<PAGE>
As filed with the Securities and Exchange Commission on June 8, 1994
Registration No.______________
================================================================================
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)
Delaware 4619 75-1191271
(State or other (Primary standard industrial (I.R.S employer
of jurisdiction classification code number) identification no.)
incorporation or
organization)
2400 Lakeside Boulevard, Sixth Floor
Richardson, TX 75082
(214) 699-4000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-------------------------
Kaneb Services, Inc. 1994 Stock Incentive Plan
(Full title of the plan)
Stephen M. Hoffner
2400 Lakeside Boulevard, Sixth Floor
Richardson, TX 75082
(214) 699-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, TX 77010
(713) 651-5151
Attention: John A. Watson
-------------------------
CALCULATION OF REGISTRATION FEE
================================================================================
Title of shares to Amount Proposed Proposed Amount of
be registered to be maximum maximum registration
registered offering aggregate fee
price offering
per share price
- --------------------------------------------------------------------------------
Common Stock,
without par value 1,600,000 shares/1/ $3.06/2/ $4,896,000/2/ $1,689
================================================================================
(1) Estimated number of shares that may be purchased hereunder, based, in part,
upon the price of Common Stock set forth herein.
(2) 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 prices of the Common Stock in the consolidated
reporting system on June 2, 1994, which was $3.06.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
Kaneb Services, Inc. (the "Company") incorporates 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, 1993 and the Company's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since the fiscal year ended December 31, 1993.
(c) The description of the Company's common stock, no par value (the
"Common Stock"), which is contained in a registration statement filed
under 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.
The consolidated financial statements and schedules of the Company
incorporated by reference in this Registration Statement from the Company's
Annual Report on Form 10-K for the year ended December 31, 1993, have been
audited by Price Waterhouse, independent auditors, as indicated in their
reports with respect thereto and are incorporated herein in reliance upon the
authority of said firm as experts in accounting and auditing.
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.
II-1
<PAGE>
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.
In 1986, the Company entered into individual Indemnification
Assurance Agreements (the "Agreements") with each person who was then a
director or executive officer of the Company. Pursuant to the Agreements, the
Company has agreed to indemnify such persons to the full extent provided by
applicable law in the bylaws of the Company.[ To assure such indemnitees that
funds will be available to make any indemnification payments required by such
Agreements, the Company has established an irrevocable letter of credit in the
amount of $900,000 to provide, through a trust, for the payment to each
indemnitee of any amounts to which he may become entitled as indemnification
pursuant to the bylaws or in the event, for any reason, the Company shall not
otherwise pay to him any such indemnification.]
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Certificate of Designation related to registrant's Adjustable Rate
Cumulative Class A Preferred Stock (filed as Exhibit 4 of the
exhibits to the registrant's quarterly report of Form 10-Q for the
quarter ended September 30, 1983, which exhibit is hereby
incorporated by reference).
4.2 Certificate of Designation, Preferences and Rights of Series B Junior
Participating Preferred Stock (filed as Exhibit 1 of the exhibits to
the registrant's report on Form 8-K and registration statement on
Form 8-A, both filed with the Securities and Exchange Commission on
April 5, 1988, which exhibit is hereby incorporated by reference).
4.3 Certificate of Designations to the Restated Certificate of
Incorporation of the registrant dated February 11, 1991 (filed as
Exhibit 4.3 to the registrant's report on Form 10-K for the year
ended December 31, 1990, which exhibit is hereby incorporated by
reference).
4.4 Certificate of Designation to the Restated Certificate of
Incorporation of registrant dated April 23, 1991 (filed as Exhibit
4.4 of the exhibits to registrant's report on Form 10-K for the year
ended December 31, 1991, which exhibit is hereby incorporated
herein).
4.5 Certificate of Designation dated November 2, 1992 relating to the
issuance of Series E Preferred Stock (filed as Exhibit 10.2 of the
exhibits to registrant's report on Form 8-K dated January 23, 1993,
which exhibit is hereby incorporated by reference).
4.6 Indenture, dated as of January 1, 1978, between Moran Energy Inc. and
First City National Bank of Houston, under which Moran Energy Inc
issued the 11 1/2% Subordinated Debentures due 1998 (filed as Exhibit
2(g) to Moran Energy Inc.'s Registration Statement on Form S-7 (SEC
File No. 2-61216), which exhibit is hereby incorporated by
reference).
II-2
<PAGE>
4.7 First Supplemental Indenture, dated as of March 20, 1984, between the
registrant and First City National Bank of Houston, under which the
registrant assumed obligations under the Indenture listed as Exhibit
4.3 above (filed as Exhibit 4.4 to the registrant's report on Form
10-K for the year ended December 31, 1983, which is hereby
incorporated by reference).
4.8 Indenture, dated as of November 1, 1980, between Moran Energy
International N.V., Moran Energy Inc. and First City National Bank of
Houston, under which Moran Energy International N.V. issued the 8%
Convertible Subordinated Debentures due 1995 of Moran Energy
International N.V. guaranteed on a subordinated basis by Moran Energy
Inc. (filed as Exhibit 4(b) to Moran Energy Inc.'s Form 10-K for the
year ended December 1, 1980, which Exhibit 4(b) is hereby
incorporated by reference).
4.9 First Supplemental Indenture, dated as of March 20, 1984, by and
among Moran Energy International N.V., the registrant and First City
National Bank of Houston, under which the registrant assumed Moran
Energy Inc.'s obligations under the Indenture listed as Exhibit 4.5
above (filed as Exhibit 4.6 to the registrant's Form 10-K for the
year ended December 31, 1983, which is hereby incorporated by
reference).
4.10 Indenture, dated as of January 15, 1984, between Moran Energy Inc.
and First City National Bank of Houston, under which Moran Energy
Inc. issued the 8 3/4% Convertible Subordinated Debentures due 2008
(filed as Exhibit 4.1 to Moran Energy Inc.'s registration statement
on Form S-3 (SEC File No. 2-81227), which Exhibit 4.1 is hereby
incorporated by reference).
4.11 First Supplemental Indenture, dated as of March 20, 1984, between the
registrant and First City National Bank of Houston, under which the
registrant assumed obligations under the Indenture listed as Exhibit
4.7 above (filed as Exhibit 4.8 to the registrant's Form 10-K for the
year ended December 31, 1983, which is hereby incorporated by
reference.
4.12 The Kaneb Services, Inc. 1994 Stock Incentive Plan effective as of
May 20, 1994.
5. Opinion of Fulbright & Jaworski L.L.P., as to legality of securities
registered hereby.
24. Consent of independent auditors: Price Waterhouse.
25. Power of attorney (contained on page II-5 hereof).
Item 9. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this Registration Statement; and
II-3
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
Provided however, that paragraphs (i) and (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 Company pursuant
to Section 13 or 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for the purposes
of determining any liability under the Securities Act, each filing of the
Company's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference into 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.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company 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 and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company 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 of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Stephen M. Hoffner to act as his true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all post-effective amendments to this Registration
Statement, and to file the same with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done, as
fully and to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact or agent, or
his substitute or substitutes or all of them may lawfully do or cause to be
done by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Richardson, State of Texas, on the
7th day of June, 1994.
KANEB SERVICES, INC.
By: Stephen M. Hoffner
------------------------------------------
Stephen M. Hoffner
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
- -------------------- ----------------------------------- ------------
<S> <C> <C>
John R. Barnes June 7, 1994
- -------------------- Chairman of the Board, President
(John R. Barnes) and Chief Executive Officer
Tony M. Regan
- -------------------- Controller (Principal Financial June 7, 1994
(Tony M. Regan) and Accounting Officer)
Sangwoo Ahn
- -------------------- Director June 7, 1994
(Sangwoo Ahn)
C.E. Bentley
- -------------------- Director June 7, 1994
(C.E. Bentley)
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
Preston A. Peak
- -------------------- Director June 7, 1994
(Preston A. Peak)
Ralph A. Rehm
- -------------------- Director June 7, 1994
(Ralph A. Rehm)
James R. Whatley
- -------------------- Director June 7, 1994
(James R. Whatley)
</TABLE>
II-6
<PAGE>
Exhibit 4.12
KANEB SERVICES, INC.
1994 STOCK INCENTIVE PLAN
PURPOSE
This plan is intended to assist the Company in recruiting and retaining
employees with ability and initiative by enabling employees to participate in
its future success and to associate their interests with those of the Company
and its shareholders. The plan is intended to permit the grant of SARs, and the
grant of both Options qualifying under Section 422 of the Code ("incentive stock
options") and Options not so qualifying. No option that is intended to be an
incentive stock option shall be invalid for failure to qualify as an incentive
stock option. The proceeds received by the Company from the sale of Common
Stock pursuant to this Plan shall be used for general corporate purposes.
ARTICLE I
DEFINITIONS
1.01 "Agreement" means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the
terms and conditions under which an Option or SAR is granted to such
Participant.
1.02 "Board" means the Board of Directors of the Company.
1.03 "Code" means the Internal Revenue Code of 1986, and any amendments thereto.
1.04 "Committee" means the Compensation Committee of the Board appointed to
administer the Plan.
1.05 "Common Stock" means the Common Stock, without par value, of the Company.
1.06 "Company" means Kaneb Services, Inc., a Delaware corporation.
1.07 "Corresponding SAR" means an SAR that is granted in relation to a
particular Option and that can be exercised only upon surrender to the
Company, unexercised, of that portion of the Option to which the SAR
relates.
1.08 "Date of Exercise" means (i) with respect to a particular Option, the date
that the Option price is received by the Company and (ii) with respect to
an SAR, the date that the notice of exercise is received by the Company.
1.09 "Fair Market Value" means, on any given date, the closing price of the
Common Stock. If the Common Stock was not traded on such date, then the
"Fair Market Value" is determined with reference to the preceding day that
the Common Stock was so traded.
1.10 "Initial Value" means with respect of an SAR, the Fair Market Value of one
share of Common Stock on the date of grant, as set forth in the Agreement.
1.11 "Option" means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.12 "Participant" means an employee of the Company or an Affiliate, including
an employee who is a member of the Board, who satisfies the requirements of
Article III and is selected by the Committee to receive an Option, an SAR,
or a combination thereof.
1.13 "Plan" means The Kaneb Services, Inc. 1994 Stock Incentive Plan.
1.14 "SAR" means a stock appreciation right that entitles the holder to receive,
with respect to each share of Common Stock encompassed by the exercise of
such SAR, the amount determined by the Committee and specified in the
Agreement. In the absence of such a determination, the holder shall be
entitled to receive, with respect to each share of Common Stock encompassed
by the exercise of such SAR, the excess, at the election of the Committee,
payable in cash or the equivalent value in Common Stock, of the Fair Market
Value on the Date of Exercise over the Initial Value. References to "SARs"
include both Corresponding SARS and SARs granted independently of Options
unless the context requires otherwise.
1.15 "Subsidiary" means any "subsidiary corporation" as such term is defined in
Section 424 of the Code.
<PAGE>
ARTICLE II
ADMINISTRATION
Except as provided in this Article II, the Plan shall be administered by
the Committee. The Committee shall have the authority to grant Options and SARs
upon such terms (not inconsistent with this Plan) as the Committee shall
consider appropriate. Such terms may include conditions (in addition to those
contained in this Plan) on the exercisability of all or any part of an Option or
SAR. Notwithstanding any such conditions, the Committee may, in its discretion,
accelerate the time at which any Option or SAR may be exercised. In addition,
the Committee shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this Plan.
The express grant in the Plan of any specific power to the Committee shall not
be construed as limiting any power or authority of the Committee. Any decision
made, or action taken, by the Committee or in connection with the administration
of this Plan shall be final and conclusive. No member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any
Agreement, Option, or SAR award. All expenses of administering this Plan shall
be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers of
the Company, all or part of the Committee's authority and duties with respect to
Participants who are not subject to reporting and other provisions of Section 16
of the Securities Exchange Act of 1934, as in effect from time to time.
In the event of such delegation, references in the Plan to the Committee
shall be encompassed by the delegation, references in the Plan to the Committee
shall be interpreted as a reference to the Committee's delegate or delegates.
The Committee may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the Committee's delegate or
delegates that were consistent with the terms of the Plan.
ARTICLE III
ELIGIBILITY
3.01 General. Any employee of the Company or of any Subsidiary (including any
-------
corporation that becomes a Subsidiary after the adoption of this Plan) is
eligible to participate in this Plan if the Committee, in its sole discretion,
determines that such person has contributed or can be expected to contribute to
the profits or growth of the Company or a Subsidiary. Any such employee may be
granted one or more Options, SARs, or Options and SARs. A Director of the
Company who is an employee of the Company or a Subsidiary may be granted Options
or SARs under this Plan.
3.02 Grants. The Committee will designate individuals to whom Options and SARs
------
are to be granted and will specify the number of shares of Common Stock subject
to each award or grant. An Option may be granted with or without a related SAR.
An SAR may be granted with or without a related Option. All Options and SARs
granted, under this Plan shall be evidenced by Agreements which shall be subject
to applicable provisions of this Plan and to such other provisions as the
Committee may adopt. The Committee may substitute new Options or SARs for
previously granted Options or SARs including those previously granted having
higher exercise prices. The Committee may also substitute new SARs for
previously granted Options or new Options for previously granted SARs including
those SARs or Options theretofore granted having higher exercise prices. No
Participant may be granted incentive stock options or related SARs (under all
incentive stock option plans of the Company and its Subsidiaries) which are
first exercisable in any calendar year for stock having an aggregate Fair Market
Value (determined as of the date an option is granted) exceeding $100,000. The
preceding annual limitation shall not apply with respect to Options that are not
incentive stock options.
1
<PAGE>
ARTICLE IV
STOCK SUBJECT TO PLAN
4.01 Source of Shares. Upon the exercise of any Options or SARs, the Company
----------------
may issue authorized but unissued Common Stock or Common Stock held by the
Company in its Treasury for delivery to the Participant (or to the Participant's
broker if the Participant so directs).
4.02 Maximum Number of Shares. The maximum aggregate number of shares of Common
-------------------------
Stock that may be utilized pursuant to the exercise of Options and SARs under
this Plan is 1,600,000, subject to increases and adjustments as provided in this
Article IV and Article VIII.
4.03 Replenishment. The maximum number of shares authorized for issuance under
--------------
this Plan under Section 4.02 shall be increased each year by 5% (the
Replenishment Percentage) of the amount, if any, by which the total number of
shares of Common Stock outstanding as of the last day of the Company's fiscal
year exceeds the total number of shares of Common Stock outstanding as of the
first day of such fiscal year. The issuance of shares of Common Stock under
this Plan and the application of Article VIII shall be disregarded for purposes
of applying the preceding sentence. This section 4.03 shall first apply to the
fiscal year beginning on January 1, 1995.
4.04 Incentive Stock Options. Section 4.02 to the contrary notwithstanding, the
------------------------
maximum aggregate number of shares of Common Stock that may be issued pursuant
to the exercise of Options that are incentive stock options under this Plan is
1,600,000, subject to adjustments as provided in Article VIII.
4.05 Forfeitures. If an option or SAR is terminated, in whole or in part, for
------------
any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or SAR or portion thereof may be reallocated to other
Options or SARs to be granted under this Plan.
ARTICLE V
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an Option
shall be determined by the Committee on the date of grant; provided, however,
that the price per share for Common Stock purchased on the exercise of any
Option, including an Option that is an incentive stock option, shall not be less
than the Fair Market Value on the date the Option is granted.
ARTICLE VI
EXERCISE OF OPTIONS
6.01 Maximum Option or SAR Period. The maximum period in which an Option or SAR
-----------------------------
may be exercised shall be determined by the Committee on the date of grant
except that no Option that is an incentive stock option and any Corresponding
SAR that relates to such Option shall be exercisable after the expiration of 10
years from the date the Option or SAR was granted. The terms of any Option or
SAR may provide that it is exercisable for a period less than such maximum
period.
6.02 Transferability. Any Option or SAR granted under this Plan shall be
----------------
nontransferable except by will or by laws of descent and distribution. In the
event of any such transfer, the Option and any Corresponding SAR that relates to
such Option must be transferred to the same person or persons or entity or
entities. During the lifetime of the Participant to whom the Option or SAR is
granted, the Option or SAR may be exercised only by the Participant. No right
or interest of a Participant in any Option or SAR shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
2
<PAGE>
6.03 Employee Status. For purposes of determining the applicability of Section
----------------
422 of the Code (relating to incentive stock options), or in the event that the
terms of any Option or SAR provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Committee may decide to what extent leaves of absence for government or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment. In the absence of terms
established in an Option and or SAR Agreement by the Committee, the following
shall apply:
(a) Death. In the event of death while employed, Options and SARs may be
------
exercised for a period of one hundred eighty (180) days after the Participant's
death or until the expiration of the Option or SAR (if sooner), to the extent of
the shares with respect to which the Option or SAR could have been exercised by
the Participant on the date of the Participant's death, by the Participant's
estate or personal representative, or by the person who acquired the right to
exercise the Option or SAR by bequest or inheritance or by reason of the
Participant's death;
(b) Disability. In the event of termination of employment as the result of
-----------
a total and permanent disability (as defined in Section 105(d) (4) of the Code),
the Option or SAR may be exercised by the Participant or his guardian for a
period of ninety (90) days after the Participant's termination or until
expiration of the Option or SAR period (if sooner) to the extent of the shares
with respect to which the Option or SAR could have been exercised by the
Participant on the date of such termination;
(c) Termination. Provided an Option or SAR has been in effect for at least
------------
two (2) years, a Participant may exercise such Option or SAR in the event the
Company terminates his employment without cause for a period of ninety (90) days
after the Participant's termination or until expiration of the Option or SAR
period (if sooner) to the extent of the shares with respect to which the Option
or SAR could have been exercised by the Participant on the date of termination.
Termination of employment by the Company without cause in the case of Options or
SARs which have been in effect for less than two (2) years, or, the voluntary
termination of a Participant not specifically covered under paragraphs (b) or
(d) of this Section 6.03, shall result in allowing the Participant a period of
thirty (30) days after the Participant's termination or until expiration of the
Option or SAR period (if sooner) to the extent of the shares with respect to
which the Option or SAR could have been exercised by the Participant on the date
of termination. For purposes of this paragraph, "cause" shall be defined to
mean a Participant's willful misconduct or dishonesty, which is directly and
materially harmful to the business or reputation of the Company;
(d) "Retirement". In the event of retirement from employment, a
-------------
Participant may exercise Options or SARs for a period of ninety (90) days after
the Participant's retirement or until expiration of the Option or SAR period (if
sooner) to the extent of the shares with respect to which the Option or SAR
could have been exercised by the Participant on the date of retirement. For
purposes of this paragraph, "retirement" shall mean the voluntary or involuntary
termination of employment by the Company of the Participant after his attainment
of 55 years of age, and whose employment was not terminated for cause as defined
in paragraph (c) above.
6.04 Terms. The Committee may provide for the terms of the Participant's
------
eligibility to exercise Options or SARs in installments or under any such
conditions and restrictions as it may determine. In the absence of such terms
established in an Option or SAR Agreement by the Committee, the Option or SAR
shall be exercisable in its entirety on the date of grant, subject to any
applicable law or statute and as otherwise provided for in this Article VI,
including the proviso that any participant who is required to report under
Section 16 of the Securities Exchange Act of 1934 may not exercise an Option or
related SAR prior to the lapse of six months from the date of its grant.
3
<PAGE>
ARTICLE VII
METHOD OF EXERCISE
7.01 Exercise. An Option or SAR granted under this Plan shall be deemed to have
---------
been exercised on the Date of Exercise. Subject to the provisions of Articles
VI and IX, an Option or SAR may be exercised in whole at any time or in part at
any time at such times and in compliance with such requirements as the Committee
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive stock option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the option
price of the related Option. An Option or SAR granted under this Plan may be
exercised with respect to any number of whole shares less than the full number
of whole shares for which the Option or SAR could be exercised. A partial
exercise of an Option or SAR shall not affect the right to exercise the Option
or SAR from time to time in accordance with this Plan and the applicable
Agreement with respect to remaining shares subject to the Option or related to
the SAR. The exercise of either an Option or Corresponding SAR shall result in
the termination of the other to the extent of the number of shares with respect
to which the Option or Corresponding SAR is exercised.
7.02 Payment. Unless otherwise provided by the Agreement, payment of the Option
--------
price shall be made in cash, a cash equivalent acceptable to the Committee, or
in Common Stock. All or part of the Option price may be paid by surrendering
shares of Common Stock to the Company. If Common Stock is used to pay all or
part of the Option price, the shares surrendered must have a Fair Market Value
(determined as of the day preceding the Date of Exercise) that is not less than
such price or part thereof. A fractional share of Common Stock shall not be
deliverable upon the exercise of an SAR or Option but a cash payment will be
made in lieu thereof.
7.03 Shareholder Rights. No Participant shall have any rights as a stockholder
-------------------
with respect to shares subject to his Option or SAR until the Date of Exercise
of such Option or SAR.
ARTICLE VIII
ADJUSTMENT UPON CHANGE IN COMMON STOCK
8.01 General. The maximum number of shares as to which Options and SARs may
--------
be granted under this Plan and the Replenishment Percentage of Section 4.03
shall be proportionately adjusted, and the terms of outstanding Options and SARs
shall be adjusted, as the Committee shall determine to be equitably required in
the event that the Company effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares. Any determination made under this
Article VIII by the Committee shall be final and conclusive. This issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon exercise of rights or warrants to subscribe
therefore, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect and no
adjustment by reason thereof shall be made with respect to, outstanding Options
or SARs. The Committee may grant Options, and may grant SARs in substitution
for stock awards, stock options, stock appreciation rights, or similar awards
held by an individual who becomes an employee of the Company or a Subsidiary in
connection with a transaction described in the first paragraph of this Article
VIII. Notwithstanding any provision of the Plan (other than the limitation of
Article IV), the terms of such substituted Option or SAR grants shall be as the
Committee, in its discretion, determines is appropriate.
8.02 Liquidation or Dissolution. In case the Company shall, at any time while
---------------------------
any unexercised Option or SAR shall be in force and remain unexpired under this
Plan, (1) sell all or substantially all its property and thereafter distribute
in partial or total liquidation of the Company, or (ii) dissolve, liquidate, or
wind
4
<PAGE>
up its affairs, then each Participant may thereafter receive upon exercise of
Options or SARs (in lieu of each share of Common Stock of the Company which such
Participant would have been entitled to receive) the same kind and amount of any
securities or assets as may be issuable, distributable or payable upon any such
sale, dissolution, liquidation, or winding up with respect to each share of
Common Stock of the Company. In the event that the Company shall, at any time
prior to the expiration of any Option or SAR make any partial distribution of
its assets (but not including dividends payable in capital stock of the
Company), in the nature of a partial liquidation, whether payable in cash or in
kind (but excluding the distribution of a cash dividend payable out of earned
surplus and designated as such) then in such event the exercise prices then in
effect with respect to each outstanding Option or SAR shall be reduced, on the
payment date of such distribution, in proportion to the percentage reduction in
the tangible book value of the shares of the Company's Common Stock (determined
in accordance with generally accepted accounting principles) resulting by reason
of such distribution.
8.03 Change of Control. The following acceleration and valuation provisions
------------------
shall apply in the event of a "Change of Control" or "Potential Change of
Control," as defined in this Section 8.03:
(a) In the event of a "Change of Control" as defined in paragraph (b)(1)
of this Section 8.03, unless otherwise determined by the Committee or Board in
writing at or after grant but prior to the occurrence of such Change of Control,
or, if and to the extent so determined by the Committee or the Board at or after
grant, in the event of a "Potential Change of Control," any Options or SARs
awarded under the Plan not previously exercisable, shall be fully exercisable.
(b) Definitions.
------------
(1) For the purposes of this Section 8.03, "Change of Control" means the
occurrence of any one or more of the following events:
(i) any Person (defined below) becomes the Beneficial Owner (defined
below) of securities of the Company having 20% or more of the total votes
that may be cast for the election of directors of the Company; or
(ii) the stockholders of the Company approve the sale or other
disposal of all or substantially all of the assets of the Company
(including a plan of liquidation or dissolution) or the merger or
consolidation of the Company with or into another corporation, in
accordance with the requirements of the Certificate of Incorporation of the
Company and applicable law; or
(iii) as a result of or in connection with any tender offer, exchange
offer, merger or other business combination, sale of assets or contested
election of directors, or any combination of the foregoing, the individuals
who are directors of the Company immediately prior to such event shall
cease to constitute the majority of the Company's Board.
(2) For purposes of this Section 8.03, a "Potential Change of Control"
means the entering into an agreement by the Company, the consummation of
which would result in a "Change of Control" of the Company as defined in
paragraph (b)(1) of the Section 8.03.
(3) A "Person" means any individual, firm corporation, partnership, trust
or other entity. Two or more Persons who agree to act together for the
purpose of acquiring, holding, voting, or disposing of securities of the
Company shall be deemed a "Person". Excluded from the definition of
"Person" are the Company and any Affiliates of the Company, whether
individually or in any combination.
5
<PAGE>
(4) A Person is a "Beneficial Owner" of securities of the Company if such
Person or any of such Person's Affiliates (defined below) or Associates
(defined below) has or shares, directly or indirectly, through any
contract, arrangement, understanding or otherwise, the power to vote or
direct the voting of securities of the Company or the power to dispose or
direct the disposition of securities of the Company. A Person shall be the
"Beneficial Owner" of securities of the Company that such Person or any of
such Person's Affiliates or Associates has the right to become the
"Beneficial Owner" of (whether such right is exercisable immediately or
only after the passage of time) pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants, options, or otherwise.
(5) An "Affiliate" of a specified Person is a Person that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Person specified.
(6) An "Associate" of a specified Person is (i) any corporation or
organization (other than the Company or any Subsidiary of the Company) of
which such Person is an officer or partner or is, directly or indirectly,
the Beneficial Owner of 10% or more of any class of equity securities, (ii)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar
fiduciary capacity, or (iii) any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person or who is a
director or officer of the Company or any Subsidiary or Parent (defined
below) of the Company.
(7) A "Parent" of a specified Person is an Affiliate controlling such
Person directly, or indirectly through one ormore intermediaries.
(8) "Securities" of the Company for the purposes of this Section 8.03
shall mean, unless the context requires otherwise, equity securities of
the Company or any Subsidiary or Parent or any securities or instruments
entitling the holder thereof to acquire upon exercise, exchange or
conversion thereof equity securities of the Company, entitles the holder,
by trust, proxy or any other agreement, arrangement or understanding or
otherwise, to vote in the election of directors of the Company.
ARTICLE IX
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance will all applicable federal and
state laws and regulations (including without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company shall have the right to rely on an
opinion of its counsel as to such compliance. Any share certificate issued to
evidence Common Stock for which an Option or SAR is exercised may bear such
legends and statements as the Committee may deem advisable to assure compliance
with federal and state laws and regulations. No Option or SAR shall be
exercisable, no Common Stock Shall be issued, no certificate for shares shall be
delivered, and no payment shall be made under this Plan until the Company has
obtained such consent or approval as the Committee may deem advisable from
regulatory bodies having jurisdiction over such matters.
6
<PAGE>
ARTICLE X
GENERAL PROVISIONS
10.01 Effect on Employment. Neither the adoption of this Plan, its operation,
---------------------
nor any documents describing or referring to this Plan (or any part thereof)
shall confer upon any employee any right to continue in the employ of the
Company or a Subsidiary or in any way effect any right and power of the Company
or a Subsidiary to terminate the employment of any employee at any time with or
without assigning a reason therefor.
10.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall not be
--------------
required to segregate any assets that may at any time be represented by grants
under this Plan. Any liability of the Company to any person with respect to any
grant under this Plan shall be based solely upon any contractual obligations
that may be created pursuant to this Plan. No such obligation of the Company
shall be deemed to be secured by any pledge of, or other encumbrance on, any
property of the Company.
10.03 Rules of Construction. Headings are given to the articles and sections
----------------------
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law.
ARTICLE XI
AMENDMENT
The Board may amend or terminate this Plan from time to time, provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan or (ii) the amendment changes the class
of individuals eligible to become Participants or (iii) the amendment extends
the duration of the Plan, as defined in Article XII. No amendment shall without
a Participant's consent adversely affect any rights of such Participant under
any Option or SAR outstanding at the time such amendment is made.
ARTICLE XII
DURATION OF PLAN
No Option or SAR may be granted under this Plan more than 10 years after
the earlier of the date that the Plan is adopted by the Board or the date that
the Plan is approved by the shareholders as provided for in Article XIII.
Options and SARs granted before that date shall remain valid in accordance with
their terms.
ARTICLE XIII
EFFECTIVE DATE OF PLAN
Options and SARs may be granted under this Plan upon its adoption by the
Board, provided that no Option or SAR will be effective unless this Plan is
approved by shareholders holding a majority of the Company's outstanding voting
stock voting either in person or by proxy at a duly held shareholders' meeting
within twelve months of such adoption.
7
<PAGE>
Exhibit 5
[LETTERHEAD OF FULBRIGHT & JAWORSKI LLP. APPEARS HERE]
June 3, 1994
Kaneb Services, Inc.
2400 Lakeside Boulevard, Sixth Floor
Richardson, TX 75082
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, as amended, of 1,600,000 shares of the Company's
common stock, no par value (the "Shares"), to be offered upon the terms and
subject to the conditions set forth in the Company's 1994 Stock Incentive
Plan (the "Plan").
In connection therewith, we have examined 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, the Plan, records of relevant corporate proceedings with respect
to the offering of the Shares and such other documents and instruments as
we have deemed necessary or appropriate for the expression of the opinions
contained herein. We have also reviewed the Company's Registration
Statement on Form S-8 to be filed with the Securities and Exchange
Commission with respect to the Shares (the "Registration Statement").
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 authorized and, when issued in accordance with the
terms of the Plan, will be validly issued, fully paid and non-assessable.
The opinions expressed herein are limited exclusively to the General
Corporation Law of the State of Delaware.
<PAGE>
Kaneb Services, Inc.
June 3, 1994
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
Fulbright & Jaworski L.L.P.
<PAGE>
Exhibit 24
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 8, 1994 appearing on page F-1
of Kaneb Services, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1993. We also consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in such Registration Statement.
PRICE WATERHOUSE
Dallas, Texas
June 6, 1994
