total months of the performance period. If a
Participant's employment with the Company and all Subsidiaries terminates during
a performance period for any reason other than Retirement or death, the
Performance Units issued with respect to that performance period will be
forfeited on the date such Participant's employment terminates. Notwithstanding
the foregoing provisions of this Part V, if a Participant's employment with the
Company and all Subsidiaries terminates before the end of the Performance Period
with respect to any Performance Units awarded to him, the Committee may
determine that the Participant will be entitled to receive all or any portion of
the units that he or she would otherwise receive, and may accelerate the
determination and payment of the value of such units or make such other
adjustments as the Committee, in its sole discretion, deems desirable.
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FORM OF PROXY
x PLEASE MARK YOUR VOTES
AS IN THIS EXAMPLE
WITHHOLD AUTHORITY Nominees:
FOR To vote for M. Jay Allison
David W. Sledge
1. Election of
two (2) Class B
Directors (term
expires in 2002): ----- -----
(Instruction: To withhold authority to vote for the individual nominee, write
that nominee's name on the line below.)
- ------------------------
WITHHOLD AUTHORITY Nominee:
FOR To vote for Roland O. Burns
Election of
one (1) Class C
Directors (term
expires in 2000): ----- -----
(Instruction: To withhold authority to vote for the individual nominee, write
that nominee's name on the line below.)
- -----------------------
FOR AGAINST ABSTAIN
2. Approve the
Comstock Resources,
Inc. 1999 Long-term
Incentive Plan ----- ----- -----
FOR AGAINST ABSTAIN
3. Approve the issuance of
1,052,000 shares of Series A
1999 Convertible Preferred
Stock, par value $10.00 per
share, and shares of Common
Stock related thereto ----- ----- -----
FOR AGAINST ABSTAIN
4. Proposal to ratify the
appointment of
Arthur Andersen LLP
independent accountants
for 1999 ----- ----- -----
5. In their discretion on such other matters which may properly come before
this meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, 3 and 4.
SIGNATURE(S) --------------------------- DATE: ----------
NOTE: Please sign exactly as your name appears on this proxy. If your stock is
jointly owned, both parties must sign. Fiduciaries and representatives should so
indicate when signing, and when more than one is named, a majority should sign.
<PAGE>
COMSTOCK RESOURCES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - JUNE 23, 1999
The undersigned hereby appoints M. Jay Allison and Roland O. Burns, and each of
them with full power of substitution, attorneys, agents and proxies of the
undersigned to vote as directed on the reverse the shares of stock which the
undersigned would be entitled to vote, if personally present, at the Annual
Meeting of Stockholders of Comstock Resources, Inc. to be held Monday, June 23,
1999 at 4:00 p.m. Dallas time and any adjournment or adjournments thereof. The
undersigned hereby revokes any proxy or proxies heretofore given to vote upon or
act with respect to such shares of stock and hereby ratifies and confirms all
that said attorneys, their substitutes, or any of them, may lawfully do by
virtue hereof.
(To be Signed on Reverse Side.)
