sv3asr
As filed with the Securities and
Exchange Commission on May 18, 2011
Registration No.
333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
APPROACH RESOURCES
INC.*
(Exact name of registrant as
specified in its charter)
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Delaware
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51-0424817
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. employer identification
number)
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One Ridgmar Centre
6500 West Freeway, Suite 800
Fort Worth, Texas 76116
(817) 989-9000
(Address, including zip
code, and telephone number,
including area code, of registrants principal executive
offices)
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J. Curtis Henderson
Executive Vice President and General Counsel
Approach Resources Inc.
One Ridgmar Centre
6500 West Freeway, Suite 800
Fort Worth, Texas 76116
(817) 989-9000
(Name, address, including
zip code, and
telephone number, including area code, of agent for service)
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Copy to:
Wesley P. Williams
Jessica W. Hammons
Thompson & Knight LLP
One Arts Plaza
1722 Routh Street, Suite 1500
Dallas, Texas
75201-2533
(214) 969-1700
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
registration statement.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following
box. o
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following
box. þ
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a registration statement pursuant to General
Instruction I.D. or a post-effective amendment thereto that
shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the
following
box. þ
If this Form is a post-effective amendment to a registration
statement filed pursuant to General Instruction I.D. filed
to register additional securities or additional classes of
securities pursuant to Rule 413(b) under the Securities
Act, check the following
box. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act.
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Large accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller reporting
company o
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(Do not check if smaller reporting company)
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CALCULATION
OF REGISTRATION FEE
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Title of Each Class of
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Amount to be
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Proposed Maximum
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Proposed Maximum
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Amount of
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Securities to be Registered(1)
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Registered(2)
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Offering Price Per Unit
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Aggregate Offering Price
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Registration Fee(3)
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Common Stock, $0.01 par value per share
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Preferred Stock, $0.01 par value per share
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Depositary Shares(4)
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Warrants
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Rights
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Debt Securities
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Guarantee of Debt Securities(5)
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(1)
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Any securities registered hereunder
may be sold separately or as units with the other securities
registered hereunder.
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(2)
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There is to be registered hereunder
such indeterminate number or amount of securities of each
identified class as may from time to time be issued by the
registrant at indeterminate prices and as may be issuable upon
conversion, redemption, exchange, exercise or settlement of any
securities registered hereunder, including under any applicable
anti-dilution provisions.
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(3)
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In accordance with
Rules 456(b) and 457(r) of the Securities Act of 1933, as
amended, which we refer to as the Securities Act, the registrant
is deferring payment of all of the registration fee, except for
$3,033 that has already been paid with respect to
$150 million aggregate initial offering price of securities
that were previously registered pursuant to Registration
Statement
No. 333-164371
and were not sold thereunder.
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(4)
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Each depositary share will be
issued under a depository agreement and will be evidenced by a
depositary receipt. If Approach Resources Inc. elects to offer
fractional interests in shares of preferred stock to the public,
depositary receipts will be distributed to the investors
purchasing the fractional interests, and the shares will be
issued to the depositary under the depositary agreement.
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(5)
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Subsidiaries of Approach Resources
Inc. named as co-registrants may fully, irrevocably and
unconditionally guarantee on an unsecured basis the
non-convertible debt securities of Approach Resources Inc. No
additional consideration will be received for the guarantees and
in accordance with Rule 457(n) of the Securities Act, no
additional fee is required.
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*ADDITIONAL
SUBSIDIARY GUARANTOR REGISTRANTS
Each of the following subsidiaries and each other subsidiary of
Approach Resources Inc. that becomes a guarantor of certain of
the securities registered hereby, is hereby deemed to be a
registrant.
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Jurisdiction of Incorporation
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I.R.S. Employer
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Exact Name as Specified in their Charters
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or Organization
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Identification Number
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Approach Resources I, LP
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Texas
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20-0415316
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Approach Oil & Gas Inc.
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Delaware
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20-1997957
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Approach Operating, LLC
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Delaware
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54-2131981
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Approach Delaware, LLC
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Delaware
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20-0507483
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Approach Services, LLC
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Delaware
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PROSPECTUS
APPROACH
RESOURCES INC.
Common Stock
Preferred Stock
Depositary Shares
Warrants
Rights
Debt Securities
Guarantee of Debt Securities of Approach Resources Inc.
by:
Approach Resources I, LP
Approach Oil & Gas Inc.
Approach Operating, LLC
Approach Delaware, LLC
Approach Services, LLC
We may offer and sell the securities listed above from time to
time in one or more transactions. Any non-convertible debt
securities we issue under this prospectus may be guaranteed by
one or more of our subsidiaries.
The securities:
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will be offered at prices and on terms to be set forth in an
accompanying prospectus supplement;
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may be offered separately or together, or in separate series;
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may be convertible into or exchangeable for other securities;
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may be guaranteed by certain of our domestic
subsidiaries; and
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may be listed on a national securities exchange, if specified in
an accompanying prospectus supplement
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We will provide the specific terms of the securities in
supplements to this prospectus. This prospectus may be used to
offer and sell securities only if it is accompanied by a
prospectus supplement. The prospectus supplement will contain
more specific information about the offering and the terms of
the securities being offered, including any guarantees by our
domestic subsidiaries. A prospectus supplement may also add,
update or change information contained in this prospectus. This
prospectus may not be used to offer or sell securities without a
prospectus supplement describing the method and terms of the
offering.
We may sell these securities directly or through agents,
underwriters or dealers or through a combination of these
methods. See Plan of Distribution. The prospectus
supplement will list any agents, underwriters or dealers that
may be involved and the compensation they will receive. The
prospectus supplement will also show you the net proceeds that
we expect to receive from selling the securities being offered.
You should carefully read this prospectus and any accompanying
prospectus supplement, together with the documents we
incorporate by reference, before you invest in any of our
securities.
Investing in any of our securities involves
risk. Please read carefully the information included
and incorporated by reference in this prospectus and in any
applicable prospectus supplement for a discussion of the factors
you should consider before deciding to purchase our securities.
See Risk Factors beginning on page 5 of this
prospectus.
Our common stock is traded on the NASDAQ Global Select Market
under the symbol AREX.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal
offense.
This
prospectus is dated May 18, 2011.
TABLE OF
CONTENTS
You should rely only on the information contained in this
prospectus, any prospectus supplement and the documents we have
incorporated by reference. We have not authorized anyone to
provide you with different information. We are not making an
offer of these securities in any state where the offer is not
permitted. You should not assume that the information contained
in this prospectus or any prospectus supplement, as well as
information we previously filed with the Securities and Exchange
Commission that is incorporated by reference herein, is accurate
as of any date other than its respective date.
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ABOUT
THIS PROSPECTUS
This prospectus is a part of a registration statement that we
filed with the Securities and Exchange Commission, which we
refer to as the SEC, utilizing a shelf registration
process. Under this shelf registration process, we may sell any
combination of the securities described in this prospectus in
one or more offerings. This prospectus provides you with a
general description of the securities we may offer. Each time we
sell securities under this shelf registration, we will provide a
prospectus supplement that will contain specific information
about the terms of that offering and the securities offered by
us in that offering. The prospectus supplement may also add,
update or change information contained in this prospectus. Any
statement that we make in this prospectus will be modified or
superseded by any inconsistent statement made by us in a
prospectus supplement. You should read both this prospectus and
any prospectus supplement together with additional information
described under the heading Where You Can Find More
Information before making an investment in our securities.
You should not assume that the information in this prospectus,
any accompanying prospectus supplement or any document
incorporated herein by reference is accurate as of any date
other than the date of such document.
In this prospectus, the Company, we,
us, our or ours refer to
Approach Resources Inc. and its subsidiaries, unless we state
otherwise or the context indicates otherwise.
APPROACH
RESOURCES INC.
Approach Resources Inc. is an independent energy company engaged
in the exploration, development, production and acquisition of
oil and gas properties. Our core properties are located in the
Permian Basin in West Texas (Clearfork, Wolfcamp Shale, Canyon
Sands, Strawn and Ellenburger target formations). We also own
interests in the East Texas Basin (Cotton Valley Sands and
Cotton Valley Lime target formations) and in the Chama Basin in
Northern New Mexico (Mancos Shale target formation). The Company
was incorporated in Delaware in 2002. Our principal executive
offices are located at One Ridgmar Centre, 6500 West
Freeway, Suite 800, Fort Worth, Texas 76116, and our
telephone number is
(817) 989-9000.
THE
SUBSIDIARY GUARANTORS
Certain of our domestic subsidiaries, which we refer to as the
Subsidiary Guarantors in this prospectus, may fully and
unconditionally guarantee our payment obligations under any
series of debt securities offered by this prospectus. Financial
information concerning our Subsidiary Guarantors and any
non-guarantor subsidiaries will be included in our consolidated
financial statements filed as part of our periodic reports filed
pursuant to the Securities Exchange Act of 1934, as amended,
which we refer to as the Exchange Act, to the extent required by
the rules and regulations of the SEC.
Additional information concerning our subsidiaries and us is
included in reports and other documents incorporated by
reference in this prospectus. See Where You Can Find More
Information.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other
information with the SEC (File
No. 001-33801)
pursuant to the Exchange Act. You may read and copy any
documents that are filed at the SECs public reference room
at 100 F Street, N.E., Washington, D.C. 20549.
You may also obtain copies of these documents at prescribed
rates from the public reference section of the SEC at its
Washington address. Please call the SEC at
1-800-SEC-0330
for further information.
Our filings are also available to the public through the
SECs website at
http://www.sec.gov.
The SEC allows us to incorporate by reference
information that we file with it, which means that we can
disclose important information to you by referring you to
documents previously filed with the SEC. The information
incorporated by reference is an important part of this
prospectus, and the information that we later
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file with the SEC will automatically update and supersede this
information. The following documents we have filed with the SEC
pursuant to the Exchange Act are incorporated herein by
reference:
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our Annual Report on
Form 10-K
for the year ended December 31, 2010;
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our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2011;
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our Current Reports on
Form 8-K
filed on January 6, 2011, January 14, 2011,
January 28, 2011, March 1, 2011 (as such Current
Report on Form 8-K was amended by the Form 8-K/A with the SEC on
April 21, 2011), April 8, 2011 and May 4,
2011; and
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the description of our common stock contained in our
registration statement on Form
8-A12B filed
on November 5, 2007, including any amendment to that form
that we may file in the future for the purpose of updating the
description of our common stock.
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These reports contain important information about us, our
financial condition and our results of operations.
All future documents filed pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act (excluding any
information furnished pursuant to Item 2.02 or
Item 7.01 on any Current Report on
Form 8-K)
before the termination of each offering under this prospectus
shall be deemed to be incorporated in this prospectus by
reference and to be a part hereof from the date of filing of
such documents. Any statement contained herein, or in a document
incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of
this prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is or is deemed
to be incorporated by reference herein, modifies or supersedes
such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address or telephone number:
Approach
Resources Inc.
One Ridgmar Centre
6500 West Freeway, Suite 800
Fort Worth, Texas 76116
Attention: Executive Vice President and General Counsel
(817) 989-9000
We also maintain a website at
http://www.approachresources.com.
The information on our website is not part of this prospectus.
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Various statements contained in this prospectus, any prospectus
supplement and in the documents incorporated herein by
reference, including those that express a belief, expectation or
intention, as well as those that are not statements of
historical fact, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, which we refer to as the Securities Act, and
Section 21E of the Exchange Act. The forward-looking
statements may include projections and estimates concerning the
timing and success of specific projects, typical well economics
and our future reserves, production, revenues, costs, income,
capital spending,
3-D seismic
operations, interpretation and results and obtaining permits and
regulatory approvals. When we use the words will,
believe, intend, expect,
may, should, anticipate,
could, estimate, plan,
predict, project, potential
or their negatives, other similar expressions or the statements
that include those words, they are intended to identify a
forward-looking statement, although not all forward-looking
statements contain such identifying words.
These forward-looking statements are largely based on our
expectations, which reflect estimates and assumptions made by
our management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors. Although we believe such estimates and assumptions to
be reasonable, they are inherently uncertain and involve a
number of risks and uncertainties that are beyond our control.
In addition, managements assumptions about future events
may prove to be inaccurate. We caution all readers that the
forward-looking statements contained in this prospectus are not
guarantees of future performance, and we cannot assure any
reader that such statements will be realized or the
forward-looking events and circumstances will occur. Actual
results may differ materially from those anticipated or implied
in the forward-looking statements due to the factors detailed
below and discussed in our Annual Report on
Form 10-K
for the year ended December 31, 2010, and our subsequent
SEC filings. All forward-looking statements contained in this
prospectus speak only as of the date of this prospectus, and all
forward-looking statements incorporated by reference into this
prospectus speak only as of the dates such statements were
issued. We expressly disclaim all responsibility to publicly
update or revise any forward-looking statements as a result of
new information, future events or otherwise. These cautionary
statements qualify all forward-looking statements attributable
to us, or persons acting on our behalf. The risks, contingencies
and uncertainties relate to, among other matters, the following:
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our business strategy, including our ability to recover oil and
gas in place associated with our Wolffork oil resource play in
the Permian Basin;
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estimated quantities of oil, natural gas liquids, which we refer
to as NGLs, and gas reserves;
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uncertainty of commodity prices in oil, gas and NGLs;
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overall United States and global economic and financial market
conditions;
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domestic and foreign demand and supply for oil, gas, NGLs and
the products derived from such hydrocarbons;
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disruption of credit and capital markets;
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our financial position;
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our cash flow and liquidity;
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replacing our oil and natural gas reserves;
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our inability to retain and attract key personnel;
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uncertainty regarding our future operating results;
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uncertainties in exploring for and producing oil and gas;
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high costs, shortages, delivery delays or unavailability of
drilling and completion, equipment, materials, labor or other
services;
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disruptions to, capacity constraints in or other limitations on
the pipeline systems that deliver our gas and NGLs and other
processing and transportation considerations;
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our inability to obtain additional financing necessary to fund
our operations and capital expenditures and to meet our other
obligations;
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competition in the oil and gas industry;
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marketing of oil, gas and NGLs;
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interpretation of
3-D seismic
data;
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development of our current asset base or property acquisitions;
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the effects of government regulation and permitting and other
legal requirements;
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plans, objectives, expectations and intentions contained in this
prospectus, any prospectus supplement and the documents we
incorporate herein by reference that are not historical; and
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the other risks described in this prospectus, any prospectus
supplement and the documents we incorporate herein by reference.
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4
RISK
FACTORS
You should carefully consider the risk factors set forth under
the heading Risk Factors in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, as well as in
any of our filings with the SEC pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act incorporated herein by
reference, and those risk factors that may be included in any
applicable prospectus supplement, together with all of the other
information included in this prospectus, any prospectus
supplement and the documents we incorporate by reference, before
investing in our securities. If any of the risks discussed in
the foregoing documents were to occur, our business, financial
condition, results of operations and cash flows could be
materially adversely affected.
RATIOS OF
EARNINGS TO FIXED CHARGES
The following table contains our consolidated ratio of earnings
to fixed charges for the periods indicated. You should read
these ratios of earnings to fixed charges in connection with our
consolidated financial statements, including the notes to those
statements, incorporated by reference into this prospectus.
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Three Months Ended
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Years Ended December 31,
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March 31, 2011
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2010
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2009
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2008
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2007
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2006
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Ratio of (loss) earnings to fixed charges(1)
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5.35
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6.21
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x
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(2)
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27.89
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x
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1.47
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x
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9.73
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x
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(1) |
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The ratio has been computed by dividing (loss) earnings by fixed
charges. For purposes of computing the ratio, (i) (loss)
earnings consist of (loss) income before income taxes, and
(ii) fixed charges consist of interest expense and a
portion of rentals representative of an implicit interest factor
for such rentals. |
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Due to our net loss for the year ended December 31, 2009,
the coverage ratio for this period was less than 1:1. To achieve
a coverage ratio of 1:1, we would have needed additional
earnings of approximately $4.2 million for the year ended
December 31, 2009. |
We did not have any preferred stock outstanding and there were
no preferred stock dividends paid or accrued during the periods
presented above.
USE OF
PROCEEDS
Except as may be stated in the applicable prospectus supplement,
we intend to use the net proceeds from any sales of securities
by us under this prospectus and any applicable prospectus
supplement for general corporate purposes. These purposes may
include repayment or refinancing of borrowings, working capital,
capital expenditures, investments and acquisitions. Pending any
specific application, we may initially invest funds in
short-term marketable securities.
DESCRIPTION
OF CAPITAL STOCK
The following description is based on relevant provisions of the
Delaware General Corporation Law, which we refer to as the DGCL,
our restated certificate of incorporation, which we refer to as
our certificate of incorporation, and our amended and restated
bylaws, which we refer to as our bylaws. This summary does not
purport to be complete and is qualified in its entirety by
reference to the provisions of DGCL and to our certificate of
incorporation and bylaws.
Our authorized capital stock consists of 90,000,000 shares
of common stock, $0.01 par value per share, and
10,000,000 shares of preferred stock, $0.01 par value
per share. Under the DGCL, our stockholders shall not be
personally liable for our debts or obligations except as they
may be liable by reason of their own conduct or acts.
5
Common
Stock
As of May 11, 2011, we had a total of
28,462,505 shares of common stock issued and outstanding,
including 874,536 shares of restricted stock. The shares of
restricted stock have voting rights, rights to receive dividends
and are subject to certain forfeiture restrictions.
Additionally, options to purchase 302,775 shares of common
stock are currently outstanding and have been granted to certain
members of our management and other employees. We have reserved
10% of our outstanding shares of common stock for grant of
awards under our 2007 Stock Incentive Plan (which are adjusted
each year to remain at 10% of the outstanding shares of our
common stock), plus all shares of common stock that remain
available for grant of awards under a prior plan, plus shares of
common stock subject to outstanding awards under the prior plan
that later cease to be subject to those awards for any reason
other than those awards having been exercised.
Holders of our common stock are entitled to one vote for each
share held on all matters submitted to a vote of stockholders.
Because holders of common stock do not have cumulative voting
rights, the holders of a majority of the shares of common stock
can elect all of the members of the board of directors standing
for election.
Holders of our common stock are entitled to receive dividends if
and when such dividends are declared by our board of directors
out of assets legally available therefor after payment of
dividends required to be paid on shares of preferred stock, if
any. Upon our dissolution, liquidation or winding up, and
subject to any prior rights of outstanding preferred stock, the
holders of our common stock will be entitled to share pro rata
in the distribution of all our assets available for distribution
to our stockholders after satisfaction of our debts and other
liabilities and the payment of the liquidation preference of any
preferred stock that may be outstanding. There are no redemption
or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and
nonassessable. The holders of our common stock have no
preemptive, conversion, redemption or other subscription rights.
The rights, preferences and privileges of holders of common
stock are subject to, and may be adversely affected by, the
rights of holders of shares of any series of preferred stock
that we may designate and issue in the future.
Our common stock is listed on the NASDAQ Global Select Market
under the symbol AREX. As of May 11, 2011,
there were 80 holders of record of our common stock.
Preferred
Stock
Subject to the provisions of our certificate of incorporation
and limitations prescribed by law, our board of directors is
authorized, without further stockholder approval, to establish
and to issue from time to time one or more classes or series of
preferred stock, par value $0.01 per share, covering up to an
aggregate of 10,000,000 shares of preferred stock. Each
class or series of preferred stock will cover the number of
shares and will have preferences, voting powers, qualifications
and special or relative rights or privileges as is determined by
the board of directors, which may include, among others,
dividend rights, liquidation preferences, voting rights,
conversion rights, preemptive rights and redemption rights.
The rights of the holders of common stock will be subject to the
rights of holders of any preferred stock issued in the future.
The issuance of preferred stock could adversely affect the
voting power of holders of common stock and reduce the
likelihood that common stockholders will receive dividend
payments and payments upon liquidation. The issuance of
preferred stock could also have the effect of decreasing the
market price of the common stock and could delay, deter or
prevent a change in control of our company.
The existence of authorized but unissued shares of preferred
stock could have anti-takeover effects because we could issue
preferred stock with special dividend or voting rights that
could discourage potential bidders. For example, a business
combination could be impeded by the issuance of a series of
preferred stock containing class voting rights that would enable
the holder or holders of such series to block any such
transaction. Alternatively, a business combination could be
facilitated by the issuance of a series of preferred stock
having sufficient voting rights to provide a required percentage
vote of our stockholders. In addition, under some circumstances,
the issuance of preferred stock could adversely affect the
voting power and other rights of the holders of common stock and
could also affect the likelihood that holders of our common
stock
6
will receive dividend payments and payments on liquidation.
Although prior to issuing any series of preferred stock our
board of directors will be required to make a determination as
to whether the issuance is in the best interest of our
stockholders, our board of directors could act in a manner that
would discourage an acquisition attempt or other transaction
that some, or a majority, of our stockholders might believe to
be in their best interests or in which our stockholders might
receive a premium for their stock over prevailing market prices
of such stock. Our board of directors does not at present intend
to seek stockholder approval prior to any issuance of currently
authorized preferred stock, unless otherwise required by law or
applicable stock exchange requirements.
It is not possible to state the actual effect of the issuance of
any shares of preferred stock upon the rights of holders of the
common stock until the board of directors determines the
specific rights of the holders of the preferred stock. We
currently have no shares of preferred stock outstanding.
Anti-Takeover
Effects of Provisions of Delaware Law, Our Certificate of
Incorporation and Bylaws
A number of provisions in our certificate of incorporation, our
bylaws and the DGCL may make it more difficult to acquire
control of us. These provisions could deprive our stockholders
of opportunities to realize a premium on the shares of common
stock owned by them. In addition, these provisions may adversely
affect the prevailing market price of our common stock. These
provisions are intended to:
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enhance the likelihood of continuity and stability in the
composition of the board of directors and in the policies
formulated by the board of directors;
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discourage transactions which may involve an actual or
threatened change in control of us;
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discourage tactics that may be involved in proxy fights; and
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encourage persons seeking to acquire control of our company to
consult first with the board of directors to negotiate the terms
of any proposed business combination or offer.
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Written consent of stockholders. Our
certificate of incorporation and bylaws provide that any action
required or permitted to be taken by our stockholders must be
taken at a duly called meeting of stockholders and not by
written consent.
Call of special stockholder meetings. Our
bylaws provide that stockholders are not permitted to call
special meetings of stockholders. Only our board of directors,
chairman or Chief Executive Officer is permitted to call a
meeting of stockholders.
Amending the bylaws. Our certificate of
incorporation permits our board of directors to adopt, alter or
repeal any provision of the bylaws or to make new bylaws. Our
certificate of incorporation also provides that our bylaws may
be amended by the affirmative vote of at least 67% of the voting
power of the outstanding shares of our capital stock.
Classified board. Our certificate of
incorporation provides that our board of directors is divided
into three classes of directors, with the classes to be as
nearly equal in number as possible. As a result, approximately
one-third of our board of directors will be elected each year.
The classification of directors has the effect of making it more
difficult for stockholders to change the composition of our
board of directors. Our certificate of incorporation and bylaws
provide that the number of directors will be fixed from time to
time pursuant to a resolution adopted by the board of directors.
Advance notice procedures for stockholder proposals and
director nominations. Our bylaws provide that
stockholders seeking to bring business before an annual meeting
of stockholders, or to nominate candidates for election as
directors at an annual meeting of stockholders, must provide
timely notice thereof in writing. To be timely, a
stockholders notice generally must be delivered to or
mailed and received at our principal executive offices not less
than 90 and no more than 120 calendar days before the first
anniversary of the date on which we first mailed our proxy
materials for the preceding years annual meeting of
stockholders. In addition, our bylaws specify requirements for
the form and content of a stockholders notice. These
provisions may preclude
7
stockholders from bringing matters before an annual meeting of
stockholders or from making nominations for directors at an
annual meeting of stockholders.
Filling board of directors vacancies;
removal. Our certificate of incorporation
provides that vacancies and newly created directorships
resulting from any increase in the authorized number of
directors may be filled by the affirmative vote of a majority of
our directors then in office, though less than a quorum. Each
director will hold office until his or her successor is elected
and qualified, or until the directors earlier death,
resignation, retirement or removal from office. Any director may
resign at any time upon written notice to us. Our certificate of
incorporation provides, in accordance with the DGCL, that the
stockholders may remove directors only for cause and by the
affirmative vote of at least 67% of the voting power of all of
the then-outstanding shares of our common stock. We believe that
the removal of directors by the stockholders only for cause,
together with the classification of the board of directors, will
promote continuity and stability in our management and policies
and that this continuity and stability will facilitate
long-range planning.
No cumulative voting. The DGCL provides that
stockholders are not entitled to use cumulative voting in the
election of directors unless our restated certificate of
incorporation provides otherwise. Under cumulative voting, a
majority stockholder holding a sufficient percentage of a class
of shares may be able to ensure the election of one or more
directors. Our certificate of incorporation expressly precludes
cumulative voting.
Authorized but unissued shares. Our
certificate of incorporation provides that the authorized but
unissued shares of preferred stock are available for future
issuance without stockholder approval. These additional shares
may be utilized for a variety of corporate purposes, including
future public offerings to raise additional capital, corporate
acquisitions and employee benefit plans. The existence of
authorized but unissued shares of common stock and preferred
stock could discourage an attempt to obtain control of us by
means of a proxy contest, tender offer, merger or otherwise.
Delaware Business Combination Statute. We are
subject to Section 203 of the DGCL regulating corporate
takeovers. This section prevents a Delaware corporation from
engaging in a business combination that includes a merger or
sale of more than 10% of the corporations assets with a
stockholder who owns 15% or more of the corporations
outstanding voting stock, as well as affiliates and associates
of any of those persons. That prohibition extends for three
years following the date that stockholder acquired that amount
of stock unless:
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the transaction in which that stockholder acquired the stock is
approved by the board of directors prior to that date;
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upon completion of the transaction that resulted in the
acquisition of the stock, the stockholder owned at least 85% of
the voting stock of the corporation outstanding at the time the
transaction commenced, excluding those shares owned by various
employee benefit plans or persons who are directors and also
officers; or
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on or after the date the stockholder acquired the stock, the
business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders by
the affirmative vote of at least two-thirds of the outstanding
voting stock that is not owned by the stockholder.
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Stockholders may, by adopting an amendment to our certificate of
incorporation or our bylaws, elect for the corporation not to be
governed by Section 203 of the DGCL. Such amendment shall
not become effective until 12 months after the date it is
adopted or applies to a stockholder. Neither our certificate of
incorporation nor our bylaws exempt us from the restrictions
imposed under Section 203. It is anticipated that the
provisions of Section 203 may encourage companies
interested in acquiring us to negotiate in advance with our
board of directors. Section 203 will not apply to a
business combination between us and Yorktown Energy
Partners V, L.P., Yorktown Energy Partners VI, L.P. or
Yorktown Energy Partners VII, L.P., or collectively, Yorktown,
which are under common management, or a Yorktown affiliate
because Yorktown held more than 15% of our stock prior to the
effective date of our certificate of incorporation.
Limitation of liability of directors and officers;
indemnification. Our certificate of incorporation
provides that to the fullest extent permitted by Delaware law,
as that law may be amended and supplemented from time
8
to time, our directors shall not be personally liable to us or
our stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach
of the directors duty of loyalty to the company or our
stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct, fraud or a knowing
violation of law, (iii) the payment of dividends in
violation of Section 174 of the DGCL, or (iv) for any
transaction from which the director derived any improper
personal benefit. The effect of the provision of our certificate
of incorporation is to eliminate the rights of the company and
our stockholders (through stockholders derivative suits on
our behalf) to recover monetary damages against a director for
breach of the fiduciary duty of care as a director (including
breaches resulting from negligent behavior) except in the
situations described in clauses (i) through
(iv) above. Our bylaws also set forth certain
indemnification provisions and provide for the advancement of
expenses incurred by a director in defending a claim by reason
of the fact that he was one of our directors (or was serving as
a director or officer of another entity at our request),
provided that the director agrees to repay the amounts advanced
if the director is not entitled to be indemnified by us under
the provisions of the DGCL. The indemnification provisions of
our certificate of incorporation may reduce the likelihood of
derivative litigation against directors and may discourage or
deter stockholders or management from bringing a lawsuit against
directors for breaches of their fiduciary duties, even though an
action, if successful, otherwise might have benefited us and our
stockholders.
The right to indemnification and advancement of expenses are not
exclusive of any other rights to indemnification our directors
or officers may be entitled to under any agreement, vote of
stockholders or disinterested directors or otherwise. We have
entered into indemnification agreements with each of our
directors and some of our officers pursuant to which we agree to
indemnify the director or officer against expenses, judgments,
fines or amounts paid in settlement incurred by the director or
officer and arising in his capacity as a director, officer,
employee
and/or agent
of the Company or other enterprise of which he is a director,
officer, employee or agent acting at our request to the maximum
extent permitted by applicable law, subject to certain
limitations. Additionally, under Delaware law, we may purchase
and maintain insurance for the benefit and on behalf of our
directors and officers insuring against all liabilities that may
be incurred by the director or officer in or arising out of his
capacity as our director, officer, employee
and/or agent.
Business
Opportunities Renunciation
All of our non-employee directors and certain of our
stockholders may from time to time have investments in other
exploration and production companies that may compete with us.
Section 122(17) of the DGCL permits a Delaware corporation,
such as the Company, to renounce in its certificate of
incorporation or by action of its board of directors any
interest or expectancy of the corporation in certain
opportunities, effectively eliminating the ambiguity in a
Delaware corporations ability to do so in advance arising
out of prior Delaware case law. Under corporate law concepts of
fiduciary duty, officers and directors generally have a duty to
disclose to us opportunities that are related to our business
and are generally prohibited from pursuing those opportunities
unless we determine that we are not going to pursue them. Our
certificate of incorporation and our business opportunities
agreements provide that so long as any of the parties to the
business opportunities agreements, which we refer to as
designated parties, is serving as a member of our
board of directors, we renounce any interest or expectancy in
any business opportunity, transaction or other matter in and
that involves any aspect of the oil and gas exploration,
exploitation, development and production other than:
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any business opportunity that is brought to the attention of a
designated party solely in such persons capacity as a
director of the Company and with respect to which, at the time
of such presentment, no other designated party has independently
received notice or otherwise identified such opportunity; or
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any business opportunity that is identified by a designated
party solely through the disclosure of information by or on
behalf of us.
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Thus, for example, designated parties may pursue opportunities
in the oil and gas exploration and production industry for their
own account. Our certificate of incorporation provides that the
designated parties have no obligation to offer such
opportunities to us.
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Pursuant to the business opportunities agreements approved by
our board of directors, each of the designated parties do not
have a duty to inform us of a business opportunity that he
becomes aware of so long as he did not become aware of the
opportunity solely as a consequence of serving as a member of
our board of directors. Furthermore, the designated parties each
are permitted to pursue that opportunity even if it is
competitive with our business. The business opportunities
agreements do not prohibit us from pursuing any business
opportunity to which we have renounced any interest or
expectancy. The business opportunities agreements provide the
designated parties and their respective affiliates with some
certainty that opportunities that they independently pursue will
not be required to be first offered to us.
Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is
American Stock Transfer & Trust Company.
DESCRIPTION
OF DEPOSITARY SHARES
We may, at our option, elect to offer fractional shares of
preferred stock, rather than full shares of preferred stock. If
we do, we will issue to the public receipts for depositary
shares, and each of these depositary shares will represent a
fraction of a share of a particular series of preferred stock.
Description
of Depositary Shares
The shares of any series of preferred stock underlying the
depositary shares will be deposited under a deposit agreement
between us and a bank or trust company selected by us to be the
depositary. Subject to the terms of the deposit agreement, each
owner of a depositary share will be entitled, in proportion to
the applicable fractional interest in shares of preferred stock
underlying that depositary share, to all the rights and
preferences of the preferred stock underlying that depositary
share.
The depositary shares will be evidenced by depositary receipts
issued pursuant to the deposit agreement. Depositary receipts
will be issued to those persons who purchase the fractional
interests in the preferred stock underlying the depositary
shares, in accordance with the terms of the offering. The
following summary of the deposit agreement, the depositary
shares and the depositary receipts is not complete. You should
refer to the forms of the deposit agreement and depositary
receipts that may be filed as exhibits to the registration
statement of which this prospectus forms a part in the event we
issue depositary shares.
Dividends
and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received in respect of the preferred stock to the
record holders of depositary shares relating to that preferred
stock in proportion to the number of depositary shares owned by
those holders.
If there is a distribution other than in cash, the depositary
will distribute property received by it to the record holders of
depositary shares that are entitled to receive the distribution,
unless the depositary determines that it is not feasible to make
the distribution. If this occurs, the depositary may, with our
approval, sell the property and distribute the net proceeds from
the sale to the applicable holders.
Redemption
of Depositary Shares
If a series of preferred stock underlying the depositary shares
is subject to redemption, the depositary shares will be redeemed
from the proceeds received by the depositary resulting from the
redemption, in whole or in part, of that series of preferred
stock held by the depositary. The redemption price per
depositary share will be equal to the applicable fraction of the
redemption price per share payable with respect to that series
of the preferred stock. Whenever we redeem shares of preferred
stock that are held by the depositary, the depositary will
redeem, as of the same redemption date, the number of depositary
shares representing the shares of preferred stock so redeemed.
If fewer than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or pro
rata as determined by the depositary.
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After the date fixed for redemption, the depositary shares
called for redemption will no longer be outstanding, and all
rights of the holders of those depositary shares will cease,
except the right to receive any money, securities or other
property upon surrender to the depositary of the depositary
receipts evidencing those depositary shares.
Voting
the Preferred Stock
Upon receipt of notice of any meeting at which the holders of
preferred stock are entitled to vote, the depositary will mail
the information contained in the notice of meeting to the record
holders of the depositary shares underlying that preferred
stock. Each record holder of those depositary shares on the
record date (which will be the same date as the record date for
the preferred stock) will be entitled to instruct the depositary
as to the exercise of the voting rights pertaining to the amount
of the preferred stock underlying that holders depositary
shares. The depositary will try, as far as practicable, to vote
the number of shares of preferred stock underlying those
depositary shares in accordance with such instructions, and we
will agree to take all action which may be deemed necessary by
the depositary in order to enable the depositary to do so. The
depositary will not vote the shares of preferred stock to the
extent it does not receive specific instructions from the
holders of depositary shares underlying the preferred stock.
Amendment
and Termination of the Depositary Agreement
The form of depositary receipt evidencing the depositary shares
and any provision of the deposit agreement may be amended at any
time by agreement between us and the depositary. However, any
amendment that materially and adversely alters the rights of the
holders of depositary shares will not be effective unless the
amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding. The deposit
agreement may be terminated by us or by the depositary only if
(i) all outstanding depositary shares have been redeemed,
or (ii) there has been a final distribution of the
underlying preferred stock in connection with our liquidation,
dissolution or winding up and the preferred stock has been
distributed to the holders of depositary receipts.
Charges
of Bank Depositary
We will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary
arrangements. We will pay charges of the bank depositary in
connection with the initial deposit of the preferred stock and
any redemption of the preferred stock. Holders of depositary
shares will pay other transfer and other taxes and governmental
charges and any other charges, including a fee for the
withdrawal of shares of preferred stock upon surrender of
depositary receipts, as are expressly provided in the depositary
agreement to be payable by such holders.
Withdrawal
of Preferred Stock
Except as may be provided otherwise in the applicable prospectus
supplement, upon surrender of depositary receipts at the
principal office of the bank depositary, subject to the terms of
the depositary agreement, the owner of the depositary shares may
demand delivery of the number of whole shares of preferred stock
and all money and other property, if any, represented by those
depositary shares. Partial shares of preferred stock will not be
issued. If the depositary receipts delivered by the holder
evidence a number of depositary shares in excess of the number
of depositary shares representing the number of whole shares of
preferred stock to be withdrawn, the bank depositary will
deliver to such holder at the same time a new depositary receipt
evidencing the excess number of depositary shares. Holders of
preferred stock thus withdrawn may not thereafter deposit those
shares under the depositary agreement or receive depositary
receipts evidencing depositary shares therefore.
Resignation
and Removal of Depositary
The depositary may resign at any time by delivering a notice to
us of its election to do so. We may remove the depositary at any
time. Any such resignation or removal will take effect upon the
appointment of a
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successor depositary and its acceptance of its appointment. The
successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal.
Miscellaneous
The depositary will forward to holders of depository receipts
all reports and communications from us that we deliver to the
depositary and that we are required to furnish to the holders of
the preferred stock.
Neither we nor the depositary will be liable if either of us is
prevented or delayed by law or any circumstance beyond our
control in performing our respective obligations under the
deposit agreement. Our obligations and those of the depositary
will be limited to the performance in good faith of our
respective duties under the deposit agreement. Neither we nor
the depositary will be obligated to prosecute or defend any
legal proceeding in respect of any depositary shares or
preferred stock unless satisfactory indemnity is furnished. We
and the depositary may rely upon written advice of counsel or
accountants, or upon information provided by persons presenting
preferred stock for deposit, holders of depositary receipts or
other persons believed to be competent and on documents believed
to be genuine.
DESCRIPTION
OF WARRANTS
We may issue warrants for the purchase of our common stock.
Warrants may be issued independently or together with debt
securities, preferred stock or common stock offered by any
prospectus supplement and may be attached to or separate from
any such offered securities. Each series of warrants will be
issued under a separate warrant agreement to be entered into
between us and a bank or trust company, as warrant agent, all as
set forth in the prospectus supplement relating to the
particular issue of warrants. The warrant agent will act solely
as our agent in connection with the warrants and will not assume
any obligation or relationship of agency or trust for or with
any holders of warrants or beneficial owners of warrants. The
following summary of certain provisions of the warrants does not
purport to be complete and is subject to, and is qualified in
its entirety by reference to, all provisions of the warrant
agreements.
You should refer to the prospectus supplement relating to a
particular issue of warrants for the terms of and information
relating to the warrants, including, where applicable:
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the number of shares of common stock purchasable upon exercise
of the warrants and the price at which such number of shares of
common stock may be purchased upon exercise of the warrants;
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the date on which the right to exercise the warrants commences
and the date on which such right expires, which we refer to as
the expiration date;
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United States federal income tax consequences applicable to the
warrants;
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the amount of the warrants outstanding as of the most recent
practicable date; and
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any other terms of the warrants.
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Warrants will be offered and exercisable for United States
dollars only. Warrants will be issued in registered form only.
Each warrant will entitle its holder to purchase such number of
shares of common stock at such exercise price as is in each case
set forth in, or calculable from, the prospectus supplement
relating to the warrants. The exercise price may be subject to
adjustment upon the occurrence of events described in such
prospectus supplement. After the close of business on the
expiration date (or such later date to which we may extend such
expiration date), unexercised warrants will become void. The
place or places where, and the manner in which, warrants may be
exercised will be specified in the prospectus supplement
relating to such warrants.
Prior to the exercise of any warrants, holders of the warrants
will not have any of the rights of holders of common stock,
including the right to receive payments of any dividends on the
common stock purchasable upon exercise of the warrants, or to
exercise any applicable right to vote.
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DESCRIPTION
OF RIGHTS
We may issue rights to purchase preferred stock, common stock or
other securities that are being registered hereunder. These
rights may be issued independently or together with any other
security offered hereby and may or may not be transferable by
the stockholder receiving the rights in such offering. In
connection with any offering of such rights, we may enter into a
standby arrangement with one or more underwriters or other
purchasers pursuant to which the underwriters or other
purchasers may be required to purchase any securities remaining
unsubscribed for after such offering.
Each series of rights will be issued under a separate rights
agreement which we will enter into with a bank or trust company,
as rights agent, all as set forth in the applicable prospectus
supplement. The rights agent will act solely as our agent in
connection with the certificates relating to the rights and will
not assume any obligation or relationship of agency or trust
with any holders of rights certificates or beneficial owners of
rights. We will file the rights agreement and the rights
certificates relating to each series of rights with the SEC, and
incorporate them by reference as an exhibit to the registration
statement of which this prospectus is a part on or before the
time we issue a series of rights.
The applicable prospectus supplement will describe the specific
terms of any offering of rights for which this prospectus is
being delivered, including the following:
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the date of determining the stockholders entitled to the rights
distribution;
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the number of rights issued or to be issued to each stockholder;
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the exercise price payable for each share preferred stock,
common stock or other securities upon the exercise of the rights;
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the number and terms of the shares preferred stock, common stock
or other securities which may be purchased per each right;
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the extent to which the rights are transferable;
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the date on which the holders ability to exercise the
rights shall commence, and the date on which the rights shall
expire;
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the extent to which the rights may include an over-subscription
privilege with respect to unsubscribed securities;
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if applicable, the material terms of any standby underwriting or
purchase arrangement entered into by us in connection with the
offering of such rights; and
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any other terms of the rights, including the terms, procedures,
conditions and limitations relating to the exchange and exercise
of the rights.
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The description in the applicable prospectus supplement of any
rights that we may offer will not necessarily be complete and
will be qualified in its entirety by reference to the applicable
rights certificate, which will be filed with the SEC.
DESCRIPTION
OF DEBT SECURITIES
The following description of debt securities sets forth certain
general terms and provisions of the debt securities to which
this prospectus and any prospectus supplement may relate. The
particular term of any series of debt securities and the extent
to which the general provisions may apply to a particular series
of debt securities will be described in a prospectus supplement
relating to that series. The debt securities will be issued
under one or more separate indentures between us and a trustee
to be named in the prospectus supplement.
The debt securities will be either senior debt securities or
subordinated debt securities. The senior and subordinated debt
securities will be issued under separate indentures among us,
the subsidiary guarantors of the debt securities, if any, and a
trustee to be determined. Senior debt securities will be issued
under a senior
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indenture and subordinated debt securities will be issued
under a subordinated indenture. Together, the senior
indenture and the subordinated indenture are called
indentures.
Unless the debt securities are guaranteed by our subsidiaries as
described below, the rights of the Company and our creditors,
including holders of the debt securities, to participate in the
assets of any subsidiary upon the latters liquidation or
reorganization, will be subject to the prior claims of the
subsidiarys creditors, except to the extent that we may
ourselves be a creditor with recognized claims against such
subsidiary.
We have summarized selected provisions of the indentures below.
The summary is not complete. The form of each indenture has been
filed with the SEC as an exhibit to the registration statement
of which this prospectus is a part, and you should read the
indentures for provisions that may be important to you.
General
The indentures provide that debt securities in separate series
may be issued thereunder from time to time without limitation as
to aggregate principal amount. We may specify a maximum
aggregate principal amount for the debt securities of any
series. We will determine the terms and conditions of the debt
securities, including the maturity, principal and interest, but
those terms must be consistent with the Indenture. Unless
otherwise indicated in the applicable prospectus supplement, the
debt securities will be our direct, unsecured obligations.
The subordinated debt securities will be subordinated in right
of payment to the prior payment in full of all of our senior
debt as described in this prospectus under
Subordination of Subordinated Debt
Securities and in the prospectus supplement applicable to
any subordinated debt securities. If the prospectus supplement
so indicates, the debt securities will be convertible into our
common stock.
If specified in the prospectus supplement respecting a
particular series of debt securities, certain subsidiaries of
the Company, each referred to as a subsidiary guarantor, will
fully and unconditionally guarantee that series as described in
this prospectus under Subsidiary
Guarantee and in the prospectus supplement. Each
subsidiary guarantee will be an unsecured obligation of the
subsidiary guarantor. A subsidiary guarantee of subordinated
debt securities will be subordinated to the senior debt of the
subsidiary guarantor on the same basis as the subordinated debt
securities are subordinated to our senior debt.
The applicable prospectus supplement and a supplemental
indenture relating to any series of debt securities being
offered will set forth the price or prices at which the debt
securities to be issued will be offered for sale and will
describe the following terms of such debt securities:
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the title of the debt securities;
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whether the debt securities are senior debt securities or
subordinated debt securities and, if subordinated debt
securities, the related subordination terms;
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whether any subsidiary guarantor will provide a subsidiary
guarantee of the debt securities, and the terms of any
subordination of such guarantee;
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any limit on the aggregate principal amount of the debt
securities;
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each date on which the principal of the debt securities will be
payable;
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the interest rate or rates, or the method of determination
thereof, that the debt securities will bear and the interest
payment dates for the debt securities;
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each place where payments of the principal, premium, if any, and
interest may be made on the debt securities;
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any terms upon which the debt securities may be redeemed, in
whole or in part, at our option;
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any sinking fund, amortization or other provisions that would
obligate us to redeem, repurchase or otherwise repay some or all
of the debt securities;
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the portion of the principal amount, if less than all, of the
debt securities that will be payable upon declaration of
acceleration of the maturity of the debt securities;
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any index or other method used to determine the amount of
payment of principal of (and premium, if any)
and/or
interest on the debt securities;
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whether the debt securities will be subject to certain optional
interest rate reset provisions;
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whether any portion of the principal amount of such debt
securities is payable upon declaration of the acceleration of
the maturity thereof;
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any additional means of satisfaction or discharge of the debt
securities;
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whether the debt securities are defeasible;
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any deletions, modifications, additions to or changes in the
events of default or covenants pertaining to the debt securities
or made for the benefit of the holders thereof;
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whether the debt securities are convertible into our common
stock and, if so, the terms and conditions upon which conversion
will be effected, including the initial conversion price or
conversion rate and any adjustments thereto and the conversion
period;
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any addition to or change in the covenants in the indenture
applicable to the debt securities;
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whether the debt securities will be issued as a global debt
security and, in that case, the identity of the depository for
the debt securities; and
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any other terms of the debt securities not inconsistent with the
provisions of the indenture.
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Neither of the indentures limits the amount of debt securities
that may be issued. Each indenture allows debt securities to be
issued up to the principal amount that may be authorized
by us.
Original
Issue Discount
Debt securities, including any debt securities that provide for
an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration of the maturity
thereof, or original issue discount securities, may
be sold at a substantial discount below their principal amount.
Special United States federal income tax considerations
applicable to debt securities sold at an original issue discount
may be described in the applicable prospectus supplement. In
addition, special United States federal income tax or other
considerations applicable to any debt securities that are
denominated in a currency or currency unit other than United
States dollars may be described in the applicable prospectus
supplement.
Subordination
of Subordinated Debt Securities
The indebtedness evidenced by the subordinated debt securities
will, to the extent set forth in the subordinated indenture with
respect to each series of subordinated debt securities, be
subordinated in right of payment to the prior payment in full of
all of our senior debt, including the senior debt securities,
and it may also be senior in right of payment to all of our
subordinated debt. The prospectus supplement relating to any
subordinated debt securities will summarize the subordination
provisions of the subordinated indenture applicable to that
series including:
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the applicability and effect of such provisions upon any payment
or distribution respecting that series following any
liquidation, dissolution or other
winding-up,
or any assignment for the benefit of creditors or other
marshalling of assets or any bankruptcy, insolvency or similar
proceedings;
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the applicability and effect of such provisions in the event of
specified defaults with respect to any senior debt, including
the circumstances under which and the periods during which we
will be prohibited from making payments on the subordinated debt
securities; and
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the definition of senior debt applicable to the subordinated
debt securities of that series and, if the series is issued on a
senior subordinated basis, the definition of subordinated debt
applicable to that series.
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The prospectus supplement will also describe as of a recent date
the approximate amount of senior debt to which the subordinated
debt securities of that series will be subordinated.
The failure to make any payment on any of the subordinated debt
securities by reason of the subordination provisions of the
subordinated indenture described in the prospectus supplement
will not be construed as preventing the occurrence of an event
of default with respect to the subordinated debt securities
arising from any such failure to make payment.
The subordination provisions described above will not be
applicable to payments in respect of the subordinated debt
securities from a defeasance trust established in connection
with any legal defeasance or covenant defeasance of the
subordinated debt securities as described in this prospectus
under Legal Defeasance and Covenant
Defeasance.
Subsidiary
Guarantees
Our payment obligations under any series of the debt securities
may be jointly and severally guaranteed by one or more of our
domestic subsidiaries. If a series of debt securities is so
guaranteed by any of our subsidiaries, such subsidiaries will
execute a supplemental indenture or notation of guarantee as
further evidence of their guarantee. Unless otherwise indicated
in the prospectus supplement, the following provisions will
apply to the subsidiary guarantee of the subsidiary guarantors.
Subject to the limitations described below and in the prospectus
supplement, one or more of the subsidiary guarantors will
jointly and severally, fully and unconditionally guarantee the
punctual payment when due, whether at maturity, by acceleration
or otherwise, of all our payment obligations under the
indentures and the debt securities of a series, whether for
principal of, premium, if any, or interest on the debt
securities or otherwise (all such obligations guaranteed by a
subsidiary guarantor being herein called the guaranteed
obligations). The subsidiary guarantors will also pay all
expenses (including reasonable counsel fees and expenses)
incurred by the trustee in enforcing any rights under a
subsidiary guarantee with respect to a subsidiary guarantor.
In the case of subordinated debt securities, a subsidiary
guarantors subsidiary guarantee will be subordinated in
right of payment to the senior debt of such subsidiary guarantor
on the same basis as the subordinated debt securities are
subordinated to our senior debt. No payment will be made by any
subsidiary guarantor under its subsidiary guarantee during any
period in which payments by us on the subordinated debt
securities are suspended by the subordination provisions of the
subordinated indenture.
Each subsidiary guarantee will be limited in amount to an amount
not to exceed the maximum amount that can be guaranteed by the
relevant subsidiary guarantor without rendering such subsidiary
guarantee voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
Each subsidiary guarantee will be a continuing guarantee and
will:
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remain in full force and effect until either (i) payment in
full of all the applicable debt securities (or such debt
securities are otherwise satisfied and discharged in accordance
with the provisions of the applicable indenture), or
(ii) released as described in the following paragraph;
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be binding upon each subsidiary guarantor; and
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inure to the benefit of and be enforceable by the trustee, the
debt securities holders and their successors, transferees and
assigns.
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In the event that (i) a subsidiary guarantor ceases to be a
subsidiary, (ii) either legal defeasance or covenant
defeasance occurs with respect to the series or (iii) all
or substantially all of the assets or all of the capital stock
of such subsidiary guarantor is sold, including by way of sale,
merger, consolidation or otherwise,
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such subsidiary guarantor will be released and discharged of its
obligations under its subsidiary guarantee without any further
action required on the part of the trustee or any debt
securities holder, and no other person acquiring or owning the
assets or capital stock of such subsidiary guarantor will be
required to enter into a subsidiary guarantee. In addition, the
prospectus supplement may specify additional circumstances under
which a subsidiary guarantor can be released from its subsidiary
guarantee.
Form,
Exchange and Transfer
The debt securities of each series will be issuable only in
fully registered form, without coupons, and, unless otherwise
specified in the applicable prospectus supplement, only in
denominations of $1,000 and integral multiples thereof.
At the option of the debt securities holder, subject to the
terms of the applicable indenture and the limitations applicable
to global securities, debt securities of each series will be
exchangeable for other debt securities of the same series of any
authorized denomination and of a like tenor and aggregate
principal amount.
Subject to the terms of the applicable indenture and the
limitations applicable to global securities, debt securities may
be presented for exchange as provided above or for registration
of transfer (duly endorsed or with the form of transfer endorsed
thereon duly executed) at the office of the security registrar
or at the office of any transfer agent designated by us for such
purpose. No service charge will be made for any registration of
transfer or exchange of debt securities, but we may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in that connection. Such transfer or
exchange will be effected upon the security registrar or such
transfer agent, as the case may be, being satisfied with the
documents of title and identity of the person making the
request. The security registrar and any other transfer agent
initially designated by us for any debt securities will be named
in the applicable prospectus supplement. We may at any time
designate additional transfer agents or rescind the designation
of any transfer agent or approve a change in the office through
which any transfer agent acts, except that we will be required
to maintain a transfer agent in each place of payment for the
debt securities of each series.
If the debt securities of any series (or of any series and
specified tenor) are to be redeemed in part, we will not be
required to (i) issue, register the transfer of or exchange
any debt security of that series (or of that series and
specified tenor, as the case may be) during a period beginning
at the opening of business 15 days before the day of
mailing of a notice of redemption of any such debt security that
may be selected for redemption and ending at the close of
business on the day of such mailing or (ii) register the
transfer of or exchange any debt security so selected for
redemption, in whole or in part, except the unredeemed portion
of any such debt security being redeemed in part.
Global
Securities
Some or all of the debt securities of any series may be
represented, in whole or in part, by one or more global
securities that will have an aggregate principal amount equal to
that of the debt securities they represent. Each global security
will be registered in the name of a depositary or its nominee
identified in the applicable prospectus supplement, will be
deposited with such depositary or nominee or its custodian and
will bear a legend regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any such
other matters as may be provided for pursuant to the applicable
indenture.
Notwithstanding any provision of the indentures or any debt
security described in this prospectus, no global security may be
exchanged in whole or in part for debt securities registered,
and no transfer of a global security in whole or in part may be
registered, in the name of any person other than the depositary
for such global security or any nominee of such depositary
unless:
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the depositary has notified us that it is unwilling or unable to
continue as depositary for such global security or has ceased to
be qualified to act as such as required by the applicable
indenture, and in either case we fail to appoint a successor
depositary within 90 days;
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an event of default with respect to the debt securities
represented by such global security has occurred and is
continuing and the trustee has received a written request from
the depositary to issue certificated debt securities;
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subject to the rules of the depositary, we shall have elected to
terminate the book-entry system through the depositary; or
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other circumstances exist, in addition to or in lieu of those
described above, as may be described in the applicable
prospectus supplement.
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All certificated debt securities issued in exchange for a global
security or any portion thereof will be registered in such names
as the depositary may direct.
As long as the depositary, or its nominee, is the registered
holder of a global security, the depositary or such nominee, as
the case may be, will be considered the sole owner and debt
securities holder of such global security and the debt
securities that it represents for all purposes under the debt
securities and the applicable indenture. Except in the limited
circumstances referred to above, owners of beneficial interests
in a global security will not be entitled to have such global
security or any debt securities that it represents registered in
their names, will not receive or be entitled to receive physical
delivery of certificated debt securities in exchange for those
interests and will not be considered to be the owners or holders
of such global security or any debt securities that it
represents for any purpose under the debt securities or the
applicable indenture. All payments on a global security will be
made to the depositary or its nominee, as the case may be, as
the holder of the security. The laws of some jurisdictions may
require that some purchasers of debt securities take physical
delivery of such debt securities in certificated form. These
laws may impair the ability to transfer beneficial interests in
a global security.
Ownership of beneficial interests in a global security will be
limited to institutions that have accounts with the depositary
or its nominee, or participants, and to persons that
may hold beneficial interests through participants. In
connection with the issuance of any global security, the
depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of debt
securities represented by the global security to the accounts of
its participants. Ownership of beneficial interests in a global
security will be shown only on, and the transfer of those
ownership interests will be effected only through, records
maintained by the depositary (with respect to participants
interests) or any such participant (with respect to interests of
persons held by such participants on their behalf). Payments,
transfers, exchanges and other matters relating to beneficial
interests in a global security may be subject to various
policies and procedures adopted by the depositary from time to
time. None of us, the subsidiary guarantors, the trustees or the
agents of us, the subsidiary guarantors or the trustees will
have any responsibility or liability for any aspect of the
depositarys or any participants records relating to,
or for payments made on account of, beneficial interests in a
global security, or for maintaining, supervising or reviewing
any records relating to such beneficial interests.
Payment
and Paying Agents
Unless otherwise indicated in the applicable prospectus
supplement, payment of interest on a debt security on any
interest payment date will be made to the person in whose name
such debt security (or one or more predecessor securities) is
registered at the close of business on the record date for such
interest.
Unless otherwise indicated in the applicable prospectus
supplement, principal of and any premium and interest on the
debt securities of a particular series will be payable at the
office of such paying agent or agents as we may designate for
such purpose from time to time, except that at our option
payment of any interest on debt securities in certificated form
may be made by check mailed to the address of the person
entitled thereto as such address appears in the security
register. Unless otherwise indicated in the applicable
prospectus supplement, the corporate trust office of the trustee
under the senior indenture in the City of New York will be
designated as sole paying agent for payments with respect to
senior debt securities of each series, and the corporate trust
office of the trustee under the subordinated indenture in the
City of New York will be designated as the sole paying agent for
payment with respect to subordinated debt securities of each
series. Any other paying agents initially designated by us for
the debt securities of a particular series will be named
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in the applicable prospectus supplement. We may at any time
designate additional paying agents or rescind the designation of
any paying agent or approve a change in the office through which
any paying agent acts, except that we will be required to
maintain a paying agent in each place of payment for the debt
securities of a particular series.
All money paid by us to a paying agent for the payment of the
principal of or any premium or interest on any debt security
which remains unclaimed at the end of two years after such
principal, premium or interest has become due and payable will
be repaid to us, and the holder of such debt security thereafter
may look only to us for payment.
Consolidation,
Merger and Sale of Assets
Unless otherwise specified in the prospectus supplement, we may
not consolidate with or merge into, or transfer, lease or
otherwise dispose of all or substantially all of our assets to,
any person, which we refer to as a successor person, and may not
permit any person to consolidate with or merge into us, unless:
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the successor person (if not us) is a corporation, partnership,
trust or other entity organized and validly existing under the
laws of any domestic jurisdiction and assumes our obligations on
the debt securities and under the indentures;
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immediately before and after giving pro forma effect to the
transaction, no event of default, and no event which, after
notice or lapse of time or both, would become an event of
default, has occurred and is continuing; and
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several other conditions, including any additional conditions
with respect to any particular debt securities specified in the
applicable prospectus supplement, are met.
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The successor person (if not us) will be substituted for us
under the applicable indenture with the same effect as if it had
been an original party to such indenture, and, except in the
case of a lease, we will be relieved from any further
obligations under such indenture and the debt securities.
Events of
Default
Unless otherwise specified in the prospectus supplement, each of
the following will constitute an event of default under the
applicable indenture with respect to debt securities of any
series:
1. failure to pay principal of or any premium on any debt
security of that series when due, whether or not, in the case of
subordinated debt securities, such payment is prohibited by the
subordination provisions of the subordinated indenture;
2. failure to pay any interest on any debt securities of
that series when due, continued for 30 days, whether or
not, in the case of subordinated debt securities, such payment
is prohibited by the subordination provisions of the
subordinated indenture;
3. failure to deposit any sinking fund payment, when due,
in respect of any debt security of that series, whether or not,
in the case of subordinated debt securities, such deposit is
prohibited by the subordination provisions of the subordinated
indenture;
4. failure to perform or comply with the provisions
described in this prospectus under
Consolidation, Merger and Sale of Assets;
5. failure to perform any of our other covenants in such
indenture (other than a covenant included in such indenture
solely for the benefit of a series other than that series),
continued for 60 days after written notice has been given
by the trustee, or the holders of at least 25% in principal
amount of the outstanding debt securities of that series, as
provided in such indenture;
6. any debt of ourselves, any significant subsidiary or, if
a subsidiary guarantor has guaranteed the series, such
subsidiary guarantor, is not paid within any applicable grace
period after final maturity or is
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accelerated by its holders because of a default and the total
amount of such debt unpaid or accelerated exceeds
$20 million;
7. any judgment or decree for the payment of money in
excess of $20 million is entered against us, any
significant subsidiary or, if a subsidiary guarantor has
guaranteed the series, such subsidiary guarantor, remains
outstanding for a period of 60 consecutive days following entry
of such judgment and is not discharged, waived or stayed;
8. certain events of bankruptcy, insolvency or
reorganization affecting us, any significant subsidiary or, if a
subsidiary guarantor has guaranteed the series, such subsidiary
guarantor; and
9. if any subsidiary guarantor has guaranteed such series,
the subsidiary guarantee of any such subsidiary guarantor is
held by a final non-appealable order or judgment of a court of
competent jurisdiction to be unenforceable or invalid or ceases
for any reason to be in full force and effect (other than in
accordance with the terms of the applicable indenture) or any
subsidiary guarantor or any person acting on behalf of any
subsidiary guarantor denies or disaffirms such subsidiary
guarantors obligations under its subsidiary guarantee
(other than by reason of a release of such subsidiary guarantor
from its subsidiary guarantee in accordance with the terms of
the applicable indenture).
If an event of default (other than an event of default with
respect to Approach Resources Inc. described in clause (8)
above) with respect to the debt securities of any series at the
time outstanding occurs and is continuing, either the trustee or
the holders of at least 25% in principal amount of the
outstanding debt securities of that series by notice as provided
in the indenture may declare the principal amount of the debt
securities of that series (or, in the case of any debt security
that is an original issue discount debt security, such portion
of the principal amount of such debt security as may be
specified in the terms of such debt security) to be due and
payable immediately, together with any accrued and unpaid
interest thereon. If an event of default with respect to
Approach Resources Inc. described in clause (8) above with
respect to the debt securities of any series at the time
outstanding occurs, the principal amount of all the debt
securities of that series (or, in the case of any such original
issue discount security, such specified amount) will
automatically, and without any action by the trustee or any
holder, become immediately due and payable, together with any
accrued and unpaid interest thereon. After any such acceleration
and its consequences, but before a judgment or decree based on
acceleration, the holders of a majority in principal amount of
the outstanding debt securities of that series may, under
certain circumstances, rescind and annul such acceleration if
all events of default with respect to that series, other than
the non-payment of accelerated principal (or other specified
amount), have been cured or waived as provided in the applicable
indenture. For information as to waiver of defaults, see
Modification and Waiver below.
Subject to the provisions of the indentures relating to the
duties of the trustees in case an event of default has occurred
and is continuing, no trustee will be under any obligation to
exercise any of its rights or powers under the applicable
indenture at the request or direction of any of the holders,
unless such holders have offered to such trustee reasonable
security or indemnity. Subject to such provisions for the
indemnification of the trustees, the holders of a majority in
principal amount of the outstanding debt securities of any
series will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of that series.
No holder of a debt security of any series will have any right
to institute any proceeding with respect to the applicable
indenture, or for the appointment of a receiver or a trustee, or
for any other remedy thereunder, unless:
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such holder has previously given to the trustee under the
applicable indenture written notice of a continuing event of
default with respect to the debt securities of that series;
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the holders of at least 25% in principal amount of the
outstanding debt securities of that series have made written
request, and such holder or holders have offered reasonable
security or indemnity, to the trustee to institute such
proceeding as trustee; and
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the trustee has failed to institute such proceeding, and has not
received from the holders of a majority in principal amount of
the outstanding debt securities of that series a direction
inconsistent with such request, within 60 days after such
notice, request and offer.
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However, such limitations do not apply to a suit instituted by a
holder of a debt security for the enforcement of payment of the
principal of or any premium or interest on such debt security on
or after the applicable due date specified in such debt security
or, if applicable, to convert such debt security.
We will be required to furnish to each trustee annually a
statement by certain of our officers as to whether or not we, to
their knowledge, are in default in the performance or observance
of any of the terms, provisions and conditions of the applicable
indenture and, if so, specifying all such known defaults.
Modification
and Waiver
We may modify or amend an indenture without the consent of any
holders of the debt securities in certain circumstances,
including:
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to evidence the succession under the indenture of another person
to us or any subsidiary guarantor and to provide for its
assumption of our or such subsidiary guarantors
obligations to holders of debt securities;
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to make any changes that would add any additional covenants of
us or the subsidiary guarantors for the benefit of the holders
of debt securities or that do not adversely affect the rights
under the indenture of the holders of debt securities in any
material respect;
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to add any additional events of default;
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to provide for uncertificated notes in addition to or in place
of certificated notes;
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to secure the debt securities;
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to establish the form or terms of any series of debt securities;
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to evidence and provide for the acceptance of appointment under
the indenture of a successor trustee;
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to cure any ambiguity, defect or inconsistency;
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to add subsidiary guarantors; or
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in the case of any subordinated debt security, to make any
change in the subordination provisions that limits or terminates
the benefits applicable to any holder of senior debt.
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Other modifications and amendments of an indenture may be made
by us, the subsidiary guarantors, if applicable, and the
applicable trustee with the consent of the holders of not less
than a majority in principal amount of the outstanding debt
securities of each series affected by such modification or
amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each
outstanding debt security affected thereby:
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change the stated maturity of the principal of, or any
installment of principal of or interest on, any debt security;
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reduce the principal amount of, or any premium or interest on,
any debt security;
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reduce the amount of principal of an original issue discount
security or any other debt security payable upon acceleration of
the maturity thereof;
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change the place or currency of payment of principal of, or any
premium or interest on, any debt security;
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impair the right to institute suit for the enforcement of any
payment due on or any conversion right with respect to any debt
security;
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modify the subordination provisions in the case of subordinated
debt securities, or modify any conversion provisions, in either
case in a manner adverse to the holders of the subordinated debt
securities;
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except as provided in the applicable indenture, release the
subsidiary guarantee of a subsidiary guarantor;
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reduce the percentage in principal amount of outstanding debt
securities of any series, the consent of whose holders is
required for modification or amendment of the indenture;
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reduce the percentage in principal amount of outstanding debt
securities of any series necessary for waiver of compliance with
certain provisions of the indenture or for waiver of certain
defaults;
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modify such provisions with respect to modification, amendment
or waiver; or
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following the making of an offer to purchase debt securities
from any holder that has been made pursuant to a covenant in
such indenture, modify such covenant in a manner adverse to such
holder.
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The holders of not less than a majority in principal amount of
the outstanding debt securities of any series may waive
compliance by us with certain restrictive provisions of the
applicable indenture. The holders of not less than a majority in
principal amount of the outstanding debt securities of any
series may waive any past default under the applicable
indenture, except a default in the payment of principal, premium
or interest and certain covenants and provisions of the
indenture which cannot be amended without the consent of the
holder of each outstanding debt security of such series.
Each of the indentures provides that in determining whether the
holders of the requisite principal amount of the outstanding
debt securities have given or taken any direction, notice,
consent, waiver or other action under such indenture as of any
date:
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the principal amount of an original issue discount security that
will be deemed to be outstanding will be the amount of the
principal that would be due and payable as of such date upon
acceleration of maturity to such date;
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if, as of such date, the principal amount payable at the stated
maturity of a debt security is not determinable (for example,
because it is based on an index), the principal amount of such
debt security deemed to be outstanding as of such date will be
an amount determined in the manner prescribed for such debt
security;
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the principal amount of a debt security denominated in one or
more foreign currencies or currency units that will be deemed to
be outstanding will be the United States-dollar equivalent,
determined as of such date in the manner prescribed for such
debt security, of the principal amount of such debt security
(or, in the case of a debt security described in clause (1)
or (2) above, of the amount described in such
clause); and
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certain debt securities, including those owned by us, any
subsidiary guarantor or any of our other affiliates, will not be
deemed to be outstanding.
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Except in certain limited circumstances, we will be entitled to
set any day as a record date for the purpose of determining the
holders of outstanding debt securities of any series entitled to
give or take any direction, notice, consent, waiver or other
action under the indenture, in the manner and subject to the
limitations provided in the indenture. In certain limited
circumstances, the trustee will be entitled to set a record date
for action by holders. If a record date is set for any action to
be taken by holders of a particular series, only persons who are
holders of outstanding debt securities of that series on the
record date may take such action. To be effective, such action
must be taken by holders of the requisite principal amount of
such debt securities within a specified period following the
record date. For any particular record date, this period will be
180 days or such other period as may be specified by us (or
the trustee, if it set the record date), and may be shortened or
lengthened (but not beyond 180 days) from time to time.
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Satisfaction
and Discharge
Each indenture will be discharged and will cease to be of
further effect as to all outstanding debt securities of any
series issued thereunder, when:
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(i)
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all outstanding debt securities of that series that have been
authenticated (except lost, stolen or destroyed debt securities
that have been replaced or paid and debt securities for whose
payment money has theretofore been deposited in trust and
thereafter repaid to us) have been delivered to the trustee for
cancellation; or
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(ii)
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all outstanding debt securities of that series that have been
not delivered to the trustee for cancellation have become due
and payable or will become due and payable at their stated
maturity within one year or are to be called for redemption
within one year under arrangements satisfactory to the trustee
and in any case we have irrevocably deposited with the trustee
as trust funds money in an amount sufficient, without
consideration of any reinvestment of interest, to pay the entire
indebtedness of such debt securities not delivered to the
trustee for cancellation, for principal, premium, if any, and
accrued interest to the stated maturity or redemption date;
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we have paid or caused to be paid all other sums payable by us
under the indenture with respect to the debt securities of that
series; and
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we have delivered an officers certificate and an opinion
of counsel to the trustee stating that all conditions precedent
to satisfaction and discharge of the indenture with respect to
the debt securities of that series have been satisfied.
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Legal
Defeasance and Covenant Defeasance
To the extent indicated in the applicable prospectus supplement,
we may elect, at our option at any time, to have our obligations
discharged under provisions relating to defeasance and discharge
of indebtedness, which we refer to as legal defeasance, or
relating to defeasance of certain restrictive covenants applied
to the debt securities of any series, or to any specified part
of a series, which we refer to as covenant defeasance.
Legal
Defeasance
The indentures provide that, upon our exercise of our option (if
any) to have the legal defeasance provisions applied to any
series of debt securities, we and, if applicable, each
subsidiary guarantor will be discharged from all our
obligations, and, if such debt securities are subordinated debt
securities, the provisions of the subordinated indenture
relating to subordination will cease to be effective, with
respect to such debt securities (except for certain obligations
to convert, exchange or register the transfer of debt
securities, to replace stolen, lost or mutilated debt
securities, to maintain paying agencies and to hold moneys for
payment in trust) upon the deposit in trust for the benefit of
the holders of such debt securities of money or
U.S. government obligations, or both, which, through the
payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an amount
sufficient (in the opinion of a nationally recognized firm of
independent public accountants) to pay the principal of and any
premium and interest on such debt securities on the respective
stated maturities in accordance with the terms of the applicable
indenture and such debt securities. Such defeasance or discharge
may occur only if, among other things:
1. we have delivered to the applicable trustee an opinion
of counsel to the effect that we have received from, or there
has been published by, the United States Internal Revenue
Service a ruling, or there has been a change in tax law, in
either case to the effect that holders of such debt securities
will not recognize gain or loss for federal income tax purposes
as a result of such deposit and legal defeasance and will be
subject to federal income tax on the same amount, in the same
manner and at the same times as would have been the case if such
deposit and legal defeasance were not to occur;
2. no event of default or event that with the passing of
time or the giving of notice, or both, shall constitute an event
of default shall have occurred and be continuing at the time of
such deposit or, with
23
respect to any event of default described in clause (8)
under Events of Default, at any time
until 121 days after such deposit;
3. such deposit and legal defeasance will not result in a
breach or violation of, or constitute a default under, any
agreement or instrument (other than the applicable indenture) to
which we are a party or by which we are bound;
4. in the case of subordinated debt securities, at the time
of such deposit, no default in the payment of all or a portion
of principal of (or premium, if any) or interest on any senior
debt shall have occurred and be continuing, no event of default
shall have resulted in the acceleration of any senior debt and
no other event of default with respect to any senior debt shall
have occurred and be continuing permitting after notice or the
lapse of time, or both, the acceleration thereof; and
5. we have delivered to the trustee an opinion of counsel
to the effect that such deposit shall not cause the trustee or
the trust so created to be subject to the Investment Company Act
of 1940, as amended.
Covenant
Defeasance
The indentures provide that, upon our exercise of our option (if
any) to have the covenant defeasance provisions applied to any
debt securities, we may fail to comply with certain restrictive
covenants (but not with respect to conversion, if applicable),
including those that may be described in the applicable
prospectus supplement, and the occurrence of certain events of
default, which are described above in clause (5) (with respect
to such restrictive covenants) and clauses (6), (7) and
(9) under Events of Default and any that may be
described in the applicable prospectus supplement, will not be
deemed to either be or result in an event of default and, if
such debt securities are subordinated debt securities, the
provisions of the subordinated indenture relating to
subordination will cease to be effective, in each case with
respect to such debt securities. In order to exercise such
option, we must deposit, in trust for the benefit of the holders
of such debt securities, money or U.S. government
obligations, or both, which, through the payment of principal
and interest in respect thereof in accordance with their terms,
will provide money in an amount sufficient (in the opinion of a
nationally recognized firm of independent public accountants) to
pay the principal of and any premium and interest on such debt
securities on the respective stated maturities in accordance
with the terms of the applicable indenture and such debt
securities. Such covenant defeasance may occur only if we have
delivered to the applicable trustee an opinion of counsel to the
effect that holders of such debt securities will not recognize
gain or loss for federal income tax purposes as a result of such
deposit and covenant defeasance and will be subject to federal
income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit and
covenant defeasance were not to occur, and the requirements set
forth in clauses (2), (3), (4) and (5) above are
satisfied. If we exercise this option with respect to any series
of debt securities and such debt securities were declared due
and payable because of the occurrence of any event of default,
the amount of money and U.S. government obligations so
deposited in trust would be sufficient to pay amounts due on
such debt securities at the time of their respective stated
maturities but may not be sufficient to pay amounts due on such
debt securities upon any acceleration resulting from such event
of default. In such case, we would remain liable for such
payments.
If we exercise either our legal defeasance or covenant
defeasance option, any subsidiary guarantee will terminate.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator, stockholder,
member, partner or trustee of the Company or any subsidiary
guarantor, as such, shall have any liability for any obligations
of the Company or any subsidiary guarantor under the debt
securities, the indentures or any subsidiary guarantees or for
any claim based on, in respect of, or by reason of, such
obligations or their creation. By accepting a debt security,
each holder shall be deemed to have waived and released all such
liability. The waiver and release shall be a part of the
consideration for the issue of the debt securities. The waiver
may not be effective to waive liabilities under the federal
securities laws, and it is the view of the SEC that such a
waiver is against public policy.
24
Notices
Notices to holders of debt securities will be given by mail to
the addresses of such holders as they may appear in the security
register.
Title
We, the subsidiary guarantors, the trustees and any agent of
ours, the subsidiary guarantors or a trustee may treat the
person in whose name a debt security is registered as the
absolute owner of the debt security (whether or not such debt
security may be overdue) for the purpose of making payment and
for all other purposes.
Governing
Law
The indentures and the debt securities will be governed by, and
construed in accordance with, the law of the State of New York.
The
Trustee
We will enter into the indentures with a trustee that is
qualified to act under the Trust Indenture Act of 1939, as
amended, which we refer to as the Trust Indenture Act, and
with any other trustees chosen by us and appointed in a
supplemental indenture for a particular series of debt
securities. We may maintain a banking relationship in the
ordinary course of business with our trustee and one or more of
its affiliates.
Resignation
or Removal of Trustee
If the trustee has or acquires a conflicting interest within the
meaning of the Trust Indenture Act, the trustee must either
eliminate its conflicting interest or resign, to the extent and
in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and the applicable indenture. Any
resignation will require the appointment of a successor trustee
under the applicable indenture in accordance with the terms and
conditions of such indenture.
The trustee may resign or be removed by us with respect to one
or more series of debt securities and a successor trustee may be
appointed to act with respect to any such series. The holders of
a majority in aggregate principal amount of the debt securities
of any series may remove the trustee with respect to the debt
securities of such series.
Limitations
on Trustee if it is Our Creditor
Each indenture will contain certain limitations on the right of
the trustee, in the event that it becomes our creditor, to
obtain payment of claims in certain cases, or to realize on
certain property received in respect of any such claim as
security or otherwise.
Certificates
and Opinions to be Furnished to Trustee
Each indenture will provide that, in addition to other
certificates or opinions that may be specifically required by
other provisions of an indenture, every application by us for
action by the trustee must be accompanied by an officers
certificate and an opinion of counsel stating that, in the
opinion of the signers, all conditions precedent to such action
have been complied with by us.
25
PLAN OF
DISTRIBUTION
We may sell securities pursuant to this prospectus in and
outside the United States (i) through underwriters or
dealers, (ii) directly to purchasers, including our
affiliates and stockholders, (iii) through agents or
(iv) through a combination of any of these methods. The
prospectus supplement will include the following information:
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the terms of the offering;
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the names of any underwriters, dealers or agents;
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the name or names of any managing underwriter or underwriters;
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the purchase price of the securities;
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the estimated net proceeds to us from the sale of the securities;
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any delayed delivery arrangements;
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any underwriting discounts, commissions and other items
constituting underwriters compensation;
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any discounts or concessions allowed or reallowed or paid to
dealers; and
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any commissions paid to agents.
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Sale
Through Underwriters or Dealers
If underwriters are used in the sale, the underwriters will
acquire the securities for their own account for resale to the
public, either on a firm commitment basis or a best efforts
basis. The underwriters may resell the securities from time to
time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying
prices determined at the time of sale. Underwriters may offer
securities to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by
one or more firms acting as underwriters. Unless we inform you
otherwise in the prospectus supplement, the obligations of the
underwriters to purchase the securities will be subject to
certain conditions. The underwriters may change from time to
time any offering price and any discounts or concessions allowed
or reallowed or paid to dealers.
We may also make direct sales through subscription rights
distributed to our existing stockholders on a pro rata basis,
which may or may not be transferable. In any distribution of
subscription rights to our stockholders, if all of the
underlying securities are not subscribed for, we may then sell
the unsubscribed securities directly to third parties or may
engage the services of one or more agents, dealers,
underwriters, including standby underwriters, or remarketing
firms to sell the unsubscribed securities to third parties.
During and after an offering through underwriters, the
underwriters may purchase and sell the securities in the open
market. These transactions may include overallotment and
stabilizing transactions and purchases to cover syndicate short
positions created in connection with the offering. The
underwriters may also impose a penalty bid, which means that
selling concessions allowed to syndicate members or other
broker-dealers for the offered securities sold for their account
may be reclaimed by the syndicate if the offered securities are
repurchased by the syndicate in stabilizing or covering
transactions. These activities may stabilize, maintain or
otherwise affect the market price of the offered securities,
which may be higher than the price that might otherwise prevail
in the open market. If commenced, the underwriters may
discontinue these activities at any time.
Some or all of the securities that we offer pursuant to this
prospectus may be new issues of securities with no established
trading market. Any underwriters to whom we sell our securities
for public offering and sale may make a market in those
securities, but they will not be obligated to do so and they may
discontinue any market making at any time without notice.
Accordingly, we cannot assure you of the liquidity of, or
continued trading markets for, any securities that we offer.
If dealers are used, we will sell the securities to them as
principals. The dealers may then resell those securities to the
public at varying prices determined by the dealers at the time
of resale. We will include in the prospectus supplement the
names of the dealers and the terms of the transaction.
26
The maximum commission or discount to be received by any FINRA
member or independent broker/dealer will not be greater than
eight percent (8%) of the gross proceeds received by us for the
sale of any securities being registered pursuant to
Rule 415 under the Securities Act.
If more than 10% of the net proceeds of any offering of
securities made under this prospectus will be received by FINRA
members participating in the offering or affiliates or
associated persons of such FINRA members, the offering will be
conducted in accordance with the National Association of
Securities Dealers Conduct Rule 2710(h).
Direct
Sales and Sales Through Agents
We may sell the offered securities directly. In this case, no
underwriters or agents would be involved. We may also sell the
offered securities through agents designated from time to time.
In the prospectus supplement, we will name any agent involved in
the offer or sale of the offered securities, and we will
describe any commissions payable to the agent. Unless we inform
you otherwise in the prospectus supplement, any agent will agree
to use its reasonable best efforts to solicit purchases for the
period of its appointment.
We may sell the offered securities upon the exercise of rights
that we may issue to our securityholders. We may also sell the
offered securities directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the
Securities Act with respect to any sale of securities. We will
describe the terms of any such sales in the prospectus
supplement.
Remarketing
Arrangements
Offered securities may also be offered and sold, if so indicated
in the applicable prospectus supplement, in connection with a
remarketing upon their purchase, in accordance with a redemption
or repayment pursuant to their terms, or otherwise, by one or
more remarketing firms, acting as principals for their own
accounts or as agents for us. Any remarketing firm will be
identified and the terms of its agreements, if any, with us and
its compensation will be described in the applicable prospectus
supplement. Remarketing firms may be deemed to be underwriters,
as that term is defined in the Securities Act, in connection
with the securities remarketed.
Delayed
Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize
agents, underwriters or dealers to solicit offers from certain
types of institutions to purchase securities from us at the
public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those
conditions described in the prospectus supplement. The
prospectus supplement will describe the commission payable for
solicitation of those contracts.
General
Information
Agents, dealers, underwriters and remarketing firms that
participate in the distribution of the offered securities may be
underwriters as defined in the Securities Act, and any discounts
or commissions received by them from us and any profit on the
resale of the offered securities by them may be treated as
underwriting discounts and commissions under the Securities Act.
Any underwriters or agents will be identified and their
compensation described in a prospectus supplement.
We may have agreements with the agents, dealers, underwriters
and remarketing firms to indemnify them against certain civil
liabilities, including liabilities under the Securities Act, or
to contribute with respect to payments that the agents, dealers,
underwriters or remarketing firms may be required to make.
Agents, dealers, underwriters and remarketing firms may be
customers of, engage in transactions with, or perform services
for us or our subsidiaries in the ordinary course of their
businesses.
27
LEGAL
MATTERS
Certain legal matters in connection with the securities offered
pursuant to this prospectus will be passed upon by
Thompson & Knight LLP, Dallas, Texas, as our counsel.
Underwriters, dealers, agents and remarketing firms, if any, who
we will identify in a prospectus supplement, may have their
counsel pass upon certain legal matters in connection with the
securities offered by this prospectus.
EXPERTS
The (i) consolidated financial statements of Approach
Resources Inc. and subsidiaries incorporated herein by reference
to our Annual Report on
Form 10-K
for the year ended December 31, 2010,
(ii) managements assessment of the effectiveness of
internal control over financial reporting incorporated herein by
reference to our Annual Report on
Form 10-K
for the year ended December 31, 2010, and (iii) the
statement of revenues and direct operating expenses of
properties acquired by Approach Resources Inc. incorporated
herein by reference to our Current Report on Form 8-K/A
filed on April 21, 2011, have been audited by
Hein & Associates LLP, independent registered public
accountants, as stated in their reports appearing in our Annual
Report on
Form 10-K
for the year ended December 31, 2010 and their report
appearing in our Current Report on
Form 8-K/A
filed on April 21, 2011, and have been so included in
reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
Certain estimates of our oil and natural gas reserves and
related information included in this prospectus, any applicable
prospectus supplement or incorporated herein by reference have
been derived from reports prepared by DeGolyer and MacNaughton.
All such information has been so included or incorporated by
reference in reliance upon the authority of DeGolyer and
MacNaughton as experts in these matters.
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PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 14.
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Other
Expenses of Issuance and Distribution
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Except for the Securities and Exchange Commission registration
fee, all expenses are estimated. All such expenses will be paid
by the registrant.
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Securities and Exchange Commission registration fee
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$
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*
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Accounting fees and expenses
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$
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**
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Legal fees and expenses
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$
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**
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Trustee fees and expenses
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$
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**
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FINRA filing fee
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$
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**
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Printing and engraving expenses
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$
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**
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Blue sky fees and expenses (including legal fees)
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$
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**
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Miscellaneous
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$
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**
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Total
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$
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**
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* |
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In accordance with Rules 456(b) and 457(r), the registrant
is deferring payment of all of the registration fee. |
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** |
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These fees are calculated based on the number of issuances and
amount of securities offered and accordingly cannot be estimated
at this time. |
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Item 15.
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Indemnification
of Directors and Officers
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Approach
Resources Inc.
The restated certificate of incorporation of Approach Resources
Inc. (the Company, we, us,
our or ours) provides that no director
or officer will be liable to the Company or any of its
stockholders for damages for breach of fiduciary duty as a
director or officer occurring on or after the date of
incorporation; provided, however, that the foregoing provision
shall not eliminate or limit the liability of a director or
officer (i) for any breach of the directors duty of
loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or that involved intentional
misconduct, fraud or a knowing violation of the law,
(iii) the payment of dividends in violation of
Section 174 of the General Corporation Law of the State of
Delaware (the DGCL) or (iv) for any transaction
from which the director derived an improper personal benefit. In
addition, if the DGCL is amended to authorize corporate action
further eliminating or limiting the personal liability of
directors, then the liability of a director of the Company shall
be eliminated or limited to the fullest extent permitted by the
DGCL, as so amended. Our restated bylaws provide that the
Company will indemnify, and advance expenses to, any officer or
director to the fullest extent authorized by the DGCL.
Section 145 of the DGCL provides that a corporation may
indemnify directors and officers as well as other employees and
individuals against expenses, including attorneys fees,
judgments, fines and amounts paid in settlement in connection
with specified actions, suits and proceedings whether civil,
criminal, administrative or investigative, other than a
derivative action by or in the right of the corporation, if they
acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation
and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A
similar standard is applicable in the case of derivative
actions, except that indemnification extends only to expenses,
including attorneys fees, incurred in connection with the
defense or settlement of such action and the statute requires
court approval before there can be any indemnification when the
person seeking indemnification has been found liable to the
corporation. The statute provides that it is not exclusive of
other indemnification that may be granted by a
corporations charter, bylaws, disinterested director vote,
stockholder vote, agreement or otherwise.
II-1
Our restated certificate of incorporation also contains
indemnification rights for our directors and our officers.
Specifically, our restated certificate of incorporation provides
that we shall indemnify our officers and directors to the
fullest extent authorized by the DGCL. Further, we may maintain
insurance on behalf of our officers and directors against
expenses, liability or loss incurred by them in their capacities
as officers and directors.
We maintain directors and officers insurance to
cover directors, officers and certain employees of the Company
and its subsidiaries for certain liabilities.
We have entered into written indemnification agreements with our
directors and executive officers. Under these agreements, if an
officer or director makes a claim of indemnification to us,
either a majority of the independent directors or independent
legal counsel selected by the independent directors must review
the relevant facts and make a determination whether the officer
or director has met the standards of conduct under Delaware law
that would permit (under Delaware law) and require (under the
indemnification agreement) us to indemnify the officer or
director.
The registration rights agreement we entered into in connection
with our initial public offering provides for the
indemnification by certain holders of registrable securities
under such agreement of our officers and directors for certain
liabilities.
Approach
Resources I, LP
Approach Resources I, LP is a Texas limited partnership
organized under the Texas Revised Limited Partnership Act, which
was succeeded by the Texas Business Organizations Code on
January 1, 2010 (as amended from time to time, the
Code). Sections 8.003 and 8.102 of the Code
provide that a limited partnerships certificate of
formation may eliminate all monetary liability of a governing
person to the limited partnership for acts or omissions in the
governing persons capacity as a governing person other
than conduct specifically excluded from protection.
Sections 8.101 and 8.102(b)(3) of the Code provide that
Texas law does not permit any limitation of liability of a
governing person found liable for (i) willful or
intentional misconduct in the performance of the persons
duty to the enterprise, (ii) breaching the duty of loyalty
to the partnership or (iii) an act or omission not
committed in good faith that constitutes a breach of the duty
owed to the partnership.
Section 8.102 of the Code permits a partnership to
indemnify any person who has been or is threatened to be made a
party to a legal proceeding because he is or was a governing
person of the partnership, or because he served at the request
of the partnership as a principal of another business or
employee benefit plan, against any judgments, penalties, fines,
settlements and reasonable expenses actually incurred by him in
connection with the proceeding. However, Section 8.101 of
the Code provides that a partnership may not indemnify a
director in reliance on this part of the Code unless the
governing person (i) conducted himself in good faith,
(ii) reasonably believed that his conduct was in the best
interests of the partnership or, in the case of action not taken
in his official capacity, was not opposed to the best interests
of partnership and (iii) in the case of a criminal
proceeding, had no reasonable cause to believe that his conduct
was unlawful.
Section 8.051(a) of the Code provides that a partnership is
required to indemnify any governing person of the partnership
who has been or is threatened to be made a party to a legal
proceeding by reason of his service to the partnership if the
governing person is successful on the merits or otherwise in the
defense of such proceeding. In addition, Section 8.151(b)
of the Code provides that a partnership may purchase and
maintain on behalf of its governing persons insurance with
respect to any liability asserted against or incurred by such
persons, whether or not the partnership would have the power
under applicable law to indemnify such persons.
Section 8.102(b) of the Code permits a partnership to
indemnify a governing person for reasonable expenses actually
incurred by the governing person in connection with the
proceeding (and not for a judgment, penalty, fine or excise or
similar tax) if the governing person has not been found liable
to the partnership or is found to have received an improper
personal benefit. Section 8.104 of the Code permits a
partnership to pay reasonable expenses of a governing person in
advance of the final disposition of a proceeding for which
indemnification may be provided on the condition that the
partnership first receives (i) a written affirmation by
II-2
the governing person of his good faith belief that he has met
the standard of conduct necessary for indemnification, and
(ii) a written undertaking by or on behalf of the governing
person that he will repay such expenses if it is ultimately
determined that he is not entitled to be indemnified.
Section 8.105 of the Code allows a partnership to indemnify
and advance expenses to its officers, employees and other agents
to the same extent that it allows a partnership to indemnify and
advance expenses to directors.
Neither the certificate of limited partnership of Approach
Resources I, LP nor the limited partnership agreement of
Approach Resources I, LP addresses indemnification or
advancement of expenses of the governing persons of Approach
Resources I, LP.
Approach
Oil & Gas Inc.
Approach Oil & Gas Inc. is a Delaware corporation
organized under the DGCL. The provisions of the DGCL regarding
indemnification of directors and officers and advancement of
expenses of directors and officers discussed above as applying
to the Company also apply to Approach Oil & Gas Inc.
The certificate of incorporation of Approach Oil & Gas
Inc. provides that, to the fullest extent permitted by the DGCL,
no director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for breach
of duty as a director. The certificate of incorporation of
Approach Oil & Gas Inc. further provides that no
director of the corporation shall be personally liable to the
corporation or its stockholders for monetary damages for beach
of duty as a director, except for liability (i) for any
breach of the directors duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing
violation of the law, (iii) the payment of dividends in
violation of Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal
benefit. In addition, if the DGCL is amended to authorize
corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the
corporation shall be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended.
Both the certificate of incorporation of Approach
Oil & Gas Inc. and the bylaws of Approach
Oil & Gas Inc. also contain indemnification rights for
the corporations directors and officers. Specifically, the
certificate of incorporation and the bylaws provide that
Approach Oil & Gas Inc. shall indemnify its officers
and directors to the fullest extent authorized by the DGCL.
Further, the certificate of incorporation and the bylaws provide
that Approach Oil & Gas Inc. may maintain insurance on
behalf of its officers and directors against expenses, liability
or loss incurred by them in their capacities as officers and
directors.
Approach
Operating, LLC
Approach Operating, LLC is a Delaware limited liability company
organized under the Delaware Limited Liability Company Act (the
DLLCA).
Section 18-108
of the DLLCA provides that, subject to such standards and
restrictions, if any, as are set forth in its limited liability
company agreement, a limited liability company may, and shall
have the power to, indemnify and hold harmless any member or
manager or other person from and against any and all claims and
demands whatsoever.
Neither the certificate of formation of Approach Operating, LLC
nor the limited liability company agreement of Approach
Operating, LLC directly addresses indemnification of officers
and directors and advancement of expenses of officers and
directors. However, the limited liability company agreement of
Approach Operating, LLC does state that the officers of Approach
Operating, LLC shall be liable for errors or omissions in
performing their duties with respect to Approach Operating, LLC
only in the case of gross negligence, willful misconduct or bad
faith, but not otherwise.
Approach
Delaware, LLC
Approach Delaware, LLC is a Delaware limited liability company
organized under the DLLCA.
Section 18-108
of the DLLCA provides that, subject to such standards and
restrictions, if any, as are set forth in its limited liability
company agreement, a limited liability company may, and shall
have the power to, indemnify and hold harmless any member or
manager or other person from and against any and all claims and
demands whatsoever.
II-3
Neither the certificate of formation of Approach Delaware, LLC
nor the limited liability company agreement of Approach
Delaware, LLC directly addresses indemnification of officers and
directors and advancement of expenses of officers and directors.
However, the limited liability company agreement of Approach
Delaware, LLC does state that the officers of Approach Delaware,
LLC shall be liable for errors or omissions in performing their
duties with respect to Approach Delaware, LLC only in the case
of gross negligence, willful misconduct or bad faith, but not
otherwise.
Approach
Services, LLC
Approach Services, LLC is a Delaware limited liability company
organized under the DLLCA.
Section 18-108
of the DLLCA provides that, subject to such standards and
restrictions, if any, as are set forth in its limited liability
company agreement, a limited liability company may, and shall
have the power to, indemnify and hold harmless any member or
manager or other person from and against any and all claims and
demands whatsoever.
Neither the certificate of formation of Approach Services, LLC
nor the limited liability company agreement of Approach
Services, LLC directly addresses indemnification of officers and
directors and advancement of expenses of officers and directors.
However, the limited liability company agreement of Approach
Services, LLC does state that the officers of Approach Services,
LLC shall be liable for errors or omissions in performing their
duties with respect to Approach Services, LLC only in the case
of gross negligence, willful misconduct or bad faith, but not
otherwise.
(a) Exhibits
The following documents are filed as exhibits to this
registration statement:
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Exhibit
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Number
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Exhibit Title
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1
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.1**
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Form of Underwriting Agreement.
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4
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.1
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|
Specimen Stock Certificate (filed as Exhibit 4.1 to the
Companys Registration Statement on
Form S-1/A
filed October 18, 2007 (File
No. 333-144512),
and incorporated herein by reference).
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4
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.2*
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Form of Senior Indenture.
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4
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.3*
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Form of Subordinated Indenture.
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4
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.4**
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Form of Warrant Agreement.
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4
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.5**
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Form of Depositary Agreement.
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4
|
.6
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Registration Rights Agreement dated as of November 14,
2007, among Approach Resources Inc. and the investors identified
therein (filed as Exhibit 10.1 to the Companys
Current Report on
Form 8-K/A
filed December 3, 2007, and incorporated herein by
reference).
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5
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.1*
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|
Opinion of Thompson & Knight LLP as to the legality of
the securities being registered.
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12
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.1*
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Statement of Computation of Ratios of Earnings to Fixed Charges.
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23
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.1*
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Consent of Hein & Associates LLP, independent
registered public accounting firm.
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23
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.2*
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Consent of Thompson & Knight LLP (contained in
Exhibit 5.1 hereto).
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23
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.3*
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Consent of DeGolyer and MacNaughton, independent petroleum
engineering consulting firm.
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24
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.1*
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Power of Attorney (included on the signature page to this
Registration Statement).
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25
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.1***
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Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 respecting the Senior Indenture.
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25
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.2***
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Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 respecting the Subordinated
Indenture.
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* |
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Filed herewith. |
|
** |
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To be filed by amendment, as an exhibit to a report pursuant to
Section 13(a) or 15(d) of the Exchange Act and incorporated
herein by reference or in a post-effective amendment to this
registration statement. |
|
*** |
|
To be filed in accordance with the requirements of
Section 305(b)(2) of the Trust Indenture Act of 1939 and
Rules 5b-1
through 5b-3 thereunder. |
II-4
(b) Financial statement schedules
No financial statement schedules are included herein. All other
schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission
are not required under the related instructions, are
inapplicable, or the information is in the consolidated
financial statements, and have therefore been omitted.
(c) Reports, opinions and appraisals
The following reports, opinions and appraisals are included
herein: None.
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(a) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933 (the
Securities Act);
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement;
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs 1(a), 1(b) and 1(c) of
this section do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission
by the registrant pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (the Exchange Act)
that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed
pursuant to Rule 424(b) that is part of the registration
statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under
the Securities Act to any purchaser:
(a) Each prospectus filed by the registrant pursuant to
Rule 424(b)(3) shall be deemed to be part of the
registration statement as of the date the filed prospectus was
deemed part of and included in the registration
statement; and
(b) Each prospectus required to be filed pursuant to
Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration
statement in reliance on Rule 430B relating to an offering
made pursuant to Rule 415(a)(1)(i), (vii) or
(x) for the purpose of providing the information required
by section 10(a) of the Securities Act shall be deemed to
be part of and included in the registration statement as of
II-5
the earlier of the date such form of prospectus is first used
after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As
provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration
statement to which that prospectus relates, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof. Provided, however, that no statement
made in a registration statement or prospectus that is part of
the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such
effective date, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately
prior to such effective date.
(5) That, for the purpose of determining liability of the
registrant under the Securities Act to any purchaser in the
initial distribution of the securities, the undersigned
registrant undertakes that in a primary offering of securities
of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered
or sold to such purchaser by means of any of the following
communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such
securities to such purchaser:
(a) Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering required to be
filed pursuant to Rule 424;
(b) Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned registrant or used
or referred to by the undersigned registrant;
(c) The portion of any other free writing prospectus
relating to the offering containing material information about
the undersigned registrant or its securities provided by or on
behalf of the undersigned registrant; and
(d) Any other communication that is an offer in the
offering made by the undersigned registrant to the purchaser.
(6) That, for purposes of determining any liability under
the Securities Act, each filing of the registrants annual
report pursuant to section 13(a) or section 15(d) of
the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(7) To supplement the prospectus, after the expiration of
the subscription period, to set forth the results of the
subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities
to be purchased by the underwriters and the terms of any
subsequent reoffering thereof. If any public offering by the
underwriters is to be made on terms differing from those set
forth on the cover page of the prospectus, a post-effective
amendment will be filed to set forth the terms of such offering.
(8) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether
II-6
such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
(9) To file an application for the purpose of determining
the eligibility of the trustee, both of the subordinated
indenture and of the senior indenture, to act under
subsection (a) of section 310 of the
Trust Indenture Act of 1939, as amended (the
Act), in accordance with the rules and regulations
prescribed by the Commission under section 305(b)(2) of the
Act.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on
Form S-3
and has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of Fort Worth, State of Texas, on May 18, 2011.
APPROACH RESOURCES INC.
J. Ross Craft
President and Chief Executive Officer
POWER OF
ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints J. Ross Craft, Steven P.
Smart and J. Curtis Henderson, and each of them severally, his
true and lawful attorney or attorneys-in-fact and agents, with
full power to act with or without the others and with full power
of substitution and resubstitution, to execute in his name,
place and stead, in any and all capacities, any or all
amendments (including pre-effective and post-effective
amendments) to this registration statement and any registration
statement for the same offering filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and
authority to do and perform in the name of on behalf of the
undersigned, in any and all capacities, each and every act and
thing necessary or desirable to be done in and about the
premises, to all intents and purposes and as fully as they might
or could do in person, hereby ratifying, approving and
confirming all that said attorneys-in-fact and agents or their
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ J.
Ross Craft
J.
Ross Craft
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President, Chief Executive Officer and Director (Principal
Executive Officer)
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May 18, 2011
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|
/s/ Steven
P. Smart
Steven
P. Smart
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Executive Vice President and Chief Financial Officer (Principal
Financial and Chief Accounting Officer)
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May 18, 2011
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/s/ Bryan
H. Lawrence
Bryan
H. Lawrence
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|
Director and Chairman of the
Board of Directors
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May 18, 2011
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/s/ Alan
D. Bell
Alan
D. Bell
|
|
Director
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|
May 18, 2011
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/s/ James
H. Brandi
James
H. Brandi
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Director
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|
May 18, 2011
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/s/ James
C. Crain
James
C. Crain
|
|
Director
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|
May 18, 2011
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|
/s/ Sheldon
B. Lubar
Sheldon
B. Lubar
|
|
Director
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|
May 18, 2011
|
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|
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|
/s/ Christopher
J. Whyte
Christopher
J. Whyte
|
|
Director
|
|
May 18, 2011
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
of the registrants has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Worth, State of Texas, on
May 18, 2011.
APPROACH RESOURCES I, LP
APPROACH OIL & GAS INC.
APPROACH OPERATING, LLC
APPROACH DELAWARE, LLC
APPROACH SERVICES, LLC
J. Ross Craft
President and Chief Executive Officer
POWER OF
ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints J. Ross Craft, Steven P.
Smart and J. Curtis Henderson, and each of them severally, his
true and lawful attorney or attorneys-in-fact and agents, with
full power to act with or without the others and with full power
of substitution and resubstitution, to execute in his name,
place and stead, in any and all capacities, any or all
amendments (including pre-effective and post-effective
amendments) to this registration statement and any registration
statement for the same offering filed pursuant to Rule 462
under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and
authority to do and perform in the name of on behalf of the
undersigned, in any and all capacities, each and every act and
thing necessary or desirable to be done in and about the
premises, to all intents and purposes and as fully as they might
or could do in person, hereby ratifying, approving and
confirming all that said attorneys-in-fact and agents or their
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ J.
Ross Craft
J.
Ross Craft
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|
President, Chief Executive Officer* and Director (Principal
Executive Officer)
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|
May 18, 2011
|
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/s/ Steven
P. Smart
Steven
P. Smart
|
|
Executive Vice President and Chief Financial Officer (Principal
Financial and Chief Accounting Officer)
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May 18, 2011
|
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* |
|
J. Ross Craft serves as the President and Chief Executive
Officer of (i) Approach Resources Inc., which is the sole
general partner of Approach Resources I, LP, and
(ii) Approach Oil & Gas Inc., Approach Operating,
LLC, Approach Delaware, LLC and Approach Services, LLC. |
II-9
|
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Exhibit
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Number
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Exhibit Title
|
|
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1
|
.1**
|
|
Form of Underwriting Agreement.
|
|
4
|
.1
|
|
Specimen Stock Certificate (filed as Exhibit 4.1 to the
Companys Registration Statement on
Form S-1/A
filed October 18, 2007 (File
No. 333-144512),
and incorporated herein by reference).
|
|
4
|
.2*
|
|
Form of Senior Indenture.
|
|
4
|
.3*
|
|
Form of Subordinated Indenture.
|
|
4
|
.4**
|
|
Form of Warrant Agreement.
|
|
4
|
.5**
|
|
Form of Depositary Agreement.
|
|
4
|
.6
|
|
Registration Rights Agreement dated as of November 14,
2007, among Approach Resources Inc. and the investors identified
therein (filed as Exhibit 10.1 to the Companys
Current Report on
Form 8-K/A
filed December 3, 2007, and incorporated herein by
reference).
|
|
5
|
.1*
|
|
Opinion of Thompson & Knight LLP as to the legality of
the securities being registered.
|
|
12
|
.1*
|
|
Statement of Computation of Ratios of Earnings to Fixed Charges.
|
|
23
|
.1*
|
|
Consent of Hein & Associates LLP, independent
registered public accounting firm.
|
|
23
|
.2*
|
|
Consent of Thompson & Knight LLP (contained in
Exhibit 5.1 hereto).
|
|
23
|
.3*
|
|
Consent of DeGolyer and MacNaughton, independent petroleum
engineering consulting firm.
|
|
24
|
.1*
|
|
Power of Attorney (included on the signature page to this
Registration Statement).
|
|
25
|
.1***
|
|
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 respecting the Senior Indenture.
|
|
25
|
.2***
|
|
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 respecting the Subordinated
Indenture.
|
|
|
|
* |
|
Filed herewith. |
|
** |
|
To be filed by amendment, as an exhibit to a report pursuant to
Section 13(a) or 15(d) of the Exchange Act and incorporated
herein by reference or in a post-effective amendment to this
registration statement. |
|
*** |
|
To be filed in accordance with the requirements of
Section 305(b)(2) of the Trust Indenture Act of 1939 and
Rules 5b-1
through 5b-3 thereunder. |