SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Kinark Corporation
(Name of Registrant as Specified in Its Charter)
Paul A. Quiros, 400 Colony Square, Suite 2200,
1201 Peachtree Street, Atlanta, Georgia 30361; (404) 817-6000
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act
Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-
11.
(1) Title of each class of securities to which transaction
applies:
Common Stock - $.10 par value per share
(2) Aggregate number of securities to which transactions applies:
6,066,536 Shares of Common Stock
(3) Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11:1
_______________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by
Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
______________________________________________________________________________
(2) Form, schedule or registration statement no.:
______________________________________________________________________________
(3) Filing party:
______________________________________________________________________________
(4) Date filed:
______________________________________________________________________________
____________________
1 Set forth the amount on which the filing fee is calculated and state how it
was determined.<PAGE>
KINARK CORPORATION LETTERHEAD APPEARS HERE
May 3, 1996
ANNUAL MEETING - JUNE 5, 1996
Dear Kinark Stockholder:
On behalf of the Board of Directors and management, it is my pleasure
to
invite you to attend the Annual Meeting of Stockholders on Wednesday, June 5,
1996, in Tulsa, Oklahoma.
Business matters expected to be acted upon at the meeting are
described
in
detail in the accompanying Notice of the Annual Meeting and Proxy Statement.
Members of management will report on the Company's operations, followed by a
period for questions and discussion. As customary, a report on the meeting
will be included in the Company's second quarter earnings announcement.
We hope you can attend the meeting. Regardless of the number of
shares
you own, your vote is very important. Please ensure that your shares will be
represented at the meeting by signing and returning your proxy now, even if you
plan to attend the meeting.
Thank you for your continued interest in the Company.
Sincerely,
/s/ Michael T. Crimmins
Michael T. Crimmins
Chairman of the Board
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
<PAGE>
KINARK CORPORATION LETTERHEAD APPEARS HERE
NOTICE OF ANNUAL MEETING
TULSA, OKLAHOMA, JUNE 5, 1996
To the Stockholders of KINARK CORPORATION:
The annual meeting of stockholders of KINARK CORPORATION, a Delaware
corporation (the "Company"), will be held at the Marriott Hotel, 1902 East 71st
Street, Tulsa, Oklahoma, on Wednesday, June 5, 1996, at 9:00 A.M. local time,
for the following purposes:
1. To elect seven directors to serve until the 1997 annual meeting of
stockholders;
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized shares of the
Company's
common stock, $.10 par value per share, from 12,000,000 shares to
18,000,000 shares;
3. To approve the Company's 1996 Stock Option Plan; and
2. To transact such other business as may properly come before the
meeting
and any adjournments thereof.
The Board of Directors fixed April 15, 1996 as the record date for
determining stockholders entitled to notice of and to vote at the meeting. A
list of those stockholders will be open for examination at the offices of the
Company for a period of ten (10) days prior to the meeting and also will be
available for inspection at the meeting.
Please sign and date the enclosed proxy card and return it in the
enclosed
postage-paid envelope as soon as possible. It is important that your shares be
represented at the meeting regardless of the number you may hold. If you do
attend, you may vote or change your vote in person at the meeting.
By Order of the Board of Directors
/s/ Carolyn A. Fredrich
CAROLYN A. FREDRICH,
Secretary
May 3, 1996<PAGE>
KINARK CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 5, 1996
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of
proxies by the Board of Directors of Kinark Corporation ("Kinark" or the
"Company") for use at the Annual Meeting of Stockholders to be held on June 5,
1996, at 9:00 a.m., local time, at the Marriott Hotel in Tulsa, Oklahoma, or at
any adjournments thereof (the "Annual Meeting"). On April 15, 1996, the record
date for determination of stockholders of the Company entitled to vote at the
Annual Meeting (the "Record Date"), there were 6,066,536 shares of the
Company's common stock outstanding (the "Common Stock"), each share of which
entitles the holder thereof to one vote on all matters. The holders of a
majority of the Common Stock present in person or represented by proxy will
constitute a quorum for transaction of business at the Annual Meeting.
Abstentions and broker non-votes are counted to determine the presence or
absence of a quorum at the Annual Meeting.
This Proxy Statement and the Form of Proxy will be sent to the
Company's
stockholders on or about May 3, 1996.
The Company's principal executive office is located at 7060 South Yale
Avenue, Suite 603, Tulsa, Oklahoma, 74136-3324.
The Company's Amended and Restated Bylaws (the "Bylaws") require the
affirmative vote of a majority of the shares of Common Stock represented at the
Annual Meeting and entitled to vote thereon to elect the directors nominated
for election at the Annual Meeting, as set forth in this Proxy Statement (the
"Election of Directors").
In addition to the Election of Directors, the Company's Board of
Directors
(the "Board") is submitting to the stockholders for their consideration, a
proposal to amend the Company's Restated Certificate of Incorporation, as
amended (the "Certificate"), to increase the number of authorized shares of
Common Stock from 12,000,000 shares to 18,000,000 shares, as set forth in this
Proxy Statement (the "Common Stock Amendment"). The affirmative vote of a
majority of the shares of Common Stock outstanding as of the Record Date and
entitled to vote thereon is required to approve the Common Stock Amendment.
The Board is also submitting to the stockholders for their
consideration a
proposal to approve the Company's 1996 Stock Option Plan, as set forth in this
Proxy Statement (the "1996 Stock Option Plan"). The affirmative vote of a
majority of the shares of Common Stock represented at the Annual Meeting and
entitled to vote thereon is required to approve the proposal to adopt the 1996
Stock Option Plan (the "1996 Stock Option Plan Proposal").
With respect to abstentions, because shares abstaining are not
affirmative
votes for the Common Stock Amendment, they will have the same effect as votes
against the Common Stock Amendment, but will have no effect with respect to the
Election of Directors or the 1996 Stock Option Plan Proposal. Under the rules
of the American Stock Exchange ("ASE"), brokers who hold shares of Common Stock
in street name for customers have "discretionary" authority to vote on certain
items in their discretion, on behalf of their clients if they do not receive
instructions within ten days of the Annual Meeting. The brokers will have
discretionary authority to vote on the Election of Directors and the Common
Stock Amendment. The 1996 Stock Option Plan Proposal, however, is not a
discretionary item and the brokers may not vote on that proposal without
instructions ("broker non-votes"). A majority of the shares of Common Stock
represented at the Annual Meeting and entitled to vote thereon is required to
approve the 1996 Stock Option Plan Proposal; therefore, broker non-votes will
have no effect with respect to that proposal.
You may revoke your proxy at any time before it is voted by executing
and
filing, with the Company or its proxy solicitor, a revocation of your proxy or
a subsequently dated proxy or by voting in person at the Annual Meeting.
Shares represented by properly executed proxies will be voted at the Annual
Meeting as specified, unless such proxies are subsequently revoked as provided
above. If no choice is specified on a valid, unrevoked proxy, the shares will
be voted as recommended by the Board. Proxies will also authorize the shares
represented thereby to be voted on any matters not known as of the date of this
Proxy Statement that may properly be presented for action at the Annual
Meeting.
ELECTION OF DIRECTORS
At the 1993 Annual Meeting, the Company's stockholders approved an
amendment to the Certificate to delete the provision that established three
classes of directors, with the term of each class expiring in successive years.
Directors are now elected each year for one-year terms. The Board is currently
composed of six members. At a regular meeting of the Board held on February
29, 1996, the Board voted unanimously to amend the Bylaws to increase the size
of the Board to seven members; therefore, at the Annual Meeting, seven
directors will be elected in accordance with the Bylaws to serve until the 1997
Annual Meeting. The Board has nominated five of the current directors, Richard
C. Butler, Paul R. Chastain, Michael T. Crimmins, Ronald J. Evans and Mark E.
Walker, and two persons not currently directors, Joseph J. Morrow and John H.
Sununu for election at the Annual Meeting for a term expiring at the 1997
Annual Meeting, and each of them has agreed to serve, if elected.
At the Annual Meeting, the shares of Common Stock represented by
proxies
will be voted in favor of (unless otherwise directed) the election of the
nominees named below. While it is not anticipated, if any nominee is unable or
should decline to serve as a director at the date of the Annual Meeting, such
proxies will be voted for persons proposed by the Board.
NOMINEES FOR ELECTION AS DIRECTORS
TO SERVE UNTIL NEXT ANNUAL MEETING
BUSINESS EXPERIENCE DURING PAST
YEAR FIRST
Name and Age FIVE YEARS AND OTHER INFORMATION
Elected Director
Richard C. Butler Former Chairman of the Board of
1974
(86) Peoples Savings & Loan Association in
Little Rock, Arkansas. From 1963 until
1980, Chairman of the Board and
President of Commercial National Bank
in Little Rock. Prior to 1963,
(Photo of Mr. Partner in the Little Rock law firm of
Butler appears House, Holmes, Butler and Jewell. Served
Here) on the Board of Directors of Coca-Cola
Bottling Co. of Arkansas, Advistory
Board Member of Power & Light Co. and
past President of First Arkansas
Development Finance Corporation. Past
President of the Little Rock Chamber of
Commerce and member of numerous
charitable and education organizations
in Arkansas. Awarded honorary degrees
from Hendrix College in Conway,
Arkansas and from the University of
Arkansas at Little Rock. Member of
Kinark's Board from 1974 to 1979, and
later served as an Advisory Board
Member. In May 1993, he was appointed
to Kinark's Board and elected to the
Board in July 1993 and is a member of
the Compensation and Audit Committees.
Paul R. Chastain Appointed Vice President and Chief
1975
(61) Financial Officer of Kinark in February
1996. President and Chief Executive
Officer of Kinark from July 1993 to
February 1996. Chairman and Chief
(Photo of Mr. Executive Officer of Kinark from June
Chastain appears 1991 through July 1993. Co-Chairman
here) and Co-here) Chief Executive Officer of
Kinark from June 1990 through June
1991. From 1976 until June 1990,
Executive Vice President and Treasurer.
From 1993 until 1976, Vice President of
Finance and Secretary of the Company.
Mr. Chastain's previous experience
included six years with Allis-Chalmers
and nine years with Litton Industries.
Michael T. Crimmins Appointed Chief Executive Officer of
1993
(56) Kinark in February 1996 and elected
Chairman of the Board of Kinark in May
1995. From 1989 to 1995, Vice
President and General Counsel of
Northbridge Holdings, Inc. and Deltech
(Photo of Mr. Corporation. Vice President -- General
Crimmins appears Counsel from 1988 until 1989 of the
here) Advanced Technology Group of Hoechst
Celanese Corporation. From 1976
until 1987, Assistant Secretary and
Associate General Counsel of American
Hoechst Corporation. Mr. Crimmins is
an attorney admitted to the bars of the
States of New York and New Jersey. Mr.
Crimmins was appointed to Kinark's
Board in March 1993 and elected to the
Board in July 1993. He is a member of
the Executive Committee.
Ronald J. Evans Appointed President of Kinark in February
1995
(47) 1996. Private investor from May 1995
to February 1996. From July 1989 to
May 1995, Vice President and General
(Photo of Mr. Manager of Deltech Corporation. From
Evans appears January 1989 to July 1989, Vice President
here) of Sales and Marketing for Deltech
Corporation. Manager from 1976 to 1989
for Hoechst Celanese Corporation. Mr.
Evans was appointed to Kinark's Board
in May 1995. He is currently a member
of the Executive Committee and was a
member of the Audit Committee from May
1995 to February 1996.
Joseph J. Morrow Chief Executive Officer of Morrow & Co.,
*
(56) Inc. since 1972. Chief Executive Officer
(Photo of Mr. of Proxy Services Corporation from 1972
Morrow appears to 1992. Chairman of Proxy Services
here) Corporation from 1992 to present. Currently
a Director of Telephone Access, Inc. and
Digital
Vision, Inc.
John Sununu President of JHS Associates, Ltd. since June
1992 *
(56) and a partner in Trinity International
Partners,
a private financial firm, since June 1993.
Co-host
of CNN's "Crossfire", a news/public affairs
(Photo of Mr. discussion program, since March 1992. From
Sununu appears January 1989 until March 1992, Chief of
here) Staff to the President of the United States.
From January 1983 to January 1989,
Governor of the State of New Hampshire.
From 1963 until his election as
Governor, President of JHS Engineering
Company and Thermal Research Inc.
Helped establish and served as chief
engineer for Astro Dynamics Inc. from
1960 until 1965. From 1968 until 1973,
Governor Sununu was Associate Dean of
the College of Engineering at Tufts
University and Associate Professor of
Mechanical Engineering. Served on the
Advisory Board of the Technology and
Policy Program at MIT from 1984 until
1989. A member of the National Academy
of Engineering and the Board of
Trustees for the George Bush
Presidential Library Foundation.
Mark E. Walker President and Director since 1991 of
*
(40) Ocean's Window, Inc. President and
Director of Ocean's Window Travel Services
(Photo of Mr. since 1995. Manager from 1985 until 1992
Walker appears for DSC Communications Corporation. Manager
here) from 1978 until 1984 for Texas Instruments
Incorporated. Mr. Walker was appointed to
Kinark's Board in March 1993 and elected to
the Board in July 1993. He is a member of
the Executive, Compensation and Audit
Committees.
With the exception of Messrs. Chastain, Crimmins and Evans, none of
the
directors are, or have been, employed by any parent, subsidiary or other
affiliate of the Company. There are no family relationships between any
directors or executive officers.
The election of the nominees requires the affirmative vote of a
majority
of the shares of Common Stock represented at the Annual Meeting and entitled to
vote thereon.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE NOMINEES LISTED ABOVE.
COMMON STOCK AMENDMENT
The Board has unanimously adopted a resolution approving and
recommending
to the Company's stockholders for their adoption an amendment to Article Fourth
of the Certificate to increase the number of authorized shares of Common Stock
from 12,000,000 shares to 18,000,000 shares.
The Board believes that the approval of the Common Stock Amendment
will
give the Company flexibility to issue additional shares of Common Stock to
advance the Company's long range plans to make strategic acquisitions to
enhance the value of the Company for the benefit of all of its stockholders.
Over half of the existing authorized Common Stock is currently issued and
outstanding. If the Common Stock Amendment is approved by the stockholders,
the additional shares of Common Stock may be used to acquire assets or stock of
targeted companies or to raise money to fund such acquisitions. Although the
Company has not committed itself to any specific acquisitions at this time, the
Company is formulating a long range plan which may incorporate expansion
through acquisitions in galvanizing or other businesses. The Company does not
presently have any agreement, understanding, arrangement or plan that would
result in the issuance of any additional shares, except for a rights offering
in the second quarter of 1996 whereby the Company plans to distribute to each
holder of its Common Stock one nontransferable right for each share of common
stock held as of a record date to be determined according to Delaware law and
ASE rules, with each such right entitling the holder thereof to subscribe for
and purchase one share of Common Stock (the "Rights Offering"), with certain
stockholders agreeing in advance not to subscribe for shares of Common Stock,
or to reduce their subscriptions, if subscriptions exceed 4,798,464 shares (the
"Non-subscription Agreement"). The Company expects to commence the Rights
Offering prior to the Annual Meeting and the Rights Offering is not contingent
upon approval of the Common Stock Amendment. There can be no assurance,
however, that the Rights Offering will commence before the Annual Meeting.
The additional shares could also be available for issuance from time
to
time for the purposes and consideration approved by the Board, including stock
offerings, stock splits, stock dividends, stock options and employee benefits
as well as financings and business acquisitions. The Company intends to
reserve 800,000 shares of Common Stock for issuance pursuant to the 1996 Stock
Option Plan if the 1996 Stock Option Plan Proposal is approved by a majority of
the stockholders represented at the Annual Meeting and entitled to vote
thereon. The 1996 Stock Option Plan Proposal, however, is not contingent on
the approval of the Common Stock Amendment by the stockholders. Due to the
Non-subscription Agreement, there will be sufficient authorized shares of
Common Stock to fulfill the Company's obligations under the Rights Offering and
the 1996 Stock Option Plan, whether or not the Common Stock Amendment is
approved by the stockholders, although no shares or only a small number of
shares of Common Stock would be available for other purposes if the Common
Stock Amendment is not approved and the 1996 Stock Plan Proposal is approved
and the Rights Offering is fully subscribed.
The approval of the Common Stock Amendment should allow the Company
the
flexibility to act quickly to consummate advantageous transactions, without the
expense and delay of a special stockholders' meeting. Subject to the following
sentence, no further authorization by the stockholders will be necessary for
the issuance of the additional shares of Common Stock subject to the Common
Stock Amendment, unless required by Delaware law or ASE rules. In general,
Delaware law and the ASE rules would require that the issuance of Common Stock
in a merger or business combination, which would increase the outstanding
Common Stock by twenty percent (20%) or more, be approved by the Company's
stockholders at an annual or a special meeting of the stockholders.
The general effect of the issuance of the additional shares of Common
Stock authorized by the approval of the Common Stock Amendment will be the pro-
rata dilution of all of the current stockholders of the Company. The
availability of authorized but unissued shares could affect the ability of a
third party to gain voting control of the Company, because the Board could
authorize issuance in a private placement or otherwise to one or more persons
and dilute the voting power of a potential acquiror. Additionally, unissued
shares could be issued in circumstances that would dilute the equity position
of a potential acquiror. In either of these situations, the issuance of
additional shares could impact a potential takeover. The Board has no present
intention to issue additional shares to implement defensive or anti-takeover
devices.
The Common Stock Amendment requires the approval of a majority of the
shares of Common Stock outstanding as of the Record Date and, if the Common
Stock Amendment is so approved at the Annual Meeting, the Board will amend
Article Fourth of the Certificate to increase the number of authorized shares
of Common Stock from 12,000,000 shares to 18,000,000 shares.
The text of Article Fourth of the Certificate as proposed to be
amended is
set forth in Exhibit 1 hereto.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE COMMON STOCK AMENDMENT.
1996 STOCK OPTION PLAN PROPOSAL
The Board has unanimously adopted a resolution approving and
recommending
to the Company's stockholders for their approval, the 1996 Stock Option Plan
Proposal. Copies of the 1996 Stock Option Plan are available upon request
directed to Paul R. Chastain, Vice-President and Chief Financial Officer,
Kinark Corporation, 7060 South Yale Avenue, Suite 603, Tulsa, Oklahoma 74136-
3324.
The purpose of the 1996 Stock Option Plan is to attract and retain
highly
qualified directors, employees, consultants and advisors and to increase the
growth and profitability of the Company and its subsidiaries by providing the
grantees of options ("Options") and stock appreciation rights ("SARs") with
additional incentive to achieve the Company's objectives and to participate in
its success and growth by encouraging their continued association with or
service to the Company and its subsidiaries.
The Board believes that the 1996 Stock Option Plan is needed to
provide
the Company with greater flexibility to attract highly qualified directors,
employees, consultants and advisors in the future. The 1996 Stock Option Plan,
unlike the 1988 Stock Option Plan, will provide for the automatic annual grant
of Options to non-employee directors, which the Board believes will enhance the
Company's ability to attract highly qualified persons to serve as directors.
The 1988 Stock Option Plan terminates by its terms on January 31, 1998, and
there are currently less than 7,000 shares of Common Stock available for
issuance under options pursuant to the 1988 Stock Option Plan. The Board
believes that the Company will need an additional compensation plan for future
use.
Administration
The 1996 Stock Option Plan will be administered by a committee of the
Board which is vested with responsibility for administering the 1996 Stock
Option Plan (the "Compensation Committee"). The Compensation Committee will
consist of at least three (3) directors appointed from time to time by the
Board, and at least two (2) of the members will be disinterested directors.
The Compensation Committee will have the power to (i) interpret the plan, (ii)
promulgate rules and regulations relating to the plan, and (iii) make all other
determinations and take all other actions necessary or desirable for the
administration of the plan. Decisions of the Compensation Committee regarding
the interpretation and administration of the 1996 Stock Option Plan will be
binding upon all persons.
Amendment of 1996 Stock Option Plan
The 1996 Stock Option Plan may be amended at any time and from time to
time by the Board. The Board may not, however, amend the 1996 Stock Option
Plan without the approval of the stockholders of the Company if such amendment
would (i) increase the total number of shares of Common Stock issuable under
the plan, (ii) materially change the class of person that may participate in
the plan, or (iii) materially increase the benefits accruing to participants
under the plan.
Eligibility
The class of persons eligible to participate in the 1996 Stock Option
Plan
shall include, but not be limited to, all directors, employees, consultants and
advisors to the Company or its subsidiaries; provided, however, that non-
employee directors shall only be entitled to receive automatic annual grants of
Options (see "Terms of Stock Options" below) and shall not be entitled to
receive discretionary grants of Options by the Compensation Committee; and
provided, further, that only employees of the Company or its subsidiaries shall
be eligible to receive incentive stock options. Subject to the limitations
described above, the Compensation Committee shall have the discretion to
include all persons whose participation in the 1996 Stock Option Plan that the
Compensation Committee determines to be in the best interests of the Company.
The approximate number of all directors, employees, consultants and advisors
which management believes will be initially eligible to participate in the 1996
Stock Option Plan is 30, provided that the Compensation Committee shall have
the discretion to include any other persons whose participation it deems
beneficial.
Shares Subject to the 1996 Stock Option Plan
The Board will reserve 800,000 shares of Common Stock for issuance
under
the 1996 Stock Option Plan. The market value of the Common Stock as of April
15, 1996, was $3.38 per share. In the event of a change in the outstanding
shares of the Company's Common Stock by reason of a stock dividend, stock
split, recapitalization, merger, consolidation, reorganization, or other change
in corporate structure, the number and/or type of shares to be awarded under
the 1996 Stock Option Plan shall be adjusted appropriately by the Compensation
Committee to prevent an unfavorable effect upon the value of the Options and
SARs to be granted under the 1996 Stock Option Plan.
The 1996 Stock Option Plan Proposal is not contingent on the approval
of
the Common Stock Amendment by a majority of the stockholders represented at the
Annual Meeting and entitled to vote thereon. Due to the Non-subscription
Agreement, there will be sufficient authorized shares of Common Stock to
fulfill the Company's obligations under the Rights Offering and the 1996 Stock
Option Plan, whether or not the Common Stock Amendment is approved by the
stockholders, although no shares or only a small number of shares of Common
Stock would be available for other purposes if the Common Stock Amendment is
not approved and the 1996 Stock Plan Proposal is approved and the Rights
Offering is fully subscribed.
Effective Date
The 1996 Stock Option Plan will be effective as of June 5, 1996, if
such
plan is approved by a majority of the stockholders of the Company voting in
person or by proxy at the Annual Meeting, or any adjournment thereof.
Terms of Stock Options
Options granted under the 1996 Stock Option Plan may consist of
incentive
stock options ("ISOs") and nonqualified stock options ("NSOs") and Non-Employee
Director Options (as defined below); provided, however, that only employees of
the Company or its subsidiaries shall be eligible to receive ISOs. Except for
Non-Employee Director Options, Options granted under the 1996 Stock Option Plan
need not be identical to one another.
The Committee may, in its discretion, grant Options under the 1996
Stock
Option Plan to employees, including directors who are also employees, as well
as advisors and consultants upon such restrictions, terms and conditions as the
Committee may prescribe ("Discretionary Grants").
Commencing on July 1, 1996 and continuing on the first day of each
July
thereafter for a period of ten years through (and including) July 1, 2005, each
non-employee Director who is a member of the Board of Directors on each of such
dates shall be automatically granted an Option for 5,000 shares of Common Stock
("Non-Employee Director Options"). Non-Employee Director Options shall be NSOs
and shall vest and become exercisable six months after the date granted. The
exercise price of Non-Employee Director Options shall be 100% of the fair
market value of the Company's Common Stock on the date of the grant and Non-
Employee Director Options shall be exercisable for a period of ten years after
the date of grant.
The purchase price under each Option which is not a Non-Employee
Director
Option will be established by the Compensation Committee, but in no event will
the option price of an ISO be less than 100% of the fair market value of the
Company's Common Stock on the date of the grant. The purchase price of each
Non-Employee Director Option will be 100% of the fair market value of the
Company's Common Stock on the date of the grant. The purchase price for any
Option granted under the 1996 Stock Option Plan must be paid in full at the
time of exercise. The price may be paid in cash or the surrender of shares of
Common Stock owned by the participant exercising the Option and having a fair
market value on the date of exercise equal to the option price, or any
combination of the foregoing equal to the option price. The Compensation
Committee, in its discretion, may provide that the purchase price for certain
Options may be paid by execution of recourse promissory notes in favor of the
Company.
ISOs must be granted within ten years of the effective date of the
1996
Stock Option Plan and may not be exercisable more than ten years from the date
of the grant. However, there is no requirement that NSOs be exercised within a
fixed amount of time. The Compensation Committee may provide, however, that a
particular Option (either an ISO or an NSO) will terminate in a specified
period of time. Non-Employee Director Options shall be exercisable for a
period of ten years from the date of the grant.
The Compensation Committee, in its discretion, may provide for
accelerated
vesting of an Option, except for Non-Employee Director Options, in the event of
the participant's death, disability, or retirement or other events in
accordance with policies established by the Compensation Committee. The
Compensation Committee, in its discretion, may also provide for accelerated
vesting in the event of certain changes in control of the Company. If an
employee participant's employment is terminated "for cause", such as acts of
fraud, dishonesty or gross malfeasance of duty, any Options held by such
participant shall terminate immediately.
Each Option is transferrable only by will or the law of descent and
distribution and may only be exercisable by the participant during his or her
lifetime.
The Compensation Committee may, at any time prior to exercise and
subject
to consent of the participant, amend, modify or cancel any Option, except Non-
Employee Director Options, previously granted and may or may not substitute in
its place Options at a different price and of a different type under different
terms or in different amounts.
Stock Appreciation Rights
A SAR is the right to receive an amount equal to the appreciation, if
any,
in fair market value of one share of Common Stock from the date the SAR is
granted until the time the participant elects to receive payment. The
Committee may grant SARs under the Plan upon such restrictions, terms and
conditions as the Committee may prescribe. SARs will not be awarded to non-
employee directors. Participants who elect to receive payment of a SAR will
receive an amount in cash, Common Stock, or any combination of cash or Common
Stock, as determined by the Compensation Committee.
Each SAR will be represented by a SAR agreement which shall contain
such
restrictions, terms and conditions as the Compensation Committee may, in its
discretion, determine including without limitation, restricting the time of
exercise of the SAR to specified periods. The price or base value of each SAR
shall be established by the Compensation Committee, but in no event will the
price or base value of a SAR issued in tandem with an ISO be less than 100% of
the fair market value of the Common Stock on the date the SAR is granted. The
grantee of a SAR shall have no rights as a shareholder with respect to such
SAR.
Option and SAR Grants
The number of Discretionary Grants likely to be granted under the 1996
Stock Option Plan, the persons who might receive such grants and the value of
such grants cannot be determined at this time because all Discretionary Grants
of Options and SARs under the plan will be made at the discretion of the
Compensation Committee and the option price per share of Common Stock and the
price or base value of SARs will depend upon contingent and variable factors.
The chart below states the number of Non-Employee Director Options and
the
estimated value of such options that each non-employee director, and the non-
employee directors as a group, will receive in the 1996 fiscal year.
New Plan Benefits
1996 Stock Option Plan
(for Non-Employee Directors)
Position Dollar Value($)(1)
Number of Options
Each Non-Employee Director $16,900
5,000
All Non-Employee Directors
as a group(2) $50,700
15,000
(1) The dollar value is based on the closing price per share of the
Company's
Common Stock as of April 15, 1996, which was $3.38 per share.
(2) Assumes that three non-employee directors, Messrs. Butler, Morrow and
Sununu will be elected at the Annual Meeting.
The number and value of Non-Employee Director Options in future years
will
depend on the number of non-employee directors on the Board and the fair market
value of the Stock on the grant dates.
Federal Income Tax Consequences
The following discussion of the federal income tax consequences of the
1996 Stock Option Plan is intended to be a summary of applicable federal income
tax law. State and local tax consequences may differ. Because the federal
income tax rules governing options, SARs and related payments are complex and
subject to frequent change, participants are advised to consult their tax
advisors prior to exercise of Options, SARs or dispositions of stock acquired
pursuant to an Option exercise.
ISOs and NSOs are treated differently for federal income tax purposes.
ISOs are intended to comply with the requirements of Section 422 of the
Internal Revenue Code, as amended (the "Code"). NSOs need not comply with such
requirements.
A participant is not taxed on the grant or exercise of an ISO. The
difference between the fair market value of the shares on the exercise date
will, however, be a preference item for purposes of the alternative minimum
tax. If a participant holds the shares acquired upon exercise of an ISO for at
least two years following grant and at least one year following exercise, the
participant's gain, if any, by a subsequent disposition of such shares will be
treated as long term capital gain for federal income tax purposes. The measure
of the gain is the difference between the proceeds received on disposition and
the participant's basis in the shares (which generally equals the exercise
price). If the participant disposes of stock acquired pursuant to exercise of
an ISO before satisfying the one and two year holding periods described above,
the participant will recognize both ordinary income and capital gain in the
year of disposition. The amount of the ordinary income will be the lesser of
(i) the amount realized on disposition less the participant's adjusted basis in
the stock (usually the option exercise price) or (ii) the difference between
the fair market value of the stock on the exercise date and the option price.
The balance of the consideration received on such disposition will be long term
capital gain if the stock had been held for at least one year following
exercise of the ISO. The Company is not entitled to an income tax deduction on
the grant or the exercise of an ISO or on the participant's disposition of the
shares after satisfying the holding period requirement described above. If the
holding periods are not satisfied, the Company will be entitled to an income
tax deduction in the year the participant disposes of the shares, in an amount
equal to the ordinary income recognized by the participant.
A participant is not taxed on the grant of an NSO. Upon exercise,
however, the participant recognizes ordinary income equal to the difference
between the option price and the fair market value of the shares on the date of
the exercise. The Company is entitled to an income tax deduction in the year
of exercise in the amount recognized by the participant as ordinary income.
Any gain on subsequent disposition of the shares is long term capital gain if
the shares are held for at least one year following exercise. The Company does
not receive an income tax deduction for this gain.
Recipients of SARs do not recognize income upon the grant of such
rights.
When a participant receives or is deemed under applicable tax rules to have
received payment of a SAR, the participant recognizes ordinary income in the
amount equal to the cash and/or fair market value of shares of Common Stock to
which the SAR relates, and the Company is entitled to an income tax deduction
equal to such amount.
The general effect of the 1996 Stock Option Plan will be the pro-rata
dilution of all of the current stockholders of the Company any time Options are
exercised by the participants in the plan.
The affirmative vote of a majority of the shares of Common Stock
represented at the Annual Meeting and entitled to vote thereon is required to
approve the 1996 Stock Option Plan Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE STOCK OPTION PLAN PROPOSAL.
THE BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the
Board.
The Board presently consists of six directors, with two outside members, three
Kinark officers and one former Kinark officer now employed by the Company as a
consultant. At a regular meeting of the Board held on February 29, 1996, the
Board voted unanimously to amend the Bylaws to increase the size of the Board
to seven members; as a result, there is one vacancy on the Board which will be
filled at the Annual Meeting. Additionally, Harry D. Jones declined to stand
for reelection at the Annual Meeting. Seven directors will be elected at the
Annual Meeting to serve until their successors are elected at the 1997 Annual
Meeting, unless they earlier resign or are removed as provided in the Bylaws.
Richard E. Baierlein resigned from the Board and the Executive
Committee
on May 17, 1995, immediately following the 1995 Annual Meeting, and the Board
appointed Ronald J. Evans to fill the vacancy on the Board created by the
resignation of Mr. Baierlein.
The Board met thirteen times in 1995 (including regularly scheduled
and
special meetings). At least one Board meeting was held at each of the
Company's continuing subsidiaries to permit inspection and review of the
various operations and management teams. During 1995, the directors' overall
attendance for all Board and Committee meetings was 96%. Each incumbent
director attended at least 92% of scheduled Board and the committee meetings of
which he was a member.
The Board's non-employee members receive an annual retainer of $3,000
and
a fee of $1,000 for attendance at each Board meeting and each Committee meeting
not held during the same twenty-four hour period as Board meetings. The fee
for a telephonic Board or Committee meeting is $500. The employee/Board
members receive no compensation beyond their normal salary for their Board and
Committee services. All directors, including employee/Board members, are
reimbursed by the Company for expenses incurred by them in connection with
their service on the Board and Committees. The standing Committees of the
Board of Directors are the Executive Committee, Compensation Committee and
Audit Committee. At its July 30, 1993 meeting, the Board eliminated the Stock
Option Committee and its functions were assigned to the Compensation Committee.
Executive Committee. The Executive Committee is delegated authority
to
act on behalf of the Board in certain operational and personnel matters, and to
approve limited capital expenditures. The Executive Committee also evaluates
the qualifications of Board candidates for consideration of nomination by the
Board of Directors. The Executive Committee, which did not meet in 1995,
consisted of Messrs. Baierlein, Crimmins and Chastain until Mr. Baierlein's
resignation on May 17, 1995. Following Mr. Baierlein's resignation, the
Executive Committee consisted of Messrs. Crimmins, Chastain and Walker. On
February 6, 1996, the Board appointed its current members, Messrs. Crimmins,
Evans and Walker.
Compensation Committee. The Compensation Committee considers
remuneration
of the corporate and subsidiary officers of the Company, and administers the
Company's incentive compensation plans and 1988 Stock Option Plan. The
Compensation Committee held two meetings in 1995. The Compensation Committee
consisted of Messrs. Walker, Butler, Jones and Crimmins until Mr. Crimmins was
elected chairman of the board on May 17, 1995, at which time Mr. Crimmins
resigned from the Compensation Committee. The committee currently has two
outside directors, Messrs. Walker and Butler, as well as Mr. Jones. Mr. Jones
has declined to stand for reelection to the Board at the 1996 Annual Meeting.
Audit Committee. The Audit Committee reviews the scope of the annual
audit and recommendations of the independent audit firm as well as reviewing
the internal audit functions of the Company. The Audit Committee met three
times in 1995. The Audit Committee consisted of Raymond W. Smedley and Messrs.
Butler and Walker until Mr. Smedley resigned from the Board and the Audit
Committee on March 27, 1995, prior to the Company's last annual meeting.
Following Mr. Smedley's resignation, the Audit Committee consisted of Messrs.
Butler, Evans and Jones. On February 6, 1996, the Board appointed the current
members of the Audit Committee, Messrs. Butler, Walker and Jones. Mr. Jones
has declined to stand for reelection to the Board at the 1996 Annual Meeting.
The functions customarily attributable to a nominating committee are
performed by the Executive Committee of the Board.
The Company's Bylaws require that a stockholder who desires to
nominate a
candidate for election to the Board at the Annual Meeting or present business
to be considered at the Annual meeting must give the Board advance notice of
such nomination or proposed business. To be timely, a stockholder's notice
must be received at the principal executive offices of the Company not less
than 90 days prior to the meeting. However, in the event that the date of the
next annual meeting is advanced more than 30 days or delayed more than 60 days
from the date of the anniversary of the preceding year's annual meeting, notice
by the stockholder to be timely must be so delivered not later than the close
of business on the later of the 60th day prior to such annual meeting or the
10th day following the date notice of such meeting is first given to
stockholders in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document filed by
the Company with the Securities and Exchange Commission. The Company's Bylaws
require that the notice contain certain information with respect to the
proposed nominee and the stockholder giving the notice. The Company will
furnish on request to any stockholder a copy of the relevant section of the
Bylaws.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth certain information as of April 15,
1996
regarding the beneficial ownership of the Company's Common Stock by (a) all
persons who are beneficial owners of five percent or more of the Common Stock,
(b) each director, former director or nominee for director of the Company,
(c) each executive officer of the Company and (d) all directors and officers of
the Company as a group. Unless otherwise noted, the persons named below have
sole voting and investment power with respect to such shares:
Amount and Nature
Percentage of
Name of Stockholder of Beneficial
Ownership Common Stock(1)
Richard E. Baierlein
1,000 --
Richard C. Butler
37,000 (2) --
Paul R. Chastain
60,779 (3) 1.0
Michael T. Crimmins
373,300 (4) 6.1
Ronald J. Evans
5,000 (5) --
Harry D. Jones
17,000 --
Joseph J. Morrow
1,782,538 (6) 29.6
Raymond W. Smedley
600 --
John H. Sununu
160,000 (7) 2.7
Mark E. Walker
410,530 (8) 6.8
Dimensional Fund Advisors, Inc.
207,900 (9) 3.4
Steel Partners II, L.P.
585,100 (10) 9.7
Robert G. and Pauline B. Walker
Revocable Trust
379,724(11) 6.3
All Kinark Directors and Officers as Group
(7 persons)
902,819(12) 14.8
_________________
(1) Based on 6,066,536 shares of the Company's Common Stock outstanding as
of
April 15, 1996. Where a percentage for a person or group is not
shown,
the percentage of Common Stock beneficially owned by that person or
group
does not exceed one percent (1%).
(2) Information based on Form 4 of Mr. Butler filed with the SEC.
Includes
3,000 shares held by Maumelle Gardens, Inc., of which company Mr.
Butler
owns 60%. Mr. Butler disclaims beneficial ownership of these shares.
(3) Includes presently exercisable stock options to acquire 48,000 Shares.
The stockholder's address is 7060 South Yale Avenue, Suite 603 Tulsa,
Oklahoma 74136.
(4) Information based on Schedule 13D and Form 4 filed with the SEC. The
stockholder's address is 7060 South Yale Avenue, Suite 603, Tulsa,
Oklahoma 74136.
(5) Information based on Form 3 of Mr. Evans filed with the SEC.
(6) Information based on Schedule 13D filed with the SEC. Mr. Morrow
acquired
1,759,083 shares in a private placement by the Company in January
1996.
Mr. Morrow has sole voting power and sole dispositive power with
respect
to 1,727,002 shares and he shares voting power and dispositive power
with
his spouse as to 55,536 shares. The stockholder's address is 47
LaFayette
Place, Apt. 1-E, Greenwich, Connecticut 06830.
(7) All 160,000 shares were acquired in a private placement by the Company
in
January 1996.
(8) Information based on Form 4 of Mr. Walker filed with the SEC.
Includes
5,000 shares of Common Stock owned by a trust for Mr. Walker's son, of
which Mr. Walker is trustee. Also includes 379,724 shares
beneficially
owned by the Robert G. and Pauline B. Walker Revocable Trust, the
Pauline
B. Walker Revocable Trust A and the Robert G. Walker Irrevocable Trust
B,
to which Mr. Walker provides investment advice and for which he
receives
certain compensation. Mr. Walker disclaims beneficial ownership of
such
shares and shares of Common Stock owned by other members of the Walker
family. The stockholder's address is 2301 N. Central Expressway,
Suite
140, Plano, Texas 75075.
(9) Information based on Schedule 13G of Dimensional Fund Advisors, Inc.
("Dimensional") filed with the SEC. Dimensional, a registered
investment
advisor, is deemed to have beneficial ownership of 207,900 shares of
Common Stock, all of which shares are held in portfolios of DFA
Investment
Dimensions Group Inc., a registered open-end investment company, or in
a
series of the DFA Investment Trust Company, a Delaware business trust,
or
the DFA Group Trust and DFA Participation Group, investment vehicles
for
qualified employee benefit plans, all of which Dimensional serves as
an
investment manager. Dimensional disclaims beneficial ownership of all
such shares. The stockholder's address is 1229 Ocean Avenue, Santa
Monica, California 90401.
(10) Information based on the joint Schedule 13D of Steel Partners II,
L.P.,
Steel Partners Services, Ltd., Warren Lichtenstein and Lawrence Butler
filed with the SEC. According to the Schedule 13D, Steel Partners II,
L.P. beneficially owns 527,850 shares, and Steel Partners Services,
Ltd.
beneficially owns 55,250 shares. Mr. Lichtenstein and Mr. Butler
beneficially own 583,150 and 585,100 shares, respectively, by virtue
of
their authority to vote and dispose of the 527,850 shares owned by
Steel
Partners II, L.P. and the 55,250 shares owned by Steel Partners
Services,
Ltd. Each of Mr. Lichtenstein and Mr. Butler has sole voting and
dispositive power with respect to the 50 and 2,000 shares,
respectively,
owned by each individual. The stockholders' address is 750 Lexington
Avenue, 27th Floor, New York, NY 10022.
(11) Information based on Form 4s of the Robert G. and Pauline B. Walker
Revocable Trust, the Pauline B. Walker Revocable Trust A and the
Robert G.
Walker Irrevocable Trust B filed with the SEC. The Robert G. and
Pauline
B. Walker Revocable Trust, together with two affiliated trusts, the
Pauline B. Walker Revocable Trust A and the Robert G. Walker
Irrevocable
Trust B, beneficially own 379,724 shares. Pauline B. Walker is the
sole
trustee of all three trusts. The address for the trusts is 2301 N.
Central Expressway, Suite 140, Plano, Texas 75075.
(12) All directors and officers as a group held in the aggregate presently
exercisable stock options to acquire 49,500 shares. On the Record
Date,
directors and officers as a group owned 853,319 shares, or 14.1% of
the
6,066,536 shares outstanding and entitled to vote, not including
presently
exercisable stock options.<PAGE>
<TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
Payouts
All
Other
Restricted
LTIP Compen
Name and Principal Other Annual Stock Options/
Pay- sation
Position Year Salary Bonus (A) Compensation (B) Award(s) (SARs(#1))
outs (c)
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
Paul R. Chastain, 1995 $141,600 $-- $-- $-- --
$-- $ 8,496
President & CEO 1994 $141,200 $-- $3,623 -- 6,000
- -- $ 8,472
1993 $137,500 $16,074 $4,655 -- --
- -- $ 8,250
Harry D. Jones, 1995 $-- $-- $-- -- --
$-- $137,000
President & CEO 1994 $-- $-- $-- -- --
- -- $114,500
1993 $94,461(D) $-- $2,620 -- --
- -- $ 58,193
</TABLE>
(A) Annual bonus amounts are earned and accrued during the fiscal years
indicated, and paid subsequent to the end of each fiscal year.
(B) Group health insurance premiums paid by the Company for the named
employee.
(C) All compensation shown in this column for Mr. Chastain consists of
Company
matching contributions to the Company's 401(k) defined contribution
retirement plan. All compensation shown in this column for Mr. Jones
consists of Company matching contributions to the Company's 401(k)
defined
contribution retirement plan, consulting fees paid to Mr. Jones
pursuant
to his consulting agreement with the Company in the amounts of
$50,000,
$104,167, and $115,000 for 1993, 1994 and 1995, respectively, and
director's fees paid to Mr. Jones in the amounts of $2,750, $9,500 and
$22,000 for 1993, 1994 and 1995, respectively.
(D) Mr. Jones resigned as President and Chief Operating Officer effective
July
31, 1993. This amount includes payment for accrued vacation and for
the
cancellation of a stock option for 5,000 shares, as well as salary
through
July 31, 1993.
<PAGE>
<TABLE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUE
<CAPTION>
Number of Value of Unexercised
Unexercised
In-the-Money
Options
Options
at FY-End at
FY-End
#
$
Shares Acquired Value
on Exercise Realized(A) Exercisable/
Exercisable/
Name # $ Unexercisable
Unexercisable
<S> <C> <C> <C> <C>
Paul R. Chastain --- --- 20,000/0 $
0(B)/0
Paul R. Chastain --- --- 25,000/0
$14,062(C)/0
Paul R. Chastain --- --- 1,500/4,500 $
0(D)/0
</TABLE>
____________
(A) Market value of underlying securities at December 31, 1995 minus the
exercise price of "in-the-money" options.
(B) Option granted July 13, 1988 pursuant to the Company's 1988 Stock
Option
Plan at an exercise price of $4.4375 was not "in- the-money" at
December
31, 1995.
(C) Option granted September 16, 1986 pursuant to the Company's 1978 Stock
Option Plan at an exercise price of $3.1875 was not "in-the-money" at
December 31, 1995.
(D) Option granted February 16, 1994 pursuant to the Company's 1988 Stock
Option Plan at an exercise price of $4.50 was not "in-the-money" at
December 31, 1995.
_______________________
EXECUTIVE SEVERANCE AGREEMENTS
The Company had severance agreements with one key executive of the
Company, Mr. Chastain, and with Kawyn L. Zilm, who previously served as the
Company's vice president of Human Resources and as vice president of Boyles
Galvanizing Company, a subsidiary of the Company. These agreements provided
for payments of compensation and all normal employee benefit plans if a "change
of control" of the Company occurred, coupled with a "change in status" of these
employees, as such terms are defined in the severance agreements. In 1991, the
Board of Directors determined that the severance agreements would not be
extended beyond their then current expiration dates of December 31, 1995;
therefore, these severance agreements are no longer in effect and the Company
believes it has no further obligations under these agreements. Mr. Zilm's
employment with the Company terminated in January 1996 and he received certain
severance payments which are unrelated to the severance agreements.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board establishes the general
compensation policies of the Company and the compensation plans and specific
compensation levels for executive officers. The Compensation Committee was
comprised of Messrs. Butler, Crimmins, Jones and Walker until May 17, 1995, at
which time Mr. Crimmins resigned as a result of having been elected chairman of
the board. During the balance of fiscal year 1995 the Compensation Committee
was comprised of Messrs. Butler, Jones and Walker. All decisions by the
Compensation Committee relating to the compensation of the Company's executive
officers are reviewed by the full Board.
In accordance with recently adopted rules designed to enhance
disclosure
of companies' policies toward executive compensation, the following is a report
submitted by the Compensation Committee members addressing the Company's
compensation policy as it related to the named executive officers for fiscal
1995.
The Company's objective is to ensure that executive compensation is
directly linked to ongoing improvement in corporate performance and increasing
shareholder value. The following objectives are guidelines for compensation
decisions:
JOB CLASSIFICATION. The Company assigns a job grade to each salaried
position, and each job grade has a salary range which is based on
national salary surveys. These salary ranges are reviewed annually
to determine parity with national compensation trends, and to ensure
that the Company maintains a competitive compensation structure.
COMPETITIVE SALARY BASE. Actual salaries are based on individual
performance contributions within a competitive salary range for each
position established through job evaluation and market comparisons.
The salary of each subsidiary president and corporate officer, except
the chief executive officer, is reviewed annually by the chief
executive officer who may recommend an increase for approval by the
Compensation Committee. The chief executive officer's salary is
determined by the Board based on a review and recommendation by the
Compensation Committee. The chief executive officer's base salary
was not increased in 1995.
ANNUAL INCENTIVE COMPENSATION. The Company's officers are eligible
to participate in an annual incentive compensation plan with awards
based primarily on achievement of performance targets for net
earnings. This objective focuses corporate decisions toward
consistent and steady earnings growth. Awards are subject to
decrease or increase on the basis of the Company's performance and at
the discretion of the Compensation Committee. The Company did not
achieve its financial performance objectives for 1995 resulting in no
incentive awards for any of the Company's officers.
STOCK OPTION PROGRAM. The purpose of this program is to provide
additional incentives to employees to work to maximize shareholder
value. The stock option program may utilize vesting periods to
encourage key employees to continue in the employ of the Company.
The number of options granted is determined by the subjective
evaluation of the executive's ability to influence the Company's
long-term growth and profitability. All options have been granted at
the current market price at the time of the grant. The Compensation
Committee, which must include at least three outside directors, works
to achieve overall compensation objectives for key employees.
The Compensation Committee believes that its objectives of linking
executive compensation to corporate performance results in alignment of
compensation with corporate goals and shareholder interest. When performance
goals are met or exceeded, shareholders' value is increased and executives are
rewarded commensurately. The Committee believes that compensation levels
during 1995 adequately reflect the Company's compensation goals and policies.
Compensation Committee
Richard C. Butler
Harry D. Jones
Mark E. Walker
Michael T. Crimmins (resigned 5/17/95)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The 1988 Stock Option Plan was administered by the Compensation
Committee
consisting of Messrs. Walker, Butler and Jones, as well as Mr. Crimmins prior
to his resignation on May 17, 1995. Mr. Jones acts as a consultant to the
Company. Mr. Jones has declined to stand for reelection to the Board at the
1996 Annual Meeting and will no longer serve on the Compensation Committee.
Mr. Crimmins was elected chairman of the board of the Company on May 17, 1995
and resigned from the Compensation Committee at that time.
COMPANY PERFORMANCE
The following performance graph compares cumulative total stockholder
returns on the Company's Common Stock compared to the Dow Jones Diversified
Industrials Index and the Dow Jones Equity Market Index calculated at the end
of each fiscal year, December 31, 1991 through December 31, 1995. The graph
assumes $100 was invested December 31, 1990, in the Company's Common Stock and
in each of the referenced indices and assumes the reinvestment of dividends.
[GRAPH APPEARS HERE]
Dow Jones Dow Jones
Measurement Period Equity Diversified
(Fiscal Year Kinark Market Industrials
Covered) Corporation Index Index
1990 100 100 100
1991 252 132 124
1992 119 144 144
1993 94 158 176
1994 81 159 161
1995 73 220 211
RELATED PARTY TRANSACTIONS
On July 1, 1993, the Company and Harry Jones entered into a
Termination
of
Employment Agreement, providing for Mr. Jones' resignation as president and
chief operating officer of the Company, effective July 31, 1993. Pursuant to
this agreement, the Company canceled his stock options to acquire 5,000 shares
and entered into a three year consulting arrangement with Mr. Jones. The
consulting agreement with Mr. Jones terminates on July 31, 1996. Joseph J.
Morrow, a nominee for director, purchased 1,759,083 shares of Common Stock in
the Company's private placement in January 1996. Mr. Morrow is the chief
executive officer of Morrow & Co., Inc., which provides proxy solicitation and
other stockholder related services to the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires
the Company's executive officers and directors and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities,
to file reports of securities ownership and changes in such ownership with the
SEC. Officers, directors and greater than ten-percent beneficial owners also
are required by rules promulgated by the SEC to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company, the Company believes that, during the last fiscal year, its executive
officers, directors and greater than ten-percent beneficial owners complied
with all applicable Section 16(a) filing requirements, except that one report
with respect to one transaction was inadvertently not timely filed by a
director of the Company, and three reports with respect to the same transaction
were inadvertently not timely filed by three affiliated stockholders which
together were the beneficial owners of greater than ten percent of the Common
Stock at the time of the transaction.
INDEPENDENT AUDITORS
Deloitte & Touche, LLP audited the Company's financial statements for the
fiscal year ended December 31, 1995, and the Board of Directors has approved
the engagement of that firm to serve as the Company's auditors for 1996.
Representatives of Deloitte & Touche are expected to be present at the Annual
Meeting and will be afforded the opportunity to make a statement if they desire
to do so and to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be considered by the Company for
inclusion in the proxy materials for the 1997 Annual Meeting of Stockholders
must be received by the Company by January 3, 1997. Such proposals should be
directed to Kinark Corporation, Attention: Secretary, 7060 South Yale Avenue,
Tulsa, Oklahoma 74136. No stockholder proposals were received for inclusion
in this Proxy Statement.
OTHER MATTERS
Management is not aware of any other business to be presented at the
meeting. However, should any additional matters properly come before the
meeting, it is the intention of the persons named in the accompanying proxy to
vote on such matters in accordance with their best judgment. The enclosed
proxy confers discretionary authority to take action with respect to any
additional matters which may come before the meeting.
All expenses in connection with solicitation of proxies will be borne by
the Company. In addition to solicitation by mail, proxies may be solicited
personally by telephone, telecopy or telegraph by Company officers and
employees. The Company has also retained Morrow & Co., Inc., 909 Third Avenue,
New York, New York 10022-4799, to assist in such solicitation for a fee of
$7,500 plus customary out-of-pocket expenses. Brokers, banks, nominees,
fiduciaries and other custodians will be requested to solicit beneficial owners
of shares and will be reimbursed for their expenses.
Chemical Mellon Shareholder Services has been retained to receive and
tabulate proxies and to provide representatives to act as inspectors of
election for this Annual Meeting of Stockholders.
By order of the Board of Directors
/s/ Carolyn A. Fredrich
Carolyn A. Fredrich, Secretary
Tulsa, Oklahoma
May 3, 1996
<PAGE>
EXHIBIT 1
PROPOSED ARTICLE FOURTH OF THE
RESTATED CERTIFICATE OF INCORPORATION
FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is Eighteen Million (18,000,000) shares of Common
Stock of a par value of Ten Cents ($.10) per share.
<PAGE>
APPENDIX
FORM OF
KINARK CORPORATION
1996 STOCK OPTION PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
1
ARTICLE II THE PLAN
4
2.1 Name
4
2.2 Purpose.
4
2.3 Effective Date.
5
ARTICLE III PARTICIPANTS
5
ARTICLE IV ADMINISTRATION
5
4.1 Duties and Powers of the Committee
5
4.2 Interpretation; Rules.
5
4.3 No Liability
6
4.4 Majority Rule
6
4.5 Company Assistance
6
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN
6
5.1 Limitations
6
5.2 Antidilution
6
ARTICLE VI OPTIONS
8
6.1 Types of Options Granted
8
6.2 Discretionary Options
8
6.3 Optionee Limitations
8
6.4 $100,000 Limitation
9
6.5 Exercise Price of Discretionary Options
9
6.6 Exercise Period of Discretionary Options
9
6.7 Non-Employee Director Options
9
6.8 Option Exercise
10
6.9 Nontransferability.
11
6.10 Termination of Employment or Service
11
6.11 Certain Successor Options
11
6.12 Effect of Change in Control
12
ARTICLE VII STOCK APPRECIATION RIGHTS
12
7.1 SAR Awards
12
7.2 Determination of Price
12
7.3 Exercise of a SAR
12
7.4 Payment of a SAR Spread
12
7.5 Effect of SARs on Stock Subject to Plan
12
7.6 Termination of SARs
13
7.7 Nontransferability
13
7.8 No Stockholder Rights
13
ARTICLE VIII STOCK CERTIFICATES
14
ARTICLE IX TERMINATION AND AMENDMENT
14
9.1 Termination and Amendment
14
9.2 Rule 16b-3 Requirement
14
9.3 Effect on Grantee's Rights
15
ARTICLE X RELATIONSHIP TO OTHER COMPENSATION PLANS
15
ARTICLE XI MISCELLANEOUS
15
11.1 Replacement or Amended Grants
15
11.2 Employment Rights.
15
11.3 Section 16 of Exchange Act
15
11.4 Plan Binding on Successors.
15
11.5 Singular, Plural, Gender
15
11.6 Headings Not Part of Plan
16
11.7 Interpretation
16
11.8 Governing Law.
16
<PAGE>
KINARK CORPORATION
1996 STOCK OPTION PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the following meanings unless
the
context clearly indicates to the contrary:
"Advisor" or "Consultant" shall mean any person performing services for
the Company or any Subsidiary of the Company, with or without compensation, to
whom the Company chooses to grant Options in accordance with the Plan, provided
that bona fide services must be rendered by such person and such services shall
not be rendered in connection with the offer or sale of securities in a
capital-raising transaction.
"Award" shall mean a grant of a SAR under this Plan.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall mean the occurrence of either of the following
events:
(a) A change in the composition of the Board as a result of which fewer
than one-half of the incumbent Directors are Directors who either:
(i) were Directors of the Company twenty-four (24) months
prior to
such change, or
(ii) were elected, or nominated for election, to the Board
with the
affirmative votes of at least a majority of the
Directors who
had been Directors of the Company twenty-four (24)
months prior
to such change and who were still in office at the
time of the
election or nomination; or
(b) Any "person" (as such term is used in Sections 13(d) and 14(d)
of the
Exchange Act), by the acquisition or aggregation of
securities, is or
becomes the beneficial owner, directly or indirectly, of
securities
of the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of
Directors
(the "Base Capital Stock"); except that any change in the
relative
beneficial ownership of the Company's securities by any person
resulting solely from a reduction in the aggregate number of
outstanding shares of Base Capital Stock shall be disregarded
until
such person increases in any manner, directly or indirectly,
such
person's beneficial ownership of any securities of the
Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
including
effective date and transition rules (whether or not codified). Any reference
herein to a specific section of the Code shall be deemed to include a reference
to any applicable corresponding provision of future law.
"Committee" shall mean a committee of at least three (3) Directors
appointed from time to time by the Board, having the duties and authority set
forth herein in addition to any other authority granted by the Board; provided,
however, that with respect to any Discretionary Options or Awards granted to an
individual who is also a Section 16 Insider, the Committee shall consist of at
least two (2) Directors (who need not be members of the Committee with respect
to Options or Awards granted to any other individuals) who are Disinterested
Persons, and all authority and discretion shall be exercised by such
Disinterested Persons, and references herein to the "Committee" shall mean such
Disinterested Persons insofar as any actions or determinations of the Committee
shall relate to or affect Discretionary Options or Awards made to or held by
any Section 16 Insider. At any time that the Board shall not have appointed a
committee as described above, any reference herein to the Committee shall mean
a reference to the Board.
"Company" shall mean Kinark Corporation, a Delaware corporation.
"Director" shall mean a member of the Board and any person who is an
advisory or honorary director of the Company if such person is considered a
director for the purposes of Section 16 of the Exchange Act.
"Disabled Optionee" shall mean a Grantee who suffers a Disability.
"Disability" shall mean a physical or mental infirmity which impairs a
Grantee's ability to substantially perform his duties with the Company or a
Subsidiary for a period of 180 consecutive days, as determined by an
independent physician selected by agreement between the Company and the Grantee
or, failing such agreement, selected by two physicians (one of which shall be
selected by the Company and the other by the Grantee); provided, however,
"Disability" shall have the meaning set forth in Section 22(e)(3) of the Code
and the regulations promulgated thereunder in respect of an Optionee granted
Incentive Stock Options.
"Discretionary Option" shall mean an Option granted under this Plan,
at
the discretion of the Committee, in accordance with, and subject to, Section
6.2 hereof, and which may be an Incentive Stock Option or a non-Incentive Stock
Option.
"Disinterested Person" shall have the meaning given such term under
Rule
16b-3 of the Exchange Act, as the same may be in effect from time to time, or
in any successor rule thereto.
"Employee" shall mean an employee of the Company, or of any
Subsidiary, as
defined under Section 3401(c) of the Code and the regulations thereunder.
Unless the context otherwise indicates, the term "Employee" shall include any
Officers or Directors who are not Non-Employee Directors.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended
and as the same may be amended from time to time. Any reference herein to a
specific section of the Exchange Act shall be deemed to include a reference to
any corresponding provision of future law.
"Exercise Price" shall mean the price at which an Optionee may
purchase a
share of Stock under a Stock Option Agreement.
"Fair Market Value" on any date shall mean the closing sales price of
the
Stock on such date on the national securities exchange having the greatest
volume of trading in the Stock during the thirty (30) day period preceding such
date or, if such exchange was not open for trading on such date, the next
preceding date on which it was open.
"For Cause" termination shall mean the termination of the Grantee's
employment as a result of: (i) any act that constitutes, on the part of the
Grantee, fraud, dishonesty, gross malfeasance of duty, or conduct grossly
inappropriate to the Grantee's position of employment; or (ii) the conviction
(from which no appeal may be or is timely taken) of the Grantee of a felony.
"Grantee" shall mean a person who is an Optionee (or his permitted
assign)
or a person who has received an Award of a SAR.
"Incentive Stock Option" shall mean an Option that complies with and
is
subject to the terms, limitations and conditions of Section 422 of the Code and
the regulations promulgated thereunder.
"Non-Employee Director" shall mean a Director of the Company who has
not
been an Officer or an Employee of the Company or any Subsidiary at any time
during the twelve (12) months preceding the grant of a Non-Employee Director
Option.
"Non-Employee Director Option" shall mean an Option granted to a Non-
Employee Director in accordance with, and subject to, Section 6.7 hereof.
"Officer" shall mean a person who constitutes an officer of the
Company
for the purposes of Section 16 of the Exchange Act, as the same may be in
effect from time to time, or in any successor rule thereto.
"Option" shall mean an option, including a Discretionary Option and a
Non-
Employee Director Option, to purchase Stock granted pursuant to the provisions
of Article VI hereof.
"Optionee" shall mean a person to whom an Option has been granted
hereunder or his permitted assign.
"Plan" shall mean the Kinark Corporation 1996 Stock Option Plan, the
terms
of which are set forth herein, as the same may be amended from time to time.
"Qualified Domestic Relations Order" shall have the meaning set forth
in
Section 414(p)(1)(A) of the Code and the regulations promulgated thereunder.
"SAR" means a stock appreciation right, which is the right to receive
an
amount equal to the SAR Spread.
"SAR Agreement" shall mean a written agreement setting forth the terms
of
an Award of a SAR, as provided in Section 7.1 hereof.
"SAR Price" shall mean the base value established by the Committee for
a
SAR on the date the SAR is granted and which is used in determining the SAR
Spread.
"SAR Spread" shall mean, with respect to any SAR, an amount equal to
(a)
the Fair Market Value of a share of Stock on the date such SAR is exercised,
less (b) the SAR Price of such SAR.
"Section 16 Insider" shall mean any person who is subject to the
provisions of Section 16 of the Exchange Act, as provided in Rule 16a-2
promulgated pursuant to the Exchange Act, as the same may be in effect from
time to time, or in any successor rule thereto.
"Stock" shall mean the Common Stock, par value $.10 per share, of the
Company, subject to the provisions of Article V hereof.
"Stock Option Agreement" shall mean a written agreement between the
Company and an Optionee under which the Optionee may purchase Stock hereunder,
as provided in Article VI hereof.
"Subsidiary" shall mean any corporation in which the Company directly
or
indirectly owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock of such corporation.
"Vested" shall refer to an Option that may be exercised by an Optionee
under the terms of this Plan on or after a certain date specified in the
applicable Stock Option Agreement.
ARTICLE II
THE PLAN
2.1 Name. This Plan shall be known as the "Kinark Corporation
1996 Stock
Option Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests
of the
Company, its Subsidiaries and its stockholders by affording Directors and
Employees of the Company and its Subsidiaries, as well as Consultants and
Advisors to the Company or any Subsidiary, an opportunity to acquire or
increase their proprietary interests in the Company. The objective of the
Options and Awards is to promote the growth and profitability of the Company
and its Subsidiaries by providing the Grantees with an additional incentive to
achieve the Company's objectives through participation in its success and
growth and by encouraging their continued association with or service to the
Company and its Subsidiaries.
2.3 Effective Date. The effective date of this Plan is June 5,
1996,
subject to the approval of this Plan by the stockholders of the Company at the
annual meeting of the stockholders on June 5, 1996, or any adjournment thereof.
ARTICLE III
PARTICIPANTS
The class of persons eligible to participate in this Plan shall
consist of
all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which shall include, but not be limited to,
all Directors and Employees of the Company or any Subsidiary, as well as
Consultants and Advisors to the Company or any Subsidiary; provided, however,
that (a) only Employees of the Company or any Subsidiary shall be eligible to
receive grants of Incentive Stock Options and (b) Non-Employee Directors are
only eligible to receive Non-Employee Director Options.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. This Plan shall be
administered
by the Committee. The Committee shall select one of its members as its
Chairman and shall hold its meetings at such times and places as it may
determine. The Committee shall keep minutes of its meetings and shall make
such rules and regulations for the conduct of its business as it may deem
necessary. The Committee shall have the power to act by unanimous written
consent in lieu of a meeting, and to meet telephonically. In administering
this Plan, the Committee's actions and determinations shall be binding on all
interested parties. The Committee shall have the power to grant Discretionary
Options and Awards in accordance with the provisions of this Plan and may grant
Discretionary Options and Awards singularly, in combination, or in tandem.
Subject to the provisions of this Plan, the Committee shall have the discretion
and authority to determine those persons to whom Discretionary Options or
Awards will be granted, the number of shares of Stock subject to each
Discretionary Option or Award, such other matters as are specified herein, and
any other terms and conditions of a Stock Option Agreement and SAR Agreement.
To the extent not inconsistent with the provisions of this Plan, the Committee
may give a Grantee an election to surrender a Discretionary Option or Award in
exchange for the grant of a new Discretionary Option or Award, and shall have
the authority to amend or modify an outstanding Stock Option Agreement or SAR
Agreement, or to waive any provision thereof, provided that the Grantee
consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of
this
Plan, the Committee shall have complete authority to interpret this Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement and SAR Agreement,
and to make all other determinations necessary or advisable for the
administration of this Plan, including, without limitation, the amending or
altering of this Plan and any Options or Awards granted hereunder as may be
required to comply with or to conform to any federal, state or local laws or
regulations.
4.3 No Liability. Neither any Director nor any member of the
Committee
shall be liable to any person or entity for any act or determination made in
good faith with respect to this Plan or any Option or Award granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee
shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of
the Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary
in the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to the antidilution provisions
of Section
5.2, the maximum number of shares of Stock that may be issued hereunder
pursuant to Options or as payment of a SAR Spread shall be eight hundred
thousand (800,000). Any or all shares of Stock subject to the Plan may be
issued in respect of Incentive Stock Options and non-Incentive Stock Options
and as payment of a SAR Spread, or in any combination thereof. Except as
otherwise provided in Section 5.2, the amount of Stock subject to the Plan may
not be increased without stockholder approval, as provided in Article IX
hereof. Shares of Stock subject to an Option or issued as payment of a SAR
Spread may be either authorized and unissued shares or treasury shares issued
and later acquired by the Company. The shares of Stock subject to any
unexercised portion of an Option that has terminated for any reason (except as
set forth in the following paragraph) may again be subject to an Option or
issued as payment of a SAR Spread under this Plan, and shall not be considered
as having been optioned or issued in computing the number of shares of Stock
remaining available for issuance under this Plan.
5.2 Antidilution.
(a) If (i) the outstanding shares of Stock are increased,
decreased,
or changed into or exchanged for a different number or kind of shares or other
securities of the Company, by reason of merger, consolidation, reorganization,
recapitalization, reclassification, combination or exchange of shares, or stock
split or stock dividend, (ii) any spin-off, split-off or other distribution of
assets materially affects the price of the Stock, or (iii) there is any
assumption and conversion to this Plan by the Company of an acquired company's
outstanding option grants, then:
(A) the maximum aggregate number and the class
or series of
shares of Stock available for issuance hereunder shall be
adjusted
appropriately by the Committee; and
(B) the rights of Optionees (concerning the
number of shares
subject to Options and the Exercise Price) under outstanding
Options
and the rights of the holders of Awards (concerning the terms
and
conditions of the lapse of any then-remaining restrictions),
shall be
adjusted appropriately by the Committee.
(b) If the Company is a party to any reorganization in
which it does
not survive, involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company, the Committee, in its discretion,
may:
(i) notwithstanding other provisions hereof, declare that
all or a
portion of the Options granted under this Plan shall become
exercisable
immediately notwithstanding the provisions of the respective Stock
Option
Agreements regarding exercisability, that all such Options shall
terminate
thirty (30) days after the Committee gives written notice of the
immediate
right to exercise all such Options and of the decision to terminate
all
Options not exercised within such 30-day period, and that all then-
remaining restrictions pertaining to all or a portion of the Awards
under
this Plan shall immediately lapse; and/or
(ii) notify all Grantees that all or a portion of the
Options and
Awards granted under this Plan shall be assumed by the successor
corporation or substituted on an equitable basis with options or stock
appreciation rights issued by such successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection
with a reorganization described in Section 5.2(b), the provisions of that
Section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause all then-remaining restrictions pertaining to Options
and Awards under the Plan to lapse, and shall cause every Option and Award
outstanding under the Plan to terminate to the extent not exercised prior to
the adoption of the plan of dissolution or liquidation by the stockholders;
provided that, notwithstanding any other provisions hereof, the Committee may
declare all Options and Awards granted under the Plan to be exercisable at any
time on or before the fifth (5th) business day following such adoption,
notwithstanding the provisions of the respective Stock Option Agreements or SAR
Agreements regarding exercisability.
(d) The adjustments described in paragraphs (a) through
(c) of this
Section 5.2, and the manner of their application, shall be determined solely by
the Committee, and any such adjustment may provide for the elimination of
fractional share interests; provided, however, that any adjustment made by the
Committee shall be made in a manner that will not cause an Incentive Stock
Option to be other than an Incentive Stock Option under applicable statutory
and regulatory provisions. The adjustments required under this Article V shall
apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Types of Options Granted. The Committee may, under this Plan,
grant
either Incentive Stock Options or Options which do not qualify as Incentive
Stock Options; provided, however, that only Employees of the Company or any
Subsidiary shall be eligible to receive grants of Incentive Stock Options.
Non-Employee Director Options shall be non-Incentive Stock Options. Within the
limitations provided in this Plan, both Incentive Stock Options and non-
Incentive Stock Options may be granted to the same person at the same time, or
at different times, under different terms and conditions, as long as the terms
and conditions of each Option are consistent with the provisions of this Plan.
Without limitation of the foregoing, Discretionary Options may be granted
subject to conditions based on the financial performance of the Company or any
other factor the Committee deems relevant. Neither the Company, nor any
Subsidiary or any Director or Officer of the Company or any Subsidiary warrants
or represents that (i) any Option granted under this Plan shall be considered
an Incentive Stock Option for applicable tax purposes, or (ii) favorable or
desirable tax treatment or characterization will be applicable in respect of
any Options.
6.2 Discretionary Options. The Committee may grant Discretionary
Options
under this Plan upon such restrictions, terms and conditions as the Committee
may prescribe. Each Discretionary Option granted hereunder shall be evidenced
by minutes of a meeting or the written consent of the Committee and by a
written Stock Option Agreement executed by the Company and the Optionee. The
terms of the Discretionary Option, including the Discretionary Option's
duration, vesting schedule, exercise price, and whether it is intended to be an
Incentive Stock Option, shall be determined by the Committee, and stated in the
Stock Option Agreement. No Incentive Stock Option may be granted more than ten
(10) years after the effective date of this Plan. Separate Stock Option
Agreements may be used for Discretionary Options intended to be Incentive Stock
Options and those not so intended, but any failure to use such separate
agreements shall not invalidate, or otherwise adversely affect the Optionee's
interest in, the Discretionary Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an
Incentive
Stock Option to any person who, at the time the Incentive Stock Option is
granted:
(a) is not an Employee of the Company or any of its
Subsidiaries; or
(b) owns or is considered to own stock possessing at
least ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries; provided, however, that this limitation
shall not apply if at the time an Incentive Stock Option is granted the
Exercise Price is at least one hundred ten percent (110%) of the Fair Market
Value of the Stock subject to such Option and such Option by its terms is not
exercisable after five (5) years from the date on which the Option is granted.
For the purpose of this subsection (b), a person shall be considered to own:
(i) the stock owned, directly or indirectly, by or for his or her brothers and
sisters (whether by whole or half blood), spouse, ancestors and lineal
descendants; (ii) the stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust in proportion to such person's stock
interest, partnership interest or beneficial interest therein; and (iii) the
stock which such person may purchase under any outstanding options of the
Company or any Subsidiary.
6.4 $100,000 Limitation. Except as provided below, the Committee
shall
not grant an Incentive Stock Option to, or modify the exercise provisions of
any outstanding Incentive Stock Option held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Company and any Subsidiary, such that the
aggregate Fair Market Value (determined as of the respective dates of grant or
modification of each Option) of the Stock with respect to which such Incentive
Stock Options are exercisable for the first time during any calendar year is in
excess of $100,000 (or such other limit as may be prescribed by the Code from
time to time); provided, that the foregoing restriction on modification of
outstanding Incentive Stock Options shall not preclude the Committee from
modifying an outstanding Incentive Stock Option if, as a result of such
modification and with the consent of the Optionee, such Option no longer
constitutes an Incentive Stock Option; and provided further that, if the
$100,000 limitation (or such other limitation prescribed by the Code) described
in this Section 6.4 is exceeded, the Incentive Stock Option, the granting or
modification of which resulted in the exceeding of such limit, shall be treated
as an Incentive Stock Option up to the limitation and the excess shall be
treated as an Option not qualifying as an Incentive Stock Option.
6.5 Exercise Price of Discretionary Options. The Exercise Price
of the
Stock subject to each Discretionary Option shall be determined by the
Committee. Subject to the provisions of Section 6.3(b) hereof, the Exercise
Price of an Incentive Stock Option shall not be less than the Fair Market Value
of the Stock as of the date the Discretionary Option is granted (or in the case
of an Incentive Stock Option that is subsequently modified, on the date of such
modification).
6.6 Exercise Period of Discretionary Options. The period for the
exercise of each Discretionary Option granted hereunder shall be determined by
the Committee. The Committee shall have the authority to prescribe in any
Stock Option Agreement that the Discretionary Option may be exercised in
accordance with a vesting schedule set forth in such agreement. The Stock
Option Agreement with respect to each Discretionary Option intended to be an
Incentive Stock Option shall provide that such Discretionary Option shall not
be exercisable after the expiration of ten (10) years from the date of grant
(or modification) of the Discretionary Option. In addition, no Discretionary
Option granted to a Section 16 Insider shall be exercisable prior to the
expiration of six (6) months from the date such Discretionary Option is
granted, other than in the case of the death or disability of the Optionee.
6.7 Non-Employee Director Options.
(a) Commencing on July 1, 1996, and continuing on the
first day of
July 1 thereafter for a period of ten years, through and including July 1,
2005, each Non-Employee Director who is a member of the Board on each of such
dates shall automatically receive Non-Employee Director Stock Options to
purchase five thousand (5,000) shares of Stock. Non-Employee Director Options
shall be evidenced by a written Stock Option Agreement. Non-Employee Director
Options shall be non-Incentive Stock Options.
(b) The Exercise Price of Non-Employee Director Options
shall be
100% of the Fair Market Value of the Company's Stock as of July 1 of the year
in which the Non-Employee Director Option is granted.
(c) Each Non-Employee Director Option shall vest and
become
exercisable upon the expiration of six (6) months from the date such Non-
Employee Director Option is granted.
(d) Each Non-Employee Director Option shall terminate and
cease to
be exercisable after the expiration of ten (10) years from the date such Non-
Employee Director Option is granted.
(e) In the event a Non-Employee Director Optionee ceases
to be a
Director by reason of his or her death or Disability, the Optionee or the
Optionee's administrators, executors or personal representatives may exercise
the Optionee's Non-Employee Director Options on the earlier of (i) the last day
of the one (1) year period following the Optionee's death or the beginning of
the Optionee's Disability or (ii) the expiration of the Optionee's Non-Employee
Director Options.
(f) In the event a Non-Employee Director Optionee ceases
to be a
Director for any reason other than his or her death or Disability, the Optionee
may exercise his or her Non-Employee Director Options on the earlier of (i) the
last day of the two (2) year period following the date the Optionee ceases to
be a Director or (ii) the expiration of the Optionee's Non-Employee Director
Options.
(g) The anti-dilution provisions of Section 5.2 as well
as the
provisions of Sections 6.8 and 6.9 shall apply to Non-Employee Director
Options.
6.8 Option Exercise.
(a) Unless otherwise provided in the Stock Option
Agreement or
Section 6.6 hereof, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all Options which have become Vested
under the terms and conditions of the Option, but not at any time as to less
than one hundred (100) shares unless the remaining Options that have become
Vested relate to less than one hundred (100) shares.
(b) An Option shall be exercised by (i) delivery to the
Company at
its principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of the
full amount of the Exercise Price for such number of shares in accordance with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with
the involvement of a stockbroker in accordance with the federal margin rules
set forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the
stockbroker).
(c) The Exercise Price is to be paid in full in cash upon
the
exercise of the Option and the Company shall not be required to deliver
certificates for the shares purchased until such payment has been made;
provided, however, that the Committee may provide in a Stock Option Agreement
(or may otherwise determine in its sole discretion at the time of exercise)
that in lieu of cash, all or any portion of the Exercise Price may be paid by
tendering to the Company shares of Stock duly endorsed for transfer and owned
by the Optionee, or by authorization to the Company to withhold shares of Stock
otherwise issuable upon exercise of the Option, in each case to be credited
against the Exercise Price at the Fair Market Value of such shares on the date
of exercise (however, no fractional shares may be so transferred, and the
Company shall not be obligated to make any cash payments in consideration of
any excess of the aggregate Fair Market Value of shares transferred over the
aggregate Exercise Price); provided further, the Committee may provide in a
Stock Option Agreement (or may otherwise determine in its sole discretion at
the time of exercise) that, in lieu of cash or shares, all or a portion of the
Exercise Price may be paid by the Optionee's execution of a recourse promissory
note the principal amount of which shall be equal to the Exercise Price or the
relevant portion thereof, subject to compliance with applicable state and
federal laws, rules and regulations.
(d) In addition to and at the time of payment of the
Exercise Price,
the Company may withhold, or require the Optionee to pay to the Company in
cash, the amount of any federal, state and local income, employment or other
withholding taxes which the Committee determines are required to be withheld
under federal, state or local law in connection with the exercise of an Option;
provided, however, the Committee may provide in a Stock Option Agreement (or
may otherwise determine in its sole discretion at the time of exercise) that
all or any portion of such tax obligations may, upon the election of the
Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.
(e) The holder of an Option shall not have any of the
rights of a
stockholder with respect to the shares of Stock subject to the Option until
such shares have been issued and transferred to the Optionee upon the exercise
of the Option.
6.9 Nontransferability. No Option shall be transferable by an
Optionee
other than by will or the laws of descent and distribution; provided, however,
non-Incentive Stock Options may also be transferred pursuant to a Qualified
Domestic Relations Order. During the lifetime of an Optionee, Options shall be
exercisable only by such Optionee (or by such Optionee's guardian or legal
representative, should one be appointed).
6.10 Termination of Employment or Service. The Committee shall
have the
power to specify, with respect to the Discretionary Options granted to a
particular Optionee, the effect upon such Optionee's right to exercise a
Discretionary Option upon termination of such Optionee's employment or service
under various circumstances, which effect may include immediate or deferred
termination of such Optionee's rights under a Discretionary Option, or
acceleration of the date at which a Discretionary Option may be exercised in
full; provided, however, that in no event may an Incentive Stock Option be
exercised after the expiration of ten (10) years from the date of grant
thereof.
6.11 Certain Successor Options. To the extent not inconsistent
with the
terms, limitations and conditions of Code Section 422 and any regulations
promulgated thereunder, an Option issued in respect of an option to acquire
stock of any entity acquired, by merger or otherwise, by the Company or any
Subsidiary, may contain terms that differ from those stated in this Article VI,
but solely to the extent necessary to preserve the rights and benefits
contained in such predecessor option, or to satisfy the requirements of Code
Section 424(a).
6.12 Effect of Change in Control. The Committee may determine, at
the
time of granting a Discretionary Option or thereafter, that such Discretionary
Option shall become exercisable on an accelerated basis in the event that a
Change in Control occurs with respect to the Company (and the Committee shall
have the discretion to modify the definition of Change in Control in a
particular Stock Option Agreement). If the Committee finds that there is a
reasonable possibility that, within the succeeding six (6) months, a Change in
Control will occur with respect to the Company, then the Committee may
determine that all outstanding Discretionary Options shall be exercisable on an
accelerated basis.
ARTICLE VII
STOCK APPRECIATION RIGHTS
7.1 SAR Awards. The Committee may grant Awards of SARs under this
Plan
upon such restrictions, terms and conditions as the Committee may prescribe;
provided, however, that the Committee may not grant Awards of SARs to Non-
Employee Directors. Each Award shall be governed by a SAR Agreement between
the Company and the Grantee which shall contain the restrictions, terms and
conditions prescribed by the Committee, including, without limitation,
restrictions on the time of exercise of the SAR to specified periods as may be
necessary to satisfy the requirements of Rule 16b-3. Awards of SARs may be
granted singularly, or in combination or in tandem with Options granted under
this Plan, and may be granted at the same time as or later than the grant of
the Option to which it relates.
7.2 Determination of Price. The SAR Price shall be established by
the
Committee in its sole discretion. The SAR Price shall not be less than one
hundred percent (100%) of the Fair Market Value of the Stock on the date the
SAR is granted for a SAR issued in tandem with an Incentive Stock Option.
7.3 Exercise of a SAR. A SAR shall be exercisable at such time as
may be
determined by the Committee, provided that a SAR issued in tandem with an
Option shall be exercisable to the extent that the related Option is
exercisable. Upon exercise of a SAR, the Grantee shall be entitled, subject to
the terms and conditions of this Plan and the SAR Agreement, to receive an
amount equal to the SAR Spread.
7.4 Payment of a SAR Spread. Payment of the SAR Spread for any
SAR shall
be made, at the sole discretion of the Committee, in (a) cash, (b) shares of
Stock, or (c) a combination of both. Shares of Stock used for this payment
shall be valued at their Fair Market Value on the date of exercise of the
applicable SAR.
7.5 Effect of SARs on Stock Subject to Plan. Stock issued in
payment of
the SAR Spread shall reduce the number of shares of Stock remaining available
for issuance under this Plan. The exercise of a SAR which results in the
termination of an unexercised Option issued in tandem with such SAR shall also
reduce the number of shares of Stock remaining available for issuance under
this Plan by the number of shares of Stock subject to the terminated Option.
7.6 Termination of SARs. A SAR may be terminated as follows:
(a) During the period of a Grantee's continuous
employment with the
Company or a Subsidiary, a SAR will be terminated only if it has been fully
exercised or it has expired by its terms.
(b) Upon termination of a Grantee's employment with the
Company or a
Subsidiary, the SAR will terminate upon the earliest of (i) the full exercise
of the SAR, (ii) the expiration of the SAR by its terms, and (iii) not more
than three (3) months following the date of employment termination; provided,
however, should termination of employment (A) result from the death or
Disability of the Grantee, the period referenced in clause (iii) hereof shall
be one (1) year, or (B) be For Cause, the SAR will terminate on the date of
employment termination. For purposes of this Plan, a leave of absence approved
by the Company shall not be deemed to be termination of employment unless
otherwise provided in the SAR Agreement or by the Company on the date of the
leave of absence.
(c) Subject to the terms of the SAR Agreement with the
Grantee, if a
Grantee should die or become subject to a Disability prior to the termination
of employment with the Company or any Subsidiary and prior to the termination
of a SAR, such SAR may be exercised to the extent that the Grantee shall have
been entitled to exercise it at the time of death or Disability, as the case
may be, by the Grantee, the estate of the Grantee or the person or persons to
whom the SAR shall have been transferred by will or by the laws of descent and
distribution.
(d) Except as otherwise expressly provided in the SAR
Agreement with
the Grantee, in no event will the continuation of the term of a SAR beyond the
date of termination of employment allow the Employee, or his beneficiaries or
heirs, to accrue additional rights under this Plan, have additional SARs
available for exercise, or receive a higher benefit than the benefit payable as
if the SAR had been exercised on the date of employment termination.
7.7 Nontransferability. No SAR shall be transferable by a
Grantee;
provided, however, that a SAR issued in tandem with an Option shall be
transferable, if at all, to the same extent and upon the same terms and
conditions as the related Option.
7.8 No Stockholder Rights. The Grantee of a SAR shall have no
rights as
a stockholder with respect to such SAR. In addition, no adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or rights, except as provided in Section 5.2
hereof.
ARTICLE VIII
STOCK CERTIFICATES
The Company shall not be required to issue or deliver any certificate
for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof prior to fulfillment of all of the following conditions:
(a) the admission of such shares to listing on all stock
exchanges
on which the Stock is then listed;
(b) the completion of any registration or other
qualification of
such shares which the Committee shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;
(c) the obtaining of any approval or other clearance from
any
federal or state governmental agency or body which the Committee shall
determine to be necessary or advisable; and
(d) the lapse of such reasonable period of time following
the
exercise of the Option as the Board from time to time may establish for reasons
of administrative convenience.
Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant
to applicable federal and state securities laws.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination and Amendment. Subject to Section 9.2 hereof, the
Board
may at any time terminate this Plan, and may at any time and from time to time
and in any respect amend this Plan; provided, however, that the Board (unless
its actions are approved or ratified by the stockholders of the Company within
twelve (12) months of the date that the Board amends the Plan) may not amend
this Plan to:
(a) increase the total number of shares of Stock issuable
under this
Plan, except as contemplated under Article V hereof;
(b) materially change the class of persons that may
participate in
this Plan; or
(c) otherwise materially increase the benefits accruing
to
participants under this Plan.
9.2 Rule 16b-3 Requirement. As required by Rule 16b-3 of the
Exchange
Act, any provision of this Plan relating to Non-Employee Director Options shall
not be amended more than once every six months, except as is necessary to make
the Plan comport with changes in the Code, the Employment Retirement Income
Security Act, or the rules thereunder.
9.3 Effect on Grantee's Rights. No termination, amendment or
modification of this Plan shall adversely affect a Grantee's rights under a
Stock Option Agreement or SAR Agreement without the consent of the Grantee or
his legal representative.
ARTICLE X
RELATIONSHIP TO OTHER COMPENSATION PLANS
The adoption of this Plan shall not affect any other stock option,
incentive or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for Employees or Directors of the Company or any of its
Subsidiaries.
ARTICLE XI
MISCELLANEOUS
11.1 Replacement or Amended Grants. At the sole
discretion of the
Committee, and subject to the terms of this Plan, the Committee may modify
outstanding Discretionary Options or Awards or accept the surrender of
outstanding Discretionary Options or Awards and grant new Discretionary Options
or Awards in substitution thereof. However, no modification of a Discretionary
Option or Award shall adversely affect a Grantee's rights under a Stock Option
Agreement or SAR Agreement without the consent of the Grantee or his legal
representative.
11.2 Employment Rights. Nothing in this Plan or in any Stock
Option
Agreement or SAR Agreement shall confer on any person any right to continue in
the employ of the Company or any of its Subsidiaries, or shall interfere in any
way with the right of the Company or any of its Subsidiaries to terminate such
person's employment at any time.
11.3 Section 16 of Exchange Act. With respect to persons
subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3, as the same may be amended
from time to time, or any successor thereto. To the extent any provision of
the Plan or action by the Committee fails to so comply, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
11.4 Plan Binding on Successors. This Plan shall be
binding upon the
successors and assigns of the Company.
11.5 Singular, Plural, Gender. Whenever used herein,
nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender and vice versa.
11.6 Headings Not Part of Plan. Headings of Articles and
Sections
hereof are inserted for convenience and reference, and they do not constitute
part of this Plan.
11.7 Interpretation. With respect to Section 16 Insiders,
transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act, and shall be interpreted
consistent therewith.
11.8 Governing Law. This Plan shall be governed by, and construed
in
accordance with, the laws of the State of Delaware, without regard to conflicts
of laws principles.
* * * * *
<PAGE>
PRELIMINARY COPIES
FORM OF PROXY CARD
KINARK CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JUNE 5, 1996
The undersigned, a stockholder of record of Kinark Corporation (the
"Company") on April 15, 1996 (the "Record Date"), hereby appoints Michael T.
Crimmins and Paul R. Chastain, or either of them with full power of
substitution, as proxies for the undersigned, to vote all shares of common
stock, $.10 par value per share (the "Common Stock"), of the Company, which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held on June 5, 1996, and at any adjournments or postponements thereof, on the
following matters.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW
AND
FOR THE PROPOSALS DESCRIBED BELOW.
1. Election of the following nominees as Directors: Richard C.
Butler,
Paul R. Chastain, Michael T. Crimmins, Ronald J. Evans, Mark E. Walker, Joseph
J. Morrow and John H. Sununu.
FOR all nominees WITHHOLD
INSTRUCTIONS: To vote FOR or WITHHOLD
listed (except as AUTHORITY to AUTHORITY
to vote for the election of
marked to the vote for all all
candidates, check the appropriate
contrary) nominees listed box
above. To withhold authority to
the
election of any candidate(s), write
[ ] [ ] the
name(s) of such candidate(s) in the
following
space: __________________.
IF NO BOX
IS MARKED ABOVE, THE
UNDERSIGNED WILL BE DEEMED TO VOTE FOR
EACH
CANDIDATE EXCEPT THAT THE
UNDERSIGNED WILL NOT BE DEEMED TO
CONSENT
TO THE ELECTION OF ANY
CANDIDATE
WHOSE NAME IS WRITTEN IN THE
SPACE
PROVIDED ABOVE.
2. Amend Article Fourth of the Company's Amended and Restated
Certificate of Incorporation (the "Certificate") to increase the number of
authorized shares of Common Stock from 12,000,000 shares to 18,000,000 shares,
as set forth in the accompanying proxy statement (the "Proxy Statement").
[ ] FOR [ ] AGAINST
[ ] ABSTAIN
3. Approve the Company's 1996 Stock Option Plan, as set forth in
the
Proxy Statement.
[ ] FOR [ ] AGAINST
[ ] ABSTAIN
IF NO BOX IS MARKED ABOVE WITH RESPECT TO PROPOSALS 2 AND/OR 3, THE
UNDERSIGNED WILL BE DEEMED TO HAVE VOTED FOR SUCH PROPOSALS.
4. In their discretion, upon such other matters as may properly
come
before the Annual Meeting.
The invalidity, illegality or unenforceability of any particular
provision
of this Proxy shall be construed in all respects as if such invalid, illegal or
unenforceable provision were omitted without affecting the validity, legality
or enforceability of the remaining provisions hereof.
(Continued on next page.)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE.
Please sign below exactly
as name appears on this
Proxy. If shares are
registered in more than one
name, all such persons
should sign. A
corporation should sign in
its full corporate
name by a duly authorized
officer, stating his
title. Trustees,
guardians, executors and
administrators should sign
in their official
capacity, giving their
full title as such. If a
partnership, please sign
in the partnership name
by authorized persons.
Make sure that the name
on your stock
certificate(s) is exactly as you
indicate below.
Dated:_______________________________, 1996
______________________________________________
(Signature)
[mailing label]
______________________________________________
(Signature if held
Jointly)
______________________________________________
(Title or authority (if
applicable))
**THIS IS YOUR PROXY CARD**
