<PAGE>
As filed with the Securities and Exchange Commission on September 9, 1997
Registration No. 33-___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CROSS TIMBERS OIL COMPANY
(Exact name of registrant as specified in its charter)
Delaware 75-2347769
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
810 Houston Street, Suite 2000, Fort Worth, Texas 76102
(Address of Principal Executive Offices) (Zip Code)
CROSS TIMBERS OIL COMPANY 1994 STOCK INCENTIVE PLAN
(Full title of the plan)
Mr. Bob R. Simpson
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
(Name and address of agent for service)
(817) 870-2800
(Telephone number, including area code, of agent for service)
----------
Copy to:
KELLY, HART & HALLMAN, P.C.
201 Main Street, Suite 2500
Fort Worth, Texas 76102
Attn: F. Richard Bernasek, Esq.
<TABLE>
<CAPTION>
Calculation of Registration Fee
================================================================================
Proposed Proposed
Amount maximum maximum
to be offering aggregate Amount of
Title of securities registered price per offering registration
to be registered (1) share (2) price fee (2)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 300,000 $21.4375 $6,431,250 $1,948.86
value shares
</TABLE>
- ---------
(1) Pursuant to Rule 416(a), the number of shares of Common Stock registered
hereunder includes such indeterminate number of additional shares of Common
Stock as may be offered or issued to prevent dilution resulting from stock
splits, stock dividends or similar transactions.
(2) Computed pursuant to Rules 457 (c) and (h) based on the average of the
high and low prices on September 4, 1997.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This Registration Statement registers additional securities to be issued under
the Cross Timbers Oil Company 1994 Stock Incentive Plan. The contents of the
prior Registration Statement on Form S-8, Registration No. 33-81766, are hereby
incorporated by reference in this Registration Statement.
Item 8. Exhibits.
Exhibit Number Page
and Description Number
--------------- ------
(4) Instruments defining the rights of security holders,
including indentures
4.1 Cross Timbers Oil Company 1994 Stock Incentive Plan,
as amended and restated on May 21, 1996
(5) Opinion re legality
5.1 Kelly, Hart & Hallman, P.C.
(15) Letter re unaudited interim financial information
15.1 Awareness letter of Arthur Andersen LLP
(23) Consents of experts and counsel
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Kelly, Hart & Hallman, P.C. (included in
its opinion filed as Exhibit 5.1)
(24) Power of attorney (included on page 4 of the Registration
Statement)
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<PAGE>
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-8 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 September 9, 1997.
CROSS TIMBERS OIL COMPANY
By: BOB R. SIMPSON
------------------------------
Bob R. Simpson
Chairman and Chief Executive Officer
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Bob R. Simpson and Steffen E. Palko, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits hereto, 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 each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
BOB R. SIMPSON Chairman of the Board; September 9, 1997
- ----------------------- Executive Officer;
Bob R. Simpson Director (Principal
Executive Officer)
STEFFEN E. PALKO Vice Chairman; President; September 9, 1997
- ----------------------- Director
Steffen E. Palko
J. RICHARD SEEDS Executive Vice President; September 9, 1997
- ----------------------- Director
J. Richard Seeds
LOUIS G. BALDWIN Senior Vice President; September 9, 1997
- ----------------------- Chief Financial Officer;
Louis G. Baldwin (Principal Financial
Officer)
BENNIE G. KNIFFEN Senior Vice President; September 9, 1997
- ----------------------- Controller (Principal
Bennie G. Kniffen Accounting Officer)
J. LUTHER KING, JR. Director September 9, 1997
- -----------------------
J. Luther King, Jr.
JACK P. RANDALL Director September 9, 1997
- -----------------------
Jack P. Randall
SCOTT G. SHERMAN Director September 9, 1997
- -----------------------
Scott G. Sherman
</TABLE>
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<PAGE>
EXHIBIT 4.1
================================================================================
CROSS TIMBERS OIL COMPANY
AMENDED AND RESTATED
1994 STOCK INCENTIVE PLAN
May 21, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C>
ARTICLE I. GENERAL...................................................... 1
Section 1.1. Purpose.............................................. 1
Section 1.2. Administration....................................... 1
Section 1.3. Eligibility for Participation........................ 2
Section 1.4. Types of Awards Under Plan........................... 2
Section 1.5. Aggregate Limitation on Awards....................... 2
Section 1.6. Effective Date and Term of Plan...................... 3
ARTICLE II. STOCK OPTIONS............................................... 3
Section 2.1. Award of Stock Options............................... 3
Section 2.2. Stock Option Agreements.............................. 3
Section 2.3. Stock Option Price................................... 3
Section 2.4. Term and Exercise.................................... 3
Section 2.5. Manner of Payment.................................... 3
Section 2.6. Restrictions on Certain Shares....................... 3
Section 2.7. Death, Retirement and Termination of Employment
of Optionee.......................................... 3
ARTICLE III. INCENTIVE STOCK OPTIONS.................................... 4
Section 3.1. Award of Incentive Stock Options..................... 4
Section 3.2. Incentive Stock Option Agreements.................... 4
Section 3.3. Incentive Stock Option Price......................... 4
Section 3.4. Term and Exercise.................................... 4
Section 3.5. Maximum Amount of Incentive Stock Option Grant....... 4
Section 3.6. Death of Optionee.................................... 5
Section 3.7. Retirement or Disability............................. 5
Section 3.8. Termination for Other Reasons........................ 5
Section 3.9. Applicability of Stock Options Sections.............. 5
ARTICLE IV. PERFORMANCE SHARE AWARDS.................................... 5
Section 4.1. Awards Granted by Committee.......................... 5
Section 4.2. Amount of Award...................................... 5
Section 4.3. Communication of Award............................... 5
Section 4.4. Amount of Award Payable.............................. 5
Section 4.5. Adjustments.......................................... 6
Section 4.6. Payments of Awards................................... 6
Section 4.7. Termination of Employment............................ 6
Section 4.8. Transfer Restriction................................. 6
ARTICLE V. AUTOMATIC GRANTS............................................. 6
Section 5.1. Grant................................................ 6
Section 5.2. Applicable Provisions................................ 7
ARTICLE VI. MISCELLANEOUS............................................... 7
Section 6.1. General Restriction.................................. 7
Section 6.2. Non-Assignability.................................... 7
Section 6.3. Withholding Taxes.................................... 7
Section 6.4. Right to Terminate Employment........................ 7
Section 6.5. Non-Uniform Determinations........................... 7
Section 6.6. Rights as a Stockholder.............................. 7
Section 6.7. Definitions.......................................... 7
Section 6.8. Leaves of Absence.................................... 8
Section 6.9. Newly Eligible Employees............................. 8
Section 6.10. Adjustments.......................................... 8
Section 6.11. Changes in the Company's Capital Structure........... 8
Section 6.12. Amendment of the Plan................................ 9
</TABLE>
<PAGE>
CROSS TIMBERS OIL COMPANY
STOCK INCENTIVE PLAN
ARTICLE I. GENERAL
Section 1.1. Purpose. The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) associate the interests of the management of CROSS
TIMBERS OIL COMPANY and its subsidiaries and affiliates (collectively referred
to as the "Company") closely with the stockholders to generate an increased
incentive to contribute to the Company's future success and prosperity, thus
enhancing the value of the Company for the benefit of its stockholders; (2)
provide management with a proprietary ownership interest in the Company
commensurate with Company performance, as reflected in increased stockholder
value; (3) maintain competitive compensation levels thereby attracting and
retaining highly competent and talented directors and employees; and (4) provide
an incentive to management for continuous employment with the Company. Certain
capitalized terms are defined in Section 6.7.
Section 1.2. Administration.
(a) The Plan shall be administered by the Compensation Committee
of the Board of Directors of the Company (the "Committee"), as constituted
from time to time, each member of which shall be a disinterested person
appointed by the Board of Directors. The Committee shall consist of at
least two members of the Board of Directors. During the one year prior to
commencement of service on the Committee, the Committee members shall not
have participated in, and while serving on the Committee, such members
shall not be eligible for selection as, persons to whom stock may be
allocated or to whom Options or Performance Shares may be granted under
the Plan or any other discretionary plan of the Company under which
participants are entitled to acquire stock, stock options or stock
appreciation rights of the Company other than the automatic grant of non-
discretionary Awards as provided in Article V.
(b) The Committee shall have the authority, in its sole
discretion and from time to time to:
(i) designate the executive employees (as defined in
Section 1.3) of the Company eligible to participate in the Plan;
(ii) grant Awards provided in the Plan in such form and
amount as the Committee shall determine;
(iii) impose such limitations, restrictions and conditions,
not inconsistent with this Plan, upon any such Award as the
Committee shall deem appropriate; and
(iv) interpret the Plan and any agreement, instrument or
other document executed in connection with the Plan, adopt, amend
and rescind rules and regulations relating to the Plan, and make
all other determinations and take all other action necessary or
advisable for the implementation and administration of the Plan.
(c) Decisions and determinations of the Committee on all matters
relating to the Plan shall be in its sole discretion and shall be final,
conclusive and binding upon all persons, including the Company, any
participant, any stockholder of the Company and any employee. A majority
of the members of the Committee may determine its actions and fix the time
and place of its meetings. No member of the Committee shall be liable for
any action taken or decision made relating to the Plan or any Award
thereunder.
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<PAGE>
Section 1.3. Eligibility for Participation. Participants in the Plan shall
be selected by the Committee from the executive employees of the Company or its
Subsidiaries. For the purposes of this Plan, (i) the term "executive employee"
shall include only employees who are officers, or who are determined by the
Committee, in its discretion, to be key professional, managerial,
administrative, or technical employees or supervisors, and (ii) the term
"Subsidiary" means any corporation or other entity of which at least 50% of the
voting securities are owned by the Company directly or through one or more other
corporations, each of which is also a Subsidiary. With respect to non-corporate
entities, Subsidiary shall mean an entity managed or controlled by the Company
or any Subsidiary and with respect to which the Company or any Subsidiary is
allocated more than half of the profits and losses thereof.
Section 1.4. Types of Awards Under Plan. Awards under the Plan may be in
the form of any or more of the following:
(i) Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III; and/or
(iii) Performance Shares, as described in Article IV.
Awards under the Plan shall be evidenced by an Award Agreement between the
Company and the recipient of the Award, in form and substance satisfactory to
the Committee, and not inconsistent with this Plan. Award Agreements may
provide such vesting schedules for Stock Options and Incentive Stock Options,
and such other terms, conditions and provisions as are not inconsistent with the
terms of this Plan. Subject to the express provisions of the Plan, and within
the limitations of the Plan, the Committee may modify, extend or renew
outstanding Award Agreements, or accept the surrender of outstanding Awards and
authorize the granting of new Awards in substitution therefor. However, except
as provided in this Plan, no modification of an Award shall impair the rights of
the holder thereof without his consent.
Section 1.5. Aggregate Limitation on Awards.
(a) Shares of stock which may be issued under the Plan shall be
authorized and unissued or treasury shares of Common Stock of the Company
("Common Stock"). The maximum number of shares of Common Stock which may
be issued pursuant to Awards issued under the Plan shall be 1,000,000, of
which 350,000 may be issued as Performance Shares. In addition, the
maximum number of shares that may be issued to any individual hereunder
pursuant to Options or Performance Shares issued hereunder shall be
120,000 and 100,000, respectively.
(b) For purposes of calculating the maximum number of shares of
Common Stock which may be issued under the Plan at any time:
(i) all the shares issued (including the shares, if any,
withheld for tax withholding requirements) under the Plan shall be
counted when issued upon exercise of a Stock Option or Incentive
Stock Option; and
(ii) only the net shares issued as Performance Shares shall
be counted (shares reacquired by the Company because of failure to
achieve a performance target or failure to become fully vested for
any other reason shall again be available for issuance under the
Plan).
(c) Shares tendered by a participant as payment for shares
issued upon exercise of a Stock Option or Incentive Stock Option shall be
available for issuance under the Plan. Any shares of Common Stock subject
to a Stock Option or Incentive Stock Option which for any reason is
terminated unexercised or expires shall again be available for issuance
under the Plan.
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<PAGE>
Section 1.6. Effective Date and Term of Plan.
(a) The Plan shall become effective on the date adopted by the
Board of Directors, subject to approval by the holders of a majority of
the shares of Common Stock present in person or by proxy and entitled to
vote at the Annual Meeting of stockholders of the Company held in 1994.
(b) No Awards shall be made under the Plan after the tenth
anniversary of the effective date of this Plan; provided, however, that
the Plan and all Awards made under the Plan prior to such date shall
remain in effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.
ARTICLE II. STOCK OPTIONS
Section 2.1. Award of Stock Options. The Committee may from time to time,
and subject to the provisions of the Plan and such other terms and conditions as
the Committee may prescribe, grant to any participant in the Plan one or more
options to purchase for cash or shares the number of shares of Common Stock
("Stock Options") allotted by the Committee. The date a Stock Option is granted
shall mean the date selected by the Committee as of which the Committee allots a
specific number of shares to a participant pursuant to the Plan.
Section 2.2. Stock Option Agreements. The grant of a Stock Option shall be
evidenced by a written Award Agreement, executed by the Company and the holder
of a Stock Option (the "Optionee"), stating the number of shares of Common Stock
subject to the Stock Option evidenced thereby, and in such form as the Committee
may from time to time determine.
Section 2.3. Stock Option Price. The option price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be 100% of the fair
market value of a share of Common Stock on the date the Stock Option is granted.
Section 2.4. Term and Exercise. A Stock Option shall not be exercisable
prior to six months from the date of its grant and unless a shorter period is
provided by the Committee or by another Section of this Plan, may be exercised
during a period of ten years from the date of grant thereof (the "Option Term")
and may be subject to such vesting scheduling as the Committee may provide in an
Award Agreement. No Stock Option shall be exercisable after the expiration of
its Option Term.
Section 2.5. Manner of Payment. Each Award Agreement providing for Stock
Options shall set forth the procedure governing the exercise of the Stock Option
granted thereunder, and shall provide that, upon such exercise in respect of any
shares of Common Stock subject thereto, the Optionee shall pay to the Company,
in full, the option price for such shares with cash or Common Stock.
Section 2.6. Restrictions on Certain Shares. As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock. The Optionee shall become a
stockholder of the Company with respect to Common Stock represented by share
certificates so issued and as such shall be fully entitled to receive dividends,
to vote and to exercise all other rights of a stockholder.
Section 2.7. Death, Retirement and Termination of Employment of Optionee.
Unless otherwise provided in an Award Agreement or otherwise agreed to by the
Committee:
(a) Upon the death of the Optionee, any rights to the extent
exercisable on the date of death may be exercised by the Optionee's
estate, or by a person who acquires the right to exercise such Stock
Option by bequest or inheritance or by reason of the death of the
Optionee, provided that such exercise
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<PAGE>
occurs within both (i) the remaining Option Term of the Stock Option and
(ii) one year. The provisions of this Section shall apply notwithstanding
the fact that the Optionee's employment may have terminated prior to
death, but only to the extent of any rights exercisable on the date of
death.
(b) Upon termination of the Optionee's employment by reason of
retirement or permanent disability (as each is determined by the
Committee), the Optionee may exercise any Stock Options, provided such
option exercise occurs within both (i) the remaining Option Term of the
Stock Option and (ii) six months (in the case of permanent disability) or
three months (in the case of retirement).
(c) Upon termination of the Optionee's employment by reason
other than death, disability or cause (as each is determined by the
Committee), the Optionee may exercise any Stock Options, provided such
option exercise occurs within both (i) the remaining Option Term of the
Stock Option and (ii) 30 days of the date of termination.
(d) Except as provided in Subsections (a), (b) and (c) of this
Section 2.7, all Stock Options shall terminate immediately upon the
termination of the Optionee's employment.
ARTICLE III. INCENTIVE STOCK OPTIONS
Section 3.1. Award of Incentive Stock Options. The Committee may, from
time to time and subject to the provisions of the Plan and such other terms and
conditions as the Committee may prescribe, grant to any participant in the Plan
one or more "incentive stock options" (intended to qualify as such under the
provisions of section 422 of the Internal Revenue Code of 1986, as amended
("Incentive Stock Options")) to purchase for cash or shares the number of shares
of Common Stock allotted by the Committee. The date an Incentive Stock Option is
granted shall mean the date selected by the Committee as of which the Committee
allots a specific number of shares to a participant pursuant to the Plan.
Notwithstanding the foregoing, Incentive Stock Options shall not be granted to
any owner of 10% or more of the total combined voting power of the Company and
its subsidiaries.
Section 3.2. Incentive Stock Option Agreements. The grant of an Incentive
Stock Option shall be evidenced by a written Award Agreement, executed by the
Company and the holder of an Incentive Stock Option (the "Optionee"), stating
the number of shares of Common Stock subject to the Incentive Stock Option
evidenced thereby, and in such form as the Committee may from time to time
determine.
Section 3.3. Incentive Stock Option Price. The option price per share of
Common Stock deliverable upon the exercise of an Incentive Stock Option shall be
100% of the fair market value of a share of Common Stock on the date the
Incentive Stock Option is granted.
Section 3.4. Term and Exercise. Each Incentive Stock Option shall not be
exercisable prior to six months from the date of its grant and unless a shorter
period is provided by the Committee or another Section of this Plan, may be
exercised during a period of ten years from the date of grant thereof (the
"Option Term") and may be subject to such vesting scheduling as the Committee
may provide in an Award Agreement. No Incentive Stock Option shall be
exercisable after the expiration of its Option Term.
Section 3.5. Maximum Amount of Incentive Stock Option Grant. The aggregate
fair market value (determined on the date the Incentive Stock Option is granted)
of Common Stock with respect to which Incentive Stock Options first become
exercisable by an Optionee during in any calendar year (under all plans of the
Optionee's employer corporations and their parent and subsidiary corporations)
shall not exceed $100,000.
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<PAGE>
Section 3.6. Death of Optionee.
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the Optionee's estate
or by a person who acquires the right to exercise such Incentive Stock
Option by bequest or inheritance or by reason of the death of the
Optionee, provided that such exercise occurs within both the remaining
Option Term of the Incentive Stock Option and one year after the
Optionee's death.
(b) The provisions of this Section shall apply notwithstanding
the fact that the Optionee's employment may have terminated prior to
death, but only to the extent of any Incentive Stock Options exercisable
on the date of death.
Section 3.7. Retirement or Disability. Unless otherwise provided in an
Award Agreement or otherwise agreed to by the Committee, upon the termination of
the Optionee's employment by reason of permanent disability or retirement (as
each is determined by the Committee), the Optionee may exercise any Incentive
Stock Options, provided such option exercise occurs within both (i) the
remaining Option Term of the Incentive Stock Option and (ii) one year (in the
case of permanent disability) or three months (in the case of retirement).
Notwithstanding the terms of an Award Agreement, the tax treatment available
pursuant to Section 422 of the Internal Revenue Code of 1986 upon the exercise
of an Incentive Stock Option shall not be available to an Optionee who exercises
any Incentive Stock Options more than (i) one year after the date of termination
of employment due to permanent disability or (ii) three months after the date of
termination of employment due to retirement.
Section 3.8. Termination for Other Reasons. Except as provided in Sections
3.6 and 3.7 or except as otherwise determined by the Committee in an Award
Agreement, all Incentive Stock Options shall terminate immediately upon the
termination of the Optionee's employment.
Section 3.9. Applicability of Stock Options Sections. Sections 2.5, Manner
of Payment; and 2.6, Restrictions on Certain Shares, applicable to Stock
Options, shall apply equally to Incentive Stock Options. Said Sections are
incorporated by reference in this Article III as though fully set forth herein.
ARTICLE IV. PERFORMANCE SHARE AWARDS
Section 4.1. Awards Granted by Committee. Coincident with or following
designation for participation in the Plan, a participant may be granted
Performance Shares. Certificates representing Performance Shares shall be issued
to the participant effective as of the date of the Award. Holders of Performance
Shares shall have all of the voting, dividend and other rights of stockholders
of the Company, subject to the terms of any Award Agreement.
Section 4.2. Amount of Award. The Committee shall establish a maximum
amount of a participant's Award, which amount shall be denominated in shares of
Common Stock.
Section 4.3. Communication of Award. Written notice of the maximum amount
of a participant's Award and the Performance Cycle determined by the Committee,
if any, shall be given to a participant as soon as practicable after approval of
the Award by the Committee. The grant of Performance Shares shall be evidenced
by a written Award Agreement, executed by the Company and the recipient of
Performance Shares, in such form as the Committee may from time to time
determine, providing for the terms of such grant.
Section 4.4. Amount of Award Payable. Performance Shares may be granted
based upon past performance or future performance. In addition to any other
restrictions the Committee may place on Performance Shares, the Committee may,
in its discretion, provide that Performance Shares shall vest upon the
satisfaction of performance targets to be achieved during an applicable
"Performance Cycle." Failure to satisfy the performance targets may result, in
the Committee's discretion as set forth in an Award Agreement, in the forfeiture
of the
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<PAGE>
Performance Shares by the participant and the return of such shares to the
Company, or have any other consequence as determined by the Committee.
Performance targets established by the Committee may relate to corporate, group,
unit or individual performance and may be established in terms of market price
of common stock, cash flow or cash flow per share, reserve value or reserve
value per share, net asset value or net asset value per share, earnings, or such
other measures or standards determined by the Committee. Multiple performance
targets may be used and the components of multiple performance targets may be
given the same or different weighting in determining the amount of an Award
earned, and may relate to absolute performance or relative performance measured
against other groups, units, individuals or entities. The Committee may also
establish that none, a portion or all of a participant's Award will vest
(subject to Section 4.6) for performance which falls below the performance
target applicable to such Award. Certificates representing Performance Shares
shall bear a legend restricting their transfer and requiring the forfeiture of
the shares to the Company if any performance targets or other conditions to
vesting are not met. The Committee may also require a participant to deliver
certificates representing unvested Performance Shares to the Company in escrow
until the Performance Shares vest.
Section 4.5. Adjustments. At any time prior to vesting of a Performance
Share, the Committee may adjust previously established performance targets or
other terms and conditions to reflect events such as changes in laws,
regulations, or accounting practice, or mergers, acquisitions, divestitures or
any other event determined by the Committee.
Section 4.6. Payments of Awards. Following the conclusion of each
Performance Cycle, the Committee shall determine the extent to which performance
targets have been attained, and the satisfaction of any other terms and
conditions with respect to vesting an Award relating to such Performance Cycle.
Subject to the provisions of Section 6.3, to the extent the Committee determines
Performance Shares have vested, the Company shall issue to the participant
certificates representing vested shares free of any legend regarding performance
targets or forfeiture in exchange for such participant's legended certificates.
Section 4.7. Termination of Employment. Unless the Award Agreement
provides for vesting upon death, disability, retirement or termination of
employment, upon any such termination of employment of a participant prior to
vesting of Performance Shares, all outstanding and unvested Awards of
Performance Shares to such participant shall be cancelled, shall not vest and
shall be returned to the Company.
Section 4.8. Transfer Restriction. Any Award Agreement providing for the
issuance of Performance Shares to any person who, at the time of grant, is
subject to the restrictions of Section 16(b) of the Exchange Act, shall provide
that such Common Stock cannot be resold for a period of six months following the
grant of such Performance Shares.
ARTICLE V. AUTOMATIC GRANTS
Section 5.1. Grant. Each director who is not an employee of the Company,
its subsidiaries, affiliates and managers ("Non-Employee Director") shall on the
date on which he or she is initially elected or appointed a director of the
Company, be granted a Stock Option to purchase 1,000 shares of Common Stock for
the fair market price on the date of such grant, for an Option Term of ten
years. Thereafter, on the first business day following the Annual Meeting of
Stockholders of each subsequent year in which the Non-Employee Director is still
serving as a director (whether or not such Non-Employee Director's term has been
continuous), he or she shall automatically be granted a Stock Option to purchase
an additional 1,000 shares of Common Stock for the fair market price on the date
of such grant for an Option Term of ten years, and shall automatically be
granted, in lieu of a cash fee for serving as a director of the Company, 1,500
Performance Shares, which shall vest immediately upon grant and shall not be
subject to forfeiture, provided, however, that such Performance Shares shall not
be sold, assigned, pledged, hypothecated, transferred or otherwise disposed of
prior to six months after the date of grant, except by will or the laws of
descent and distribution. The Company shall deliver a certificate to the
director with a proper legend subscribed thereon giving notice of such
restriction on transferability.
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<PAGE>
Section 5.2. Applicable Provisions. The provisions of Section 2.7(a)
relating to the death of the Non-Employee Director shall apply to options
granted under Section 5.1 and the Committee may not agree to the contrary in an
Award Agreement or otherwise. The provisions of Subsections 2.7(b), (c) and (d)
relating to disability and other termination of employment shall not apply to
options granted under Section 5.1, and the failure of a Non-Employee Director to
be re-elected as a director of the Company shall not effect the Stock Options
granted under this Section.
ARTICLE VI. MISCELLANEOUS
Section 6.1. General Restriction. Each Award under the Plan shall be
subject to the requirement that, if at any time the Committee shall determine
that (i) the listing, registration or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or Federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the grantee of an Award with respect to the
disposition of shares of Common Stock, is necessary or desirable as a condition
of, or in connection with, the granting of such Award or the issue or purchase
of shares of Common Stock thereunder, such Award may not be consummated in whole
or in part unless such listing, registration, qualification, consent, approval
or agreement shall have been effected or obtained free of any conditions not
acceptable to the Committee.
Section 6.2. Non-Assignability. No Award under the Plan shall be
assignable or transferable by the recipient thereof, except by will or by the
laws of descent and distribution. During the life of the recipient, such Award
shall be exercisable only by such person or by such person's guardian or legal
representative.
Section 6.3. Withholding Taxes. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. Alternatively, the Company may issue, transfer or vest only such number
of shares of the Company net of the number of shares sufficient to satisfy the
withholding tax requirements. For withholding tax purposes, the shares of Common
Stock shall be valued on the date the withholding obligation is incurred.
Section 6.4. Right to Terminate Employment. Nothing in the Plan or in any
agreement entered into pursuant to the Plan shall confer upon any participant
the right to continue in the employment of the Company or affect any right which
the Company may have to terminate the employment of such participant.
Section 6.5. Non-Uniform Determinations. The Committee's determinations
under the Plan (including without limitation determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
Section 6.6. Rights as a Stockholder. The recipient of any Award under the
Plan shall have no rights as a stockholder with respect thereto unless and until
certificates for shares of Common Stock are issued to him.
Section 6.7. Definitions. In this Plan the following definitions shall
apply:
(a) "Award" shall mean a grant of Stock Options, Incentive Stock
Options or Performance Shares under the Plan.
(b) "Fair market value" as of any date and in respect or any
share of Common Stock means the average of the high and low sales price on
such date or on the next business day, if such date is not a business day,
of a share of Common Stock reflected in the consolidated trading tables of
The Wall Street Journal (presently the NYSE - Composite Transactions) or
any other publication selected by the
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Committee, provided that, if shares of Common Stock shall not have been
traded on the New York Stock Exchange or other public securities market
for more than 10 days immediately preceding such date or if deemed
appropriate by the Committee for any other reason, the fair market value
of shares of Common Stock shall be as determined by the Committee in such
other manner as it may deem appropriate. In no event shall the fair market
value of any share of Common Stock be less than its par value.
(c) "Option" means a Stock Option or Incentive Stock Option.
(d) "Option price" means the purchase price per share of Common
Stock deliverable upon the exercise of a Stock Option or Incentive Stock
Option.
(e) "Performance Cycle" means the period of time, if any, as
specified by the Committee over which Performance Share are to be vested.
Section 6.8. Leaves of Absence. The Committee shall be entitled to make
such rules, regulations and determinations as it deems appropriate under the
Plan in respect of any leave of absence taken by the recipient of any Award.
Without limiting the generality of the foregoing, the Committee shall be
entitled to determine (i) whether or not any such leave of absence shall
constitute a termination of employment within the meaning of the Plan and (ii)
the impact, if any, of any such leave of absence on Awards under the Plan
theretofore made to any recipient who takes such leave of absence.
Section 6.9. Newly Eligible Employees. The Committee shall be entitled to
make such rules, regulations, determinations and Awards as it deems appropriate
in respect of any employee who becomes eligible to participate in the Plan or
any portion thereof after the commencement of an Award or incentive period.
Section 6.10. Adjustments. In the event of any change in the outstanding
Common Stock by reason of a stock dividend or distribution, recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like,
the Committee may appropriately adjust the number of shares of Common Stock
which may be issued under the Plan, the number of shares of Common Stock subject
to Options or Performance Shares theretofore granted under the Plan, and any and
all other matters deemed appropriate by the Committee.
Section 6.11. Changes in the Company's Capital Structure.
(a) The existence of outstanding Options or Performance Shares
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(b) If, while there are outstanding Options, the Company shall
effect a subdivision or consolidation of shares or other increase or
reduction in the number of shares of the Common Stock outstanding without
receiving compensation therefor in money, services or property, then,
subject to the provisions, if any, in the Award Agreement (a) in the event
of an increase in the number of such shares outstanding, the number of
shares of Common Stock then subject to Options hereunder shall be
proportionately increased; and (b) in the event of a decrease in the
number of such shares outstanding the number of shares then available for
Option hereunder shall be proportionately decreased.
(c) After a merger of one or more corporations into the Company,
or after a consolidation of the Company and one or more corporations in
which the Company shall be the surviving corporation, (i) each holder of
an outstanding Option shall, at no additional cost, be entitled upon
exercise of such
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Option to receive (subject to any required action by stockholders) in lieu
of the number of shares as to which such Option shall then be so
exercisable, the number and class of shares of stock, other securities or
consideration to which such holder would have been entitled to receive
pursuant to the terms of the agreement of merger or consolidation if,
immediately prior to such merger or consolidation, such holder had been
the holder of record of a number of shares of the Company equal to the
number of shares as to which such Option had been exercisable and (ii)
unless otherwise provided by the Committee, the number of shares of Common
Stock, other securities or consideration to be received with respect to
unvested Performance Shares shall continue to be subject to the Award
Agreement, including any vesting provisions thereof.
(d) If the Company is about to be merged into or consolidated
with another corporation or other entity under circumstances where the
Company is not the surviving corporation, or if the Company is about to
sell or otherwise dispose of substantially all of its assets to another
corporation or other entity while unvested Performance Shares or
unexercised Options remain outstanding, then the Committee may direct that
any of the following shall occur:
(i) If the successor entity is willing to assume the
obligation to deliver shares of stock or other securities after the
effective date of the merger, consolidation or sale of assets, as
the case may be, each holder of an outstanding Option shall be
entitled to receive, upon the exercise of such Option and payment
of the option price, in lieu of shares of Common Stock, such shares
of stock or other securities as the holder of such Option would
have been entitled to receive had such Option been exercised
immediately prior to the consummation of such merger, consolidation
or sale, and the terms of such Option shall apply as nearly as
practicable to the shares of stock or other securities purchasable
upon exercise of the Option following such merger, consolidation or
sale of assets;
(ii) The Committee may waive any limitations set forth in
or imposed pursuant to this Plan or any Award Agreement with
respect to such Option or Performance Share such that (A) such
Option shall become exercisable prior to the record or effective
date of such merger, consolidation or sale of assets or (B) the
vesting of such Performance Share shall occur upon such merger,
consolidation or sale of assets; and/or
(iii) The Committee may cancel all outstanding Options as
of the effective date of any such merger, consolidation or sale of
assets provided that prior notice of such cancellation shall be
given to each holder of an Option at least 30 days prior to the
effective date of such merger, consolidation or sale of assets, and
each holder of an Option shall have the right to exercise such
Option in full during a period of not less than 30 days prior to
the effective date of such merger, consolidation or sale of assets.
(e) Except as herein provided, the issuance by the Company of
Common Stock or any other shares of capital stock or securities
convertible into shares of capital stock, for cash, property, labor done
or other consideration, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of
Common Stock then subject to outstanding Options.
Section 6.12. Amendment of the Plan.
(a) The Committee may, without further action by the
stockholders and without receiving further consideration from the
participants, amend this Plan or condition or modify Awards under this
Plan in response to changes in securities or other laws or rules,
regulations or regulatory interpretations thereof applicable to this Plan
or to comply with stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the
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Plan in any respect, except that without stockholder approval the
Committee may not (i) increase the maximum number of shares of Common
Stock which may be issued under the Plan (other than increases pursuant to
Section 6.10), (ii) extend the period during which any Award may be
granted or exercised, (iii) extend the term of the Plan or (iv) change the
employees or class of employees eligible to participate in the Plan. The
termination or any modification or amendment of the Plan, except as
provided in subsection (a), shall not, without the consent of a
participant, affect his or her rights under an Award previously granted to
him or her.
(c) Notwithstanding Sections 6.12(a) and (b), the provisions of
Article V of the Plan may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder.
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EXHIBIT 5.1
KELLY, HART & HALLMAN
(A PROFESSIONAL CORPORATION)
201 MAIN STREET, SUITE 2500
FORT WORTH, TEXAS 76102
September 9, 1997
Cross Timbers Oil Company
810 Houston Street, Suite 2000
Fort Worth, Texas 76102
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
The opinion set forth below is given pursuant to Item 601(b)(5) of
Regulation S-K for inclusion as Exhibit 5.1 to the Registration Statement on
Form S-8 (the "Registration Statement"), of Cross Timbers Oil Company, a
Delaware corporation (the "Company"), pertaining to the offering of up to
300,000 shares of Common Stock (the "Shares") under the Company's 1994 Stock
Incentive Plan (the "Plan").
In connection with this opinion, we have made the following assumptions:
(i) all documents submitted to or reviewed by us, including all amendments and
supplements thereto, are accurate and complete and if not originals are true and
correct copies of the originals; (ii) the signatures on each of such documents
by the parties thereto are genuine; (iii) each individual who signed such
documents had the legal capacity to do so; and (iv) all persons who signed such
documents on behalf of a corporation were duly authorized to do so. We have
assumed that there are no amendments, modifications or supplements to such
documents other than those amendments, modifications and supplements that are
known to us.
Based on the foregoing, and subject to the limitations and
qualifications set forth herein, we are of the opinion that the Shares have been
duly authorized and will, when sold pursuant to the Plan, be validly issued,
fully paid and nonassessable.
This opinion is further limited and qualified in all respects as
follows:
This opinion is specifically limited to matters of the General
Corporation Law of the State of Delaware and the federal laws of the United
States of America. We express no opinion as to the applicability of the laws of
any other particular jurisdiction to the transactions described in this opinion.
This opinion is limited to the specific opinions expressly stated herein, and no
other opinion is implied or may be inferred beyond the specific opinions
expressly stated herein.
<PAGE>
Cross Timbers Oil Company
September 9, 1997
Page 2
This opinion is intended solely for your benefit. It is not to be quoted
in whole or in part, disclosed, made available to or relied upon by any other
person, firm or entity without our express prior written consent.
This opinion is based upon our knowledge of the law and facts as of the
date hereof. We assume no duty to update or supplement this opinion to reflect
any facts or circumstances that may hereafter come to our attention or to
reflect any changes in any law that may hereafter occur or become effective.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission promulgated thereunder.
Respectfully submitted,
KELLY, HART & HALLMAN
(a professional corporation)
<PAGE>
EXHIBIT 15.1
AWARENESS LETTER - UNAUDITED INTERIM FINANCIAL INFORMATION
Cross Timbers Oil Company
Fort Worth, Texas
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Cross Timbers Oil Company ("the Company") for the periods ended
March 31 and June 30, 1997, as indicated in our reports dated April 23 and July
24, 1997, respectively. Because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our reports referred to above, which were included in the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and
June 30, 1997, are being incorporated by reference in this Registration
Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
September 9, 1997
<PAGE>
EXHIBIT 23.1
INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
Cross Timbers Oil Company
Fort Worth, Texas
We consent to the incorporation by reference in this Registration Statement of
Cross Timbers Oil Company on Form S-8 of our report dated March 13, 1997,
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, and to the reference to our firm under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
ARTHUR ANDERSEN LLP
Fort Worth, Texas
September 9, 1997
