<PAGE> 1
As filed with the Securities and Exchange Commission on October 11, 1996
Registration No. 33-
------------
================================================================================
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 75-1191271
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2435 N. CENTRAL EXPRESSWAY
RICHARDSON, TEXAS 75080
- ------------------------------------------ -----------------------------
(Address of Principal Executive Offices) (Zip Code)
KANEB SERVICES, INC.
SAVINGS INVESTMENT PLAN
(Full title of the plan)
MICHAEL B. GLAZER, CORPORATE COUNSEL
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>
==========================================================================================================================
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of
registered registered offering price per aggregate registration fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,500,000 shares $3.1875 $4,781,250 $1,449
==========================================================================================================================
</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 October 8,
1996.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Kaneb Services, Inc., a Delaware corporation (the "Company"), hereby
incorporates by reference in this Registration Statement the following
documents:
(a) The Company's Registration Statement on Form S-8, File No.
33-41295, dated June 19, 1991;
(b) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
(c) 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 December 31, 1995.
(d) The description of the Company's common stock, no par value
(the "Common Stock"), contained in a registration statement on
Form 8-A filed pursuant to 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, is hereby
deemed to be incorporated by reference in this Registration Statement and a
part hereof from the date of the filing of such documents.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The consolidated financial statements of the Company incorporated in
this Registration Statement by reference to the Company's Annual Report on Form
10-K for the year ended December 31, 1995, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in accounting and auditing. The
validity of the issuance of the shares of Common Stock registered hereby will
be passed upon by Fulbright & Jaworski L.L.P., counsel to the Company.
ITEM 8. EXHIBITS.
4.1 Amendments to Kaneb Services, Inc. Savings Investment
Plan.
4.2 Amendment to Kaneb Services, Inc. Savings Investment
Trust between the Registrant and the Charles Schwab
Trust Company.
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding the
legality of the securities being registered.
24.1 Consent of independent accountants, Price Waterhouse
LLP, filed herewith.
24.2 Consent of Fulbright & Jaworski L.L.P. (contained in
Exhibit 5.1 hereto).
25.1 Power of attorney (contained on page 4 hereof).
<PAGE> 3
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(A) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933, as amended (the "Securities
Act");
(B) 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
(C) 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 (a)(i)(A) and (a)(i)(B) 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 Section 15(d) of the Exchange
Act that are incorporated by reference in this Registration Statement.
(ii) 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.
(iii) 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.
(b) The undersigned Registrant hereby undertakes that, for 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.
(c) 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.
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Howard C. Wadsworth or Tony M.
Regan 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 the
foregoing filing, 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 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 11th day of
October, 1996.
KANEB SERVICES, INC.
By: Howard C. Wadsworth
-------------------------------
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.
<TABLE>
<CAPTION>
Name Title Date
- ------------------------ ---------------------------------- ----------------
<S> <C> <C>
John R. Barnes Chairman of the Board, President October 11, 1996
- ------------------------ and Chief Executive Officer
(John R. Barnes)
Tony M. Regan Controller (Principal Financial and October 11, 1996
- ------------------------ Accounting Officer)
(Tony M. Regan) Accounting Officer)
Sangwoo Ahn Director October 11, 1996
- ------------------------
(Sangwoo Ahn)
Charles R. Cox Director October 11, 1996
- ------------------------
(Charles R. Cox)
Preston A. Peak Director October 11, 1996
- ------------------------
(Preston A. Peak)
Ralph A. Rehm Director October 11, 1996
- ------------------------
(Ralph A. Rehm)
James R. Whatley Director October 11, 1996
- ------------------------
(James R. Whatley)
</TABLE>
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<S> <C>
4.1 Amendments to Kaneb Services, Inc. Savings Investment Plan.
4.2 Amendment to Kaneb Services, Inc. Savings Investment Trust between the Registrant and the
Charles Schwab Trust Company.
5.1 Opinion of Fulbright & Jaworski L.L.P. regarding the legality of the securities being
registered.
24.1 Consent of independent accountants, Price Waterhouse LLP, filed herewith.
24.2 Consent of Fulbright & Jaworski L.L.P. (contained in Exhibit 5.1 hereto).
25.1 Power of attorney (contained on page 4 hereof).
</TABLE>
<PAGE> 1
EXHIBIT 4.1
AMENDMENT NO. 1
TO THE KANEB SERVICES, INC.
SAVINGS INVESTMENT PIAN
WHEREAS, KANEB SERVICES, INC. (the "Company"), a corporation organized and
existing under the laws of the State of Delaware, has heretofore adopted THE
KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN (the "Plan"); and
WHEREAS, pursuant to the provisions of the Plan permitting the Company to
amend the Plan from time to time, the Company desires to amend the Plan in
certain respects as hereinafter provided;
NOW, THEREFORE, the Company does hereby amend the Plan in the following
particulars:
1. Section 4.01 of the Plan is hereby revised by amending paragraphs (a)
and (b)(1) thereof to be and read as follows:
"4.01 Employer Contributions
(a) Salary Reduction Contributions--For each calendar quarter,
each Employer shall contribute on behalf of each of its
Employees participating in the plan an amount of contribution
agreed to be made by such Employer pursuant to a salary
reduction agreement under Section 4.02 entered into between
the Employer and the Participant for such quarter.
Contributions made by the Employer for a given quarter
pursuant to this paragraph (a) shall be in the form of cash
or, to the extent elected by the Participant pursuant to
Section 7.02 hereof, common stock of Kaneb Services, Inc. and
shall be deposited in the Trust Fund as soon as
administratively feasible, but in no event later than ninety
(90) days from the date on which such amounts would otherwise
have been payable to the Participant, in accordance with
Department of Labor Regulation 2510.3-102.
(b) Matching Employer Contributions--(l) In General. For each
calendar quarter, each Employer shall contribute on behalf of
each of its Employees for
1
<PAGE> 2
whom a contribution was made pursuant to paragraph (a) of
this Section 4.01 an amount which will be sufficient to credit
each such Participant's Matching Employer Contribution Account
with an amount equal to (i) twenty-five percent (25%) of that
portion of the Participant's salary reduction for such quarter
pursuant to Section 4.02 hereof which is invested for such
quarter in the Government Securities Fund or the Equity Fund
described in Article VII hereof, plus (ii) fifty percent (50%)
of that portion of the Participant's salary reduction for such
quarter pursuant to Section 4.02 hereof which is invested for
such quarter in the Company Stock Fund described in Article
VII hereof; provided, however, that no portion of a
Participant's salary reduction shall be taken into account for
purposes of this computation if, prior to the end of such
quarter, such portion is withdrawn by, or otherwise
distributed to, the Participant or his Beneficiary for any
reason other than the Participant's attainment of age seventy
and one-half (70-1/2). For any Year, the Employers may
decline to make any portion of the contribution specified in
this paragraph (b) if the Employers determine that such action
is necessary to ensure that the discrimination tests of
Section 401(m) of the Code, as amended, are satisfied; or, in
the alternative, the Employers may direct the Trustee to
distribute "excess aggregate contributions" (as defined in
Section 401(m)(6)(B) of such Code) to the Participants by
or on whose behalf such contributions were made by the last
day of the following Year. All Matching Employer
Contributions for a Year shall be in the form of cash or
common stock of Kaneb Services, Inc. and shall be paid to the
Trustee not later than the time prescribed by law for filing
the consolidated Federal income tax return of the Employers
for the taxable year within which such Year ends, including
any extensions which have been granted for the filing of such
tax return.
* * * * *"
2. Section 7.02 of the Plan is hereby revised to be and read
as follows:
2
<PAGE> 3
"7.02 Investment of Trust Fund
The Trustee shall generally have authority for the management of
assets held in the Trust, to the extent provided in the Trust;
provided that (i) all assets comprising a Participant's Matching
Employer Contribution Account shall be invested exclusively in a fund
consisting of the common stock of Kaneb Services, Inc. (the "Company
Stock Fund"), (ii) all assets comprising a Participant's Employer
Contribution Account (other than assets comprising the subaccount
described in Section 4.04 hereof) shall be invested exclusively in a
fund consisting of obligations of the United States of America (the
"U.S. Government Securities Fund"), and (iii) a Participant shall
have the right, in accordance with procedures prescribed by the
Committee, to direct the Trustee as to the investment of assets
comprising his Salary Reduction Contribution Account and that portion,
if any, of his Employer Contribution Account consisting of the
subaccount described in Section 4.04 hereof. Any such investment
direction by a Participant shall consist solely of the right to direct
the extent to which such assets shall be invested in the Company Stock
Fund, the U.S. Government Securities Fund or a fund consisting of
corporate securities (the "Equity Fund"). Upon execution of a salary
reduction agreement described in Section 4.02 hereof, a Participant
shall be requested to indicate the extent to which assets shall be
invested in such Funds on forms provided by the Committee for this
purpose, with amounts invested to be in twenty-five percent (25%)
increments. A Participant may elect that future allocations--to his
Salary Reduction Contribution Account be invested to a different
extent, in twenty-five percent (25%) increments, on the first day of
any Plan Year. Requests to vary the extent to which allocations are
to be invested shall be made on such form or forms as the Committee
shall prescribe and shall be effective only if such completed form or
forms are received by the Committee at least thirty (30) days prior to
the applicable election date. Except as otherwise provided in Section
7.03 hereof, a Participant shall have no right to vary the extent to
which current allocations in his Salary Reduction Contribution Account
are invested in the three Funds. Should a Participant fail to provide
the Trustee with the investment directives described herein, the
assets in the Participant's Salary Reduction Contribution Account
shall be invested in the U.S. Government Securities Fund. A
Participant whose Accounts are invested to any extent in the Company
Stock Fund shall be entitled to direct the exercise of voting rights
with respect to the shares of Company common stock allocated to said
Accounts. The Committee shall obtain,
3
<PAGE> 4
as to all such common stock, directions from such Participant as to
how said shares are to be voted. The Committee shall furnish such
directions to the Trustee, who shall then vote the shares accordingly.
If, however, within a reasonable period of time prior to any meeting
of stockholders of the Company as may be specified by the Committee,
no instructions shall have been received by the Committee from such
Participant(s), the Committee shall instruct the Trustee to vote, in
person or by proxy, such shares in the manner determined by the
Committee in its sole discretion. The Trustee shall vote any
unallocated shares of Company common stock held by it pursuant to
written directions from the Committee."
IN WITNESS WHEREOF, the Company has caused this AMENDMENT NO. 1 TO THE
KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN to be executed in its name and on
its behalf this 5 day of March, 1992, effective as of April 1, 1991.
KANEB SERVICES, INC.
By: /s/ STEPHEN M. HOFFNER
---------------------------
Title: VP.
---------------------
ATTEST:
/s/ HEATHER R. BULBA
- ----------------------
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on March 5, 1992, by Stephen
M. Hoffner of KANEB SERVICES, INC., a Delaware corporation, on behalf of said
corporation.
/s/ Leslie R. Neumann
----------------------------
Notary Public in and for
the State of Texas
My Commission Expires: Printed Name of Notary:
Sept. 24, 1994 Leslie R. Neumann
----------------------------
[Seal]
LESLIE R. NEUMANN
MY COMMISSION EXPIRES
September 24, 1994
4
<PAGE> 5
AMENDMENT NO. 2 TO
THE KANEB SERVICES, INC.
SAVINGS INVESTMENT PLAN
WHEREAS, KANEB SERVICES, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Company"), has heretofore adopted
THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN (the "Plan"); and
WHEREAS, pursuant to the provisions of the Plan permitting the Company
to amend the Plan from time to time, the Company desires to amend the Plan in
certain respects as hereinafter provided;
NOW, THEREFORE, the Company does hereby amend the Plan in the
following particulars, effective April 1, 1991:
1. Section 3.01 is hereby amended by adding at the end thereof
the following:
"For purposes of this Section 3.01, an Employee shall be considered to
be employed on a full-time basis if the Employee regularly works in
excess of the number of hours per period required by his Employer to
be classified a full-time employee. The term 'active Participant'
shall mean any Employee currently participating in the Plan who has
not incurred a Severance from Service."
2. Section 4.01 (b) (2) of the Plan is hereby amended to be and read
as follows:
"(2) Discrimination Tests. The discrimination tests of Code section
401(m) are satisfied in the following manner: Each Year, (i)
the Average Contribution Percentage for Eligible Participants
who are Highly Compensated Employees for the Year shall not
exceed the Average Contribution Percentage for Eligible
Participants who are Non-Highly Compensated Employees for the
Year multiplied by 1.25; or (ii) the Average Contribution
Percentage for Eligible Participants who are Highly
Compensated Employees for the Year shall not exceed the
Average Contribution Percentage for Eligible Participants
<PAGE> 6
who are Non-Highly Compensated Employees for the Year
Multiplied by two (2), provided that the Average Contribution
Percentage for Eligible Participants who are Highly Compensated
Employees does not exceed the Average Contribution Percentage
for Eligible Participants who are Non-Highly Compensated
Employees by more than two (2) percentage points. In any Plan
Year in which the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Year
does not satisfy the limitation set forth above, the
contribution rate of those Eligible Participants who are Highly
Compensated Employees shall be reduced (in whole or less than
whole percentages) in descending order by rate of contribution
until the Average Contribution Percentage for Eligible
Participants who are Highly Compensated Employees for the Year
meets the limitation set forth above, all in accordance with
regulations promulgated by the Secretary of Treasury.
Contributions in excess of that amount determined on the basis
of the reduced contribution rate hereunder shall be considered
'excess aggregate contributions' (as defined in Code section
401(m)(6)(B) and regulations promulgated thereunder).
For purposes of this subparagraph (2), an Eligible
Participant's 'Contribution Percentage' shall mean the ratio
(expressed as a percentage), of the sum of the Matching
Employer Contributions under the Plan on behalf of the
Eligible Participant for the Year to such Eligible
Participant's Compensation for the Year. The 'Contribution
Percentage' of an Eligible Participant who has no Matching
Employer Contributions allocated to his Matching Employer
Contribution Account for the Year shall equal zero (0).
'Eligible Participant' shall mean any Employee who is
authorized under the terms of the Plan to have Matching
Employer Contributions allocated to his Matching Employer
Contribution Account for the Year, and shall include any
Employee who is eligible to make Salary Reduction
Contributions under the terms of the Plan but elects not to
make such contributions for the Year, who is eligible to
participate under the terms of the Plan but elects not to
participate, or who is not eligible to have Matching Employer
Contributions allocated to his Matching Employer Contribution
Account due to the limitation on Additions set forth in
Section 5.03 hereof. The 'Average Contribution Percentage'
is the average
-2-
<PAGE> 7
(expressed as a percentage) of the Contribution Percentages of
all Eligible Participants.
In the event that this Plan satisfies the requirements of Code
section 410(b) only if aggregated with one or more other
plans, or if one or more other plans satisfy the requirements
of Code section 410(b) only if aggregated with this Plan, then
this subparagraph (2) shall be applied by determining the
Contribution Percentage of Eligible Participants as if all
such plans were a single plan. If a Highly Compensated
Employee participates in two (2) or more plans of the
Employers to which matching contributions are made then all
such contributions shall be aggregated for purposes of this
subparagraph (2).
For purposes of determining the Contribution Percentage of an
Eligible Participant who is a Highly Compensated Employee
during the Year in question, the Matching Employer
Contributions and Compensation of such Participant shall
include the Matching Employer Contributions and Compensation
of Family Members (as defined in Code section 414(q)(6)(B)),
but such Family Members shall be disregarded in determining
the Contribution Percentage for or other Highly Compensated
Employees and for Eligible Participants who are Non-Highly
Compensated Employees. Any 'excess aggregate contributions'
(as defined in Code section 401(m)(6)(B) and regulations
promulgated thereunder) determined under these aggregation
rules shall be allocated among all Family Members in
proportion to the contributions of each Family Member
thereunder.
Any 'excess aggregate contribution' (as defined in Code
section 401(m)(6)(B) and regulations promulgated thereunder),
together with the income allocable thereto, shall be
distributed (or, if not vested, forfeited) to the Participant
within two and one-half (2 1/2) months of the beginning of the
subsequent Plan Year.
The income allocable to an 'excess aggregate contribution' (as
defined in Code section 401(m)(6)(B) and regulations
promulgated thereunder) shall be determined by multiplying the
income allocable to a Participant's Matching Employer
Contribution Account for the Plan Year by a fraction, the
numerator of which is the 'excess aggregate contributions' (as
defined in Code
-3-
<PAGE> 8
section 401(m)(6)(B) and regulations promulgated thereunder)
for the Participant, as determined above, and the denominator
of which is the balance of the Participant's Matching Employer
Contribution Account on the last day of the Plan Year, reduced
by the income allocable to such account for the Plan Year and
increased by the loss allocable to such account for the Plan
Year.
Under regulations promulgated by the Secretary of the
Treasury, the Committee may, in its sole discretion, elect to
take contributions to a Participant's Salary Reduction
Contribution Account into account in computing the Average
Contribution Percentage. However, in such a case, the Actual
Deferral Percentage tests under Section 4.02(e) must still be
computed and met separately, and in connection therewith, no
aggregation with Matching Employer Contributions shall be
permitted. Alternatively, the Employer may, in its sole
discretion, elect to make qualified nonelective contributions,
in the manner and to the extent provided by regulations under
Code section 401(m) promulgated by the Secretary of Treasury,
that would, in combination with Matching Employer
Contributions under the Plan, satisfy the limitation set forth
above. In any event, said correction of the discrimination
tests described herein shall be made within twelve (12) months
of the end of the Year.
In order to prevent the multiple use of the alternative
limitations described in (ii) above and in Section 4.02(e)(ii)
hereof, the limitation on the multiple use of alternative
limitations described in regulations promulgated under Code
section 401(m) by the Secretary of Treasury is specifically
incorporated herein and shall apply to reduce the deferral rate
or contribution rate of those Eligible Participants who are
Highly Compensated Employees, as described above and in Section
4.02(e), so that there is no multiple use of said alternative
limitations. Any 'excess contribution' (as defined in Code
section 401(k)(8)(B) and regulations promulgated thereunder)
resulting from a reduction in deferral rate shall be
distributed in accordance with Section 4.02(d), and any 'excess
aggregate contribution' (as defined in Code section
401(m)(6)(B) and regulations promulgated thereunder) resulting
from a reduction in contribution rate shall be distributed in
-4-
<PAGE> 9
accordance with this Section. In lieu of said reduction, the
Employer may make such additional contributions as described in this
Section and Section 4.02(d) hereof, in the manner and to the extent
provided under regulations promulgated under Code sections 401(k)
and 401(m) by the Secretary of Treasury, so as to comply with the
limitation on the multiple use of alternative limitations."
3. Section 4.02 is hereby amended by adding immediately after the end
of such first paragraph the following two new paragraphs:
"In the event that the total reduction on behalf of any Participant for
any of his or her taxable years exceeds $7,000 (or such greater amount
as permitted under Treasury Department regulations to reflect
cost-of-living adjustments), such 'excess deferrals' (as defined in
Code section 402(g)(2) and regulations promulgated thereunder),
together with income allocable thereto, shall be distributed to the
Participant on whose behalf such reduction was made not later than
April 15 following the close of the Participant's taxable year in which
the reduction was made, in the manner and to the extent provided under
regulations promulgated by the Secretary of Treasury; provided that
such 'excess deferrals' shall first be reduced by any 'excess
contributions' previously distributed for the Plan Year beginning in
that taxable year pursuant to Section 4.02(d) hereof.
The income allocable to an 'excess deferral' (as defined in Code
section 402(g)(2) and regulations promulgated thereunder) shall be
determined by multiplying the income allocable to a Participant's
Salary Reduction Contribution Account for the Plan Year by a fraction,
the numerator of which is the 'excess deferrals' (as defined in Code
section 402(g)(2) and regulations promulgated thereunder) of the
Participant, as determined above, and the denominator of which is the
balance of the Participant's Salary Reduction Contribution Account on
the last day of the Plan Year, reduced by the income allocable to such
account for the Plan Year and increased by the loss allocable to such
account for the Plan Year."
4. Section 4.02(d) of the Plan is hereby amended to be and read as
follows:
"(d) An Employer may amend or revoke its salary reduction agreement
with any Participant at any time if the Employer determines that
such revocation or amendment is necessary (i) to ensure
-5-
<PAGE> 10
that a Participant's Additions for any Year will not exceed the
limitation of Section 5.03 hereof, (ii) to ensure that Employer
contributions made pursuant to Section 4.01 hereof are fully
deductible by the Employer for Federal income tax purposes, (iii) to
ensure that a Participant's Salary Reduction Contributions do not
exceed the limitation of Section 4.02 hereof relating to 'excess
deferrals' (as defined in Code section 402(g)(2) and regulations
promulgated thereunder), or (iv) to ensure that the discrimination
tests of Code section 401(k) are met for such Year. In any case in
which such discrimination tests are not met for a Year, the Employer
may, in the alternative, (i) direct the Trustee to distribute
'excess contributions' (as defined in Code section 401(k)(8)(B) and
regulations promulgated thereunder), together with the income
allocable thereto, but first reduced by any 'excess deferrals' (as
defined in Code section 402(g)(2) and regulations promulgated
thereunder) previously distributed pursuant to Section 4.02 hereof
for the taxable year ending within the Plan Year, to the Participant
on whose behalf such contributions were made within two and one-half
(2-1/2) months of the beginning of the subsequent Year, or (ii) make
such additional contributions, subject to the vesting and
distribution requirements under Section 6.03 and 6.04 hereof, and in
the manner and to the extent provided by regulations under Code
section 401(k) promulgated by the Secretary of Treasury, to the
Salary Reduction Contribution Accounts of Participants who are
Non-Highly Compensated Employees as to cause such tests to be
satisfied. In any event, said correction of the discrimination tests
described herein shall be made within twelve (12) months of the end
of the Year. In addition, an Employer may amend or revoke its salary
reduction agreement with any Participant at any time if the Employer
determines that such revocation or amendment is necessary to ensure
that the discrimination tests of Code section 401(m) are met for
such Year.
The income allocable to an 'excess contribution' (as defined in Code
section 401(k)(8)(B) and regulations promulgated thereunder) shall
be determined by multiplying the income allocable to a Participant's
Salary Reduction Contribution Account for the Plan Year by a
fraction, the numerator of which is the 'excess contributions' (as
defined in Code section 401(k)(8)(B) and regulations
-6-
<PAGE> 11
promulgated thereunder) of the Participant, as determined under
Section 4.02(e), and the denominator of which is the balance of the
Participant's Salary Reduction Contribution Account on the last day
of the Plan Year, reduced by the income allocable to such account
for the Plan Year and increased by the loss allocable to such
account for the Plan Year."
5. Section 4.02(e) of the Plan is hereby amended to be and read as
follows:
"(e) The discrimination tests of Code section 401(k) are
satisfied in the following manner: Each Year, the Actual
Deferral Percentage for Eligible Participants who are Highly
Compensated Employees for the Year shall bear a relationship
to the Actual Deferral Percentage for Eligible Participants
who are Non-Highly Compensated Employees for the Year whereby
(i) the Actual Deferral Percentage for the group of Eligible
Participants who are Highly Compensated Employees for the Year
is not more than the Actual Deferral Percentage for Eligible
Participants who are Non-Highly Compensated Employees for the
Year multiplied by 1.25; or (ii) the excess of the Actual
Deferral Percentage for the group of Eligible Participants who
are Highly Compensated Employees for the Year over that of all
Eligible Participants who are Non-Highly Compensated Employees
for the Year shall not be more than two (2) percentage points,
and the Actual Deferral Percentage for the group of Eligible
Participants who are Highly Compensated Employees for the Year
is not more than the Actual Deferral Percentage of all
Eligible Participants who are Non-Highly Compensated Employees
for the Year multiplied by two (2). In any Plan Year in which
the Actual Deferral Percentage for Eligible Participants who
are Highly Compensated Employees for the Year does not satisfy
the limitation set forth above, the deferral rate of those
Eligible Participants who are Highly Compensated Employees
shall be reduced (in whole or less than whole percentages) in
descending order by rate of deferral until the Actual Deferral
Percentage for Eligible Participants who are Highly
Compensated Employees for the Year meets the limitation set
forth above, all in accordance with regulations promulgated by
the Secretary of Treasury. Contributions in excess of that
amount determined on the basis of the
-7-
<PAGE> 12
reduced deferral rate hereunder shall be considered 'excess
contributions' (as defined in Code section 401(k)(8)(B) and
regulations promulgated thereunder).
For purposes of this paragraph (e), the 'Actual Deferral
Percentage' for a specified group of Eligible Participants for
a Year shall be the average of the ratios (expressed as a
percentage and calculated separately for each Eligible
Participant in such group) of (i) the amount of each such
Eligible Participant's Salary Reduction Contributions for such
Year, to (ii) such Participant's Compensation for the Year.
The 'Actual Deferral Percentage' of an Eligible Participant
who has no Salary Reduction Contributions paid over to the
Trust on his behalf for the Year shall equal zero (0).
'Eligible Participant' shall mean any Employee who is
authorized under the terms of the Plan to have contributions
allocated to his Salary Reduction Contribution Account for all
or a portion of the Year, and shall include any Employee who
is eligible to make Salary Reduction Contributions under the
terms of the Plan but elects not to make such contributions
for the Year, who is eligible to participate under the terms
of the Plan but elects not to participate, whose right to make
Salary Reduction Contributions has been suspended under
Section 4.02(h)(1) hereof, or who is not eligible to have
Salary Reduction Contributions allocated to his Salary
Reduction Contribution Account due to the limitation on
Additions set forth in Section 5.03 hereof.
In the event that this Plan satisfies the requirements of Code
section 401(a)(4) or 410(b) only if aggregated with one or
more other plans, or if one or more other plans satisfy the
requirements of Code section 401(a)(4) or 410(b) only if
aggregated with this Plan, then this paragraph (e) shall be
applied by determining the Contribution Percentage of Eligible
Participants as if all such plans were a single plan. If a
Highly Compensated Employee participates in two (2) or more
plans of the Employers to which salary reduction contributions
are made then all such contributions shall be aggregated for
purposes of this paragraph (e)
For purposes of determining the Actual Deferral Percentage of
an Eligible Participant who is a
-8-
<PAGE> 13
Highly Compensated Employee, the Salary Reduction
Contributions and Compensation of such Participant shall
include the Salary Reduction Contributions and Compensation of
Family Members (as defined in Code section 414(q)(6)(B)), but
such Family Members shall be disregarded in determining the
Actual Deferral Percentage for other Highly Compensated
Employees and for Eligible Participants who are Non-Highly
Compensated Employees. Any 'excess contributions' (as
defined in Code section 401(k)(8)(B) and regulations
promulgated thereunder) determined under these aggregation
rules shall be allocated among all Family Members in
proportion to the contributions of each Family Member
thereunder.
The provisions of Section 4.01(b)(2) with respect to the
limitation on the multiple use of the alternative limitations
described in (ii) above and in Section 4.01(b)(2)(ii) shall
apply in the manner provided therein."
6. Section 4.02(h)(1) of the Plan is hereby amended to be and read as
follows:
"(h) No amounts may be withdrawn by a Participant from his Salary
Reduction Contribution Account prior to termination of
employment with the Employers except to the extent of an
election made in accordance with the following:
(1) If the Participant elects a withdrawal prior to the
date on which he attains age 59-1/2, such withdrawal
(i) may not include any accrued earnings and (ii)
will require the consent of the Committee. Such
consent shall be given only if the Participant is
able to demonstrate financial hardship. The Committee
will determine that the Participant has properly
demonstrated financial hardship only if the
Participant demonstrates that the purpose of the
withdrawal is to meet his immediate and heavy
financial needs, the amount of the withdrawal does
not exceed such financial needs, and the amount of
the withdrawal is not reasonably available from other
resources. The Participant will be considered as
having demonstrated that the purpose of the
withdrawal is to meet his immediate and heavy
financial needs only if he
-9-
<PAGE> 14
represents that the distribution is on account of --
(A) medical expenses (as described in Section
213(d) of the Code) incurred (or required to
be paid in advance to obtain medical care) by
the Participant, his spouse or any of his
dependents;
(B) the purchase (excluding mortgage payments) of
a principal residence for the Participant;
(C) the payment of tuition and related
educational fees for the next twelve (12)
months of post-secondary education for the
Participant, his spouse, children or
dependents; or
(D) the need to prevent eviction of the
Participant from his principal residence or
foreclosure on the mortgage of the
Participant's principal residence.
Moreover, the Participant will be considered as
having demonstrated that the amount of the withdrawal
is unavailable from his other resources and in an
amount not in excess of that necessary to satisfy his
immediate and heavy financial needs only if each of
the following requirements is satisfied:
(AA) the Participant represents that the
distribution is not in excess of the amount
of his immediate and heavy financial needs;
and
(BB) the Participant has obtained all
distributions, other than hardship
distributions, and all nontaxable loans
currently available to him under all plans
currently maintained by the Employers.
In the event of any withdrawal by a Participant
pursuant to this subparagraph (1), (i) such
Participant's Salary Reduction Contributions under
this Section 4.02 and his contributions under all
other employee plans maintained by the Employers
shall be suspended for a period of twelve (12) months
following such withdrawal, (ii) the Participant may
-10-
<PAGE> 15
authorize no further contributions under this Section
4.02 until his taxable year following his taxable
year in which such withdrawal occurred, and (iii) the
limitations set forth in the first paragraph of this
Section 4.02 on the amount of Salary Reduction
Contributions by a Participant for any year shall be
reduced for the Participant's taxable year following
his taxable year of withdrawal to the extent of any
Salary Reduction Contributions made during such
taxable year of withdrawal. Withdrawal elections
under this subparagraph (1) may be made at any time
but not more frequently than once each calendar year.
All withdrawals under this subparagraph shall be made
in the form of a lump sum. To the extent elected by a
Participant, any hardship withdrawal made pursuant to
this subparagraph (1) to such Participant shall be
increased by an amount equal to the lesser of (i) all
federal, state and local income taxes and associated
penalties (including, if applicable, the additional
income tax described in Section 6.04(a) hereof)
imposed with respect to such hardship withdrawal or
(ii) the amount, if any, in such Participant's Salary
Reduction Contribution Account in excess of such
hardship withdrawal."
IN WITNESS WHEREOF, the Company has caused this AMENDMENT NO. 2 TO THE
KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN to be executed in its name and on
its behalf this 27th day of May, 1992, effective as of April 1, 1991.
KANEB SERVICES, INC.
By: /s/ STEPHEN M. HOFFNER
------------------------------------
Title: Vice President
--------------------------------
ATTEST:
/s/ HEATHER R. BULBA
- ---------------------------------------
-11-
<PAGE> 16
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 27th day of May,
1992, by Stephen M. Hoffner of KANEB SERVICES, INC., a Delaware corporation,
on behalf of said corporation.
LESLIE R. NEUMANN
---------------------------
Notary Public in and for
the State of Texas
My Commission Expires: Printed Name of Notary:
September 24,1994 LESLIE R. NEUMANN
---------------------------
LESLIE R. NEUMANN
MY COMMISSION EXPIRES
September 24, 1994
-12-
<PAGE> 17
AMENDMENT NO. 3 TO
THE KANEB SERVICES, INC.
SAVINGS INVESTMENT PLAN
WHEREAS, KANEB SERVICES, INC., a Delaware corporation (the "Company"),
has heretofore adopted THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN (the
"Plan"); and
WHEREAS, pursuant to the provisions of the Plan permitting the Company
to amend the Plan from time to time, the Company desires to amend the Plan in
certain respects as hereinafter provided:
NOW, THEREFORE, the Company does hereby amend the Plan in the following
particulars, effective October 1, 1993, unless otherwise provided herein:
1. The Plan is amended by adding the following new Section 3.04 to
the end of Article III thereof:
"3.04 Special Rules for Employees of Furmanite America, Inc.
Notwithstanding any provision to the contrary herein
contained, the following special rules shall apply with respect
to any Employee of Furmanite America, Inc. who immediately
prior to October 1, 1993 was a participant in, or eligible to
participate in, the Furmanite America, Inc. Employee Savings
Plan (the "Furmanite Plan"):
(a) Such Employee shall be eligible to become a
Participant in this Plan on October 1, 1993.
(b) For purposes of determining such Employee's
"vested percentage" under Section 6.03 hereof, such
Employee shall be credited with Service for those
periods of employment credited to such Employee under
the Furmanite Plan.
(c) Such Employee's Elective Account, Matching
Account, and Discretionary Account transferred from the
Furmanite Plan shall be treated as part of his Salary
Reduction Contribution Account, Matching Employer
Contribution Account, and Employer Contribution
Account hereunder, respectively. The provisions of the
Plan applicable to such accounts shall apply to such
corresponding account transferred from the Furmanite
Plan, with such
<PAGE> 18
account pursuant to Section 4.01 for the Year of
termination of employment but not yet allocated), plus
(b) An amount equal to the 'vested percentage' of his
Employer Contribution Account and Matching Employer
Contribution Account balances (including any Employer
contribution to be made to such account pursuant to
Section 4.01 for the Year of termination of employment
but not yet allocated). Such vested percentage shall
be determined in accordance with the following
schedule:
<TABLE>
<CAPTION>
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
<S> <C> <C>
Less than 1 0% 100%
1 but less than 2 20% 80%
2 but less than 3 40% 60%
3 but less than 4 60% 40%
4 but less than 5 80% 20%
5 or more 100% 0%
</TABLE>
provided, however, that the 'vested percentage' of
Participants who were employed by Furmanite America,
Inc. on October 1, 1993 (whether or not participating
in the Furmanite Plan as of such date) shall be
determined in accordance with the following schedule:
<TABLE>
<CAPTION>
Vested Forfeited
Years of Service Percentage Percentage
---------------- ---------- ----------
<S> <C> <C>
Less than 1 0% 100%
1 but less than 2 20% 80%
2 but less than 3 40% 60%
3 or more 100% 0%
</TABLE>
Payment of benefits due under this Section shall be
made in accordance with Section 6.04. Notwithstanding
any provision to the contrary herein contained, (i) a
Participant shall be fully vested in his Employer
Contribution Account and Matching Employer Contribution
Account balance upon his attainment of age sixty-five
(65), and (ii) a Participant shall be fully vested in
the balance in any subaccount of his Employer
Contribution Account established pursuant to Section
4.04 hereof. In the event that the Plan is amended to
change the vesting schedule set forth above, a
Participant with at least three (3) years of Service
shall have the right to elect that his vested
percentage be determined
-4-
<PAGE> 19
pursuant to the vesting schedule prior to amendment."
5. Section 6.04 of the Plan is amended by redesignating existing Section
6.04 of the Plan as subsection (a) and adding the following new subsection (b),
effective October 1, 1993, and the following new subsection (c), effective for
distributions from the Plan on or after January 1, 1993:
"(b) Special Rules for Former Participants in the Furmanite
Plan--Notwithstanding any provision to the contrary herein
contained, a Participant who participated in the Furmanite Plan as
of October 1, 1993 may elect to have that portion of his accounts
representing an amount transferred from the Furmanite Plan paid in a
lump sum or in monthly, quarterly, semi-annual, or annual
installments over a period not to exceed the lesser of (i) ten (10)
years, or (ii) the life expectancy of the Participant or the life
expectancy of the Participant and his Beneficiary, in which event
the unpaid balance shall receive an income allocation on each
Valuation Date.
A Participant who participated in the Furmanite Plan as of October
1, 1993 may also request, with thirty (30) days' written notice to
the Committee, a withdrawal of all or a portion of his Thrift
Account attributable to Employee Thrift Contributions made prior to
July 1, 1984 and transferred from the Furmanite Plan. Payment of
such amount shall be in a lump sum as soon as administratively
feasible after the first of the month coincident with or next
following the date of receipt of the request.
(c) Direct Rollovers--Notwithstanding any provision of the Plan to the
contrary, the recipient of all or any portion of a Participant's (or
Former Participant's) benefits, other than a Beneficiary who is not a
surviving spouse, may elect, in the manner prescribed by the
Committee, to have any portion of an eligible rollover distribution
paid directly to an individual retirement account described in Code
Section 408(a), an individual retirement annuity described in Code
Section 408(b), an annuity plan described in Code Section 403(a), or
a qualified trust described in Code Section 401(a), that will accept
the eligible rollover distribution, as specified by the recipient;
provided, however, that a recipient who is a surviving spouse may
elect a direct rollover
-5-
<PAGE> 20
to an individual retirement account or individual retirement
annuity only. For purposes of this Section 6.04(c), an
"eligible rollover distribution" shall mean any distribution
of all or any portion of the balance to the credit of the
recipient, except (i) a distribution that is one of a series
of substantially equal periodic payments (not less
frequently than annually) made for the life (or life
expectancy) of the recipient or the joint lives (or life
expectancies) of the recipient and the recipient's
designated Beneficiary, or for a specified period of ten
years or more; (ii) a distribution to the extent such
distribution is required under Code Section 401(a)(9); or
(iii) the portion of any distribution that is not includible
in gross income."
6. The Plan is amended by adding the following new Section
6.06 to the end of Article VI thereof:
"6.06 Loans to Participants
The Committee is hereby authorized to establish a
Participant loan program. The following provisions shall
apply to any and all loans to Participants:
The Trustee may, if the Committee consents, loan a
Participant an amount from, and not in excess of the value
(as of the immediately preceding Valuation Date) of, his
accounts, with such value reduced by any withdrawals made by
the Participant from such accounts after such Valuation Date
and prior to the date of the loan. Any such loan shall be
treated as an investment of the Participant's accounts for
whom the loan is made but shall be subject to the approval
of the Committee which shall thoroughly investigate each
application for a loan. The Committee shall consider only
those factors which would be considered in a normal
commercial setting by an entity in the business of making
similar loans, including but not limited to factors such as
the creditworthiness and the financial need of the
Participant.
In addition to such rules and regulations as the Committee
may adopt, all loans shall comply with the following rules
and conditions:
(a) An application for a loan by a Participant shall be
made in writing to the Committee, whose action thereon
shall be final. If the Participant is married, his
spouse must specifically consent to the application
within a period which is thirty (30) days prior to
the date on which the loan is made.
-6-
<PAGE> 21
(b) The period of repayment for any loan shall
be arrived at by agreement between the Committee
and the borrower, but such period in no event
shall exceed (5) years; provided, however, that
such period may exceed five (5) years where the
proceeds of the loan are to be used to acquire,
construct, reconstruct or substantially
rehabilitate a dwelling which is to be used
within a reasonable time as the principal
residence of the Participant or a dependent of
the Participant. Loans made must be amortized in
level payments, made not less frequently than
quarterly, over the term of the loan, with
privilege of prepayment, in whole or in part, at
any time and from time to time.
(c) Each loan made to a Participant shall be secured
by (i) an assignment and pledge of not more than
fifty percent (50%), as determined immediately
after the origination of the loan, of his right,
title and interest in and to the vested portion
of his accounts, and (ii) his promissory note for
the amount of the loan, including interest,
payable to the order of the Trustee. The loan
shall be repaid by payroll deduction or pursuant
to such other method as may be selected by the
Committee. Upon the failure of a Participant to
repay any loan, the Trustee shall (i) make
written demand for payment and shall advise the
Participant that payment (or, if permissible,
renegotiation of the loan) must be made within
twenty-five (25) days or default on the note will
occur, and (ii) furnish a copy of such written
demand to the Committee. The Trustee shall
maintain a written record of the date on which
written demand for repayment of a loan (or
payment of any installment under a loan) is
forwarded to a Participant and such record shall
be conclusive for all purposes. A "default" shall
occur upon the failure by a Participant to make
payment under (or, to the extent permitted by
Code Section 72(p), renegotiate) the loan by the
date which is twenty-five (25) days subsequent to
the date on which written demand for repayment of
such loan (or payment of such installment) is
forwarded to the Participant by the Trustee. Upon
default, the entire remaining principal balance
of the loan shall be treated as a deemed
distribution to the Participant from the Plan,
and the amount of such deemed distribution shall
be reported to the Internal Revenue Service on
the applicable tax form.
-7-
<PAGE> 22
(d) Each loan shall bear a reasonable rate of interest to
be fixed by the Committee and, in determining the
interest rate, the Committee shall take into
consideration interest rates currently being charged by
commercial lenders for loans made under similar
circumstances in effect on the date on which the loan
is made. The Committee shall not discriminate among
Participants in the matter of interest rates; but
loans granted at different times may bear different
interest rates if the Committee determines that the
difference in rates is justified and necessary to
reflect current economic conditions.
(e) No amount shall be loaned to a Participant which would
cause his outstanding loan balance under the Plan to
exceed the lesser of (i) or (ii), where-
(i) is $50,000, as reduced by the excess of the
highest outstanding balance of loans to such
Participant over the twelve (12)-month
period ending on the day before the loan is
made over the outstanding balance of loans
to such Participant on the date the loan is
made, and
(ii) is one-half (1/2) of the vested portion of
his accounts as of the immediately preceding
Valuation Date.
The amount of any loan made hereunder shall not be less
than $1,000. A Participant shall have no more than one
(1) outstanding loan at any time.
(f) No distribution shall be made to any Participant or
Former Participant or to a Beneficiary of any such
Participant unless and until all unpaid loans of such
Participant, including accrued interest thereon, have
been liquidated. Foreclosure against a Participant's
accounts shall occur immediately upon default and shall
result in the reduction of such accounts to the extent
of unpaid principal and accrued interest; provided that
there shall be no foreclosure against a Participant's
accounts until the occurrence hereunder of an event
permitting distribution of such account balance. Any
outstanding loan balance shall continue to accrue
interest until paid in full or otherwise liquidated.
(g) Loans shall be made available to Former Participants
who are parties-in-interest only as required by ERISA
and Department of Labor guidelines.
-8-
<PAGE> 23
(h) Loans shall be subject to such fees and charges, as
may be determined by the Committee to be reasonable,
representing the cost to the Plan of administering the
loan. Such fees and charges shall be communicated to
the Participant prior to the date of the loan.
(i) Any loan made prior to October 18, 1989 under the
Furmanite Plan shall continue to be governed by the
provisions of the Furmanite Plan as in effect prior to
such date and applicable to such loan."
7. Section 7.02 of the Plan is amended to be and read as
follows:
"7.02 Investment of Trust Fund
The Trustee shall generally have authority for the
management of assets held in the Trust, to the extent
provided in the Trust; provided that (i) except as otherwise
provided in Section 7.03 hereof, all assets comprising a
Participant's Matching Employer Contribution Account shall
be invested exclusively in a fund consisting of the common
stock of Kaneb Services, Inc. (the "Company Stock Fund") and
(ii) a Participant shall have the right, in accordance with
procedures prescribed by the Committee, to direct the
Trustee as to the investment of assets comprising his Salary
Reduction Contribution Account and Employer Contribution
Account. Any such investment direction by a Participant shall
consist solely of the right to direct the extent to which
such assets shall be invested in such investment media as
may be selected from time to time by the Committee and
communicated to the Participant. Upon execution of a salary
reduction agreement described in Section 4.02 hereof, a
Participant shall be requested to indicate the extent to
which assets shall be invested in such media on forms
provided by the Committee for this purpose, with amounts
invested to be in twenty-five percent (25%) increments. A
Participant may elect that future allocations to his Salary
Reduction Contribution Account and Employer Contribution
Account be invested to a different extent, in twenty-five
percent (25%) increments, on the first day of any calendar
quarter. Requests to vary the extent to which allocations
are to be invested shall be made on such form or forms as
the Committee shall prescribe and shall be effective only if
such completed form or forms are received by the Committee
at least thirty (30) days prior to the applicable election
date. A Participant's right to vary the extent to
-9-
<PAGE> 24
which current allocations in his accounts are invested
in such media shall be governed by Section 7.03 hereof.
Should a Participant fail to provide the Trustee with
the investment directives described herein, the assets
in the Participant's Salary Reduction Contribution
Account and Employer Contribution Account shall be
invested as determined by the Trustee in accordance
with the provisions of the Trust."
8. Section 7.03 of the Plan is amended to be and read as
follows:
"7.03 Transfer of Past Investments
A Participant may elect, effective as of the first day
of any calendar quarter, to transfer the full value of
his accounts invested as of the immediately preceding
Valuation Date in any one or more of the investment
media authorized pursuant to Section 7.02 hereto to any
one or more of the other investment media authorized
pursuant to such Section; provided that the transfer to
the other media shall be allocated to such other media
in twenty-five percent (25%) increments totaling
one-hundred percent (100%); provided, further, that
assets comprising a Participant's Matching Employer
Contribution Account will not, except as provided
below, be eligible for transfer to other media under
this Section 7.03 and other assets invested in the
Company Stock Fund will be eligible for transfer to
other media under this Section 7.03 only after such
amounts have been invested in the Company Stock Fund for
a period of at least two (2) years. Notwithstanding
the preceding provisions of this Section 7.03, a
Participant who has completed at least ten (10) years
of Service and who has attained the age of fifty-five
(55) years may elect, effective as of the first day of
any calendar quarter, to transfer ten percent (10%) of
the value of his Matching Employer Contribution Account
as of the immediately preceding Valuation Date from the
Company Stock Fund to any one of the other funds
authorized pursuant to Section 7.02, but only to the
extent that such transferred amounts have been invested
in the Company Stock Fund for a period of at least two
(2) years. Requests to transfer past investments shall
be made on such form or forms as the Committee shall
prescribe and shall be effective only if the form or
forms are received by the Committee at least fifteen
(15) days prior to the applicable effective date.
Transfers of past investments under this Section 7.03
shall be subject to any additional rules adopted by the
Committee with respect to
-10-
<PAGE> 25
certain investment funds which, by their nature,
require special treatment or are subject to
particular restrictions. Transfers of past
investments shall be made as soon as
administratively feasible after the value of
the accounts as of the preceding Valuation
Date has been determined."
IN WITNESS WHEREOF, the Company has caused this AMENDMENT NO. 3 TO THE
KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN to be executed in its name and on
its behalf this 1st day of September, 1993, effective as of October 1, 1993,
unless otherwise provided herein.
KANEB SERVICES, INC.
By: /s/ STEPHEN M. HOFFNER
------------------------------------
Title: Vice President/Secretary
---------------------------------
ATTEST:
William H. Kuthruf
- -----------------------------
THE STATE OF TEXAS )
)
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 1st day of September,
1993, by Stephen M. Hoffner, Vice President/Secretary of KANEB SERVICES, INC.,
a Delaware corporation, on behalf of said corporation.
/s/ HEATHER R. BULBA
---------------------------------------
Notary Public in and for
the State of Texas
My Commission Expires: Printed Name of Notary:
10-14-95 Heather R. Bulba
- --------------------- ---------------------------------------
<PAGE> 26
AMENDMENT NO. 4 TO
THE KANEB SERVICES, INC.
SAVINGS INVESTMENT PLAN
WHEREAS, KANEB SERVICES, INC., a Delaware corporation (the "Company"),
has heretofore adopted THE KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN (the
"Plan"); and
WHEREAS, pursuant to the provisions of the Plan permitting the Company
to amend the Plan from time to time, the Company desires to amend the Plan in
certain respects as hereinafter provided;
NOW, THEREFORE, the Company does hereby amend the Plan in the
following particulars, effective January 1, 1994, unless otherwise provided
herein:
1. Section 2.01(h) of the Plan is amended to be and read as
follows:
"(h) The total of all amounts paid to a Participant by the Employer
for personal services as reported on the Participant's Federal
Income Tax Withholding Statement (Form W-2) plus, to the
extent determined by the Committee from time to time in a
uniform and nondiscriminatory manner, any salary reduction
amounts described in Section 4.02 hereof and any amounts not
included in the Participant's gross income pursuant to Section
125 of the Code; provided, however, that for all purposes
other than nondiscrimination testing under Sections 401(a)(4),
401(k), 401(m), and 410(b) of the Code, Compensation shall
include only (i) base pay, (ii) overtime pay, (iii) sales
commissions, and (iv) shift differential pay. For Plan Years
beginning after 1988 and before 1994, any compensation in
excess of $200,000 (as automatically increased in accordance
with Treasury Department regulations to reflect cost-of-living
adjustments) and, for Plan Years beginning after 1993, any
compensation in excess of $150,000 (as automatically increased
in accordance with Treasury Department regulations to reflect
cost-of-living adjustments), in any Plan Year shall not be
considered Compensation under this Plan. In applying the
$200,000 or $150,000 limitation described above, in the case
of a Highly
<PAGE> 27
Compensated Employee who is subject to the aggregation rules
of Section 414(q)(6) of the Code because such Participant is
either a 5% owner of the Employer or one of the 10 highest
paid Highly Compensated Employees, such Highly Compensated
Employee and his Family Members shall be treated as a single
Participant; provided, however, that "Family Members" shall
mean only the Participant's spouse and any lineal descendants
who have not attained age 19 before the close of the year. If,
as a result of the application of these rules, the limitation
is exceeded, then the limitation shall be prorated among the
Participant and Family Members in proportion to the
Compensation of each prior to the application of the
limitation."
2. The introductory paragraph of Section 3.01 of the Plan is
amended to be and read as follows:
"Except for any Employee (i) who is a member of a collective
bargaining unit, the recognized representative of which has not agreed
to Participation in the Plan by its members, (ii) who is a leased
employee within the meaning of Section 414 (n) (2) of the Code, or
(iii) who is a project status employee (as determined by the Committee
in a uniform and nondiscriminatory manner), an Employee shall become a
Participant in this Plan as follows:"
3. Section 5.03(a) of the Plan is amended to be and read as
follows:
"(a) Notwithstanding anything contained herein to the contrary, the
total Additions made to the Salary Reduction, Employer
Contribution, and Matching Employer Contribution Accounts of a
Participant for any Year shall not exceed the lesser of (1)
and (2), where--
(1) is the greater of $30,000 (or such greater amount as
permitted under Internal Revenue Service rulings to
reflect increases in the cost of living) or one-
fourth (1/4) of the dollar limitation in effect under
Section 415(b)(1)(A) of the Code; and
(2) is 25% of the Participant's total compensation for
such Year.
For purposes of this Section 5.03, a Participant's 'total
compensation' includes earned income, wages, salaries, fees
for professional service and other
<PAGE> 28
amounts received for personal services actually rendered in
the course of employment with his Employer (including, but not
limited to, commissions paid salesmen, compensation for
services on the basis of a percentage of profits, commissions
on insurance premiums, tips, and bonuses) and excluding the
following: (i) Employer contributions to a plan of deferred
compensation to the extent contributions are not included in
the gross income of a Participant for the taxable year in
which contributed, or on behalf of a Participant to a
simplified employee pension plan to the extent such
contributions are deductible under Section 219 (b) (7) of the
Code, and any distributions from a plan of deferred
compensation whether or not includible in the gross income of
the Participant when distributed; (ii) amounts realized from
the exercise of a non-qualified stock option, or when
restricted stock (or property) held by a Participant becomes
freely transferable or is no longer subject to a substantial
risk of forfeiture; (iii) amounts realized from the sale,
exchange or other disposition of stock acquired under a
qualified stock option; (iv) other amounts which receive
special tax benefits, or contributions made by the Employer
(whether or not under a salary reduction agreement) towards
the purchase of an annuity contract described in Section
403(b) of the Code (whether or not the contributions are
excludible from the gross income of the Participant); and (v)
for Plan Years beginning after 1988 and before 1994,
compensation in excess of $200,000 (as automatically increased
in accordance with Treasury Department regulations to reflect
cost-of-living adjustments) and, for Plan Years beginning
after 1993, compensation in excess of $150,000 (as
automatically increased in accordance with Treasury Department
regulations to reflect cost-of-living adjustments)."
4. Section 5.04(b) of the Plan is amended to be and read as
follows:
"(b) Minimum Allocations--Notwithstanding the provisions of Section
5.0 2 (c) and (d), for any Year during which the Plan is
deemed a Top-Heavy Plan, the amount of Employer contribution
for the Year to be allocated to the Employer Contribution
Account of each Participant who is not a Key Employee and who
is employed by the Employers on the last day of the Year shall
not be less than the lesser of (i) three percent (3%) of the
Participant's total
<PAGE> 29
compensation for the Year or (ii) the highest percentage
obtained by dividing the amount allocated to the Employer
Contribution Account of any Key Employee for the Year by so
much of the total compensation of such Key Employee for the
Year as does not exceed $200,000 (as automatically adjusted in
accordance with Treasury Department regulations providing for
cost of living adjustments) for Plan Years beginning before
1994 and $150,000 (as automatically adjusted in accordance
with Treasury Department regulations providing for cost of
living adjustments) for Plan Years beginning after 1993;
provided that the requirements of this paragraph (b) shall not
apply to the extent that the minimum allocations set forth
herein are made under another defined contribution plan
maintained by the Employer."
5. Effective for distributions from the Plan made on or after
January 1, 1993, Section 6.04 (c) of the Plan is amended to be and read as
follows:
"(c) Direct Rollovers--Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a distributee's
election under this Section, a distributee may elect, at the
time and in the manner prescribed by the Committee, to have
any portion of an eligible rollover distribution paid directly
to an eligible retirement plan specified by the distributee in
a direct rollover. For purposes of this Section 6.04(c), the
following terms shall have the following meaning.
(1) 'Eligible rollover distribution' means any
distribution of all or any portion of the balance to
the credit of the distributee, except (i) a
distribution that is one of a series of substantially
equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life
expectancies) of the distributee and the
distributee's designated Beneficiary, or for a
specified period of ten years or more; (ii) a
distribution to the extent such distribution is
required under Section 401(a)(9) of the Code; and
(iii) the portion of any distribution that is not
includible in gross income.
<PAGE> 30
(2) 'Eligible retirement plan' means an individual
retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in
Section 408(b) of the Code, an annuity plan described
in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that will
accept the distributee's eligible rollover
distribution; provided, however, that in the case of
an eligible rollover distribution to the surviving
spouse, an eligible retirement plan includes only an
individual retirement account or individual
retirement annuity.
(3) 'Distributee' means the Participant and, with respect
to the interest of such spouse or former spouse, the
Participant's surviving spouse and the Participant's
spouse or former spouse who is the alternate payee
under a qualified domestic relations order, as
defined in Section 414(p) of the Code.
(4) 'Direct rollover' is a payment by the Plan to the
eligible retirement plan specified by the
distributee."
IN WITNESS WHEREOF, the Company has caused this AMENDMENT NO. 4 TO THE
KANEB SERVICES, INC. SAVINGS INVESTMENT PLAN to be executed in its name and on
its behalf this 24th day of March 1994, effective January 1, 1994, unless
otherwise provided herein.
KANEB SERVICES, INC.
By: /s/ [ILLEGIBLE]
------------------------------------
Title: Vice President and Treasurer
---------------------------------
ATTEST:
/s/ [ILLEGIBLE]
<PAGE> 31
)
THE STATE OF TEXAS )
COUNTY OF DALLAS )
This instrument was acknowledged before me on the 24th day of March,
1994, by Howard C. Wadsworth Vice President and Treasurer of KANEB SERVICES,
INC., a Delaware corporation, on behalf of said corporation.
SHEILA TURNER
NOTARY PUBLIC /s/ SHEILA TURNER
STATE OF TEXAS -----------------------
My Comm. Exp. 9-21-97 Notary Public in and for
the State of Texas
My Commission Expires: Printed Name of Notary:
9-21-97 Sheila Turner
- --------------------- ----------------------
-6-
<PAGE> 1
EXHIBIT 4.2
ADDENDUM TO
KANEB SERVICES, INC.
SAVINGS INVESTMENT TRUST AGREEMENT
This ADDENDUM is entered into this 22nd day of March 1996, by and between KANEB
SERVICES, INC., a corporation (the "Company"), and THE CHARLES SCHWAB TRUST
COMPANY (the "Trustee") effective for the 1st day of April, 1996.
ARTICLE 1
INVESTMENTS
1.1 (a) Except as provided below, the Committee shall have all
power over and responsibility for the management, disposition, and investment
of the Trust assets, and the Trustee shall comply with proper written
directions of the Committee concerning those assets. The Committee shall not
issue directions in violation of the terms of the Plan and Trust or prohibited
by the fiduciary responsibility rules of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Except to the extent required by
ERISA or otherwise provided in this Addendum, the Trustee shall have no duty or
responsibility to review, initiate action, or make recommendations regarding
Trust assets and shall retain assets until directed in writing by the Committee
to dispose of them.
(b) As permitted under the Plan, each Participant and/or
beneficiary may have investment power over the account maintained for him or
her, and may direct the investment and reinvestment of assets of the account
among the options authorized by the Committee. To the extent provided under
ERISA section 404(c), the Trustee shall not be liable for any loss, or by
reason of any breach, which results from such Participant's or beneficiary's
exercise of control. If a Participant who has investment authority under the
terms of the plan fails to provide such directions, the Committee shall direct
the investment of the Participant's accounts. The Committee shall maintain
records showing the interest of each Participant and/or beneficiary in the
Trust Fund. The Trustee shall have no duty or responsibility to review or make
recommendations regarding investments made at the direction of the Committee or
Participant and shall be required to act only upon receipt of proper written
directions.
1.2 The Trustee shall not be responsible for proper
diversification of the assets of the Trust Fund. The Committee or the person
to whom such responsibility has been properly delegated under the requirements
of ERISA shall be responsible for the funding policy, for diversification of
assets held in trust for the Plan, and for compliance of the Trust Fund with
statutory limitations on the amount of investment in securities or other
property of the Company or its affiliated companies.
1.3 In its administration of the Trust Fund, the Trustee shall
deliver to the Committee, or the person or persons identified by the Committee,
proxies and powers of attorney and related informational material, for any
shares or other property (other than Company Stock) held in the Trust. The
Committee shall have responsibility for voting such shares, by proxy or in
person, except to the extent such responsibility is delegated to another
person, under the terms of the
<PAGE> 2
Plan or Trust Agreement, in which case such persons shall have such
responsibility. The Trustee may use agents to effect such delivery to the
Committee or the person or persons identified by the Committee. In no event
shall the Trustee be responsible for the voting of shares of securities held in
the Trust (other than Company Stock) or for ascertaining or monitoring whether,
or how, proxies are voted or whether the proper number of proxies is received.
1.4 (a) Voting rights with respect to shares of Company Stock held
in the Trust Fund shall be voted by the Trustee in such manner as may be
determined by the respective Participant, with respect to all matters requiring
shareholder approval. With respect to shares of Company Stock in the Trust
Fund which are allocated to Participants who fail to give directions to the
Trustee, such shares shall be voted by the Trustee based on the voting
directions of those Participants who issued directions with respect to Company
Stock allocated to their Accounts. The number of non-voted shares to be voted
in a particular manner shall be determined by multiplying the total number of
such shares by a fraction, the numerator of which is the number of allocated
shares directed to be voted in such manner, and the denominator of which is the
total number of allocated shares directed to be voted in any manner with
respect to the matter at issue. Participants for whom no proxies are received
will be disregarded for this purpose. The Plan Committee may establish such
rules and guidelines as it deems necessary to properly effect the provision of
this section.
(b) Notwithstanding any other provision in the Plan and
Trust to the contrary, the Trustee shall, with respect to all Company Stock
held in the Trust Fund, accept or reject the terms of any tender offer and,
accordingly, tender Company Stock held by the Trustee in the Trust Fund in
accordance with the terms and provisions of any tender offer, or not tender
such Company Stock, as directed by the respective Participants. With respect
to shares of Company Stock which are allocated to Participants who have not
given directions, the tender or exchange rights of such shares of Company Stock
shall be exercised based on the tender or exercise directions of those
Participants who issued directions with respect to the Company Stock allocated
to their Accounts. The Trustee shall determine these tender or exercise
directions in the same manner as voting directions are determined as provided
under the above section. The Plan Committee may establish such rules and
guidelines as it deems appropriate to properly effect the provisions of this
section.
ARTICLE 2
USE OF AFFILIATES
2.1 Trustee is authorized to contract or make other arrangements
with The Charles Schwab Corporation, Charles Schwab & Co., Inc., their
affiliates and subsidiaries, successors and assigns, and any other
organizations affiliated with or subsidiaries of Trustee or related entities,
for the provision of services to the Trust Fund or Plan, except where such
arrangements are prohibited by law or regulation.
2.2 Trustee is authorized to place securities orders, settle
securities trades, hold securities in custody and other related activities on
behalf of the Trust Fund through or by Charles Schwab & Co., Inc. whenever
possible unless the Authorized Person specifically instructs the use of another
Broker. Trades and related activities conducted through the Broker
2
<PAGE> 3
shall be subject to fees and commissions established by the Broker, which may
be paid from the Trust Fund or netted from the proceeds of trades.
Trades shall not be executed through Charles Schwab & Co., Inc. unless
the Committee and the Authorized Person have received disclosure concerning the
relationship of Charles Schwab & Co., Inc. to Trustee, and the fees and
commissions which may be paid to The Charles Schwab Corporation, Charles Schwab
& Co., Inc., Trustee and any affiliate or subsidiary of any of them as a result
of using Charles Schwab & Co., Inc. to execute trades or for other services.
Trustee is authorized to disclose such information as is necessary to
the operation and administration of the Trust Fund to The Charles Schwab
Corporation or any of its affiliates, and to such other persons or
organizations that Trustee determines have a legitimate business purpose for
obtaining such information.
2.3 At the direction of the Company, Trustee may purchase shares
of regulated investment companies (or other investment vehicles) advised by The
Charles Schwab Corporation, Charles Schwab & Co., Inc. or Trustee, or any
affiliate or subsidiary of any of them ("Schwab Funds"), except to the extent
that such investment is prohibited by law or regulation. Schwab Fund shares
may not be purchased for or held by the Trust Fund unless the Committee has
received disclosure concerning the relationship of The Charles Schwab
Corporation, Charles Schwab & Co., Inc., Trustee, and any affiliate or
subsidiary of any of them, to the Schwab Funds, and any fees which may be paid
to such entities.
ARTICLE 3
RESIGNATION OR REMOVAL OF TRUSTEE
3.1 If either party has given notice of Trustee removal or
resignation as provided under the Trust Agreement, and upon the expiration of
the advance notice period no other successor Trustee has been appointed and has
accepted such appointment, this provision shall serve as (i) notice of
appointment of the Chairman of the Plan Committee as Trustee and (ii) as
acceptance by that person of that appointment.
ARTICLE 4
MISCELLANEOUS
4.1 The Trust will be administered in the State of California, and
its validity, construction, and all rights hereunder shall be governed by ERISA
and, to the extent not preempted, by the laws of California. If any provisions
of this Agreement shall be invalid or unenforceable, the remaining provisions
shall continue to be fully effective.
4.2 Any dispute under the Plan or Trust involving the Company and
Trustee shall be resolved by submission of the issue to a member of the
American Arbitration Association who is chosen by the Company and the Trustee.
If the Company and the Trustee cannot agree on such a choice, each shall
nominate a member of the American Arbitration Association, and the two
3
<PAGE> 4
nominees will then select an arbitrator. Expenses of the arbitration shall be
paid as decided upon by the arbitrator.
4.3 Trustee and Charles Schwab & Co., Inc. are authorized to tape
record conversations between Trustee or Charles Schwab & Co., Inc. and persons
acting on behalf of the Plan or a Participant in order to verify data on
transactions.
4.4 This Addendum is incorporated into and is a part of the Plan
and Trust. Anything in any other part of the Plan or Trust that is inconsistent
with this Addendum is overridden, and in the case of such conflict, the terms
of this Addendum shall govern.
IN WITNESS WHEREOF, KANEB SERVICES, INC. and THE CHARLES SCHWAB TRUST COMPANY,
have caused this Addendum to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
KANEB SERVICES, INC.,
Company
By: /s/ HOWARD C. WADSWORTH
-------------------------------------------
Printed Name: Howard C. Wadsworth
---------------------------------
Title: Vice President, Secretary & Treasurer
----------------------------------------
THE CHARLES SCHWAB TRUST COMPANY,
Trustee
By: /s/ ROSE HAUER
-------------------------------------------
Printed Name: Rose Hauer
---------------------------------
Title: Officer
----------------------------------------
4
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF FULBRIGHT & JAWORSKI L.L.P.]
October 11, 1996
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 1,500,000 shares of the Company's common stock, no par value (the
"Shares"), to be awarded by the Company under its Savings Investment Plan (the
"Plan") upon the terms and subject to the conditions set forth in the Company's
Registration Statement on Form S-8 covering the Shares (the "Registration
Statement") to be filed with the Securities and Exchange Commission.
In connection therewith, we have examined the Registration Statement, originals
or copies certified or otherwise identified to our satisfaction of the Restated
Certificate of Incorporation of the Company, as amended, the By-laws 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 and to the use of our name under the caption "Item 5.
Interest of Named Experts and Counsel" in the Registration Statement.
Very truly yours,
Fulbright & Jaworski L.L.P.
<PAGE> 1
EXHIBIT 24.1
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 5, 1996 appearing
on page F-1 of Kaneb Services, Inc.'s Annual Report on Form 10-K for the year
ended December 31, 1995. We also consent to the reference to us under the
heading "Interests of Named Experts and Counsel" in such Registration
Statement.
PRICE WATERHOUSE LLP
Dallas, Texas
October 11, 1996
