As filed with the Securities and Exchange Commission on April 10, 2000
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
KANEB SERVICES, INC.
(Exact name of Registrant as specified in its charter)
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Delaware 75-1191271
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(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Indentification No.)
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2435 N. Central Expressway 75080
Richardson, Texas
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(Address of Principal Executive Offices) (Zip Code)
-----------------------------------------------------------
1992 Stock Option Agreements
(Full title of the plan)
Howard C. Wadsworth
Kaneb Services, Inc.
2435 N. Central Expressway
Richardson, Texas 75080
(Name and address of agent for service)
(972) 699-4000
(Telephone number, including area code, of agent for service)
Copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010-3095
(713) 651-5151
Attention: John A. Watson
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------ -------------------- ------------------------ ------------------------ --------------------
Proposed maximum Proposed maximum
Title of securities Amount offering price per aggregate offering Amount of
to be registered to be registered share(1) price(1) registration fee
- ------------------------ -------------------- ------------------------ ------------------------ --------------------
<S> <C> <C> <C> <C>
Common Stock, without
par value 450,000 shares $6.25 $2,812,500 $743
- ------------------------ -------------------- ------------------------ ------------------------ --------------------
</TABLE>
(1) Pursuant to Rule 457(h), the proposed maximum offering price is
estimated, solely for the purpose of determining the registration fee,
on the basis of the average high and low sales prices of a share of
Common Stock as reported by The New York Stock Exchange on April 7,
2000.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Kaneb Services, Inc. (the "Company") incorporate by reference in this
Registration Statement the following documents:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999.
(b) The description of the Company's common stock, no par value (the
"Common Stock"), which is contained in a registration statement filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including any
amendment or report filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and a part hereof from
the date of the filing of such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director or officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
Company's bylaws provide for the indemnification of directors, officers,
employees or agents of the Company to fullest extent permitted under Delaware
law.
Article Twelfth of the Company's Certificate of Incorporation provides, in
part, that a director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or knowing violation of law,
(iii) for illegal dividends and stock repurchases or (iv) for any transaction
for which the director derived an improper personal benefit.
Item 7. Exemption from Registration Claimed.
Not applicable.
<PAGE>
Item 8. Exhibits.
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding the legality of the
securities being registered.
*10.1 Stock Option Agreement dated June 23, 1992, between the Registrant
and John R. Barnes, relating to 175,000 shares.
*10.2 Form of Letter dated April 22, 1996, amending exhibit 10.1.
*10.3 Stock Option Agreement dated June 23, 1992, between the Registrant
and John R. Barnes, relating to 275,000 shares.
*10.4 Form of Letter dated April 22, 1996, amending exhibit 10.3.
23.1 Consent of KPMG LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Counsel (the consent of Fulbright & Jaworski L.L.P. to
the use of their opinion filed as Exhibit 5.1 to the Registration
Statement and the reference to their firm in this Registration
Statement is contained in such opinion).
*A management contract or compensation plan.
Item 9. Undertakings.
The undersigned registrant hereby undertakes to file, during any period in
which offers or sales are being made, a post-effective amendment to this
Registration Statement 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.
The undersigned registrant hereby undertakes (i) that, for the purpose of
determining any liability under the 1933 Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and (ii) 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act, and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act, that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
<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 the foregoing filing and had duly caused the foregoing
filing to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Richardson, State of Texas, on the 10th of April, 2000.
KANEB SERVICES, INC.
By:...................................
Name: Howard C. Wadsworth
Title: Vice President, Secretary
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, the
foregoing filing has been signed by the following persons in the capacities and
on the dates indicated.
Name Title Date
- ------------------- ------------------------------------------ --------------
JOHN R. BARNES Chairman of the Board, President and Chief
John R. Barnes Executive Officer April 10, 2000
MICHAEL R. BAKKE
Michael R. Bakke Controller (Principal Accounting Officer) April 10, 2000
SANGWOO AHN
Sangwoo Ahn Director April 10, 2000
CHARLES R. COX
Charles R. Cox Director April 10, 2000
FRANK M. BURKE
Frank M. Burke Director April 10, 2000
HANS KESSLER
Hans Kessler Director April 10, 2000
JAMES R. WHATLEY
James R. Whatley Director April 10, 2000
<PAGE>
Index to Exhibits
Exhibit No. Description
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding the legality of the
securities being registered.
*10.1 Stock Option Agreement dated June 23, 1992, between the Registrant
and John R. Barnes, relating to 175,000 shares.
*10.2 Form of Letter dated April 22, 1996, amending exhibit 10.1.
*10.3 Stock Option Agreement dated June 23, 1992, between the Registrant
and John R. Barnes, relating to 275,000 shares.
*10.4 Form of Letter dated April 22, 1996, amending exhibit 10.3.
23.1 Consent of KPMG LLP.
23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Counsel (the consent of Fulbright & Jaworski L.L.P. to
the use of their opinion filed as Exhibit 5.1 to the Registration
Statement and the reference to their firm in this Registration
Statement is contained in such opinion).
*A management contract or compensation plan.
[LETTERHEAD OF FULBRIGHT & JAWORSKI L.L.P.]
April 10, 2000
Kaneb Services, Inc.
2435 N. Central Expressway
Suite 700
Richardson, Texas 75080
Gentlemen:
We have acted as counsel for Kaneb Services, Inc., a Delaware
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933 of 450,000 shares of the Company's common stock, no par
value (the "Shares"), issuable by the Company upon exercise of stock options
granted pursuant to two Stock Option Agreements, each dated June 23, 1992,
between the Company and John R. Barnes, as amended by letters dated April 22,
1996 (the AAmendments@).
In connection therewith, we have examined the Registration Statement,
the Agreements, the Amendments, originals or copies certified or otherwise
identified to our satisfaction of the Restated Certificate of Incorporation of
the Company, as amended, the bylaws of the Company and such other documents and
instruments as we have deemed necessary or appropriate for the expression of the
opinions contained herein.
We have assumed the authenticity and completeness of all records,
certificates and other instruments submitted to us as originals, the conformity
to original documents of all records, certificates and other instruments
submitted to us as copies, the authenticity and completeness of the originals of
those records, certificates and other instruments submitted to us as copies and
the correctness of all statements of fact contained in all records, certificates
and other instruments that we have examined.
Based on the foregoing, and having regard for such legal
considerations as we have deemed relevant, we are of the opinion that the Shares
have been duly and validly authorized for issuance and, upon issuance thereof in
accordance with the Plan, will be duly and validly issued, fully paid and
nonassessable.
The opinions expressed herein relate solely to, are based solely upon
and are limited exclusively to the laws of the State of Delaware and the federal
laws of the United States of America, to the extent applicable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Fulbright & Jaworski L.L.P.
Exhibit 10.1
STOCK OPTION AGREEMENT
Agreement made as of the 23rd day of June 1992, between Kaneb Services,
Inc. (the "Company"), and John R. Barnes ("Option Holder").
Option Holder has been elected and is presently serving as President,
Chief Executive Officer and Chairman of the Board of the Company. In order to
induce Option Holder to continue employment with the Company and to afford
Option Holder the opportunity to purchase shares of the Common Stock of the
Company, without par value (the "Stock"), the Company and Option Holder hereby
agree as follows:
1. Grant of Option. Pursuant to foregoing recitals, the Company grants
to Option Holder an option to purchase from the Company a total of 175,000
shares of Common Stock, no par value, of the Company at $6.38 per share (being
150% of the fair market value per share of the Stock on the date of this grant),
in the amounts, during the periods and upon the terms and conditions set forth
in this Agreement. The date of grant of this option is June 23, 1992.
2. Time of Exercise. Subject to the acceleration provisions and except
as otherwise specifically provided elsewhere in this Agreement, this option is
exercisable, in whole or in part, cumulatively at any time subsequent to (and to
the extent of) the vesting rights set forth below but prior to the expiration of
ten (10) years from the date of grant, after which no unexercised part of the
option may be exercised.
3. Vesting. The right to exercise shall vest in the amounts and over
the periods of time as follows: (a) one-fifth (1/5) of the total optional shares
on June 23, 1993; (b) one-forty eighth (1/48) of the total optional shares per
month thereafter.
4. Acceleration of Vesting. In the event of a Change of Control or
Potential Change of Control, any stock options not previously vested under this
Agreement shall be fully vested. A Change of Control means (i) a person becomes
the beneficial owner of Company securities having 20% or more of the total votes
that may be cast for the election of directors of the Company, or (ii) the
stockholders approve the sale of substantially all of the assets of the Company
or the merger or consolidation of the Company with or into another corporation,
or (iii) as a result of or in connection with any tender or exchange offer,
merger or other business combination, sale of assets, proxy contest or
combination of the foregoing, the directors of the Company immediately preceding
the event shall cease to constitute the majority of the Company's Board of
Directors. A Potential Change of Control means the entering into an agreement by
the Company, consummation of which would result in a Change of Control.
5. Not Subject to Plan. This option and its exercise are not subject to
the Amended and Restated Kaneb Services, Inc. 1984 Nonqualified Stock Option
Plan (the "Plan").
6. Term. This option will terminate at the first of the following:
(a) 5 p.m. on June 22, 2002.
(b) 5 p.m. on the date which is one (1) year following
the date that the Option Holder's service to the
Company is terminated by reason of the Option
Holder's death, total and permanent disability or
voluntary or involuntary termination, as an officer
and/or director, without cause; for the purpose of
this section 6(b), the one (1) year period shall not
commence until Option Holder is no longer serving as
either an officer or a director.
(c) 5 p.m. on the date which Option Holder's service to
the Company, whether as an officer or director, is
terminated involuntarily for cause. "Cause" shall
mean Options Holder's gross negligence or willful
misconduct, fraud or final conviction of a felony
offense.
7. Who May Exercise. During the lifetime of the Option Holder, this
option may be exercised only by the Option Holder, or by the Option Holders's
administrators or assigns, as provided herein;
8. Restrictions on Exercise. This option may be exercised in whole or
in part, but only with respect to full shares and no fractional share of stock
shall be issued.
<PAGE>
9. Manner of Exercise. This option may be exercised upon written notice
to the Company of the number of shares being purchased accompanied by the
following:
(a) Full payment of the option price for the shares
of stock being purchased; and
(b) Such documents as the Company in its discretion deems
necessary to evidence the exercise, in whole or in
part, of the option.
Full payment for shares purchased upon exercise of an Option shall be
made in cash, by the Option Holder's delivery to the Company of shares of Common
Stock which have a fair market value equal to the option price, or in any
combination of cash and shares of Common Stock having an aggregate fair market
value equal to the option price. The fair market value of each share of such
tendered stock shall be the closing sale price of a share of Common Stock on the
New York Stock Exchange, Inc. (the "Exchange") on the date the Option is
exercised, or if the Common Stock was not traded on the Exchange on that date,
then on the next preceding date on which the Common Stock was traded on the
Exchange. No shares may be issued until full payment of the purchase price
therefore has been made, and the Option Holder will have none of the rights of a
stock holder until shares are issued to him.
10. Non-Assignability. This option is not assignable or transferable by
the Option Holder except by assignment or transfer to members of Option Holder's
family or to an entity created for the benefit of Option Holder's family or
family members, or by will or by the laws of descent and distribution. Any such
assignee or transferee shall be subject to all of the terms and conditions
hereof and shall be prohibited from any further assignment or transfer.
11. Rights of Stockholder. Except for the adjustment in the number of
shares as provided in Section 12 below, the Option Holder will have no rights as
a stockholder with respect to any shares covered by this option until the
issuance of a certificate or certificates to the Option Holder for the shares.
Except as otherwise provided in Section 12 hereof, no adjustment shall be made
for dividends or other rights for which the record date is prior to the issuance
of such certificate or certificates.
12. Adjustment of Number of Shares and Related Matters. The Option
Holder understands that in the event of the merger, consolidation or
reorganization of the Company, or in the event of the recapitalization of the
Company, the number of shares that may be purchased upon exercise of the option
granted hereunder and the exercise price thereof shall be proportionately
adjusted. Notwithstanding the foregoing, the existence of the option granted
hereunder shall not affect the right of the Company to issue shares of stock of
any class, or securities convertible into shares of stock of any class, for
cash, property, labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities. The
issuance of such shares or securities shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of
Stock subject to the option granted hereunder.
Upon the occurrence of each event requiring an adjustment of the
exercise price and/or the number of shares purchasable pursuant to this
Agreement, the Company shall as soon as practicable mail to the Option Holder a
copy of its computation of such adjustment which shall be conclusive and shall
be binding upon the Option Holder unless contested by him by written notice to
the Company within thirty (30) days after the Option Holder's receipt of such
computation.
13. Option Holder's Representations. Notwithstanding any of the
provisions hereof, the Option Holder hereby agrees that he will not exercise the
option granted hereby, and that the Company will not be obligated to issue any
shares to the Option Holder hereunder, if the exercise thereof or the issuance
of such shares shall constitute a violation by the Option Holder or the Company
of any provision of any law or regulation of any governmental authority. Any
determination in this connection by the Board of Directors of the Company shall
be final, binding, and conclusive. The obligations of the Company and the rights
of the Option Holder are subject to all applicable laws, rules and regulations
including, without limitation, the Securities Exchange Act of 1934, as amended,
the Securities Act of 1933, as amended, the Internal Revenue Code of 1986, as
amended, any successors thereto, and any other applicable laws.
14. Investment Representation. By his execution hereof, the Option
Holder represents and warrants to the Company that all Stock which may be
purchased hereunder will be acquired by Option Holder for investment purposes
for his own account and not with any intent for resale or distribution. Unless
previously registered or issued in a transaction registered under applicable
federal and state securities laws, all certificates issued with respect to the
Common Stock shall bear an appropriate restrictive investment legend.
15. Law Governing. This Agreement is intended to be performed in the
State of Texas and shall be construed and enforced in accordance with and
governed by the laws of Texas.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Option Holder, to evidence his
consent and approval of all the terms hereof, has duly executed this Agreement,
as of the date specified in Section 1 hereof.
KANEB SERVICES, INC.
By:
-------------------------------
Title:
----------------------------
OPTION HOLDER:
----------------------------------
John R. Barnes
Exhibit 10.2
April 22, 1996
__________________________
__________________________
__________________________
__________________________
Re: Repricing of Certain "Underwater" Stock Options
Agreement of ______________,__________ Shares, Exercise Price $____
Dear Mr._________________________:
On April 20, 1996, the Compensation Committee of Kaneb Services Inc.'s Board of
Directors approved a program whereby certain previously issued stock option
agreements having an exercise price significantly above recent market prices may
be amended to reflect an exercise price of $2.625, the closing market price on
April 22, 1996 which is the effective date of the program.
Your stock option agreement dated ________________, referenced above is eligible
to be amended under this program. Under the terms of the agreement, you are
currently vested in ______________ option shares with an exercise price of
$_______ per share. The remaining shares covered by this agreement are currently
scheduled to vest between the date of this letter and __________________. The
ability to exercise shares under this agreement is currently scheduled to expire
no later than ____________________.
Should you choose to amend the existing agreement, in the manner contemplated by
the Compensation Committee, you will forfeit any and all vesting rights to the
__________________ vested shares shown above. Further, all remaining
_____________ unvested shares will not vest according to the schedule set forth
in the original agreement, the exercise price on all __________________ shares
will be changed to $2.625 per share and the expiration date (excluding other
forfeiture provisions of the original agreement which remain unchanged) will be
April 21, 2006. The option shares in the amended agreement will not be vested
(you will have no exercise rights in any of the ______________ option shares) on
the date of amendment. Vesting may occur under one of the two following
schedules:
1. You will be eligible to receive vesting at the rate of 20% per year from
April 22, 1996, the effective date of the amendment. Vesting will occur when the
30 consecutive day average of the closing price of the stock is equal to or
above the exercise price of the original agreement ($______ on ____________
shares) as shown above. Time of achievement of the 30 consecutive day average
required for vesting will apply to the year (from April 22 through April 21)
during which the first day of the 30 consecutive day average occurs. When and if
such stock price level is achieved, you will vest cumulatively on the
corresponding option shares pursuant to the following schedule:
Time of Achievement Percent Vested
(of 30 consecutive day average) (Cumulative)
------------------------------- -------------
a. April 22, 1996 through April 21, 1997 0%
b. April 22, 1997 through April 21, 1998 20%
c. April 22, 1998 through April 21, 1999 40%
d. April 22, 1999 through April 21, 2000 60%
e. April 22, 2000 through April 21, 2001 80%
f. After April 21, 2001 100%
For example, assume the following scenario, the vesting criteria is achieved
from April 22, 1998 through April 21, 1999 (two but less than three years from
the effective date of amendment) and the 30 consecutive day average requirement
is not met again until after April 21, 2000 but before April 22, 2001, (four but
less than five years from the effective date of the amendment) and finally, the
vesting criteria is not met again until after 5 years.
In this example the option holder would become 40% vested on the last day of the
30-day period during which the Company's common stock closing price averaged an
amount equal to or greater than the exercise price of the agreement which was
amended (i.e., during period (c), identified above) and would remain 40% vested
until the vesting criteria was again met between the 4th and 5th anniversaries
(period (e) above), at which time he would become 80% vested. He would remain
80% vested until the criteria was again met after 5 years, at which time he
would be 100% vested.
2. In any event, regardless of the above schedule and vesting criteria, the
amended grant (if still outstanding) will become exercisable in full (100%
vested), ten (10) years from the date of amendment or upon death,
life-threatening disability, Change of Control or Potential Change of Control
(as defined in the original agreement) or normal retirement after age 65.
As you are currently vested in __________________ of the ________________ shares
covered by the existing agreement, your decision whether or not to amend this
agreement is entirely voluntary. If you amend your original agreement, you will
forfeit all original vesting rights in all _______________ shares, whether or
not currently vested in such shares. After the amendment, if item 2 above (which
will substantially delay vesting) is not met, shares in the amended agreement
will not be vested unless the 30 consecutive day average of the closing price of
the stock is equal to or above the original agreement exercise price of
$________ per share. Even then, only a portion of shares may be vested due to
the date the criteria is met as described in item 1. Please consider your
decision whether or not to amend the agreement carefully. The company is
entirely neutral regarding your decision, but wants to make this program
available to you on a voluntary basis.
Only the terms specifically contained in this letter will amend and supersede
those terms in the original agreement. All other provisions of the original
agreement will remain unchanged. In order to effect the amendment of the
original agreement under the terms provided herein, please execute one copy of
this letter in the space provided below and return it to me within 30 days.
Please retain the additional copy of the letter for your file. Should you have
any questions regarding this amendment or the applicable agreement, please
contact me.
Very truly yours,
William H. Kettler, Jr.
Director of Human Resources
For and in consideration of the mutual covenants and conditions described above,
I hereby agree to voluntarily amend the ___________ share stock option agreement
of ____________ to incorporate the terms described herein.
- ------------------------------- ------------------------
Date
Exhibit 10.3
STOCK OPTION AGREEMENT
Agreement made as of the 23rd day of June 1992, between Kaneb Services,
Inc. (the "Company"), and John R. Barnes ("Option Holder").
Option Holder has been elected and is presently serving as President,
Chief Executive Officer and Chairman of the Board of the Company. In order to
induce Option Holder to continue employment with the Company and to afford
Option Holder the opportunity to purchase shares of the Common Stock of the
Company, without par value (the "Stock"), the Company and Option Holder hereby
agree as follows:
1. Grant of Option. Pursuant to foregoing recitals, the Company grants
to Option Holder an option to purchase from the Company a total of 275,000
shares of Common Stock, no par value, of the Company at $8.50 per share (being
200% of the fair market value per share of the Stock on the date of this grant),
in the amounts, during the periods and upon the terms and conditions set forth
in this Agreement. The date of grant of this option is June 23, 1992.
2. Time of Exercise. Subject to the acceleration provisions and except
as otherwise specifically provided elsewhere in this Agreement, this option is
exercisable, in whole or in part, cumulatively at any time subsequent to (and to
the extent of) the vesting rights set forth below but prior to the expiration of
ten (10) years from the date of grant, after which no unexercised part of the
option may be exercised.
3. Vesting. The right to exercise shall vest in the amounts and over
the periods of time as follows: (a) one-fifth (1/5) of the total optional shares
on June 23, 1993; (b) one-forty eighth (1/48) of the total optional shares per
month thereafter.
4. Acceleration of Vesting. In the event of a Change of Control or
Potential Change of Control, any stock options not previously vested under this
Agreement shall be fully vested. A Change of Control means (i) a person becomes
the beneficial owner of Company securities having 20% or more of the total votes
that may be cast for the election of directors of the Company, or (ii) the
stockholders approve the sale of substantially all of the assets of the Company
or the merger or consolidation of the Company with or into another corporation,
or (iii) as a result of or in connection with any tender or exchange offer,
merger or other business combination, sale of assets, proxy contest or
combination of the foregoing, the directors of the Company immediately preceding
the event shall cease to constitute the majority of the Company's Board of
Directors. A Potential Change of Control means the entering into an agreement by
the Company, consummation of which would result in a Change of Control.
5. Not Subject to Plan. This option and its exercise are not subject to
the Amended and Restated Kaneb Services, Inc. 1984 Nonqualified Stock Option
Plan (the "Plan").
6. Term. This option will terminate at the first of the following:
(a) 5 p.m. on June 22, 2002.
(b) 5 p.m. on the date which is one (1) year following
the date that the Option Holder's service to the
Company is terminated by reason of the Option
Holder's death, total and permanent disability or
voluntary or involuntary termination, as an officer
and/or director, without cause; for the purpose of
this section 6(b), the one (1) year period shall not
commence until Option Holder is no longer serving as
either an officer or a director.
(c) 5 p.m. on the date which Option Holder's service to
the Company, whether as an officer or director, is
terminated involuntarily for cause. "Cause" shall
mean Options Holder's gross negligence or willful
misconduct, fraud or final conviction of a felony
offense.
7. Who May Exercise. During the lifetime of the Option Holder, this
option may be exercised only by the Option Holder, or by the Option Holders's
administrators or assigns, as provided herein;
8. Restrictions on Exercise. This option may be exercised in whole or
in part, but only with respect to full shares and no fractional share of stock
shall be issued.
<PAGE>
9. Manner of Exercise. This option may be exercised upon written notice
to the Company of the number of shares being purchased accompanied by the
following:
(a) Full payment of the option price for the shares of
stock being purchased; and
(b) Such documents as the Company in its discretion deems
necessary to evidence the exercise, in whole or in
part, of the option.
Full payment for shares purchased upon exercise of an Option shall be
made in cash, by the Option Holder's delivery to the Company of shares of Common
Stock which have a fair market value equal to the option price, or in any
combination of cash and shares of Common Stock having an aggregate fair market
value equal to the option price. The fair market value of each share of such
tendered stock shall be the closing sale price of a share of Common Stock on the
New York Stock Exchange, Inc. (the "Exchange") on the date the Option is
exercised, or if the Common Stock was not traded on the Exchange on that date,
then on the next preceding date on which the Common Stock was traded on the
Exchange. No shares may be issued until full payment of the purchase price
therefore has been made, and the Option Holder will have none of the rights of a
stock holder until shares are issued to him.
10. Non-Assignability. This option is not assignable or transferable by
the Option Holder except by assignment or transfer to members of Option Holder's
family or to an entity created for the benefit of Option Holder's family or
family members, or by will or by the laws of descent and distribution. Any such
assignee or transferee shall be subject to all of the terms and conditions
hereof and shall be prohibited from any further assignment or transfer.
11. Rights of Stockholder. Except for the adjustment in the number of
shares as provided in Section 12 below, the Option Holder will have no rights as
a stockholder with respect to any shares covered by this option until the
issuance of a certificate or certificates to the Option Holder for the shares.
Except as otherwise provided in Section 12 hereof, no adjustment shall be made
for dividends or other rights for which the record date is prior to the issuance
of such certificate or certificates.
12. Adjustment of Number of Shares and Related Matters. The Option
Holder understands that in the event of the merger, consolidation or
reorganization of the Company, or in the event of the recapitalization of the
Company, the number of shares that may be purchased upon exercise of the option
granted hereunder and the exercise price thereof shall be proportionately
adjusted. Notwithstanding the foregoing, the existence of the option granted
hereunder shall not affect the right of the Company to issue shares of stock of
any class, or securities convertible into shares of stock of any class, for
cash, property, labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities. The
issuance of such shares or securities shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of
Stock subject to the option granted hereunder.
Upon the occurrence of each event requiring an adjustment of the
exercise price and/or the number of shares purchasable pursuant to this
Agreement, the Company shall as soon as practicable mail to the Option Holder a
copy of its computation of such adjustment which shall be conclusive and shall
be binding upon the Option Holder unless contested by him by written notice to
the Company within thirty (30) days after the Option Holder's receipt of such
computation.
13. Option Holder's Representations. Notwithstanding any of the
provisions hereof, the Option Holder hereby agrees that he will not exercise the
option granted hereby, and that the Company will not be obligated to issue any
shares to the Option Holder hereunder, if the exercise thereof or the issuance
of such shares shall constitute a violation by the Option Holder or the Company
of any provision of any law or regulation of any governmental authority. Any
determination in this connection by the Board of Directors of the Company shall
be final, binding, and conclusive. The obligations of the Company and the rights
of the Option Holder are subject to all applicable laws, rules and regulations
including, without limitation, the Securities Exchange Act of 1934, as amended,
the Securities Act of 1933, as amended, the Internal Revenue Code of 1986, as
amended, any successors thereto, and any other applicable laws.
14. Investment Representation. By his execution hereof, the Option
Holder represents and warrants to the Company that all Stock which may be
purchased hereunder will be acquired by Option Holder for investment purposes
for his own account and not with any intent for resale or distribution. Unless
previously registered or issued in a transaction registered under applicable
federal and state securities laws, all certificates issued with respect to the
Common Stock shall bear an appropriate restrictive investment legend.
15. Law Governing. This Agreement is intended to be performed in the
State of Texas and shall be construed and enforced in accordance with and
governed by the laws of Texas.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Option Holder, to evidence his
consent and approval of all the terms hereof, has duly executed this Agreement,
as of the date specified in Section 1 hereof.
KANEB SERVICES, INC.
By:
-------------------------------
Title:
----------------------------
OPTION HOLDER:
----------------------------------
John R. Barnes
Exhibit 10.4
April 22, 1996
__________________________
__________________________
__________________________
__________________________
Re: Repricing of Certain "Underwater" Stock Options
Agreement of ______________,__________ Shares, Exercise Price $____
Dear Mr._________________________:
On April 20, 1996, the Compensation Committee of Kaneb Services Inc.'s Board of
Directors approved a program whereby certain previously issued stock option
agreements having an exercise price significantly above recent market prices may
be amended to reflect an exercise price of $2.625, the closing market price on
April 22, 1996 which is the effective date of the program.
Your stock option agreement dated ________________, referenced above is eligible
to be amended under this program. Under the terms of the agreement, you are
currently vested in ______________ option shares with an exercise price of
$_______ per share. The remaining shares covered by this agreement are currently
scheduled to vest between the date of this letter and __________________. The
ability to exercise shares under this agreement is currently scheduled to expire
no later than ____________________.
Should you choose to amend the existing agreement, in the manner contemplated by
the Compensation Committee, you will forfeit any and all vesting rights to the
__________________ vested shares shown above. Further, all remaining
_____________ unvested shares will not vest according to the schedule set forth
in the original agreement, the exercise price on all __________________ shares
will be changed to $2.625 per share and the expiration date (excluding other
forfeiture provisions of the original agreement which remain unchanged) will be
April 21, 2006. The option shares in the amended agreement will not be vested
(you will have no exercise rights in any of the ______________ option shares) on
the date of amendment. Vesting may occur under one of the two following
schedules:
1. You will be eligible to receive vesting at the rate of 20% per year from
April 22, 1996, the effective date of the amendment. Vesting will occur when the
30 consecutive day average of the closing price of the stock is equal to or
above the exercise price of the original agreement ($______ on ____________
shares) as shown above. Time of achievement of the 30 consecutive day average
required for vesting will apply to the year (from April 22 through April 21)
during which the first day of the 30 consecutive day average occurs. When and if
such stock price level is achieved, you will vest cumulatively on the
corresponding option shares pursuant to the following schedule:
Time of Achievement Percent Vested
(of 30 consecutive day average) (Cumulative)
------------------------------- -------------
a. April 22, 1996 through April 21, 1997 0%
b. April 22, 1997 through April 21, 1998 20%
c. April 22, 1998 through April 21, 1999 40%
d. April 22, 1999 through April 21, 2000 60%
e. April 22, 2000 through April 21, 2001 80%
f. After April 21, 2001 100%
For example, assume the following scenario, the vesting criteria is achieved
from April 22, 1998 through April 21, 1999 (two but less than three years from
the effective date of amendment) and the 30 consecutive day average requirement
is not met again until after April 21, 2000 but before April 22, 2001, (four but
less than five years from the effective date of the amendment) and finally, the
vesting criteria is not met again until after 5 years.
In this example the option holder would become 40% vested on the last day of the
30-day period during which the Company's common stock closing price averaged an
amount equal to or greater than the exercise price of the agreement which was
amended (i.e., during period (c), identified above) and would remain 40% vested
until the vesting criteria was again met between the 4th and 5th anniversaries
(period (e) above), at which time he would become 80% vested. He would remain
80% vested until the criteria was again met after 5 years, at which time he
would be 100% vested.
2. In any event, regardless of the above schedule and vesting criteria, the
amended grant (if still outstanding) will become exercisable in full (100%
vested), ten (10) years from the date of amendment or upon death,
life-threatening disability, Change of Control or Potential Change of Control
(as defined in the original agreement) or normal retirement after age 65.
As you are currently vested in __________________ of the ________________ shares
covered by the existing agreement, your decision whether or not to amend this
agreement is entirely voluntary. If you amend your original agreement, you will
forfeit all original vesting rights in all _______________ shares, whether or
not currently vested in such shares. After the amendment, if item 2 above (which
will substantially delay vesting) is not met, shares in the amended agreement
will not be vested unless the 30 consecutive day average of the closing price of
the stock is equal to or above the original agreement exercise price of
$________ per share. Even then, only a portion of shares may be vested due to
the date the criteria is met as described in item 1. Please consider your
decision whether or not to amend the agreement carefully. The company is
entirely neutral regarding your decision, but wants to make this program
available to you on a voluntary basis.
Only the terms specifically contained in this letter will amend and supersede
those terms in the original agreement. All other provisions of the original
agreement will remain unchanged. In order to effect the amendment of the
original agreement under the terms provided herein, please execute one copy of
this letter in the space provided below and return it to me within 30 days.
Please retain the additional copy of the letter for your file. Should you have
any questions regarding this amendment or the applicable agreement, please
contact me.
Very truly yours,
William H. Kettler, Jr.
Director of Human Resources
For and in consideration of the mutual covenants and conditions described above,
I hereby agree to voluntarily amend the ___________ share stock option agreement
of ____________ to incorporate the terms described herein.
- ------------------------------- ------------------------
Date
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Kaneb Services, Inc.:
We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated February 25, 2000, relating to the consolidated
balance sheets of Kaneb Services, Inc. and subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for the years then ended, and related
schedules, which report is included on page F-1 of the Annual Report on Form
10-K for the fiscal year ended December 31, 1999 of Kaneb Services, Inc.
KPMG LLP
Dallas, Texas
April 10, 2000
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated February 19, 1998 relating to the
financial statements which appears in Kaneb Services, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 1999.
PricewaterhouseCoopers LLP
Dallas, Texas
April 10, 2000
