<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 25, 1998
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
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 IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
810 HOUSTON STREET, SUITE 2000
FORT WORTH, TEXAS 76102
(817) 870-2800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
BOB R. SIMPSON
810 HOUSTON STREET, SUITE 2000
FORT WORTH, TEXAS 76102
(817) 870-2800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------
COPIES OF ALL COMMUNICATIONS TO:
F. RICHARD BERNASEK, ESQ.
KELLY, HART & HALLMAN, P.C.
201 MAIN STREET, SUITE 2500
FORT WORTH, TEXAS 76102
(817) 332-2500
--------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO 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. [_]
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, check the following box. [X]
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. [_]
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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
--------------
CALCULATION OF REGISTRATION FEE
<TABLE>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
<CAPTION>
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(2) REGISTRATION FEE(2)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(3)(4)...
Common Stock, par value
$0.01 per share(4)(5)..
Preferred Stock, par
value $0.01 per
share(4)(6)............
Warrants(4)(7).......... $200,000,000 100% $200,000,000 $59,000.00
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The proposed maximum initial offering price per unit will be determined,
from time to time, by the Registrant.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). In no event will the aggregate initial offering
price of all securities issued from time to time pursuant to this
Registration Statement exceed $200,000,000.
(3) Subject to footnote (2), there are being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold from time
to time by the Registrant. If any such Debt Securities are issued at an
original issue discount, then the offering price shall be in such greater
principal amount as shall result in an aggregate initial offering price of
up to $200,000,000.
(4) Subject to footnote (2), there are being registered hereunder an
indeterminate amount and number of Debt Securities, Preferred Stock and
Common Stock as may be issuable upon the conversion or redemption of Debt
Securities or Preferred Stock registered hereby or upon exercise of the
Warrants registered hereby.
(5) Subject to footnote (2), there are being registered hereunder an
indeterminate number of shares of Common Stock as may be sold from time to
time by the Registrant.
(6) Subject to footnote (2), there are being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold from time
to time by the Registrant.
(7) Subject to footnote (2), there are being registered hereunder an
indeterminate number of Warrants as may be sold from time to time by the
Registrant.
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED FEBRUARY 25, 1998
PROSPECTUS
$200,000,000
CROSS TIMBERS OIL COMPANY
[LOGO OF CROSS TIMBERS
OIL COMPANY APPEARS HERE] DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
-----------
Cross Timbers Oil Company (the "Company") may offer from time to time
securities ("Securities"), which may consist of (i) Debt Securities ("Debt
Securities"), which may be either senior debt securities ("Senior Securities"),
senior subordinated debt securities ("Senior Subordinated Securities") or
subordinated debt securities ("Subordinated Securities"), consisting of
debentures, notes, bonds and/or other unsecured evidences of indebtedness in
one or more series, (ii) shares of Preferred Stock, $0.01 par value per share
("Preferred Stock"), in one or more classes or series, (iii) shares of Common
Stock, $0.01 par value per share ("Common Stock"), in one or more classes or
series, or (iv) Warrants ("Warrants") to purchase Debt Securities, Preferred
Stock or Common Stock. The Securities will be offered at an aggregate initial
offering price not to exceed $200,000,000, at prices and on terms to be
determined at the time of sale.
The specific terms of any Securities offered pursuant to this Prospectus will
be set forth in an accompanying supplement to this Prospectus (a "Prospectus
Supplement"), together with the terms of the offering of such Securities and
the initial offering price and the net proceeds to the Company from the sale
thereof. The Prospectus Supplement will include with regard to the particular
Securities, where applicable, the following information: (i) in the case of
Debt Securities, the title, total principal amount, denominations, maturity,
rate, if any (which may be fixed or variable), or method of calculation
thereof, and time of payment of any interest, any terms for redemption at the
option of the Company or the holder, any terms for sinking fund payments or
analogous provisions, any conversion or exchange rights, terms related to
temporary or permanent global securities, any listing on a securities exchange
and the initial public offering price and any other terms in connection with
the offering and sale of such Debt Securities, (ii) in the case of Preferred
Stock, the designation, number of shares, and stated value and liquidation
preference per share, initial public offering price, dividend rate (or method
of calculation), dates on which dividends shall be payable and dates from which
dividends shall accrue, any redemption or sinking fund provisions, any
conversion or exchange rights, any listing on a securities exchange, and any
other terms in connection with the offering and sale of such Preferred Stock;
(iii) in the case of Common Stock, the number of shares, designation and
specific terms, if any, and the terms of the offering thereof; and (iv) in the
case of Warrants, the number and terms thereof, the designation and the number
of Securities and/or amount of cash consideration issuable upon their exercise,
the exercise price, any listing of the Warrants or the underlying Securities on
a securities exchange and any other terms in connection with the offering, sale
and exercise of the Warrants. The Prospectus Supplement will also contain
information, as applicable, about certain United States federal income tax
considerations relating to the Securities in respect of which this Prospectus
is being delivered.
The Senior Securities will rank equally with all other unsubordinated and
unsecured indebtedness of the Company. The Senior Subordinated Securities will
be subordinated to all existing and future Senior Indebtedness (as defined) of
the Company, and senior to all existing and future Subordinated Indebtedness
(as defined) of the Company. The Subordinated Securities will be subordinated
to all existing and future Senior Indebtedness and Senior Subordinated
Indebtedness of the Company.
The Company's Common Stock and Series A Convertible Preferred Stock are
listed on the New York Stock Exchange and trade under the symbols "XTO" and
"XTOpA," respectively.
The Company may sell Securities to or through one or more underwriters, and
also may sell Securities directly to other purchasers or through agents. The
applicable Prospectus Supplement will set forth the names of any underwriters
or agents involved in the sale of the Securities in respect of which this
Prospectus is being delivered, the number of shares or principal amounts, if
any, to be purchased by underwriters and the compensation, if any, of such
underwriters or agents. See "Plan of Distribution" herein.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN ANY SECURITIES, SEE "RISK FACTORS", BEGINNING ON PAGE 3.
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is , 1998.
<PAGE>
ADDITONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all
amendments, exhibits and supplements thereto, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Securities offered hereby. This Prospectus, which forms a part
of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the Securities offered hereby,
reference is made to the Registration Statement. Any statements made in this
Prospectus concerning the provisions of certain documents are not necessarily
complete and, in each instance, reference is made to the copy of such
documents filed as an exhibit to the Registration Statement or otherwise filed
with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates herein by reference the following documents:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;
(b) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997,
June 30, 1997, and September 30, 1997;
(c) Current Reports on Form 8-K dated December 1, 1997 (including
Amendment No. 1), February 18, 1998 and February 25, 1998;
(d) The description of the Company's Common Stock contained in Form 8-A
of the Company dated April 8, 1993, as amended by Amendment No. 1 dated
June 15, 1995;
(e) The description of the Company's Series A Convertible Preferred Stock
contained in Form 8-A of the Company dated August 12, 1996, as amended by
Amendment No. 1 dated September 3, 1996, and Amendment No. 2 dated
September 18, 1996; and
(f) All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") subsequent to the date hereof and prior to termination of
the offering made hereby.
Any statement contained herein or in a document all or a portion of which is
incorporated by 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 other 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.
Statements contained in this Prospectus as to the contents of any contract
or other document referred to are not necessarily complete and in each
instance reference is made to such contract or other document, copies of which
are available from the Company as described below, each such statement being
qualified in all respects by such reference.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any documents
incorporated by reference herein, other than exhibits thereto unless
specifically incorporated by reference into such documents. Such request
should be directed to Cross Timbers Oil Company, 810 Houston Street, Suite
2000, Fort Worth, Texas 76102, Attention: Investor Relations (817) 870-2800.
-------
CERTAIN PERSONS PARTICIPATING IN AN OFFERING OF SECURITIES OFFERED HEREBY
MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE
PRICE OF THE SECURITIES, INCLUDING OVER-ALLOTMENT AND OTHER STABILIZING
TRANSACTIONS BY UNDERWRITERS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE THE
PROSPECTUS SUPPLEMENT RELATING TO THE SECURITIES.
2
<PAGE>
RISK FACTORS
Prospective purchasers of the Securities should carefully review the
information contained elsewhere in this Prospectus and should particularly
consider the following matters:
REPLACEMENT OF RESERVES
The Company's future success depends upon its ability to find, develop or
acquire additional oil and gas reserves that are economically recoverable. The
proved reserves of the Company will generally decline as reserves are
depleted, except to the extent that the Company conducts successful
exploration or development activities or acquires properties containing proved
reserves, or both. In order to increase reserves and production, the Company
must continue its development drilling and recompletion programs, pursue its
exploration drilling program or undertake other replacement activities. The
Company's current strategy includes increasing its reserve base through
acquisitions of producing properties, by continuing to exploit its existing
properties and, to a lesser extent, by pursuing exploration opportunities.
There can be no assurance, however, that the Company's planned development and
exploration projects and acquisition activities will result in significant
additional reserves or that the Company will have continuing success drilling
productive wells at low finding costs.
PRICE FLUCTUATIONS AND MARKETS
The Company's results of operations are highly dependent upon the prices
received for the Company's oil and natural gas. Substantially all of the
Company's sales of oil and natural gas are made in the spot market, or
pursuant to contracts based on spot market prices, and not pursuant to long-
term, fixed-price contracts. Accordingly, the prices received by the Company
for its oil and natural gas production are dependent upon numerous factors
beyond the control of the Company. These factors include, but are not limited
to, the level of consumer product demand, weather conditions, governmental
regulations and taxes, the price and availability of alternative fuels, the
level of foreign imports of oil and natural gas, and the overall economic
environment. Any significant decline in prices for oil and natural gas could
have a material adverse effect on the Company's financial condition, results
of operations and quantities of reserves recoverable on an economic basis.
Should the industry experience significant price declines from current levels
or other adverse market conditions, the Company may not be able to generate
sufficient cash flow from operations to meet its obligations and make planned
capital expenditures. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources,"
"Business and Properties--Competition and Markets" and "--Federal and State
Regulations," incorporated herein by reference from the Company's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q.
The availability of a ready market for the Company's oil and natural gas
production also depends on a number of factors, including the demand for and
supply of oil and natural gas and the proximity of reserves to, and the
capacity of, oil and gas gathering systems, pipelines or trucking and terminal
facilities. Wells may be shut-in for lack of a market or due to inadequacy or
unavailability of pipeline or gathering system capacity.
SUBSTANTIAL INDEBTEDNESS
The Company has incurred a substantial amount of indebtedness and may incur
additional indebtedness under existing and future credit agreements or
pursuant to public or private offerings of debt securities. This level of
indebtedness may pose substantial risks to holders of Securities offered
pursuant to this Prospectus, including the possibility that the Company might
not generate sufficient cash flow to pay the principal of and interest on Debt
Securities offered hereby. If the Company is unsuccessful in increasing its
proved reserves or realizing production from its proved undeveloped reserves,
the future net revenue from existing proved reserves may not be sufficient to
pay the principal of and interest on debt securities issued by the Company and
would adversely affect the value of any preferred stock or common stock
outstanding. Such indebtedness may also adversely affect the Company's ability
to finance its future operations and capital needs, and may limit its ability
to pursue other business opportunities.
3
<PAGE>
SUBSTANTIAL CAPITAL REQUIREMENTS
The Company makes, and will continue to make, substantial capital
expenditures for the acquisition, development, production, exploration and
abandonment of its oil and natural gas reserves. The Company intends to
finance such capital expenditures primarily with funds provided by operations
and borrowings under its bank credit agreement.
If revenues decrease as a result of lower oil or gas prices or otherwise,
the Company may have limited ability to expend the capital necessary to
replace its reserves or to maintain production at current levels, resulting in
a decrease in production over time. If the Company's cash flow from operations
is not sufficient to satisfy its capital expenditure requirements, there can
be no assurance that additional debt or equity financing will be available to
meet these requirements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources," incorporated herein by reference from the Company's Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q.
COMPETITION
The oil and natural gas industry is highly competitive. The Company will
compete in the acquisition, development, production and marketing of oil and
natural gas with major oil companies, other independent oil and natural gas
concerns and individual producers and operators. Many of these competitors
have substantially greater financial and other resources than the Company.
Furthermore, the oil and natural gas industry competes with other industries
in supplying the energy and fuel needs of industrial, commercial and other
consumers. See "Business and Properties--Competition and Markets,"
incorporated herein by reference from the Company's Annual Report on Form 10-
K.
ACQUISITION RISKS
The Company constantly evaluates acquisition opportunities and frequently
engages in bidding and negotiation for acquisitions, many of which are
substantial. If successful in this process, the Company may be required to
alter or increase its capitalization substantially to finance these
acquisitions through the issuance of additional debt or equity securities, the
sale of production payments or otherwise; however, the Company's current bank
revolving credit agreement and the indentures governing outstanding
indebtedness contain covenants that limit the Company's ability to incur
additional indebtedness. See "--Substantial Indebtedness." These changes in
capitalization may significantly affect the risk profile of the Company.
Additionally, significant acquisitions can change the nature of the operations
and business of the Company depending upon the character of the acquired
properties, which may be substantially different in operating or geologic
characteristics or geographic location than existing properties. Moreover,
there can be no assurance that the Company will be successful in the
acquisition of any material property interests. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources," incorporated herein by reference from the Company's Annual
Report on Form 10-K and Quarterly Reports on Form 10-Q.
DRILLING RISKS
Drilling activities are subject to many risks, including the risk that no
commercially productive reservoirs will be encountered. There can be no
assurance that new wells drilled by the Company will be productive or that the
Company will recover all or any portion of its investment. Drilling for oil
and natural gas may involve unprofitable efforts, not only from dry wells, but
from wells that are productive but do not produce sufficient net revenues to
return a profit after drilling, operating and other costs. The cost of
drilling, completing and operating wells is often uncertain. The Company's
drilling operations may be curtailed, delayed or canceled as a result of
numerous factors, many of which are beyond the Company's control, including
title problems, weather
4
<PAGE>
conditions, compliance with governmental requirements and shortages or delays
in the delivery of equipment and services.
OPERATING HAZARDS AND UNINSURED RISKS
The Company's operations are subject to hazards and risks inherent in
drilling for, producing and transporting oil and natural gas, such as fires,
natural disasters, explosions, encountering formations with abnormal
pressures, blowouts, cratering, pipeline ruptures and spills, any of which can
result in loss of hydrocarbons, environmental pollution, personal injury
claims and damage to properties of the Company and others. As protection
against operating hazards, the Company maintains insurance coverage against
some, but not all, potential losses. The Company's coverages include, but are
not limited to, operator's extra expense, physical damage on certain assets,
employer's liability, comprehensive general liability, automobile and workers'
compensation insurance. The Company believes that its insurance is adequate
and customary for companies of a similar size engaged in operations similar to
those of the Company, but losses could occur for uninsurable or uninsured
risks or in amounts in excess of existing insurance coverage. The occurrence
of an event that is not fully covered by insurance could have an adverse
impact on the Company's financial condition and results of operations.
UNCERTAINTY OF ESTIMATES OF RESERVES AND FUTURE NET REVENUES
There are numerous uncertainties inherent in estimating quantities of proved
reserves, including many factors beyond the control of the Company. The
information relating to Company oil and natural gas reserves incorporated
herein by reference represents estimates based on reports prepared by the
Company's independent petroleum engineers, as well as internally generated
reports. Petroleum engineering is not an exact science. Information relating
to the Company's proved oil and natural gas reserves is based upon engineering
estimates. Estimates of economically recoverable oil and natural gas reserves
and of future net cash flows necessarily depend upon a number of variable
factors and assumptions, such as historical production from the area compared
with production from other producing areas, the assumed effects of regulation
by governmental agencies and assumptions concerning future oil and natural gas
prices, future operating costs, severance and excise taxes, capital
expenditures and workover and remedial costs, all of which may in fact vary
considerably from actual results. For these reasons, estimates of
classifications of such reserves based on risk of recovery and estimates of
expected future cash flows prepared by different engineers or by the same
engineers at different times may vary substantially. Actual production,
revenues and expenditures with respect to the Company's reserves will likely
vary from estimates, and such variances may be material.
DEPENDENCE UPON KEY PERSONNEL
The success of the Company has been and will continue to be highly dependent
on the Company's Chairman of the Board of Directors and Chief Executive
Officer, Bob R. Simpson, its Vice Chairman of the Board and President, Steffen
E. Palko, and a limited number of other senior management personnel. Loss of
the services of Mr. Simpson or Mr. Palko or any of those other individuals
could have a material adverse impact on the Company's operations. The Company
can make no assurance regarding the future affiliation of any of such persons
with the Company.
GOVERNMENTAL REGULATION
The Company's operations are affected by extensive regulation pursuant to
various federal, state and local laws and regulations relating to the
exploration for, and the development, production, gathering and marketing of,
oil and natural gas and the release of material into the environment or
otherwise relating to protection of the environment. In particular, the
Company's oil and natural gas exploration, development and production, and its
activities in connection with the storage and transportation of liquid
hydrocarbons, are subject to stringent environmental regulations by
governmental authorities. Such regulations have increased the costs of
planning, designing, drilling, installing, operating and abandoning oil and
natural gas wells and other related facilities, and such regulations may
become more onerous in the future.
5
<PAGE>
The Company may be required to expend significant resources, both financial
and managerial, to comply with environmental regulations and permitting
requirements. Although the Company believes that its operations are in general
compliance with all such laws and regulations, including applicable
environmental laws and regulations, risks of substantial costs and liabilities
are inherent in oil and natural gas operations, and there can be no assurance
that significant costs and liabilities will not be incurred in the future.
Moreover, it is possible that other developments, such as increasingly strict
environmental laws, regulations and enforcement policies thereunder, and
claims for damages to property, employees, other persons and the environment
resulting from the Company's operations, could result in substantial costs and
liabilities in the future.
The Company expects to maintain customary insurance coverage for its
operations, including coverage for sudden environmental damages, but does not
believe that insurance coverage for environmental damages that occur over time
will be available at a reasonable cost. Moreover, the Company does not believe
that insurance coverage against the full potential liability that could be
caused by sudden environmental damages is available at a reasonable cost.
Accordingly, the Company might be subject to uninsured liability because of
the prohibitive premium costs of insuring against certain hazards. See
"Business and Properties--Federal and State Regulations" and "--Environmental
Regulations," incorporated herein by reference from the Company's Annual
Report on Form 10-K.
FORWARD-LOOKING STATEMENTS
Certain statements incorporated by reference in this Prospectus from
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business and Properties," in addition to certain statements
contained herein and elsewhere in such incorporated documents are "forward-
looking statements" and are thus prospective. Such statements include, among
others, (a) statements regarding the Company's future acquisition and
development plans and objectives and related expenditures, revenues and cash
flows, including without limitation statements regarding (1) production and
cash flows, (2) number and location of planned wells, (3) anticipated
completion of the Company's plan regarding expenditures for property
acquisitions and repurchases of the Company's Common Stock, and the
anticipated source of the funds necessary to complete the plan and (4) the
Company's capital expenditure budgets for acquisition and development,
respectively, and (b) statements regarding the Company's anticipated aggregate
annual dividends to be paid on its Common Stock. Statements of assumptions
related to or underlying such forward-looking statements include, without
limitation, statements regarding (i) the quality of the Company's properties
with regard to, among other things, anticipated reserve and production
enhancement opportunities and quantity of proved reserves, (ii) the Company's
ability to prudently add growth potential through exploration, (iii)
anticipated future domestic hydrocarbon demand, (iv) the adequacy of the
Company's sources of liquidity during the current and future years, (v) the
expected insignificant impact on the Company's future expenditures for
regulatory compliance, (vi) the expected insignificant impact of production
imbalances on the Company's liquidity during the current and future years,
(vii) the expected immaterial adverse impact of a loss of any current oil or
gas purchaser from the Company, (viii) regulatory approval and the enactment
of new legislation in Oklahoma to realize infill drilling potential and (ix)
similarity of the impact on the Company to the impact on other oil and natural
gas producers of rules promulgated by the Federal Energy Regulatory
Commission. Such forward-looking statements are subject to risks,
uncertainties and other factors which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. The most significant of such risks, uncertainties and other
factors are discussed under "Risk Factors" in this Prospectus, and under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," incorporated by reference herein from the Company's Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q, and prospective investors are
urged to carefully consider such factors.
6
<PAGE>
THE COMPANY
Cross Timbers Oil Company is a leading United States independent energy
company engaged in the acquisition, development, exploitation and exploration
of oil and natural gas properties, and in the production, processing,
marketing and transportation of oil and natural gas. The Company has
consistently increased proved reserves, production and cash flow since its
inception in 1986. The Company has grown primarily through acquisitions of
reserves, followed by aggressive development and exploitation activities and
strategic acquisitions of additional interests in or near such reserves. The
Company's oil and gas reserves are principally located in relatively long-
lived fields with well-established production histories concentrated in
western Oklahoma, the Permian Basin of West Texas and New Mexico, the Hugoton
Field of Oklahoma and Kansas, the Green River Basin of Wyoming, and the San
Juan Basin of northwestern New Mexico.
The Company is a Delaware corporation. Its principal executive offices are
located at 810 Houston Street, Suite 2000, Fort Worth, Texas 76102 and its
telephone number is (817) 870-2800.
USE OF PROCEEDS
Except as otherwise described in the applicable Prospectus Supplement, the
net proceeds from the sale of Securities will be used for general corporate
purposes, which may include refinancings or repayments of indebtedness,
property acquisitions, capital expenditures, working capital, acquisitions and
repurchases and redemptions of securities.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for the years and periods
indicated are as follows:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30
---------------------------- -------------
1992 1993 1994 1995 1996 1996 1997
---- ----- ---- ----- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated ratio of earnings to
fixed charges(a).................. 1.8x -- (b) 1.5x -- (c) 2.6x 2.3x 2.2x
</TABLE>
- --------
(a) For purposes of calculating this ratio, earnings include income (loss)
from continuing operations before income tax and fixed charges. Fixed
charges include interest expense, preferred stock dividends and an imputed
interest expense on operating lease rentals (assumed as one-third of
rentals).
(b) Earnings were insufficient to cover fixed charges by $0.4 million due to
the effect of a one-time, non-cash accounting charge of $4 million for net
deferred income tax liabilities upon the merger of the Company with the
predecessor partnership. Excluding the effect of this charge, the ratio of
earnings to fixed charges would have been 1.6x.
(c) Earnings were insufficient to cover fixed charges by $16.4 million due to
the effect of a $20.3 million pre-tax, non-cash impairment charge recorded
upon adoption of Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. Excluding the effect of this charge, the ratio
of earnings to fixed charges would have been 1.3x.
7
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The following is a description of certain general terms and provisions of
the Debt Securities. The particular terms of any series of Debt Securities
will be described in the applicable Prospectus Supplement. If so indicated in
a Prospectus Supplement, the terms of any such series may differ from the
terms set forth below.
Debt Securities may be issued from time to time in one or more series by the
Company. The Debt Securities will constitute either indebtedness designated as
Senior Indebtedness ("Senior Securities"), indebtedness designated as Senior
Subordinated Indebtedness ("Senior Subordinated Securities") or indebtedness
designated as Subordinated Indebtedness ("Subordinated Securities"). The
Company may issue Debt Securities with different terms from those of Debt
Securities previously issued without the consent of holders of previously
issued series of Debt Securities. The particular terms of each series of
Securities offered by a particular Prospectus Supplement will be described
therein. Senior Securities, Senior Subordinated Securities and Subordinated
Securities will each be issued under a separate indenture (individually, an
"Indenture" and, collectively, the "Indentures") to be entered into prior to
the issuance of such Debt Securities. The Indentures will be substantially
identical, except for provisions relating to subordination. See "--
Subordination of Senior Subordinated Securities and Subordinated Securities."
A copy of the form of the Indenture is filed as an Exhibit to the Registration
Statement of which this Prospectus is a part. There will be a separate Trustee
(individually, a "Trustee" and, collectively, the "Trustees") under each
Indenture. Information regarding the Trustee under an Indenture will be
included in any Prospectus Supplement relating to the Debt Securities issued
thereunder.
The following discussion includes a summary description of material terms of
the Indentures, other than terms that are specific to a particular series of
Debt Securities and that will be described in the Prospectus Supplement
relating to such series. The following summaries do not purport to be complete
and are subject to, and are qualified in their entirety by reference to, all
of the provisions of the Indentures, including the definitions therein of
certain terms capitalized in this Prospectus. Wherever particular Sections or
Articles or defined terms of the Indentures are referred to herein or in a
Prospectus Supplement, such Sections or defined terms are incorporated herein
or therein by reference.
To the extent applicable to the Debt Securities of a particular series, as
indicated in the applicable Prospectus Supplement, there are no provisions of
the Indentures that afford holders of the Debt Securities protection in the
event of a highly leveraged transaction involving the Company.
GENERAL
Debt Securities will be general unsecured obligations of the Company. The
Indentures do not limit the aggregate amount of Debt Securities that may be
issued under each Indenture, and Debt Securities may be issued under the
Indentures from time to time in separate series up to the aggregate amount
authorized from time to time by the Company for each series. Debt Securities
of a series will be issuable only in registered form without coupons in
denominations of $1,000 and integral multiples thereof, or in the form of one
or more Global Securities in registered form (each a "Global Security"). The
Senior Securities will be unsecured and unsubordinated obligations of the
Company and will rank equally and ratably with other unsecured and
unsubordinated indebtedness of the Company. The Senior Subordinated Securities
and the Subordinated Securities will be subordinated in right of payment to
the prior payment in full of the Senior Indebtedness, including the Senior
Securities, of the Company, and the Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the Senior
Subordinated Indebtedness, including the Senior Subordinated Securities, as
described below under "Subordination of Senior Subordinated Securities and
Subordinated Securities" and in a Prospectus Supplement applicable to an
offering of Senior Subordinated Securities or Subordinated Securities.
The applicable Prospectus Supplement or Prospectus Supplements will describe
the following terms of the series of Debt Securities in respect of which this
Prospectus is being delivered: (1) the title of such Debt Securities; (2) any
limit on the aggregate principal amount of such Debt Securities; (3) whether
any of such Debt
8
<PAGE>
Securities are to be issuable as a Global Security, whether such Global
Securities are to be issued in temporary global form or permanent global form,
and, if so, the terms and conditions, if any, upon which interests in such
Securities in global form may be exchanged, in whole or in part, for the
individual Debt Securities represented thereby; (4) the date or dates on which
such Debt Securities will mature; (5) the rate or rates of interest, if any,
or the method of calculation thereof, that such Debt Securities will bear; (6)
the date or dates from which any such interest will accrue, the interest
payment dates on which any such interest on such Debt Securities will be
payable and the record date for any interest payable on any interest payment
date; (7) the place or places where the principal of, premium (if any) and
interest on such Debt Securities will be payable; (8) the period or periods
within which, the events upon the occurrence of which, and the price or prices
at which, such Debt Securities may, pursuant to any optional or mandatory
provisions, be redeemed or purchased, in whole or in part, by the Company and
any terms and conditions relevant thereto; (9) the obligation of the Company,
if any, to redeem or repurchase such Debt Securities at the option of the
holders; (10) any index or formula used to determine the amount of payments of
principal of and any premium and interest on such Debt Securities; (11) if
other than the principal amount thereof, the portion of the principal amount
of such Debt Securities of the series that will be payable upon declaration of
the acceleration of the maturity thereof; (12) any additional covenants of the
Company; (13) the terms and conditions, if any, pursuant to which such Debt
Securities are convertible or exchangeable into Common Stock or other
securities; and (14) any other terms of such Debt Securities not inconsistent
with the provisions of the applicable Indentures.
Debt Securities may be issued at a discount from their principal amount.
United States federal income tax considerations and other special
considerations applicable to any such original issue discount securities will
be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debt Securities is denominated in a
foreign currency or currencies or a foreign currency unit or units or if the
principal of and any premium and interest on any series of Debt Securities is
payable in a foreign currency or currencies or a foreign currency unit or
units, the restrictions, elections, general tax considerations, specific terms
and other information with respect to such issue of Debt Securities and such
foreign currency or currencies or foreign currency unit or units will be set
forth in the applicable Prospectus Supplement.
SENIOR SECURITIES
The Senior Securities will rank pari passu with all other unsecured and
unsubordinated debt of the Company, including Senior Indebtedness, and senior
to the Senior Subordinated Indebtedness and Subordinated Indebtedness.
SUBORDINATION OF SENIOR SUBORDINATED SECURITIES AND SUBORDINATED SECURITIES
The payment of the principal of, premium, if any, and interest on the Senior
Subordinated Securities and the Subordinated Securities will, to the extent
set forth in the respective Indentures governing such Senior Subordinated
Securities and Subordinated Securities, be subordinated in right of payment to
the prior payment in full of all Senior Indebtedness (including the Senior
Securities), and payments in respect of the Subordinated Securities will be
subordinated to the prior payment in full of all Senior Subordinated
Indebtedness. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings of the Company, (1) the holders of all Senior Indebtedness
will be entitled to receive payment in full of all amounts due or to become
due thereon before the holders of the Senior Subordinated Securities or the
Subordinated Securities will be entitled to receive any payment of the
principal of, premium, if any, or interest on such Senior Subordinated
Securities or Subordinated Securities, as the case may be, and (2) the holders
of Senior Subordinated Securities will be entitled to receive payment in full
in respect thereof before holders of Subordinated Securities are entitled to
receive any payments in respect of such Subordinated Securities. In the event
of the acceleration of the maturity of any Senior Subordinated Securities or
Subordinated Securities, the holders of all Senior Indebtedness will be
entitled to receive payment in full of all amounts due or to become
9
<PAGE>
due thereon before the holders of the Senior Subordinated Securities or
Subordinated Securities, as the case may be, will be entitled to receive any
payment upon the principal of, premium, if any, or interest on such Senior
Subordinated Securities or Subordinated Securities, as the case may be. Upon
acceleration of the maturity of any Subordinated Securities, the holders of
any Senior Subordinated Indebtedness will be entitled to receive payment in
full of the Senior Subordinated Indebtedness before the holders of
Subordinated Securities are entitled to receive any payments in respect
thereof.
No payments of principal of, premium, if any, or interest on the Senior
Subordinated Securities or Subordinated Securities may be made if there shall
have occurred and be continuing a default in the payment of principal of,
premium, if any, or interest on any Senior Indebtedness (and, in the case of
the Subordinated Securities, on any Senior Subordinated Indebtedness) beyond
any applicable grace period. During the continuance of any default, other than
a default in the payment of principal of, premium, if any, or interest, on
Senior Indebtedness (and in the case of Subordinated Securities, on Senior
Subordinated Indebtedness) pursuant to which the maturity thereof may be
accelerated, upon receipt by the Trustee for Senior Subordinated Securities or
Subordinated Securities of notice from holders of Senior Indebtedness (and/or
Senior Subordinated Indebtedness) the Company will be restricted, as set forth
in the applicable Indenture from making any payments to holders of Senior
Subordinated Securities and/or Subordinated Securities.
The failure of the Company to make any payment on the Senior Subordinated
Securities or the Subordinated Securities when due or within any applicable
grace period, including as a result of a nonpayment default on any Senior
Indebtedness (or in the case of Subordinated Securities, on any Senior
Subordinated Indebtedness), will constitute an Event of Default under the
applicable Indenture and will entitle holders of the Senior Subordinated
Securities and/or Subordinated Securities, as applicable, to accelerate the
maturity thereof.
The Indenture pertaining to the Senior Subordinated Securities will provide
that the Company will not incur any Indebtedness which is expressly
subordinated in right of payment to Senior Indebtedness unless such
Indebtedness ranks pari passu with or subordinate to the Senior Subordinated
Securities.
The Company conducts some of its operations through subsidiaries. The Debt
Securities are obligations only of the Company and not of the subsidiaries. As
an equity holder of its subsidiaries, the right of the Company to receive
assets from a subsidiary upon the bankruptcy, liquidation or reorganization of
such subsidiary (and therefore the right of the holders of Debt Securities to
realize value from such assets) will be effectively subordinated to the claims
of all creditors of that subsidiary, except to the extent that the Company is
recognized as a creditor of the subsidiary.
By reason of such provisions, in the event of insolvency of the Company,
holders of Senior Subordinated Securities and Subordinated Securities may
recover less, ratably, than holders of Senior Indebtedness with respect
thereto, and holders of Subordinated Securities may recover less, ratably,
than holders of Senior Subordinated Securities with respect thereto.
If this Prospectus is being delivered in connection with a series of Senior
Subordinated Securities or Subordinated Securities, the accompanying
Prospectus Supplement or the information incorporated herein by reference will
set forth the approximate amount of Senior Indebtedness outstanding as of the
end of the Company's most recently completed fiscal quarter.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be obligated to
make an offer to purchase all of the then outstanding Debt Securities (a
"Change of Control Offer"), and purchase, on a business day (the "Change of
Control Purchase Date") not more than 70 nor fewer than 30 days following the
Change of Control, all of the then outstanding Debt Securities validly
tendered pursuant to such Change of Control Offer at a purchase price (the
"Change of Control Purchase Price") equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control
Purchase Date. The Change of Control Offer is
10
<PAGE>
required to remain open for at least 20 Business Days and until the close of
business on the fifth business day prior to the Change of Control Purchase
Date.
In order to effect such Change of Control Offer, the Company, not later than
the 30th day after the Change of Control, will mail to each holder of Debt
Securities a notice of the Change of Control Offer, which notice will govern
the terms of the Change of Control Offer and state, among other things, the
procedures that holders of Debt Securities must follow to accept the Change of
Control Offer.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Debt Securities delivered by holders thereof
seeking to accept the Change of Control Offer. If on a Change of Control
Purchase Date the Company does not have available funds sufficient to pay the
Change of Control Purchase Price or is prohibited from purchasing the Debt
Securities, an Event of Default will occur under the applicable Indenture. The
definition of "Change of Control" includes an event by which the Company
sells, conveys, transfers or leases all or substantially all of its properties
to any Person; the phrase "all or substantially all" is subject to applicable
legal precedent and as a result in the future there may be uncertainty as to
whether a Change of Control has occurred.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer at the
same purchase price, at the same times and otherwise in substantial compliance
with the requirements applicable to a Change of Control Offer made by the
Company and purchases all Debt Securities validly tendered and not withdrawn
under such Change of Control Offer.
The Company intends to comply with Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder, if applicable, in the event
that a Change of Control occurs and the Company is required to purchase Debt
Securities as described above. The existence of a holder's right to require,
subject to certain conditions, the Company to repurchase its Debt Securities
upon a Change of Control may deter a third party from acquiring the Company in
a transaction that constitutes, or results in, a Change of Control.
REPORTS
The Company will file on a timely basis with the Commission, to the extent
such filings are accepted by the Commission and whether or not the Company has
a class of securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be required to
file if it were subject to Section 13 or 15(d) of the Exchange Act. The
Company will also be required to file copies of such reports and documents
with the Trustee under each Indenture with outstanding Debt Securities within
15 days after the date on which the Company files, or would be required to
file, such reports and documents with the Commission.
MERGER, CONSOLIDATION AND SALE OF ASSETS, ETC.
The Company will not, in any single transaction or series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets to any Person or group of affiliated Persons,
and the Company will not permit any of its subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment,
conveyance, transfer, lease or other disposition of all or substantially all
of the properties and assets of the Company and its subsidiaries on a
consolidated basis to any other Person or group of affiliated Persons, unless
at the time and after giving effect thereto (1) either (A) if the transaction
or transactions is a merger or consolidation, the Company will be the
surviving Person of such merger or consolidation, or (B) the Person (if other
than the Company) formed by such consolidation or into which the Company or
such subsidiary is merged or to which the properties and assets of the Company
or such subsidiary, as the case may be, are sold, assigned, conveyed,
transferred, leased or otherwise disposed of is a corporation organized and
existing under the laws of the United States of America, any state thereof or
the District of Columbia and, in either case, expressly assumes by a
supplemental indenture to the Indentures, all the obligations
11
<PAGE>
of the Company under the Debt Securities and the Indentures, and, in each
case, the Indentures remain in full force and effect; (2) immediately before
and immediately after giving effect to such transaction or series of
transactions on a pro forma basis, no Event of Default shall have occurred and
be continuing; and (3) if any of the properties or assets of the Company or
any of its subsidiaries would upon such transaction or series of related
transactions become subject to any lien, the creation and imposition of such
lien will be in compliance with the terms of the Indentures.
EVENTS OF DEFAULT
The following will constitute Events of Default under the Indentures with
respect to Debt Securities of any series: (1) failure to pay principal (or
premium, if any) on any Debt Security of that series when due (whether at
maturity, upon redemption, upon repurchase pursuant to a Change of Control
Offer, by acceleration or otherwise); (2) failure to pay any interest on any
Debt Security of that series when due, which failure continues for 30 days;
(3) default in the performance of the provisions contained in the "Merger,
Consolidation and Sale of Assets" section of the applicable Indenture; (4)
failure to perform any other covenant of the Company in the applicable
Indenture or any other covenant to which the Company may be subject with
respect to Debt Securities of that series (other than a covenant solely for
the benefit of a series of Debt Securities other than that series), which
failure continues for 30 days after written notice as provided in the
applicable Indenture; (5) certain events of bankruptcy, insolvency or
reorganization; and (6) such other events as are set forth in the applicable
Indenture supplement relating to such Debt Securities.
If an Event of Default with respect to outstanding Debt Securities of any
series 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 applicable Indenture, may declare the principal
amount (or, if the Debt Securities of that series are original issue discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) of all Debt Securities of that series to be due and
payable immediately, except that upon the occurrence of an Event of Default
specified in (5) in the preceding paragraph, the principal amount (or in the
case of original issue discount Securities, such portion) of all Debt
Securities will be immediately due and payable without any action by the
Trustee or any holder. At any time after a declaration of acceleration with
respect to Debt Securities of any series has been made, but before judgment or
decree based on such acceleration has been obtained, 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. For
information as to waiver of defaults, see "Amendments and Waivers" below.
Subject to the duty of the respective Trustees during an Event of Default to
act with the required standard of care, each such Trustee will be under no
obligation to exercise any of its rights or powers under the respective
Indentures at the request or direction of any of the holders, unless such
holders shall have offered to such Trustee reasonable security or indemnity.
Subject to certain provisions, including those requiring security or
indemnification of the applicable Trustee, 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 such 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 any remedy
thereunder, unless such holder shall have previously given to the applicable
Trustee written notice of a continuing Event of Default and unless the holders
of at least 25% in aggregate principal amount of the outstanding Debt
Securities of the same series shall have provided written requests, and
offered reasonable indemnity, to such Trustee to institute such a proceeding,
and the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the outstanding Debt Securities of the same
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. However, such limitations do not
apply to a suit instituted by a holder of a Debt Security for enforcement of
payment of the principal of and interest on such Debt Security on or after the
respective due dates expressed in such Debt Security.
12
<PAGE>
The Company is required to furnish to the Trustees annually a statement as
to the performance by the Company of its obligations under the respective
Indentures and as to any default in such performance.
SATISFACTION AND DISCHARGE
An Indenture will be discharged and will cease to be of further effect,
except as to surviving rights or registration of transfer or exchange of the
Debt Securities to which such Indenture pertains, as expressly provided for in
such Indenture, as to all such Debt Securities outstanding when (1) either (A)
all such outstanding Debt Securities have been delivered to the Trustee for
cancellation or (B) all such outstanding Debt Securities not theretofore
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 for the serving of notice of redemption by the Trustee, and the
Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire indebtedness on
such Debt Securities not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on such Debt
Securities to the date of deposit or to the stated maturity or redemption
date, as the case may be, together with instructions from the Company
irrevocably directing the Trustee to apply such funds to the payment thereof
at maturity or redemption, as the case may be, (2) the Company has paid all
other sums payable under such Indenture by the Company; and (3) the Company
has delivered to the Trustee an officers' certificate and an opinion of
counsel satisfactory to the Trustee, which, taken together, state that all
conditions precedent under such Indenture relating to the satisfaction and
discharge thereof have been complied with.
AMENDMENTS AND WAIVERS
From time to time, the Company and the Trustee may, without the consent of
the holders of Debt Securities, amend, waive or supplement the Indenture to
which such Debt Securities pertain or such Debt Securities for certain
specified purposes, including, among other things, curing ambiguities, defects
or inconsistencies, qualifying, or maintaining the qualification of, such
Indenture under the Trust Indenture Act of 1939, or making any change that
does not adversely affect the rights of any holder of such Debt Securities.
Other amendments and modifications of an Indenture or a series of Debt
Securities may be made by the Company and the Trustee with the consent of the
holders of not less than a majority of the aggregate principal amount of the
Debt Securities of such series then outstanding; provided, however, that no
such modification or amendment may, without the consent of the holder of each
outstanding Debt Security affected thereby, (1) change the stated maturity of
the principal of, or any installment of interest on, any Debt Security, (2)
reduce the principal amount of, premium, if any, or interest on any Debt
Security, (3) change the currency of payment of any Debt Security, (4) impair
the right to institute suit for the enforcement of any payment on any Debt
Security, (5) reduce the percentage of aggregate principal amount of
outstanding Debt Securities of a series necessary to amend the Indenture or to
waive compliance with certain provisions of the Indenture or to waive certain
defaults, or (6) modify the obligation of the Company to make and consummate a
Change of Control Offer in the event of a Change of Control.
The holders of a majority in aggregate principal amount of the outstanding
Debt Securities of any series may waive compliance by the Company with certain
restrictive provisions of, and any past default under, the applicable
Indenture with respect to that series, except a default in the payment of
principal of, premium, if any, or interest on any Debt Security of that series
or a provision of an applicable Indenture which cannot be modified without the
consent of each holder of the Debt Security affected.
DEFEASANCE
If so indicated in the applicable Prospectus Supplement with respect to the
Debt Securities of a series, the Company at its option (i) will be discharged
from any and all obligations in respect of the Debt Securities of such series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, to replace destroyed, stolen, lost or mutilated
Debt Securities of such series, and to maintain an office or agency
13
<PAGE>
in respect of the Debt Securities and hold moneys for payment in trust) or
(ii) will (A) be released from its obligations to comply with certain
covenants relating to the Debt Securities of such series and (B) no longer be
subject to certain Events of Default with respect to the Debt Securities of
such series, in each case, as specified in the applicable Prospectus
Supplement. The Company may elect such discharge or release only if the
Company irrevocably deposits with the applicable Trustee, in trust, money,
government obligations of the government issuing the currency in which the
Debt Securities of the relevant series are denominated or a combination of
money or government obligations that through the payment of interest on and
principal of such government obligations in accordance with their terms will
provide money in an amount sufficient to pay all the principal of, premium, if
any, and interest on the Debt Securities of such series on the dates such
payments are due (up to the stated maturity date, or the redemption date, as
the case may be) in accordance with the terms of such Debt Securities. Such a
trust may only be established if, among other things, (a) no Event of Default
described under "Events of Default" shall have occurred and be continuing and
(b) the Company shall have delivered an opinion of counsel to the effect that
(i) the holders of the Debt Securities will not recognize gain or loss for
United States federal income tax purposes as a result of such deposit or
defeasance and will be subject to United States federal income tax in the same
manner as if such defeasance had not occurred, and (ii) the trust resulting
from the deposit does not constitute, or is qualified as, a regulated
investment company under the Investment Company Act of 1940. Such opinion, in
the case of defeasance under clause (i) above, must refer to and be based upon
a ruling of the Internal Revenue Service or a change in applicable federal
income tax law occurring after the date of the applicable Indenture. In the
event the Company fails to comply with its remaining obligations under the
applicable Indenture after a defeasance of such Indenture with respect to the
Debt Securities of any series as described under clause (ii) above and the
Debt Securities of such series are declared due and payable because of the
occurrence of any undefeased Event of Default, the amount of money and
government obligations on deposit with the applicable Trustee may be
insufficient to pay amounts due on the Debt Securities of such series at the
time of the acceleration resulting from such Event of Default. However, the
Company will remain liable in respect of such payments.
Notwithstanding the description set forth under "Subordination of Senior
Subordinated Securities and Subordinated Securities" above, in the event that
the Company deposits money or government obligations in compliance with the
Indenture that governs any Senior Subordinated Securities or Subordinated
Securities, as the case may be, in order to defease all or certain of its
obligations with respect to the applicable series of Debt Securities, the
money or government obligations so deposited will not be subject to the
subordination provisions of the applicable Indenture, and the indebtedness
evidenced by such series of Debt Securities will not be subordinated in right
of payment to the holders of applicable Senior Indebtedness to the extent of
the money or government obligations so deposited.
THE TRUSTEES
Each Indenture will provide that, except during the continuance of an Event
of Default, the Trustee thereunder will perform only such duties as are
specifically set forth in the Indenture. If an Event of Default occurs and is
continuing, the Trustee will exercise such rights and powers vested in it
under the Indenture and use the same degree of care and skill in its exercise
as a prudent Person would exercise under the circumstances in the conduct of
such Person's own affairs.
Each Indenture will, and provisions of the Trust Indenture Act of 1939, as
amended, contain limitations on the rights of the Trustee thereunder, should
it become a creditor of the Company, to obtain payment of claims in certain
cases or to realize on certain property received by it in respect of any such
claims, as security or otherwise. The Trustee is permitted to engage in other
transactions; provided, however, that if it acquires any conflicting interest
(as defined) it must eliminate such conflict or resign.
FORM, EXCHANGE, REGISTRATION, CONVERSION AND TRANSFER
Debt Securities are issuable in definitive form or in temporary or permanent
global form.
14
<PAGE>
Debt Securities of any series will be exchangeable for other Debt Securities
of the same series and of a like aggregate principal amount and tenor of
different authorized denominations.
Debt Securities may be presented for exchange, as provided above, and for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office or agency of the Company maintained for such purposes
and at any other office or agency maintained for such purpose with respect to
any series of Debt Securities and referred to in the applicable Prospectus
Supplement, without a service charge and upon payment of any taxes and other
governmental charges as described in the applicable Indenture. Such transfer
or exchange will be effected upon the satisfaction of the Company or its
agent, as the case may be, with the documents of title and identity of the
person making the request.
In the event of any redemption in part, the Company will not be required to
(i) issue, register the transfer of or exchange Debt Securities of any series
during a period beginning at the opening of business 15 days prior to the
selection of Debt Securities of that series for redemption and ending on the
close of business on the day of mailing of the relevant notice of redemption;
or (ii) register the transfer of or exchange any Debt Security, or portion
thereof, called for redemption, except the unredeemed portion of any Debt
Security being redeemed in part.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of, premium, if any, and interest on Debt Securities will be made
in the designated currency or currency unit at the office of such Paying Agent
or Paying Agents as the Company may designate from time to time, except that
at the option of the Company payment of any interest may be made by check
mailed to the address of the person entitled thereto at the address in the
Security Register. Unless otherwise indicated in an applicable Prospectus
Supplement, payment of any installment of interest on Debt Securities will be
made to the person in whose name such Debt Security is registered at the close
of business on the record date for such interest payment.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Corporate Trust Office of the Trustee will be designated as a Paying Agent for
the Trustee for payments with respect to Debt Securities. Any other Paying
Agents will be named in an applicable Prospectus Supplement. The Company 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 the Company will be required to maintain a Paying
Agent in each place of payment for each series of Debt Securities.
All monies paid by the Company to a Paying Agent for the payment of
principal of and any premium or interest on any Debt Security that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will (subject to applicable escheat laws) be
repaid to the Company, and the holder of such Debt Security or any coupon will
thereafter look only to the Company for payment thereof.
TEMPORARY GLOBAL SECURITIES
If so specified in the applicable Prospectus Supplement, all or any portion
of the Debt Securities of a series which are sold in offshore transactions
initially may be represented by one or more temporary global Debt Securities,
without interest coupons, to be deposited with or on behalf of, and registered
in the name of, a depositary or its nominee (a "Depositary") identified in the
applicable Prospectus Supplement for credit to the purchasers' respective
accounts at Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euroclear System ("Euroclear") and Cedel, societe anonyme
("Cedel"). On and after the date determined as provided in any such temporary
global Debt Security and described in the applicable Prospectus Supplement,
each such temporary global Debt Security will be exchangeable for definitive
Debt Securities or all or a portion of a permanent global security, or any
combination thereof, as specified in the applicable Prospectus Supplement.
15
<PAGE>
PERMANENT GLOBAL SECURITIES
If any Debt Securities of a series are issuable in permanent global form as
a Global Security, the applicable Prospectus Supplement will describe the
circumstances, if any, under which beneficial owners of interests in any such
Global Security may exchange such interests for Debt Securities of such series
in definitive form of like tenor and principal amount in any authorized
denomination.
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more Global Securities that will be deposited with, or on
behalf of, a Depositary or its nominee identified in the applicable Prospectus
Supplement. In such a case, one or more Global Securities will be issued in a
denomination or aggregate denominations equal to the portion of the aggregate
principal amount of outstanding Debt Securities of the series to be
represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Debt Securities in registered form, a Global
Security may not be registered for transfer or exchange except as a whole by
the Depositary for such Global Security to a nominee of such Depositary or by
a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any nominee to a successor Depositary or a
nominee of such successor Depositary and except in the circumstances described
in the applicable Prospectus Supplement.
The specific terms of the depository arrangement with respect to any portion
of a series of Debt Securities to be represented by a Global Security will be
described in the applicable Prospectus Supplement. The Company expects that
the following provisions will apply to depository arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary. Upon the issuance and deposit with
or on behalf of the Depositary of such Global Security, the Depositary will
credit, on its book-entry registration and transfer system, the respective
principal amounts of the Debt Securities represented by such Global Security
to the accounts of institutions that have accounts with such Depositary or its
nominee ("participants"). The accounts to be credited will be designated by
the underwriters or agents of such Debt Securities or by the Company, if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interest in such Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Depositary for such Global Security. Ownership of beneficial
interests in such Global Security by persons that hold through participants
will be shown on, and the transfer of that ownership interest within such
participant will be effected only through, records maintained by such
participant. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. The
foregoing limitations and such laws may impair the ability to transfer
beneficial interests in such Global Securities.
So long as the Depositary for a Global Security is the registered owner of
such Global Security, such Depositary will be considered the sole owner or
holder of the Debt Securities represented by such Global Security for all
purposes under the applicable Indenture. Unless otherwise specified in the
applicable Prospectus Supplement, owners of beneficial interests in such
Global Security will not be entitled to have Debt Securities of the series
represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of Debt Securities of such
series in definitive form and will not be considered the holders thereof for
any purposes under the applicable Indenture. Accordingly, each person owning a
beneficial interest in such Global Security must rely on the procedures of the
Depositary and, if such person is not a participant, on the procedures of the
participant through which such person owns its interest, to exercise any
rights of a holder under the applicable Indenture. The Company understands
that under existing industry practices, if the Company requests any action of
holders, or an owner of a beneficial interest in such Global Security desires
to give any notice or take any action a holder is entitled to give or take
under an Indenture, the Depositary would authorize
16
<PAGE>
the participants to give such notice or take such action, and participants
would authorize beneficial owners owning through such participants to give
such notice or take such action or would otherwise act upon the instructions
of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
CERTAIN DEFINITIONS
"Change of Control" means the occurrence of any of the following events: (1)
any "person" or "group" (as such terms are used in Sections 13(d)(3) or
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than
40% of the total voting power of the outstanding voting stock of the Company;
(2) the Company is merged with or into or consolidated with another Person
and, immediately after giving effect to the merger or consolidation, (A) less
than 50% of the total voting power of the outstanding voting stock of the
surviving or resulting Person is then "beneficially owned" (within the meaning
of Rule 13d-3 under the Exchange Act) in the aggregate by (x) the stockholders
of the Company immediately prior to such merger or consolidation, or (y) if a
record date has been set to determine the stockholders of the Company entitled
to vote with respect to such merger or consolidation, the stockholders of the
Company as of such record date and (B) any "person" or "group" has become the
direct or indirect "beneficial owner" of more than 40% of the total voting
power of the voting stock of the surviving or resulting Person; (3) the
Company, either individually or in conjunction with one or more subsidiaries,
sells, conveys, transfers or leases all or substantially all of the assets of
the Company and the subsidiaries, taken as a whole (either in one transaction
or a series of related transactions), including capital stock of the
subsidiaries, to any Person (other than the Company or a wholly owned
subsidiary); (4) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved
by a vote of 66 2/3% of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (5) the
liquidation or dissolution of the Company.
"Indebtedness" means, with respect to any Person, (1) all liabilities of
such Person for borrowed money or for the deferred purchase price of property
or services, including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit, bankers'
acceptance or other similar credit transaction, (2) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (3)
all Indebtedness of such Person created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person, (4) all capitalized lease obligations of such Person, (5) all
Indebtedness referred to in the preceding clauses of other Persons, the
payment of which is secured by any lien upon property owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness, (6) all guarantees by such Person of Indebtedness referred
to in this definition, (7) all redeemable capital stock of such Person, which
is redeemable at the option of the holder, or mandatorily redeemable by the
Company, prior to 91 days after the stated maturity of the applicable Debt
Security, (8) all obligations of such Person under currency exchange contracts
and interest rate protection obligations and (9) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of
such Person of the types referred to in clauses (1) through (8) above.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Senior Indebtedness" means the principal of, premium, if any, and interest
on any Indebtedness of the Company (including, in the case of any bank credit
agreement and Senior Securities, interest accruing after the filing of a
petition by or against the Company under any bankruptcy law, in accordance
with and at the rate,
17
<PAGE>
including any default rate, specified with respect to such indebtedness,
whether or not a claim for such interest is allowed as a claim after such
filing in any proceeding under such bankruptcy law), whether outstanding on
the date of the Indentures or thereafter created, incurred or assumed, unless,
in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Senior Subordinated Securities and Subordinated Securities. Notwithstanding
the foregoing, "Senior Indebtedness" does not include (1) Indebtedness
evidenced by the Senior Subordinated Securities and Subordinated Securities,
(2) Indebtedness that is expressly subordinate or junior in right of payment
to any Senior Indebtedness of the Company, (3) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11
United States Code, is by its terms without recourse to the Company, (4) any
repurchase, redemption or other obligation in respect of redeemable capital
stock of the Company, which is redeemable at the option of the holder, or
mandatorily redeemable by the Company, prior to 91 days after the stated
maturity of the applicable Debt Security, (5) to the extent it might
constitute Indebtedness, any liability for federal, state, local or other
taxes owed or owing by the Company, (6) Indebtedness of the Company to a
subsidiary of the Company or any other affiliate of the Company or any of such
affiliate's subsidiaries, and (7) that portion of any Indebtedness of the
Company which at the time of issuance is issued in violation of the
Indentures.
"Senior Subordinated Indebtedness" means any Indebtedness of the Company
which is expressly subordinated in right of payment to Senior Indebtedness,
but prior in right of payment to Subordinated Indebtedness.
"Subordinated Indebtedness" means Indebtedness of the Company which is
expressly subordinated in right of payment to Senior Indebtedness and Senior
Subordinated Indebtedness.
18
<PAGE>
DESCRIPTION OF PREFERRED STOCK
The Company's Restated Certificate of Incorporation authorizes 25,000,000
shares of preferred stock, par value $0.01 per share. Preferred Stock may be
issued from time to time in one or more classes or series, without stockholder
approval. Subject to limitations prescribed by law, the Board of Directors of
the Company is authorized to determine the different classes and/or series of
Preferred Stock and the powers, preferences and rights thereof.
The Company currently has one series of Preferred Stock outstanding,
designated as Series A Convertible Preferred Stock (the "Series A Preferred
Stock"). As of January 31, 1998, there were 1,138,729 shares of Series A
Preferred Stock outstanding that are listed on the New York Stock Exchange and
trade under the symbol "XTOpA." The Series A Preferred Stock ranks prior to
all shares of Common Stock as to payment of dividends and liquidation
distributions and provides for a liquidation preference of $25.00 per share
and cumulative dividends of $1.5625 per share per year. The Series A Preferred
Stock is subject to redemption by the Company under certain conditions and is
convertible into Common Stock at the rate of 2.16 shares of Common Stock (as
adjusted for the three-for-two stock split distributed on February 25, 1998)
for each share of Series A Preferred Stock. Holders of Series A Preferred
Stock are entitled to vote (1) with the holders of Common Stock the number of
votes equal to the number of shares of Common Stock into which such Series A
Preferred Stock is convertible and (2) separately as a class to elect two
additional directors if Series A Preferred Stock dividends are in arrears for
at least six quarters.
The following is a description of certain general terms and provisions of
Preferred Stock that may be offered hereby. The particular terms of any series
of Preferred Stock will be described in the applicable Prospectus Supplement.
If so indicated in a Prospectus Supplement, the terms of any such series may
differ from the terms set forth below. Certain provisions applicable to the
Company's Common Stock are set forth below in "Description of Common Stock."
The summary of terms of the Company's preferred stock (including the
Preferred Stock) contained in this Prospectus does not purport to be complete
and is subject to, and qualified in its entirety by, the provisions of the
Company's Restated Certificate of Incorporation and the certificate of
designations relating to each class or series of Preferred Stock, which will
be filed as an exhibit to or incorporated by reference in the Registration
Statement of which this Prospectus is a part at or prior to the time of
issuance of such series of the Preferred Stock.
The Preferred Stock will have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of Preferred Stock.
The applicable Prospectus Supplement will describe the following terms of
the series of Preferred Stock in respect of which this Prospectus is being
delivered: (1) the designation and stated value, if any, per share of such
Preferred Stock and the number of shares offered; (2) the amount of
liquidation preference per share and any priority relative to any other class
or series of Preferred Stock or Common Stock; (3) the initial public offering
price at which such Preferred Stock will be issued; (4) the dividend rate or,
if applicable, any index or formula used to determine the amount of dividends
payable, the dates on which dividends shall be payable and the dates from
which dividends will commence to cumulate, if any; (5) any redemption or
sinking fund provisions; (6) any conversion or exchange rights; (7) any voting
rights; and (8) other rights, preferences, privileges, limitations and
restrictions.
GENERAL
The Preferred Stock offered hereby will be issued in one or more classes or
series. The holders of Preferred Stock will have no preemptive rights.
Preferred Stock, upon issuance against full payment of the purchase price
therefor, will be fully paid and nonassessable. Neither the par value nor the
liquidation preference is indicative of the price at which the Preferred Stock
will actually trade on or after the date of issuance.
19
<PAGE>
RANK
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Stock will, with respect to dividend rights and rights on
liquidation, winding up and dissolution of the Company, rank prior to the
Company's Common Stock and to all other classes and series of equity
securities of the Company now or hereafter authorized, issued or outstanding
(the Common Stock and such other classes and series of equity securities
collectively may be referred to herein as the "Junior Stock"), other than any
classes or series of equity securities of the Company ranking on a parity with
(the "Parity Stock") or senior to (the "Senior Stock") the Preferred Stock as
to dividend rights and rights upon liquidation, winding up or dissolution of
the Company. The Preferred Stock will be junior to all outstanding debt of the
Company. The Preferred Stock will be subject to creation of Senior Stock,
Parity Stock and Junior Stock to the extent not expressly prohibited by the
Company's Restated Certificate of Incorporation.
DIVIDENDS
Holders of shares of Preferred Stock will be entitled to receive, when, as
and if declared by the Board of Directors out of funds of the Company legally
available for payment, cash dividends, payable at such dates and at such rates
per share per annum as set forth in the applicable Prospectus Supplement. Such
rate may be fixed or variable or both. Each declared dividend will be payable
to holders of record as they appear at the close of business on the stock
books of the Company on such record dates, not more than 60 calendar days
preceding the payment dates therefor, as are determined by the Board of
Directors.
Such dividends may be cumulative or noncumulative, as provided in the
Prospectus Supplement. If dividends on a class or series of Preferred Stock
are noncumulative and if the Board of Directors fails to declare a dividend in
respect of a dividend period with respect to such class or series, then
holders of such Preferred Stock will have no right to receive a dividend in
respect of such dividend period, and the Company will have no obligation to
pay the dividend for such period, whether or not dividends are declared
payable on any future dates. Dividends on the shares of each class or series
of Preferred Stock for which dividends are cumulative will accrue from the
date on which the Company initially issues shares of such class or series.
No full dividends will be declared or paid or set apart for payment on
Parity Stock or Junior Stock for any period unless full dividends for the
immediately preceding dividend period on the Preferred Stock offered hereby
and by the applicable Prospectus Supplement (including any accumulation in
respect of unpaid dividends for prior dividend periods, if dividends on such
Preferred Stock are cumulative) have been paid or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for such payment. When dividends are not so paid in full (or a sum
sufficient for such full payment is not so set apart) upon such Preferred
Stock and any Parity Stock, dividends upon shares of such Preferred Stock and
dividends on such Parity Stock shall be declared pro rata so that the amount
of dividends declared per share on such Preferred Stock and such Parity Stock
shall in all cases bear to each other the same ratio that accrued dividends
for the then-current dividend period per share on the shares of such Preferred
Stock (including any accumulation in respect of unpaid dividends for prior
dividend periods, if dividends on such Preferred Stock are cumulative) and
accrued dividends, including required or permitted accumulations, if any, on
shares of such Parity Stock, bear to each other. Unless full dividends on such
Preferred Stock have been declared and paid or set apart for payment for the
immediately preceding dividend period (including any accumulation in respect
of unpaid dividends for prior dividend periods, if dividends on such Preferred
Stock are cumulative) (a) no cash dividend or distribution (other than in
shares of Junior Stock) may be declared, set aside or paid on the Junior
Stock, (b) the Company may not repurchase, redeem or otherwise acquire any
shares of its Junior Stock (except by conversion into or exchange for other
Junior Stock) and (c) the Company may not, directly or indirectly, repurchase,
redeem or otherwise acquire any shares of Preferred Stock or Parity Stock
otherwise than pursuant to certain pro rata offers to purchase or a concurrent
redemption of all, or a pro rata portion, of the outstanding shares of such
Preferred Stock and Parity Stock (except by conversion into or exchange for
Junior Stock).
20
<PAGE>
CONVERTIBILITY
The terms, if any, on which shares of Preferred Stock of any class or series
may be exchanged for or converted (mandatorily or otherwise) into shares of
Common Stock of the Company or another class or series of Preferred Stock or
other securities of the Company will be set forth in the Prospectus Supplement
relating thereto. See "Description of Common Stock."
REDEMPTION
The terms, if any, on which shares of Preferred Stock of any class or series
may be redeemed will be set forth in the related Prospectus Supplement.
LIQUIDATION
Unless otherwise specified in the applicable Prospectus Supplement, in the
event of a voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Company, the holders of a class or series of Preferred
Stock will be entitled, subject to the rights of creditors, but before any
distribution or payment to the holders of Junior Stock, to receive an amount
per share as set forth in the related Prospectus Supplement plus accrued and
unpaid dividends for the then-current dividend period (including any
accumulation in respect of unpaid dividends for prior dividend periods, if
dividends on such class or series of Preferred Stock are cumulative). If the
amounts available for distribution with respect to the Preferred Stock and
Parity Stock upon liquidation are not sufficient to satisfy the full
liquidation rights of all the outstanding Preferred Stock and Parity Stock,
then the holders of such stock will share ratably in any such distribution of
assets in proportion to the full respective preferential amount to which they
are entitled. After payment of the full amount of the liquidation preference,
unless otherwise specified in the applicable Prospectus Supplement, the
holders of shares of Preferred Stock will not be entitled to any further
participation in any distribution of assets by the Company.
VOTING
The Preferred Stock of a class or series will be entitled to vote only as
specified in the applicable Prospectus Supplement and as required by
applicable law. Unless otherwise specified in the related Prospectus
Supplement, the Preferred Stock will have the following rights. At any time
dividends in an amount equal to six quarterly dividend payments on the
Preferred Stock shall have accrued and be unpaid, holders of the Preferred
Stock shall have the right to a separate class vote (together with the holders
of shares of any Parity Stock upon which like voting rights have been
conferred and are exercisable, "Voting Parity Stock") to elect two additional
members of the Board of Directors of the Company at any meeting of
stockholders at which directors are elected that is held during the period
such dividends remain in arrears. The right of holders of Voting Parity Stock
to elect such two additional directors and the term of office of such
additional directors will terminate at the time that all accrued and unpaid
dividends on such Voting Parity Stock shall be declared and paid or set apart
for payment. If the right to elect such two additional directors shall accrue
more than 90 days before the date established for the next annual meeting of
stockholders, the Chairman of the Board of the Company shall call a special
meeting of holders of Voting Parity Stock within 20 days after a written
request therefor signed by holders of at least 10% of such Voting Parity Stock
outstanding is received by the Company. Additionally, without the affirmative
vote of the holders of two-thirds of the shares of Preferred Stock then
outstanding (voting separately as a class together with any Voting Parity
Stock), the Company may not, either directly or indirectly or through merger
or consolidation with any other corporation, (i) approve the authorization,
creation or issuance, or an increase in the authorized or issued amount, of
any class or series of stock ranking prior to the shares of Preferred Stock in
rights and preferences or (ii) amend, alter or repeal its Restated Certificate
of Incorporation or the Certificate of Designations so as to materially and
adversely change the specific terms of the Preferred Stock. An amendment that
increases the number of authorized shares of or authorizes the creation or
issuance of other Parity Stock or Junior Stock, or substitutes the surviving
entity in a merger, consolidation, reorganization or other business
combination for the Company, will not be considered to be such an adverse
change.
21
<PAGE>
NO OTHER RIGHTS
The shares of a class or series of Preferred Stock will not have any
preferences, voting powers or relative, participating, optional or other
special rights except as set forth above or in the related Prospectus
Supplement, the Restated Certificate of Incorporation and in the certificate of
designations or as otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The transfer agent for each class or series of Preferred Stock will be
designated in the related Prospectus Supplement.
22
<PAGE>
DESCRIPTION OF COMMON STOCK
The Company has 100,000,000 authorized shares of Common Stock, par value
$0.01 per share. Common Stock may be issued from time to time in one or more
series, or divided into additional classes and such classes into one or more
series, with such terms, including all rights, preferences, restrictions and
qualifications, as are specified in the resolution or resolutions adopted by
the Board of Directors designating such class or series. The particular terms
of any series or class of Common Stock will be described in the applicable
Prospectus Supplement. Such terms may include, among others, any or all of the
following: (1) the number of shares to constitute such class or series and the
distinctive designation thereof; (2) the voting power, which may be full,
limited or none; (3) the dividend or manner for determining the dividend
payable with respect to the shares of such class or series and the date or
dates from which dividends will accrue, whether such dividends will be
cumulative, and, if cumulative, the date or dates from which dividends will
accumulate and whether the shares in such class or series will be entitled to
preference or priority over any other class or series of stock of the Company
with respect to payment of dividends; (4) the terms and conditions, including
price or a manner for determining the price, of redemption, if any, of the
shares of such class or series; (5) the terms and conditions of a retirement
or sinking fund, if any, for the purchase or redemption of the shares of such
class or series; (6) the amount which holders of shares of such class or
series will be entitled to receive, if any, in the event of any liquidation,
dissolution or winding up of the Company and whether such shares will be
entitled to a preference or priority over shares of another class or series
with respect to amounts received in connection with any liquidation,
dissolution or winding up of the Company; (7) whether the shares of such class
or series will be convertible into, or exchangeable for, shares of stock of
any other class or classes, or any other series of the same or any other class
or classes of stock, of the Company and the terms and conditions of any such
conversion or exchange; (8) the voting rights, if any, of shares of stock of
such class or series; (9) the status as to reissuance or sale of shares of
such class or series redeemed, purchased or otherwise reacquired or
surrendered to the Company on conversion; (10) the conditions and
restrictions, if any, on the payment of dividends or on the making of other
distributions on, or the purchase, redemption or other acquisition by the
Company or any subsidiary of, any other class or series of stock of the
Company ranking junior to such shares as to dividends or upon liquidation; and
(11) the conditions, if any, on the creation of indebtedness of the Company,
or any subsidiary.
Unless specified by the Board of Directors in resolutions designating a
class or series, all shares of the Common Stock will rank equally, and be
identical within their classes in all respects regardless of series. All
shares of any one series of a class of Common Stock will be of equal rank and
identical in all respects, except that shares of any one series issued at
different times may differ as to the dates which dividends thereon will accrue
and be cumulative.
Holders of Common Stock are not entitled to any cumulative voting rights or
rights to subscribe for or to purchase additional shares of Common Stock, any
shares of any class or series of Preferred Stock, or any other securities of
the Company. Holders of outstanding shares of Common Stock are, and unless
otherwise specified in the applicable Prospectus Supplement holders of shares
of Common Stock offered hereby will be, entitled (i) to voting rights on the
basis of one vote per share, (ii) to receive dividends if, when and as
declared by the Board of Directors out of funds legally available therefor and
(iii) to share ratably in any assets available for distribution to holders of
the Company's Common Stock upon liquidation of the Company.
The outstanding shares of Common Stock are, and shares offered hereby when
issued and sold against full payment therefor will be, validly issued fully
paid and nonassessable.
The outstanding shares of Common Stock are listed on the New York Stock
Exchange and trade under the symbol "XTO." As of January 31, 1998, the Company
had 38,969,188 outstanding shares of Common Stock (as adjusted for the three-
for-two stock split distributed on February 25, 1998). Chemical Shareholder
Services Group, Inc. is the transfer agent, registrar and dividend disbursing
agent for the Common Stock.
23
<PAGE>
DESCRIPTION OF WARRANTS
The following is a description of certain general terms and provisions of
the Warrants. The particular terms of any series of Warrants will be described
in the applicable Prospectus Supplement. If so indicated in a Prospectus
Supplement, the terms of any such series may differ from the terms set forth
below.
GENERAL
The Company may issue Warrants, including Warrants to purchase Debt
Securities ("Debt Warrants"), as well as Warrants to purchase other types of
securities, including equity securities. Warrants may be issued independently
or together with any Debt Securities and may be attached to or separate from
such Debt Securities. Each series of Warrants will be issued under a separate
warrant agreement (each a "Warrant Agreement") to be entered into between the
Company and a warrant agent ("Warrant Agent"). The Warrant Agent will act
solely as an agent of the Company in connection with the Warrants of such
series and will not assume any obligation or relationship of agency or trust
for or with any holders or beneficial owners of Warrants. The following sets
forth certain general terms and provisions of the Warrants offered hereby.
The Company currently has outstanding warrants to acquire 937,500 shares of
Common Stock at a price of $15.31 per share (as adjusted for the three-for-two
stock split distributed on February 25, 1998). These warrants were issued to
Amoco Corporation as part of the consideration for producing properties
acquired by the Company on December 1, 1997.
DEBT WARRANTS
The applicable Prospectus Supplement will describe the following terms of
the Debt Warrants in respect of which this Prospectus is being delivered: (1)
the title of such Debt Warrants; (2) the aggregate number of such Debt
Warrants; (3) the price or prices at which such Debt Warrants will be issued;
(4) the designation, aggregate principal amount and terms of the Debt
Securities purchasable upon exercise of such Debt Warrants; (5) if applicable,
the designation and terms of the Debt Securities with which such Debt Warrants
are issued and the number of such Debt Warrants issued with each such Debt
Security; (6) if applicable, the date on and after which such Debt Warrants
and the related Debt Securities will be separately transferable; (7) the price
at which the Debt Securities purchasable upon exercise of such Debt Warrants
may be purchased; (8) the date on which the right to exercise such Debt
Warrants will commence and the date on which such right will expire; (9) if
applicable, the minimum or maximum amount of such Debt Warrants which may be
exercised at any one time; (10) if applicable, any index or formula used to
determine the amount of payments of principal of and any premium and interest
on Debt Securities purchasable upon exercise of such Debt Warrants; (11)
information with respect to book-entry procedures, if any; (12) if applicable,
a discussion of certain United States federal income tax considerations; and
(13) any other terms of such Debt Warrants, including terms, procedures and
limitations relating to the exchange and exercise of such Debt Warrants.
OTHER WARRANTS
The Company may issue other Warrants. The applicable Prospectus Supplement
will describe the following terms of any such other Warrants in respect of
which this Prospectus is being delivered: (1) the title of such Warrants; (2)
the securities (which may include Preferred Stock or Common Stock) and/or
amount of cash consideration for which such Warrants are exercisable; (3) the
price or prices at which such Warrants will be issued; (4) if applicable, the
designation and terms of the Preferred Stock or Common Stock with which such
Warrants are issued and the number of such Warrants issued with each share of
Preferred Stock or Common Stock; (5) if applicable, the date on and after
which such Warrants and the related Preferred Stock or Common Stock will be
separately transferable; (6) if applicable, any index or formula used to
determine the price or prices at which such other securities and/or cash
consideration will be issued; (7) if applicable, a discussion of certain
United States federal income tax considerations; and (8) any other terms of
such Warrants, including terms, procedures and limitations relating to the
exchange and exercise of such Warrants.
24
<PAGE>
PLAN OF DISTRIBUTION
The Company may offer Securities to or through underwriters, through agents
or dealers or directly to other purchasers. The applicable Prospectus
Supplement will set forth the names of any underwriters or agents and the
amount of Securities, if any, to be purchased by such underwriters or sold
through such agents.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such market prices
or at negotiated prices.
In connection with the sale of Securities, underwriters or agents may
receive compensation from the Company or from purchasers in the form of
discounts, concessions or commissions. Underwriters, agents and dealers
participating in the distribution of the Securities may be deemed to be
underwriters within the meaning of the Securities Act.
Pursuant to agreements which may be entered into between the Company and any
underwriters or agents named in the applicable Prospectus Supplement, such
underwriters or agents may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, the Company may
issue Securities to or through underwriters, agents or dealers in connection
with the conversion or redemption of its outstanding securities.
If so indicated in the applicable Prospectus Supplement, the Company will
authorize underwriters or other persons acting as agents for the Company to
solicit offers by certain institutional investors to purchase Securities from
the Company pursuant to contracts providing for payment and delivery on a
future date. Institutions with which such contracts may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions and others, but shall in
all cases be subject to the approval of the Company. The obligations of the
purchaser under any such contract will not be subject to any conditions except
(i) the investment in the Securities by the institution shall not at the time
of delivery be prohibited by the laws of any jurisdiction in the United States
to which such institution is subject, and (ii) if a portion of the Securities
is being sold to underwriters, the Company shall have sold to such
underwriters the Securities not sold for delayed delivery. Underwriters and
such other persons will not have any responsibility in respect of the validity
or performance of such contracts.
Although the Company has previously issued debt securities, preferred stock,
common stock and warrants to purchase Common Stock, any Debt Securities,
Preferred Stock, Common Stock and Warrants offered may be a new issue of
securities with no established trading market. Any underwriters to whom such
Debt Securities, Preferred Stock and Warrants are sold by the Company for
public offering and sale may make a market in such Debt Securities, Preferred
Stock and Warrants, but such underwriters will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of or the trading markets for any Debt
Securities, Preferred Stock or Warrants.
Certain of the underwriters or agents and their associates may be customers
of, engage in transactions with and perform services for the Company in the
ordinary course of business.
The specific terms and manner of sale of the Securities in respect of which
this Prospectus is being delivered will be set forth or summarized in the
applicable Prospectus Supplement.
VALIDITY OF SECURITIES
The validity of the Securities offered will be passed upon for the Company
by Kelly, Hart & Hallman, P.C., Fort Worth, Texas.
25
<PAGE>
EXPERTS
The information incorporated by reference in this Prospectus from the
Company's Annual Report on Form 10-K for the year ended December 31, 1996
regarding the quantities of proved reserves of the oil and gas properties
owned by the Company and the future net cash flows and the present values
thereof from such reserves is derived from reserve reports prepared or
reviewed by Miller and Lents, and, to such extent, are included or
incorporated by reference herein in reliance upon the authority of said firm
as experts with respect to the matters contained in such reports.
The consolidated financial statements of Cross Timbers Oil Company as of
December 31, 1996 and 1995, and for the three years in the period ended
December 31, 1996, incorporated by reference in this Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their reports with respect thereto, and are incorporated by reference
herein in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
With respect to the unaudited interim financial information for the Company
incorporated by reference herein, Arthur Andersen LLP has applied limited
procedures in accordance with professional standards for a review of such
information. However, as stated in their separate reports thereon such
financial information incorporated by reference herein, they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such information should
be restricted in light of the limited nature of the review procedures applied.
In addition, Arthur Andersen LLP is not subject to the liability provisions of
Section 11 of the Securities Act for their report on the unaudited interim
financial information because these reports are not a "report" or a "part" of
the Registration Statement prepared or certified by Arthur Andersen LLP within
the meaning of Sections 7 and 11 of the Securities Act.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files periodic reports, proxy statements and
other information with the Commission. Reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549 and at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048 and
Suite 1400, Northwestern Atrium Center, 14th Floor, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material may also be obtained at
prescribed rates by writing to the Commission, Public Reference Section, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and such
information may also be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005. The Commission maintains
a Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. Such reports, proxy and information statements and other
information may be found on the Commission's Web site address,
http://www.sec.gov.
26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDER-
WRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMA-
TION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES. THIS PRO-
SPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Additional Information..................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Risk Factors............................................................... 3
Forward-Looking Statements................................................. 6
The Company................................................................ 7
Use of Proceeds............................................................ 7
Ratio of Earnings to Fixed Charges......................................... 7
Description of Debt Securities............................................. 8
Description of Preferred Stock............................................. 19
Description of Common Stock................................................ 23
Description of Warrants.................................................... 24
Plan of Distribution....................................................... 25
Validity of Securities..................................................... 25
Experts.................................................................... 26
Available Information...................................................... 26
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$200,000,000
[LOGO OF CROSS TIMBERS OIL COMPANY APPEARS HERE]
CROSS TIMBERS OIL COMPANY
DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
PROSPECTUS
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
Set forth below is an estimate of the approximate amount of the fees and
expenses expected to be incurred by the Company in connection with offerings
described in this Registration Statement.
<TABLE>
<S> <C>
Registration Fee...................................................... $ 59,000
Trustee's and its Counsel's Fees and Expenses......................... 50,000
Printing and Engraving................................................ 100,000
Accountants' Fees and Expenses........................................ 40,000
Blue Sky and Fees and Expenses........................................ 10,000
Rating Agency Fees.................................................... 90,000
Legal Fees and Expenses............................................... 100,000
Engineers' Fees and Expenses.......................................... 10,000
Miscellaneous......................................................... 141,000
--------
$600,000
========
</TABLE>
- --------
* All amounts, other than the registration fee, are estimated and are subject
to future contingencies.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated in Delaware. Under Section 145 of the Delaware
General Corporation Law (the "DGCL"), a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against
them by a third party or in the right of the corporation, by reason of the
fact that they were or are such directors, officers, employees or agents,
against expenses and liabilities incurred in any such action, suit or
proceeding so long as they acted in good faith and in a manner that they
reasonably believed to be in, or not opposed to, the best interests of such
corporation, and with respect to any criminal action, that they had no
reasonable cause to believe their conduct was unlawful. With respect to suits
by or in the right of such corporation, however, indemnification is generally
limited to attorneys' fees and other expenses and is not available if such
person is adjudged to be liable to such corporation unless the court
determines that indemnification is appropriate. A Delaware corporation also
has the power to purchase and maintain insurance for such persons. Article
Nine of the Restated Certificate of Incorporation of the Company permits
indemnification of directors and officers to the fullest extent permitted by
Section 145 of the DGCL. Reference is made to the Restated Certificate of
Incorporation of the Company.
Additionally, the Company has acquired directors and officers insurance in
the amount of $10,000,000, which includes coverage for liability under the
federal securities laws.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director provided that such provisions may not
eliminate or limit the liability of a director (i) for any breach of the
director's 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 law, (iii) under Section 174 (relating to liability for
unauthorized acquisitions or redemptions of, or dividends on, capital stock)
of the DGCL or (iv) for any transaction from which the director derived an
improper personal benefit. Article Ten of the Company's Restated Certificate
of Incorporation contains such a provision.
The above discussion of the Company's Restated Certificate of Incorporation
and Sections 102(b)(7) and 145 of the DGCL is not intended to be exhaustive
and is qualified in its entirety by such Restated Certificate of Incorporation
and statutes.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
4.1 Restated Certificate of Incorporation of the Company, incorporated by
reference from Exhibit 4.1 to the Company's Registration Statement on
Form S-8 (Reg. No. 33-81766), filed July 22, 1994
4.2 Bylaws of the Company, incorporated by reference from Exhibit 3.4 to
the Company's Registration Statement on Form S-1 (Reg. No. 33-59820),
filed March 19, 1993
4.3* Form of Indenture for Debt Securities
4.4* Form of Certificate of Designations of Preferred Stock
Form of Debt Warrant Agreement (including form of Debt Warrant
4.5* Certificate)
Form of Preferred Stock Warrant Agreement (including form of Preferred
4.6* Stock Warrant Certificate)
Form of Common Stock Warrant Agreement (including form of Common Stock
4.7* Warrant Certificate)
5.1* Opinion of Kelly, Hart & Hallman, P.C.
12.1 Computation of Ratio of Earnings to Fixed Charges, incorporated by
reference from Exhibit 12.1 to the Company's Annual Report on Form 10-
K for the year ended December 31, 1996
15.1 Awareness Letter of Arthur Andersen LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Miller and Lents, Ltd.
Consent of Kelly, Hart & Hallman, P.C. (set forth in their opinion
23.3* filed as Exhibit 5.1)
Power of Attorney (set forth on the signature page of this
24.1 Registration Statement)
Statement of Eligibility of Trustee on Form T-1 with respect to Debt
25.1* Securities
</TABLE>
- --------
* To be filed by amendment
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes that, for the purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of 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 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% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
II-2
<PAGE>
provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, that are incorporated by reference in the Registration Statement;
(b) That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(c) 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the Trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
II-3
<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-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN FORT WORTH, TEXAS ON THE 25TH DAY OF FEBRUARY 1998.
Cross Timbers Oil Company
By: /s/ Bob R. Simpson
--------------------------
BOB R. SIMPSON
CHAIRMAN OF THE BOARD AND CHIEF
EXECUTIVE OFFICER
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities and on the dates indicated. Each person whose signature appears
below hereby authorizes and appoints Bob R. Simpson, J. Richard Seeds and
Louis G. Baldwin, and each of them, any one of whom may act without the
joinder of the other, with full power of substitution, as his attorney-in-fact
to sign on his behalf individually and in the capacity stated below all
amendments and post-effective amendments to the Registration Statement, and
any related registration statement filed pursuant to Rule 462(b) under the
Securities Act of 1933 and all amendments and post-effective amendments
thereto, as such attorney-in-fact may deem necessary or appropriate.
SIGNATURE TITLE DATE
Director and February 25,
/s/ Bob R. Simpson Chairman of the 1998
- ------------------------------------- Board (Principal
BOB R. SIMPSON Executive Officer)
/s/ Steffen E. Palko Director, Vice February 25,
- ------------------------------------- Chairman of the 1998
STEFFEN E. PALKO Board and President
(Principal
Executive Officer)
/s/ J. Richard Seeds Director, Executive February 25,
- ------------------------------------- Vice President 1998
J. RICHARD SEEDS
/s/ J. Luther King, Jr. Director February 25,
- ------------------------------------- 1998
J. LUTHER KING, JR.
/s/ Jack P. Randall Director February 25,
- ------------------------------------- 1998
JACK P. RANDALL
/s/ Scott G. Sherman Director February 25,
- ------------------------------------- 1998
SCOTT G. SHERMAN
/s/ Louis G. Baldwin Senior Vice February 25,
- ------------------------------------- President and Chief 1998
LOUIS G. BALDWIN Financial Officer
(Principal
Financial Officer)
/s/ Bennie G. Kniffen Senior Vice February 25,
- ------------------------------------- President and 1998
BENNIE G. KNIFFEN Controller
(Principal
Accounting Officer)
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
4.1 Restated Certificate of Incorporation of the Company, incorporated by
reference from Exhibit 4.1 to the Company's Registration Statement on
Form S-8 (Reg. No. 33-81766), filed July 22, 1994
4.2 Bylaws of the Company, incorporated by reference from Exhibit 3.4 to
the Company's Registration
Statement on Form S-1 (Reg. No. 33-59820), filed March 19, 1993
4.3* Form of Indenture for Debt Securities
4.4* Form of Certificate of Designations of Preferred Stock
4.5* Form of Debt Warrant Agreement (including form of Debt Warrant
Certificate)
4.6* Form of Preferred Stock Warrant Agreement (including form of Preferred
Stock Warrant Certificate)
4.7* Form of Common Stock Warrant Agreement (including form of Common Stock
Warrant Certificate)
5.1* Opinion of Kelly, Hart & Hallman, P.C.
12.1 Computation of Ratio of Earnings to Fixed Charges, incorporated by
reference from Exhibit 12.1 to
the Company's Annual Report on Form 10-K for the year ended December
31, 1996
15.1 Awareness Letter of Arthur Andersen LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Miller and Lents, Ltd.
23.3* Consent of Kelly, Hart & Hallman, P.C. (set forth in their opinion
filed as Exhibit 5.1)
24.1 Power of Attorney (set forth on the signature page of this
Registration Statement)
25.1* Statement of Eligibility of Trustee on Form T-1 with respect to Debt
Securities
</TABLE>
- --------
* To be filed by amendment
<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 standard 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, June 30, and September 30, 1997, as indicated in our
reports dated April 23, July 24, and October 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, June
30, and September 30, 1997, are being incorporated by reference in this
Registration Statement on Form S-3.
We also are aware that the aforementioned reports, pursuant to Rule 436
under the Securities Act of 1993, 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
February 25, 1998
<PAGE>
EXHIBIT 23.1
INDEPENDENT PUBLIC ACCOUNTANTS' CONSENT
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-3 of Cross Timbers Oil
Company of our report dated March 13, 1997, included in Cross Timbers Oil
Company's Annual Report on Form 10-K for the year ended December 31, 1996, and
to all references to our firm included in this registration statement.
Arthur Andersen LLP
Fort Worth, Texas
February 25, 1998
<PAGE>
EXHIBIT 23.2
[LETTERHEAD OF MILLER AND LENTS, LTD. APPEARS HERE]
February 25, 1998
Cross Timbers Oil Company
810 Houston Street, Suite 2000
Fort Worth, TX 76102
Re: Securities and Exchange Commission
Form S-3 Registration Statement, No.333-
Gentlemen:
The firm of Miller and Lents, Ltd., consents to the incorporation of its
estimated Proved Reserves, Future Net Revenues, and Present Values of Future
Net Revenues in the Cross Timbers Oil Company Form S-3 Registration Statement,
No. 333- , and to reference to our Firm in such registration statement.
Miller and Lents, Ltd. has no interests in Cross Timbers Oil Company or any
of its affiliated companies or subsidiaries and is not to receive any such
interest as payment for such reports and has no director, officer, or
employee, or otherwise, connected with Cross Timbers Oil Company. We are not
employed by Cross Timbers Oil Company on a contingent basis.
Yours very truly,
Miller and Lents, Ltd.
/s/ James C. Pearson
By: _________________________________
James C. Pearson
President
