(2) LONG-TERM DEBT –

At September 30, 2016, long-term debt was comprised of the following:

	(In thousands)

10% Senior Secured Toggle Notes due 2020:
Principal	$	697,195
Discount, net of amortization		(13,072	)
7³⁄₄% Convertible Second Lien PIK Notes due 2019:
Principal	$	270,557
Accrued interest payable in kind		1,456
Discount, net of amortization		(67,944	)
9½% Convertible Second Lien PIK Notes due 2020:
Principal		169,747
Accrued interest payable in kind		1,120
Discount, net of amortization		(41,618	)
10% Senior Notes due 2020:
Principal		2,805
7³⁄₄% Senior Notes due 2019:
Principal		17,959
Premium, net of amortization		132
9½% Senior Notes due 2020:
Principal		4,860
Discount, net of amortization		(105	)
Debt issuance costs, net of amortization		(17,570	)
	$	1,025,522

On September 6, 2016, Comstock completed a debt exchange offer with the holders of approximately 98% of the Company's outstanding senior notes. Specifically, the Company issued (i) $697.2 million of new 10% Senior Secured Toggle Notes due 2020 and warrants exercisable for 1,917,342 shares of Comstock's common stock, in exchange for $697.2 million of the Company's 10% Senior Secured Notes due 2020, (ii) $270.6 million of new 7¾% Convertible Second Lien PIK Notes due 2019 in exchange for $270.6 million of the Company's 7¾% Senior Notes due 2019, and (iii) $169.7 million of new 9½% Convertible Second Lien PIK Notes due 2020 in exchange for $169.7 million of the Company's 9½% Senior Notes due 2020. Accrued and unpaid interest on notes tendered for exchange was paid in cash on the closing date. Following the exchange, $2.8 million of the 10% Senior Notes, $18.0 million of the 7¾% Senior Notes and $4.9 million of the 9½% Senior Notes remained outstanding.

The exchange of the 10% Senior Secured Notes for the 10% Senior Secured Toggle Notes was accounted for as a modification of debt. Accordingly no gain or loss was recognized on the exchange. The value of the warrants issued to the noteholders in consideration of the exchange of $13.4 million is being amortized to interest expense over the life of the notes. Transaction costs of $4.4 million related to the exchange have been recognized in the three months ended September 30, 2016 as a reduction to the gain on extinguishment of debt which is reported as a component of other income (loss). The exchange of the 7¾% Senior Notes and the 9½% Senior Notes for the Convertible Second Lien PIK Notes was accounted for as a debt extinguishment given the substantial difference in the terms of the exchanged notes. A gain of $106.2 million on extinguishment of debt was recognized on this exchange representing the difference between the fair market value of the new convertible second lien notes and the carrying amount of the 7¾% Senior Notes and the 9½% Senior Notes that were exchanged. Transaction costs of $6.5 million related to these exchanges have been reflected as debt issuance costs which are being amortized to interest expense over the life of the notes.

Interest on the 10% Senior Secured Toggle Notes is payable on March 15 and September 15, commencing March 15, 2017 and the notes mature on March 15, 2020. The Company has the option to pay up to $75.0 million of interest on these notes in kind. To the extent that interest is paid in kind the interest rate increases to 12¼% only for that interest payment.

Interest on the 7¾% Convertible Second Lien PIK Notes is payable on April 1 and October 1, commencing April 1, 2017 and these notes mature on April 1, 2019. Interest on the 9½% Convertible Second Lien PIK Notes is payable on June 15 and December 15, commencing December 15, 2016 and these notes mature on June 15, 2020. Interest on the convertible second lien notes is only payable in kind. Each series of the convertible second lien notes are convertible, at the option of the holder, into 81.2 shares of the Company's common stock for each $1,000 of principal amount of notes. The convertible second lien notes will mandatorily convert into shares of common stock following a 15 consecutive trading day period during which the daily volume weighted average price of the Company's common stock is equal to or greater than $12.32 per share.

Prior to the completion of the debt exchange, the Company retired $87.5 million in principal amount of the 7¾% Senior Notes and $19.8 million of the 9½% Senior Notes in 2016 in exchange for the issuance of 2,748,403 shares of common stock and $3.5 million in cash. A gain of $89.6 million was recognized on the retirement of the senior notes during the nine months ended September 30, 2016 for the difference between the market value of the stock on the closing date of the exchanges and the net carrying value of the debt. The gain is included in the net gain on extinguishment of debt. During the nine months ended September 30, 2015, the Company acquired $12.5 million in principal amount of the 7¾% Senior Notes and $88.4 million in principal amount of the 9½% Senior Notes for $37.8 million, and recognized a gain of $59.3 million on the retirement of such notes. The Company also retired its bank credit facility in 2015 with the issuance of the 10% Senior Secured Notes and incurred a $3.7 million loss on the early retirement.

Comstock has a $50.0 million revolving credit facility with Bank of Montreal and Bank of America, N.A. The revolving credit facility matures on March 4, 2019. Indebtedness under the revolving credit facility is guaranteed by all of the Company's subsidiaries and is secured by substantially all of Comstock's and its subsidiaries' assets. Borrowings under the revolving credit facility bear interest, at Comstock's option, at either (1) LIBOR plus 2.5% or (2) the base rate (which is the higher of the administrative agent's prime rate, the federal funds rate plus 0.5% or 30 day LIBOR plus 1.0%) plus 1.5%. A commitment fee of 0.5% per annum is payable quarterly on the unused credit line. The revolving credit facility contains covenants that, among other things, restrict the payment of cash dividends and repurchases of common stock, limit the amount of additional debt that Comstock may incur and limit the Company's ability to make certain loans, investments and divestitures. The only financial covenants are the maintenance of a current ratio of at least 1.0 to 1.0 and the maintenance of an asset coverage ratio of proved developed reserves to amount outstanding under the revolving credit facility of at least 2.5 to 1.0. The Company was in compliance with these covenants as of September 30, 2016.

All of the Company's subsidiaries guarantee the bank credit facility, the 10% Senior Secured Toggle Notes, the 7¾% Convertible Second Lien PIK Notes, the 9½% Convertible Second Lien PIK Notes, and the other outstanding senior notes. The bank credit facility, the 10% Senior Secured Toggle Notes and the convertible second lien notes are secured by liens on substantially all of the assets of the Company and its subsidiaries. The allocation of proceeds related to the liens on the Company's assets are governed by intercreditor agreements granting priority to the bank credit facility. Proceeds from liens on the convertible second lien notes are also subject to the priority of the 10% Senior Secured Toggle Notes. The liens that previously secured the 10% Senior Secured Notes that were not tendered for exchange were released and these notes are no longer secured.