<PAGE> 1
As filed with the Securities and Exchange Commission on July 24, 1996
Registration No. 333-__________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
KANEB SERVICES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1191271
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
2435 N. CENTRAL EXPRESSWAY
RICHARDSON, TEXAS 75080
---------------------------------------- ------------------------------------
(Address of Principal Executive Offices) (Zip Code)
KANEB SERVICES, INC.
1996 SUPPLEMENTAL
DEFERRED COMPENSATION 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)
(214) 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>
============================================================================================================================
Title of securities to be registered Amount to be Proposed maximum Proposed maximum Amount of
registered(1) offering price per aggregate offering registration fee
share(2) price(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 150,000 shares $2.75 $412,500 $143
============================================================================================================================
</TABLE>
(1) There are also registered hereby such indeterminate number of shares of
Common Stock as may become issued by reason of the anti-dilution provisions
of the plan.
(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 sales prices of a share of Common
Stock as reported by The New York Stock Exchange on July 23, 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 Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
(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 December 31, 1995.
(c) 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 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Twelve of the Company's Certificate of Incorporation provides that
no director of the Company will be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty by such
directors as a director; provided, however, that such article will not
eliminate or limit liability of a director to the extent provided by applicable
law (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 a knowing violation of the law, (iii) under Section
174 of the General Corporation Law of the State of Delaware (the "GCL"), or
(iv) for any transaction from which the director derived an improper personal
benefit.
Section 145 of the General Corporation Law of the State of Delaware
empowers the Company to, and the By-Laws of the Company provide that it shall,
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 by reason of
the fact that he is or was a director, officer, employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, 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
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; except that, in the case
of an action or suit by or in the right of the Company, no
<PAGE> 3
indemnification may be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company unless
and only to the extent that the Court of Chancery or the court in which such
action or suit was brought shall determine that such person is fairly and
reasonably entitled to indemnity for proper expenses.
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
and the By-laws of the Company.
ITEM 8. EXHIBITS.
4.1 Certificate of Designation related to the Registrant's
Adjustable Rate Cumulative Class A Preferred Stock, filed as Exhibit
4 of the exhibits to the Registrant's Quarterly Report on 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 related to
the Registrant's Series B Junior Participating Preferred Stock,
filed as Exhibit 1 of the exhibits to the Registrant's Current
Report on Form 8-K and Registration Statement on Form 8-A, dated
April 5, 1988, which exhibit is hereby incorporated by reference.
4.3 Certificate of Designation related to the Registrant's
Adjustable Rate Cumulative Class A Preferred Stock, Series C, dated
April 23, 1991, filed as Exhibit 4.4 of the exhibits to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991, which exhibit is hereby incorporated by reference.
4.4 Indenture between Moran Energy Inc. and First City National
Bank of Houston, dated as of January 15, 1984, under which Moran
Energy Inc. issued the 8 3/4% 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 is hereby
incorporated.
4.5 First Supplemental Indenture between the Registrant and First
City, dated as of March 20, 1984, under which the Registrant assumed
obligations under the Indenture listed as Exhibit 4.4 above, filed
as Exhibit 4.8 of the 1983 Form 10-K, which exhibit is hereby
incorporated by reference.
4.6 1996 Supplemental Deferred Compensation Plan.
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 hereof).
<PAGE> 4
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> 5
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 24th day of July, 1996.
KANEB SERVICES, INC.
By: /s/ 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 July 24, 1996
------------------ and Chief Executive Officer
(John R. Barnes)
Tony M. Regan Controller (Principal Financial and July 24, 1996
------------------ Accounting Officer)
(Tony M. Regan)
Sangwoo Ahn Director July 24, 1996
------------------
(Sangwoo Ahn)
Charles R. Cox Director July 24, 1996
------------------
(Charles R. Cox)
Preston A. Peak Director July 24, 1996
------------------
(Preston A. Peak)
Ralph A. Rehm Director July 24, 1996
------------------
(Ralph A. Rehm)
James R. Whatley Director July 24, 1996
------------------
(James R. Whatley)
</TABLE>
<PAGE> 6
INDEX TO EXHIBITS
NUMBER EXHIBIT
------ -------
4.1 Certificate of Designation related to the Registrant's
Adjustable Rate Cumulative Class A Preferred Stock, filed as Exhibit
4 of the exhibits to the Registrant's Quarterly Report on 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 related to
the Registrant's Series B Junior Participating Preferred Stock,
filed as Exhibit 1 of the exhibits to the Registrant's Current
Report on Form 8-K and Registration Statement on Form 8-A, dated
April 5, 1988, which exhibit is hereby incorporated by reference.
4.3 Certificate of Designation related to the Registrant's
Adjustable Rate Cumulative Class A Preferred Stock, Series C, dated
April 23, 1991, filed as Exhibit 4.4 of the exhibits to the
Registrant's Annual Report on Form 10-K for the year ended December
31, 1991, which exhibit is hereby incorporated by reference.
4.4 Indenture between Moran Energy Inc. and First City National
Bank of Houston, dated as of January 15, 1984, under which Moran
Energy Inc. issued the 8 3/4% 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 is hereby
incorporated.
4.5 First Supplemental Indenture between the Registrant and First
City, dated as of March 20, 1984, under which the Registrant assumed
obligations under the Indenture listed as Exhibit 4.4 above, filed
as Exhibit 4.8 of the 1983 Form 10-K, which exhibit is hereby
incorporated by reference.
4.6 1996 Supplemental Deferred Compensation Plan.
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 hereof).
<PAGE> 1
EXHIBIT 4.6
KANEB SERVICES, INC.
1996 SUPPLEMENTAL DEFERRED COMPENSATION PLAN
1. Purpose. This 1996 Supplemental Deferred Compensation Plan of Kaneb
Services, Inc., a Delaware corporation, is intended to advance the best
interests of the Company by providing executives and other key personnel with
a means of supplementing their deferrals made to the Company's 401(k) plan, The
Kaneb Services, Inc. Savings Investment Plan. Deferrals to the 401(k) plan are
limited by the Internal Revenue Code of 1986, as amended (the "Code"), so that
allowable deferrals, Company matching, and other Company contributions for many
key employees are, on a percentage of compensation basis, less than that
allowed for non-key employees. In addition, participation in the Company's
Deferred Stock Unit Plan may further reduce the compensation considered under
the Company's 401(k) plan, resulting in additional reduction of allowable
deferrals and Company contributions to that Plan. By this Plan (as defined
below) the Company (as defined below) seeks to remain competitive in its
compensation plans and programs, thereby serving to attract and retain key
employees and to establish an orderly compensation plan to more closely align
the interests of a Participant (as defined below) with those of the Company's
stockholders over a multi-year term, in return for the Participant's service to
the Company or its subsidiaries.
2. Definitions.
A. "Board of Directors" or "Board" means the Board of Directors
of the Company.
B. "Change of Control" means, with respect to the Company, the
occurrence of any one or more of the following events:
(1) the acquisition by any individual or entity of the
legal or beneficial ownership of securities of the Company
resulting in such person having 20% or more of the total
votes that may be cast for the election of directors of the
Company;
(2) the approval by stockholders of the Company of the sale
or other disposition 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 Certificate of Incorporation of the Company
and applicable law; or
(3) as a result of, or in connection with, any tender
offer, exchange offer, merger or other business combination
which results in the failure of individuals who are members
of the Board of Directors immediately prior to such event
to continue to constitute the majority of the Board.
C. "Committee" means the Compensation Committee of the Board of
Directors, or any successor committee appointed by resolution of
the Board.
D. " Company" means Kaneb Services, Inc. , a
Delaware Corporation.
E. "Common Stock" means the Common Stock of the
Company, no par value.
F. "Compensation" means, with respect to a Participant, his or
her regular base salary in respect of his or her service as an
employee with the Company or any of its subsidiaries, unless
otherwise defined from time to time by the Committee.
<PAGE> 2
G. "Contributions" means the cumulative amount of Compensation
which has been credited to a Participant's Deferred Stock Unit
Ledger Account, in accordance with Section 7 hereof.
H. "Deferred Stock Unit" or "DSU", means a unit credited to a
Participant's Deferred Stock Unit Ledger Account in accordance
with Section 7 hereof.
I. "Deferred Stock Unit Ledger" or "DSU Ledger" means a
bookkeeping record maintained by the Company which, among other
things, reflects the name of each Participant, the number of DSUs
which have been purchased on his or her behalf under the Plan and
the vesting status of the DSUs for such Participant.
J. "Disability" means the inability of a Participant, through
life-threatening illness or other life-threatening cause or event,
as determined in the discretion of the Committee based on the
advice of competent physicians of their selection, to continue in
the employment of the Company for a consecutive period of six (6)
months or more, as determined by the Committee.
K. "Election Date" means the date on which an Eligible Employee
elects to become a Participant in the Plan by delivering to the
Company the election authorization described in Section 6 hereof
and all periods of revocability of participation have expired.
The initial election date shall be made prior to August 16, 1996
for the period August 16, 1996 through December 31, 1996.
Subsequent Election Dates shall be prior to January 1 of each
year, to be effective for that year.
L. "Eligible Employee" means any officer or other key employee
of the Company or any of its subsidiaries who is eligible to
participate in the Company's 401(k) Plan and who participates in
the Company's Deferred Stock Unit Plan or an officer or other key
employee who is eligible to participate in the Company's 401(k)
plan whose compensation exceeds the limitations referred to above
and whose Company matching and other Company contributions under
the 401(k) Plan are reduced or limited by the Code.
M. "Final Valuation Date" means, with respect to a Participant,
the date elected by the Participant in the manner and form
prescribed by the Committee on which the Participant's Vested DSU
Value will be calculated for distribution. The Participant may
elect his or her Final Valuation Date as any one of the following:
(i) the date of a Participant's severance from employment with
the Company or any subsidiary occurs for any reason; (ii) the
earlier of, the date of a Participant's severance from employment
with the Company or any subsidiary, or a specific date selected
by the Participant, or; (iii) the later of the date of a
Participant's severance from employment with the Company or any
subsidiary, or a specific date selected by the Participant, all as
indicated on the Participant's election authorization.
Notwithstanding the above, the Final Valuation Date shall occur as
of the date of occurrence of a Change of Control regardless of
such other date elected by the Participant as described above.
N. "Monthly Valuation Date" means the last day of each month,
commencing August, 1996.
O. "Participant" means each Eligible Employee who elects to
participate in the Plan pursuant to Section 5 hereof.
P. "Plan" means this Kaneb Services, Inc. 1996 Supplemental
Deferred Compensation Plan as the same may be amended from time
to time.
<PAGE> 3
Q. "DSU Value" means: on any Final Valuation Date, the dollar
value of DSUs determined by multiplying the number of DSUs
credited to the DSU Ledger account of any Participant by the
closing sale price per share of the Company's Common Stock on the
New York Stock Exchange on such date (or, if there is no reported
sale on such date, on the last preceding date on which such sale
occurred).
R. "Vested" shall mean the Participant is entitled to receive as
of the Final Valuation Date the DSU Value on applicable DSUs as
computed pursuant to Section 2, item Q above.
3. Administration.
A. The Plan shall be administered by the Committee. The Committee
may delegate the Administration of the Plan to an officer or
executive of the Company, however the Committee may not delegate
its authority to amend, change or terminate the Plan.
B. The Committee may make such rules and regulations for the
conduct of its affairs, and subject to the provisions of the Plan,
interpret the Plan, amend the Plan and make all other
determinations and perform such actions as it deems necessary or
advisable to administer the Plan.
C. No member of the Committee shall be liable for any action taken
or determination made in good faith with respect to the Plan or
any Option granted hereunder.
D. The Company's Director of Human Resources shall report as
necessary to the Committee those events with respect to the Plan
requiring action, determination, or rulings from the Committee.
4. Determination of Eligible Employees. The determination of which
executives or other key employees of the Company are Eligible Employees and
thus eligible to participate in the Plan shall be within the sole discretion of
the Committee. Upon determining that any executive or other key employee is an
Eligible Employee, the Committee shall notify such person in writing.
5. Method of Participation. Each Eligible Employee may elect to
participate in the Plan by executing and delivering to the Company, on or
before August 15, 1996 an election authorization described in Section 6 below.
Such eligible employee shall thereby become a Participant effective as of
August 16, 1996 and shall remain a Participant until such Participant or his or
her beneficiary, as the case may be, has received payment of the Vested DSU
value of such Participant's Deferred Stock Units in accordance with Sections 8
and 9 hereof, or until such Participant's rights are earlier forfeited as
provided in Section 11.
6. Election Authorization. The Company shall furnish to each Eligible
Employee an election authorization in such form or forms as the Committee shall
proscribe. The election authorization shall request a deferral of pay during
the Contribution Period of an amount up to six (6) percent of such
Participant's Compensation as calculated prior to reduction by other deferrals
but reduced by his or her projected contribution to the Company's 401(k) plan.
No election authorization shall be effective sooner than the next payroll
period that begins after the Company's receipt of the election authorization.
All amounts deferred in accordance with a Participant's election authorization
shall be credited to such Participant's account under the Deferred Stock Unit
Ledger, as more fully described herein. No interest shall be payable on such
accounts.
7. Establishment and Maintenance of Deferred Stock Unit Ledger.
A. Concurrent with the establishment of the Plan, the Company
shall establish an Employee Deferred Stock Unit Sub-Ledger account
which shall be used as the official
<PAGE> 4
record and method of identifying the number and value of DSU's
credited to a Participant's individual accounts under the
Participant's DSU Ledger. The Employee Deferred Stock Unit
Sub-ledger will reflect, with respect to each Participant's
respective accounts thereunder (as may be more specifically
described below): (i) the name of each Participant; (ii) the
amounts actually deferred (as of the relevant date) from his or
her Compensation in accordance with his or her election
authorization; (iii) the number of his or her Deferred Stock Units
to which such Participant's Contributions equate; (iv) the vesting
status of the DSU's credited to each respective Participant's DSU
Ledger account; and, (v) such other information as the Committee
or its designee shall deem appropriate. For purposes of a
Participant's Employee Contributions, the number of DSUs to be
initially credited to the Sub-Ledger account shall be the number
of DSUs determined by dividing the amount of Compensation deferred
for that month as described in Section 6 above, by the closing
price per share of the Company's Common stock on the New York
Stock Exchange on the Monthly Valuation Date. The Participant's
Employee Deferred Stock Unit Sub-Ledger Account shall always be
Vested in the full value of such account.
B. Concurrent with the establishment of the Plan, the Company
shall establish a Participant's Company Matching Unit Sub-Ledger
account which shall be used as the official record and method of
identifying the number and value of DSU's credited to a
Participant's individual accounts under the Participant's DSU
Ledger. The Participant's Company Matching Unit Sub-ledger will
reflect, with respect to each Participant's respective accounts
thereunder: (i) the name of each Participant; (ii) the amounts
actually credited by the Company; (iii) the number of his or her
Deferred Stock Units to which such credit equates; (iv) the
vesting status of the DSU's credited to each respective
Participant's DSU Ledger account; and, (v) such other information
as the Committee or its designee shall deem appropriate. For
purposes of a Participant's Company Matching Sub-Ledger Account,
the Company shall credit monthly to each Participant's account the
number of DSUs equal to 50% of the DSUs determined in the Employee
Deferred Stock Unit Sub-Ledger Account above. The Participant's
Company Matching Sub-Ledger Account shall vest in 20% increments
in the same manner as the Participant's Kaneb Services, Inc.
Savings Investment Plan 401(k) account, and shall be Vested at any
and all times in the same percentage as the Participant's Employer
Account under the Kaneb Services, Inc. Savings Investment 401(k)
Plan.
C. Concurrent with the establishment of the Plan, the Company
shall establish a Company 2% DSU Sub-Ledger account which shall be
used as the official record and method of identifying the number
and value of DSU's credited to a Participant's individual accounts
under a Participant's DSU Ledger. The Participant's Company 2%
DSU Sub-ledger will reflect, with respect to each Participant's
respective accounts thereunder: (i) the name of each Participant;
(ii) the amounts actually credited by the Company; (iii) the
number of his or her Deferred Stock Units to which such credit
equates; (iv) the vesting status of the DSU's credited to each
respective Participant's DSU Ledger account; and, (v) such other
information as the Committee or its designee shall deem
appropriate. For purposes of a Participant's 2% DSU Sub-Ledger
Account, the Company shall credit monthly to each Participant's
account the number of DSUs equal to two (2) percent of his or her
base compensation prior to reduction by other deferrals, but
reduced by an amount equal to his or her projected Non-matching
Employer Contributions made to his Kaneb Services, Inc. Savings
Investment Plan 401(k) account for the same period. The
Participant's Company 2% Sub-Ledger Account shall vest in 20%
increments in the same manner as the Participant's Kaneb Services,
Inc. Savings Investment Plan 401(k) account, and shall be Vested
at any and all times in the same percentage as the Participant's
Employer Account under the Kaneb Services, Inc. Savings Investment
401(k) Plan.
<PAGE> 5
8. Amount and Form of Payment. On a Participant's Final Valuation Date,
such Participant or his or her beneficiary, as the case may be, shall be
entitled to receive an amount equal to the Vested DSU Value of such
Participant's DSU Ledger Accounts determined as of such Final Valuation Date,
and to be distributed in the manner described herein. All amounts distributed
to Participants or beneficiaries with respect to Final Valuation Dates prior to
August 15, 1998 shall be paid in cash. All amounts distributed to
Participants or beneficiaries with respect to Final Valuation Dates after
August 15, 1998 shall be in shares of the Company's Common Stock, unless the
Committee in its sole discretion elects to make such payment in cash. The
Company may satisfy its obligation to deliver shares of stock hereunder from
treasury shares, from authorized but unissued shares of Common Stock, or by
repurchasing shares of its Common Stock on the open market. The Company shall,
where applicable, issue and deliver to the Participant certificates
representing shares of its Common Stock as soon as practicable after the Vested
DSU Value of such Participant's account becomes due and payable hereunder;
provided however, that the obligation of the Company to deliver shares of
Common Stock shall be postponed for such period of time as may be necessary to
register or qualify such shares under the Securities Act of 1933, as amended,
or any applicable state securities law or in order to list such shares with the
New York Stock Exchange.
9. Timing of Payment. The Company shall pay to such Participant, or to
his or her beneficiary, as the case may be, the Vested DSU Value of the
Participant's account in the form determined in accordance with Section 8
above, in a single lump-sum no later than sixty (60) days following such
Participant's Final Valuation Date; provided however, that on or before his or
her Election Date, the Participant may elect that his or her Unit Value be paid
in accordance with such alternate payment schedule as the Committee in its sole
discretion may approve.
10. Beneficiary Designation. Prior to the first Monthly Valuation Date,
each Participant shall file with the Company a beneficiary designation on such
form or forms as the Committee shall proscribe naming one or more beneficiaries
to succeed to the Participant's right to receive payments hereunder in the
event of his or her death. The Participant shall have the right to change such
beneficiary designation from time to time; provided, however, that no such
change shall become effective until received in writing by the Committee or its
designee.
11. Forfeiture of Deferred Stock Units. On a Participant's Final
Valuation Date, any DSUs not Fully Vested shall be forfeited.
12. Contingent Right to Receive DSU Value. The right of each Participant
to payment and distribution of the DSU Value is contingent only upon, and
subject to, forfeiture as provided herein. Title to and beneficial ownership
of any assets, whether cash or investments, tangible or intangible, which the
Company may set aside or designate to meet its contingent deferred obligation
hereunder shall at all times remain vested in and with the Company and no
Participant or beneficiary shall under any circumstances acquire any interest
in any general or specific assets of the Company. Nothing contained herein
shall be deemed to create a trust of any kind or to create a fiduciary
relationship between the Company or the Committee (or its designee(s)) and a
Participant. To the extent that any person acquires a right to receive
payments from the Company under this Plan, such right shall be no greater than
that of any unsecured general creditor of the Company.
13. Limitation on Rights. Nothing in this Plan shall be construed to:
A. give any employee of the Company any unilateral
right to be named an Eligible Employee or a Participant in the
Plan;
B. give a Participant any rights whatsoever with
respect to shares of Common Stock of the Company;
C. give a Participant any rights of a shareholder
of the Company;
<PAGE> 6
D. limit in any way the right of the Company to terminate a
Participant's employment with the Company at any time;
E. be evidence of any agreement or understanding, express or
implied, that the Company will engage the services of a
Participant in any particular position or at any particular rate
of remuneration.
14. Dividends and Dilution. The existence of outstanding Deferred Stock
Units shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any adjustment, recapitalization,
reorganization, or any other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or any right thereto, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of its assets or business, or
any other corporate act or proceeding whether of a similar character or
otherwise.
15. Transferability of Contingent Right to Future Payments. No right or
payment under this Plan shall be subject to anticipation, alienation, sale,
assignment, pledge, encumbrance or charge, and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same shall be void. No
right or payment hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities or torts of any person entitled to such benefits.
If any Participant or beneficiary hereunder shall become bankrupt or attempt
to anticipate, alienate, assign, sell, pledge, encumber or charge any right or
benefit hereunder, or if any creditor shall attempt to subject the same to a
writ of garnishment, attachment, execution, sequestration, or any other form of
process or involuntary lien or seizure, then such right or payment shall, in
the discretion of the Committee, either cease and terminate absolutely or be
held by the Company for the sole benefit of the Participant or such
beneficiary, his or her spouse, children or other dependents, or any of them in
such manner and in such proportion as the Committee shall deem proper, free and
clear of the claims of any other party whatsoever.
16. Adjustments Upon Changes in Common Stock. In the event that the
Company shall effect a split of its Common stock or declare a dividend payable
in Common Stock, or in the event that the outstanding Common Stock shall be
combined into a smaller number of shares, the number of DSUs of any Participant
shall be increased or decreased proportionately, in a manner deemed appropriate
by the Committee. In the event of a reclassification of Common Stock not
encompassed by the foregoing, or in the event of a liquidation or
reorganization of the Company, including a merger, consolidation or sale of
assets, the Committee shall make such adjustments, if any, as it may deem
appropriate in the number of DSUs of any Participant that are subject to the
Plan. The provisions of this Section shall only be applicable if, and only to
the extent that, the application thereof does not conflict with any valid
government statute, regulation or rule.
17. Financial Hardship. Upon written petition of the affected
Participant, in a manner specified by the Committee, the Committee may in its
sole discretion, with satisfactory documentation from the Participant,
determine a Final Valuation Date for the affected Participant. The value at
such Final Valuation Date shall be determined as provided for under Section 2,
Items Q and R above.
18. Withholding Taxes. If the Company or any subsidiary in its
discretion determines that it is obligated to withhold any tax in connection
with the payment or vesting of benefits with respect to Deferred Stock Units,
the Company or such subsidiary may withhold from the Participant's wage or
other remuneration the appropriate amount of the tax. At the discretion of the
Company or such subsidiary, the amount required to be withheld may be withheld
in cash from such wages or other remuneration or in cash or in kind from cash
or the Common Stock, respectively deliverable to the Participant under the
terms hereof. If the Company or any subsidiary does not withhold an amount
from the Participant's wages or other remuneration sufficient to satisfy the
withholding obligation of the Company or such subsidiary, the Participant shall
be required to make reimbursement on demand, in cash, for the amount
underwithheld.
<PAGE> 7
19. Amendment or Termination of Plan. The Company may amend this Plan in
whole or in part at any time and from time to time. Notice of any such
amendment shall be given in writing to each Participant and beneficiary of a
deceased participant. No amendment shall operate retroactively to deprive any
Participant or beneficiary of any benefit hereunder to which he or she is then
entitled. The Company may terminate the Plan at any time. Notice of any such
termination shall be given in writing to each participant and beneficiary of a
deceased Participant. No such termination shall be operate retroactively to
deprive any Participant or beneficiary of any benefit hereunder to which he or
she is then entitled.
20. Special Start-up Provision. Eligible Employees whose Kaneb
Services, Inc. Savings Investment Plan 401(k) Company contributions to that
plan were limited as described in Section 2, Item L prior to August 16, 1996
shall have the opportunity to defer additional Compensation during the
remainder of 1996 of up to the aggregate amount of additional deferrals which
could have been made under the Kaneb Services, Inc. Savings Investment Plan
401(k) as if such deferrals were not limited by the Code during that time, to
the extent that such deferrals when added to actual deferrals made under the
Kaneb Services, Inc. Savings Investment Plan do not exceed six (6) percent of
Compensation during that time. Such additional deferrals, if any, shall be
credited to the Eligible Employee's Employee DSU Sub-Ledger account in a manner
consistent with Section 7, Item A above. If the Eligible Employee makes
additional deferrals as described in this Section 20, the Company shall make a
corresponding credit to the Eligible Employee's Company Matching DSU Sub-Ledger
Account in the same manner and terms as described in Section 7 above. Further,
the Eligible Employee's Company 2% DSU Sub-ledger Account shall be credited for
the prior period in the same manner described in Section 7 above, regardless of
whether or not the Eligible Employee makes all or part of the additional
deferral available under this Section 20.
21. Gender. Reference hereunder to the male gender shall be deemed to
include the female and neuter genders, unless otherwise stated or indicated by
the circumstances.
22. Headings. All the headings set forth in this Plan are intended for
convenience only and shall not control or affect the meaning, construction or
effect of this Plan.
23. Severability. In case any term in this Plan shall be held invalid,
illegal or unenforceable in whole or in part, neither the validity of the
remaining part of such term, nor the validity of the other terms of this Plan,
shall in any way be affected thereby.
24. Applicable Law. To the extent not in conflict with applicable
federal law, the laws of the State of Texas shall govern the validity,
construction and interpretation of this Plan.
25. Effective Date. This Plan has been approved by the Compensation
Committee, effective as of the 16th day of August, 1996.
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF FULBRIGHT & JAWORSKI L.L.P.]
July 24, 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 150,000 shares of the Company's common stock, no par value (the
"Shares"), to be awarded by the Company under its 1996 Supplemental Deferred
Compensation 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
July 24, 1996
