As filed with the Securities and Exchange Commission on June 7, 1996.
Registration No. 333-4937
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- ---------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
- ---------
KINARK CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
- ---------
DELAWARE 71-0268502
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
- ---------
7060 SOUTH YALE AVENUE
TULSA, OKLAHOMA 74136
(918) 494-0964
(Address, Including Zip Code and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
PAUL R. CHASTAIN
CHIEF FINANCIAL OFFICER
7060 SOUTH YALE AVENUE
TULSA, OKLAHOMA 74136
(918) 494-0964
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent for Service)
- ---------
COPY TO:
Paul A. Quiros, Esq.
Nelson Mullins Riley & Scarborough, L.L.P.
1201 Peachtree Street, Suite 2200
Atlanta, Georgia 30361
(404) 817-6000
(404) 817-6050 (Fax)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE
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If the only securities being registered in this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class ofAmount to beProposed MaximumProposed MaximumAmount of
Securities to be RegisteredRegistered(1)Price Per Share(2)Aggregate Offering Price(2)Registration Fee(3)
<S> <C> <C> <C> <C>
Common Stock, $.10 par value6,066,536$4.47 $27,117,415.92 $1,954.58
</TABLE>
(1) Includes an additional 1,268,072 shares not included in the Company's
initial filing made on May 31, 1996.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a). The estimated maximum price per share is calculated
in accordance with subsections (c) and (g) of Rule 457 and represents the
average of the high and low trading prices of the Common Stock on May 29, 1996.
(3) This amount is the registration fee for the additional 1,268,072 shares
included in this amendment. The Company's initial filing made on May 31, 1996,
was accompanied by a filing fee in the amount of $7,396.25 for registration of
4,798,464 shares.
---------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
<PAGE>
KINARK CORPORATION
Cross Reference Sheet Between Items in Part I of
Form S-3 and the Prospectus
Item Number and Caption Prospectus Caption
1. Front of Registration Statement
and Outside Front Cover Page
of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Inside Front and Outside Back Cover
Cover Pages of Prospectus Pages
3. Summary Information, Risk Factors Summary; Risk Factors; Summary Pro
and Ratio of Earnings to Fixed Forma and Selected Financial Data
Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price The Rights Offering
6. Dilution *
7. Selling-Security Holders *
8. Plan of Distribution Outside Front Cover Page; Summary; The
Rights Offering
9. Description of Securities to Be Description of Capital Stock
Registered
10. Interests of Named Experts and Legal Matters; Experts
Counsel
11. Material Changes Summary; Business Strategy; The
Acquisition or Merger
12. Incorporation of Certain Inside Front Cover Page; Description
Information by Reference of Capital Stock
13. Disclosure of Commission Position *
on Indemnification for Securities
Act Liabilities
*Omitted because answer is negative or not applicable<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 7, 1996
PROSPECTUS
KINARK
CORPORATION
__________ COMMON SHARES
Kinark Corporation ("Kinark" or the "Company") is offering up to 6,066,536
shares, to holders of record as of the close of business on ________________,
1996 (the "Record Date"), of its common stock, $.10 par value per share (the
"Common Stock"). Each stockholder will receive one nontransferable right
(each, a "Right") for each one share of Common Stock held on the Record Date
(the "Rights Offering"), with each such Right entitling the holder thereof to
subscribe for and purchase one share of Common Stock (the "Subscription
Privilege") for a price of $____ per share (the "Subscription Price"). The
Rights will expire at 5:00 p.m. New York City time, on ____________, 1996,
unless extended as provided herein (the "Expiration Date"). Based on the
Company's 18,000,000 authorized shares of Common Stock and the 7,201,536 shares
currently issued and outstanding or reserved for issuance pursuant to the
Company's stock option plans (collectively, the "Plans"), if each of the
stockholders exercised its Rights in full, the number of shares of Common Stock
issued and outstanding and reserved for issuance pursuant to the Plans after
the Rights Offering would be 13,268,072 and the number of shares of Common
Stock authorized and available for future issuance after the Rights Offering
would be 4,731,928. The Rights are evidenced by nontransferable Subscription
Cards (the "Subscription Cards") distributed to holders of record on the Record
Date with this Prospectus. See "The Rights Offering." There are no assurances
of proceeds to the Company under this Rights Offering. Once a holder has
exercised any Rights, such exercise may not be revoked. Holders exercising
Rights should complete and return their Subscription Card(s) with payment of
the Subscription Price promptly to insure timely receipt and the collection of
any funds prior to the Expiration Date.
[The following paragraph appears sideways along the left-hand margin of this
page in red ink.]
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE.
The proceeds of this Rights Offering, together with other sources of funds
available to the Company, if required, will be used by the Company to offer to
acquire the remaining 364 shares, representing approximately 31%, of the
capital stock (the "Acquisition") of Rogers Galvanizing Company ("Rogers") not
currently owned by the Company, at a cost of approximately $2,584,400 and to
pay related fees and expenses, for capital expenditures, for general corporate
purposes and, if available, for possible future acquisitions primarily in the
galvanizing industry and for repayment of the Company's term loan. In the
event that some or all of the minority stockholders of Rogers decline to accept
the Company's offer to purchase the remaining Rogers stock, the Company intends
to complete the Acquisition through a merger pursuant to Delaware law (the
"Merger"). In the Merger, all of the minority stockholders of Rogers would
receive cash for their shares of Rogers stock. Completion of the Rights
Offering is contingent upon satisfaction or waiver of certain conditions,
including the determination by the Board of Directors of the Company that
sufficient funds are available to permit the Company to consummate the
Acquisition or Merger. In the event the conditions to the Rights Offering have
not been satisfied by _______________, 1996, or the Rights Offering is
otherwise terminated, all subscription payments will be returned promptly,
without interest or deduction. See "The Acquisition or Merger" and "Use of
Proceeds."
This document contains a Prospectus of the Company with respect to the
shares of Common Stock issuable upon the exercise of the Rights.
The Company's Common Stock is listed for trading on the American Stock
Exchange ("AMEX") under the symbol "KIN." The last reported sales price of the
Common Stock on ________________, 1996, was $_______ per share. The Company
anticipates that the shares of Common Stock issued upon the exercise of the
Rights will be approved for trading on the AMEX.
PRIOR TO DECIDING TO EXERCISE RIGHTS AND PURCHASE SHARES OF THE COMMON
STOCK, POTENTIAL INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH IN
"RISK FACTORS" ON PAGE 12 IN ADDITION TO THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS. STOCKHOLDERS WHO DO NOT EXERCISE THEIR RIGHTS IN FULL WILL
SUFFER SIGNIFICANT DILUTION IN THEIR PROPORTIONATE INTEREST IN THE EQUITY
OWNERSHIP AND VOTING POWER OF THE COMPANY. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Public Underwriting DiscountsProceeds to the
and Commissions(1) Company(2)
<S> <C> <C> <C>
Per Share $__________ N/A $__________
Total $__________ N/A $__________
</TABLE>
(1) See "The Rights Offering - Information Agent" for information with respect
to certain contingent fees which could be payable by the Company to Morrow
& Co., Inc., the Information Agent for the Rights Offering.
(2) Before deducting expenses of the Rights Offering payable by the Company,
estimated to be $1,104,000. See "Use of Proceeds."
- --------
The date of this Prospectus is _______________, 1996.<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549; New York Regional Office, Public Reference Room, 7
World Trade Center, 13th Floor, New York, New York 10048; and Chicago Regional
Office, Suite 1400, Citicorp Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549, at
prescribed rates. The Company's Common Stock is listed on the American Stock
Exchange, Inc., and reports, proxy statements and other information concerning
the Company may be inspected at the office of the American Stock Exchange,
Inc., 86 Trinity Place, New York, New York 10006. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. The Registration Statement and any amendments thereto, including
exhibits filed as a part thereof, are available for inspection and copying as
set forth above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents heretofore filed by the Company with the
Commission under the Exchange Act are incorporated herein by reference: (a)
the Company's Annual Report on Form 10-K for the year ended December 31, 1995,
as amended; (b) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996; (c) the Company's Current Report on Form 8-K dated
February 5, 1996, as amended; (d) the Company's Current Report on Form 8-K
dated February 27, 1996, as amended; and (e) the Company's Current Report on
Form 8-K dated May 14, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statements contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so
modified or superseded. All information appearing in this Prospectus is
qualified in its entirety by the information and financial statements
(including notes thereto) appearing in the documents incorporated herein by
reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS
THERETO) ARE AVAILABLE WITHOUT CHARGE, UPON WRITTEN OR ORAL REQUEST BY ANY
PERSON TO WHOM THIS PROSPECTUS HAS BEEN DELIVERED, FROM MORROW & CO., INC., 909
THIRD AVENUE, 20TH FLOOR, NEW YORK, NEW YORK 10022-4799 (TELEPHONE (800) 566-
9061).
PROSPECTUS SUMMARY
This summary is qualified in its entirety by the more detailed information
and consolidated financial statements, including the notes thereto, appearing
elsewhere or incorporated by reference in this Prospectus. Pursuant to the
Stock Purchase Agreement dated as of August 3, 1994, as amended (the "Rogers
Agreement"), by and among the Company and The C.L. Simpson Inter Vivos
Revocable Trust and The Alta Rogers Simpson Inter Vivos Revocable Trust
(collectively, the "Trusts"), the Company and the Trusts agreed for the Company
to acquire 600 shares, representing 51.2%, of the capital stock of Rogers from
the Trusts (the "Trust Stock") for $7,100 a share. In addition, the Company
agreed to offer to purchase the remaining shares of Rogers from its minority
stockholders (the "Minority Stock") at the same price per share paid for the
Trust Stock. The Company acquired the Trust Stock on February 5, 1996, and in
February and March, 1996, acquired 208 shares of the Minority Stock,
representing 17.7% of the capital stock of Rogers, with the proceeds of a
private placement of 2,319,038 of the Company's Common Stock (the "Private
Placement"). Sales pursuant to the Private Placement closed on January 29, and
April 4, 1996, with gross proceeds of $5,797,595. The Company currently owns
68.9% of the Rogers common stock and intends to offer to acquire the remaining
Minority Stock with a portion of the proceeds of this Rights Offering (the
"Acquisition") at the same price per share paid for the Trust Stock. The
Company cannot determine how many additional minority stockholders of Rogers
will accept the Company's offer, but for purposes of pro forma financial
information appearing herein, all of the remaining Minority Stock is assumed to
have been purchased. In the event that some or all of the minority stockholders
of Rogers decline to accept the Company's offer to purchase the remaining
Minority Stock, the Company intends to complete the Acquisition through a
merger which would be effected under Section 251 of the Delaware General
Corporation Law (the "Merger"). The Company would effect the Merger with a
wholly-owned subsidiary of the Company pursuant to Delaware law and all of the
Rogers stockholders, including the minority stockholders, would be paid cash
consideration for their Rogers common stock in the amount of $7,100 a share.
The minority stockholders of Rogers would have the right to exercise
dissenters' rights pursuant to Delaware law, which would allow them to
challenge the amount of the consideration paid to them for their Minority Stock
in the Merger. The stockholders of the Company would have no such rights. The
exercise of dissenters' rights by the minority stockholders of Rogers could not
prevent the consummation of the Merger, but the exercise of such rights could
increase the cost of the Merger and the Acquisition by increasing the amount
the Company has to pay for each share of Minority Stock if it were determined
that the shares should be valued at an amount greater than $7,100 a share and
by increasing the costs associated with the Merger due to the costs that would
be incurred resolving the issues raised by the dissenting stockholders. See
"Risk Factors - Dissenters' Rights."
THE COMPANY
The Company is a diversified company conducting business in two market
segments: galvanizing and chemical storage and distribution. The Company
operates its galvanizing business through Boyles Galvanizing Company, a wholly-
owned subsidiary ("Boyles"), and Rogers, which is currently a majority owned
subsidiary. Boyles and Rogers engage principally in hot dip galvanizing, a
process in which iron and steel products are immersed in molten zinc to create
an alloyed metal surface which is highly resistant to oxidation or corrosion.
Through its wholly-owned subsidiary, Lake River Corporation ("Lake River"), the
Company engages in the bulk storage of chemicals. Lake River, located in
Chicago, has 233 tanks providing 44 million gallons of liquid storage capacity
and 600,000 square feet of warehouse capacity. Lake River also operates bag
and drum filling lines for integrated storage, formulating, packaging and
distribution of chemicals. The Company recently divested itself of its
specialty chemicals subsidiary, Kinpak, Inc. ("Kinpak"), which engaged in the
production and packaging of antifreeze, windshield washer fluid and household
cleaning products. Cash proceeds in the amount of $850,000 from the sale of
Kinpak's assets were received during February 1996 and the buyer assumed the
capital lease on Kinpak's plant facilities.
The Company was incorporated under the laws of the State of Delaware in
1955. The mailing address of the Company's executive offices is P.O. Box 1499,
Tulsa, Oklahoma 74101-1499. Its telephone number is (918) 494-0964.
BUSINESS STRATEGY
A key part of the Company's business strategy is to grow its galvanizing
business. The acquisition of a majority of the outstanding capital stock of
Rogers (the "Rogers Stock") with the proceeds of the Private Placement has
created the largest independent galvanizing operation in North America, and
management believes that the combined company will have the largest share of
the galvanizing market in the five-state region comprised of Texas, Missouri,
Kansas, Oklahoma and Arkansas. The acquisition of the remaining Minority Stock
will allow the Company to consolidate the financial results of Rogers with the
Company's results for tax purposes. Consolidation of the Company's and
Rogers' financial results should result in a favorable tax effect because it
should increase the Company's future taxable income (on a consolidated basis)
which will allow the Company to more quickly realize the tax benefit of certain
tax loss carryforwards by applying such tax loss carryforwards against its
future taxable income. Consolidation of financial results should also provide
additional net earnings for the Company which would strengthen its operating
results. Currently, the Company is able to present only 68.9% of the Rogers
net earnings in its operating results. Based on the pro forma combined results
of the Company for the most recently completed fiscal year, management believes
that the consolidation of financial results will increase the revenues and
earnings generated by the Company's galvanizing operations. The Company
believes that the acquisition of all or part of the remaining Minority Stock
will allow the Company to continue the assimilation of Rogers as a Company
subsidiary and allow the Company to realize some economies by consolidating the
corporate operations of Rogers into its operations. Management believes that
consummation of the Acquisition or the Merger and integration of Rogers with
the Company will provide additional opportunities to enhance profitability of
its galvanizing operations. The integration of Rogers should allow the Company
to reduce overhead by combining the administrative, personnel, accounting and
purchasing functions of Boyles and Rogers. Centralized purchasing is expected
to result in improved allocation and pricing for zinc raw material, chemicals
and natural gas supplies, key components utilized in the galvanizing process.
The integration of Rogers should also allow the Company to standardize
operating procedures and equipment in its galvanizing business to increase
labor productivity and improve service turn-around time, critical factors which
have a direct effect on daily production volume. In addition, the Acquisition
or Merger should provide the Company with greater financial and managerial
resources to enhance the Company's ability to make future acquisitions of
independent galvanizing operations and its ability to make capital
expenditures. See "Business Strategy."
THE ACQUISITION OR MERGER
Pursuant to the Rogers Agreement, the Company acquired the Trust Stock
from the Trusts for $7,100 per share for an aggregate purchase price of
$4,260,000 in cash with a portion of the proceeds of the Private Placement. As
part of the Rogers Agreement, the Company agreed to offer to purchase the
Minority Stock from the minority stockholders for cash at a price of $7,100 per
share, the same price per share paid for the Trust Stock. The Company has
already acquired 208 shares of the Minority Stock for $1,476,800 in cash with a
portion of the proceeds of the Private Placement. If all of the remaining
Minority Stock is purchased at the proposed price per share the acquisition
price will be $2,584,400. Giving effect to the payment of fees and expenses
related to the Rights Offering and the Acquisition, including certain expenses
related to the acquisition of the Trust Stock, the total cost associated with
the Rights Offering and the Acquisition is estimated to be approximately
$3,688,000. See "Use of Proceeds." The cost of the Merger should be
equivalent to the cost of the Acquisition, unless stockholders perfect their
dissenters' rights as described above and it is determined that the shares
should be valued at an amount greater than $7,100 a share. The Acquisition or
the Merger will be funded from the proceeds of the Rights Offering and other
sources, if required. The Company will also use a portion of the proceeds for
capital expenditures, for general corporate purposes and, if available, for
future acquisitions primarily of galvanizing operations and for repayment of
the Company's term loan. See "Use of Proceeds." There can be no assurance
that the Company will be able to acquire any or all of the remaining Minority
Stock if the Rights Offering is successful without having to effect the Merger
as described above, or that the Company will receive sufficient proceeds to
fund capital expenditures, for general corporate purposes, to finance
additional acquisitions or to repay amounts outstanding under the term loan.
See "Summary Pro Forma and Selected Consolidated Financial Information" and
"The Acquisition or Merger."
THE RIGHTS OFFERING
Rights The Company is offering up to 6,066,536 shares of
Common Stock to holders of record on __________, 1996,
(the "Record Date"). Each stockholder of the Company
will receive one nontransferable right (the "Rights")
for each one share of the Common Stock held by such
holder as of the close of business on the Record Date.
Based on the Company's authorized 18,000,000 shares of
Common Stock and 7,201,536 shares issued and
outstanding or reserved for issuance pursuant to the
Company's stock option plans (collectively, the
"Plans") as of the Record Date, if all of the Rights
were exercised in full, the number of shares of Common
Stock issued and outstanding and reserved for issuance
pursuant to the Plans after the Rights Offering would
be 13,268,072 and the number of shares of Common Stock
authorized and available for future issuance after the
Rights Offering would be 4,731,928. The Rights are
evidenced by nontransferable Subscription Cards (the
"Subscription Cards"). See "The Rights Offering - The
Rights" and "The Rights Offering - Subscription
Privileges."
Subscription Price $____ in cash per share of Common Stock subscribed for
pursuant to the Subscription Privilege (the
"Subscription Price"). See "The Rights Offering - The
Rights."
Subscription Privilege Each Right entitles the holder thereof to purchase one
share of Common Stock upon payment of the Subscription
Price (the "Subscription Privilege"). See "The Rights
Offering - Subscription Privilege."
Non-Transferability of The Rights are nontransferable.
Rights
Record Date ________________, 1996, at 5:00 p.m. New York City
time.
Expiration Date ________________, 1996, at 5:00 p.m. New York City
time, unless extended (the "Expiration Date"). The
Expiration Date will not be extended beyond
____________, 1996, and if the conditions to the
Rights Offering have not been satisfied by
____________, 1996, or the Rights Offering is
otherwise terminated, all subscription payments will
be returned promptly, without interest or deduction.
See "The Rights Offering - Expiration Date."
Procedure for Exercising Rights may be exercised by the holder by properly
Rights completing and signing the Subscription Card
evidencing the Rights and forwarding such Subscription
Card (or following the Guaranteed Delivery Procedures
described herein), with payment of the Subscription
Price for each share of Common Stock subscribed for
pursuant to the Subscription Privilege to Chemical
Mellon Shareholder Services, L.L.C. (the "Subscription
Agent") on or prior to the Expiration Date. If the
mail is used to forward Subscription Cards, it is
recommended that insured, registered mail be used. No
interest will be paid on funds delivered in payment of
the Subscription Price. ONCE A HOLDER HAS EXERCISED
ANY RIGHTS, SUCH EXERCISE MAY NOT BE REVOKED. See
"The Rights Offering - Exercise of Rights."
Procedure for Exercising Subscription Cards will not be mailed to holders of
Rights by Foreign and Common Stock whose addresses are outside the United
Certain Other States or who have an APO or FPO address, but will be
Stockholders held by the Subscription Agent for their account. To
exercise the Rights represented thereby, such holders
must contact the Subscription Agent on or prior to
5:00 p.m. New York City time, on ________________,
1996. See "The Rights Offering - Foreign and Certain
Other Stockholders."
Persons Holding Common Persons holding Common Stock and receiving the
Stock and Wishing to distributed with respect thereto through a
Exercise Rights Through broker, dealer, commercial bank, trust
Others company or other nominee should contact the
appropriate institution or nominee and request it to
effect the transactions for them. See "The Rights
Offering - Exercise of Rights."
Issuance of Common Stock Certificates representing shares of the Common Stock
purchased pursuant to the valid exercise of the Rights
will be delivered to subscribers as soon as
practicable after the Expiration Date and the
conditions to the Rights Offering have been satisfied.
See "The Rights Offering - Subscription Privilege."
Subscription Agent Chemical Mellon Shareholder Services, L.L.C.
Information Agent Morrow & Co., Inc. (Telephone number: (800) 566-9061).
Common Stock to be The exact number of shares outstanding after
Outstanding After the completion of the Rights Offering depends upon
Rights Offering the number of shares sold herein. Two scenarios are
presented: (i) 12,133,072 shares assuming the
issuance of 100% of the shares offered hereby (the
"100% Case"); and (ii) 9,099,804 shares assuming the
issuance of 3,033,268 (or 50%) of the shares offered
hereby (the "50% Case"). See "The Rights Offering"
and "Capitalization."
AMEX Symbol for the KIN
Common Stock
Use of Proceeds The proceeds from the sale of the Common Stock in the
Rights Offering will be used by the Company to fund
the Acquisition or the Merger, to pay related fees and
expenses, to pay for capital expenditures and, if
available, for future acquisitions primarily of
galvanizing operations and for repayment of
outstanding amounts pursuant to the Company's term
loan. See "Use Of Proceeds," and "The Acquisition or
Merger." There are no assurances of proceeds to the
Company under the Rights Offering or that the Company
will be able to acquire all of the remaining Minority
Stock, without effecting the Merger.
Conditions to the Rights The issuance of shares pursuant to the Rights
Offering Offering is subject to the following conditions: (i)
the absence of any suit or other action seeking to
enjoin the Rights Offering, the Acquisition or the
Merger; and (ii) the determination by the Board of
Directors of the Company that sufficient funds are
available to the Company from the proceeds of the
Rights Offering and other sources, if required, to
enable it to complete the Acquisition or the Merger.
In the event that the foregoing conditions to the
Rights Offering have not been satisfied by _________,
1996, or the Rights Offering is otherwise terminated,
all subscription payments will be returned promptly,
without interest or deduction. See "The Rights
Offering - Conditions to the Rights Offering."
Amendments and The Company may extend the Rights Offering and
Termination otherwise amend the terms of the Rights Offering or
terminate the Rights Offering at any time prior to the
Expiration Date or thereafter in the Board of
Directors' discretion or if the conditions to the
Rights Offering have not been satisfied. See "The
Rights Offering - Amendment and Termination."
Risk Factors A purchase of the Common Stock involves a substantial
degree of risk. See "Risk Factors" for certain
factors that a potential investor should carefully
consider.
<PAGE>
SUMMARY PRO FORMA AND SELECTED CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except share and per share data)
The Company's pro forma combined financial data set forth below and on the
following page should be read in conjunction with the Unaudited Pro Forma
Combined Condensed Financial Statements included elsewhere herein. Such pro
forma data do not purport to present the financial position or results of
operations of the Company had the transactions assumed herein occurred on the
dates indicated, nor are they necessarily indicative of the results of
operations which may be expected in the future. The pro forma combined
financial data have been prepared showing the acquisition of all the remaining
Minority Stock, and are presented assuming the Acquisition or Merger is funded
either (i) by the proceeds of the sale of all of the shares offered hereby (the
"100% Case") or (ii) by the sale of 3,033,268 of the shares offered hereby (or
50% of the total shares offered) (the "50% Case"). The summary historical data
presented below and on the following pages have been derived from the Company's
Consolidated Financial Statements and notes thereto incorporated by reference
herein and Rogers' Consolidated Financial Statements and notes thereto included
elsewhere herein, and should be read in conjunction therewith.
Pro Forma
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1996
100% Case(2) 50% Case(3)
Kinark Rogers Pro Forma Pro Forma Pro Forma Pro Forma
HistoricalHistorical(1)AdjustmentsCombinedAdjustmentsCombined
<S> <C> <C> <C> <C> <C> <C>
Sales $10,417 $1,603 $- $12,020 $- $12,020
Costs and expenses 9,885 1,752 (45) 11,592 (45) 11,592
Other expenses 205 21 157 69 (35) 191
Income tax expense (benefit)120(65) 74 129 29 84
Minority Interest (83) - 83 - 83 -
Net earnings (Loss) 124 (105) 211 230 134 153
Net earnings (Loss)
per common shares .02 - - .02 - .02
Weighted average
shares outstanding (4)5,318 - 6,815 12,133 3,782 9,100
</TABLE>
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995
100% Case(2) 50% Case(3)
Kinark Rogers Pro Forma Pro Forma Pro Forma Pro Forma
Historical(5)Historical(6)AdjustmentsCombinedAdjustmentsCombined
<S> <C> <C> <C> <C> <C> <C>
Sales $25,246 $17,614 $- $42,860 $- $42,860
Costs and expenses 25,761 16,014 (180) 41,595 (180) 41,595
Other expenses 634 26 (629) 31 (139) 521
Income tax expense (benefit)(446)586 295 435 116 256
Discontinued Operation
(Loss) (1,176) - 1,176 - 1,176 -
Net earnings (loss) (1,879) 988 1,484 799 1,361 488
Net earnings (loss)
per common share (.50) - - .07 - .05
Weighted average shares
outstanding (4) 3,747 - 8,386 12,133 5,353 9,100
</TABLE>
(1) Rogers historical for the month of January 1996.
(2) Pro forma data reflecting (i) the issuance of all 6,066,536 shares of the
Common Stock offered in this Rights Offering, and (ii) the acquisition of
100% of the remaining capital stock of Rogers by the Company. See "The
Acquisition or Merger."
(3) Pro forma data reflecting (i) the issuance of 3,033,268 of the shares of
the Common Stock offered in this offering, and (ii) the acquisition of
100% of the remaining capital stock of Rogers by the Company. See "The
Acquisition or Merger."
(4) Weighted average shares outstanding include the dilutive effect of stock
options, if applicable.
(5) During August 1995, the Company finalized a formal plan to discontinue the
operations of its Kinpak subsidiary, comprising the Company's chemical
packaging business. Substantially all of the assets of Kinpak were
subsequently sold on February 27, 1996 for $1,840,000 consisting of
$850,000 cash and the assumption by the buyer of the capital lease on its
plant facilities which was financed by a $3,000,000 industrial revenue
bond issue. Included in the Discontinued Operation Loss of $1,176,000 is
a loss of $307,000 from operations in addition to the $1,264,000 loss on
disposal (before income taxes of $395,000) which includes $460,000 of
operating losses incurred through February 27, 1996, the closing date, and
a $804,000 loss on the sale of assets. Revenues from Kinpak were
$6,346,236 (including revenues of $263,110 for the period through the
closing date) for the year ended December 31, 1995.
(6) Rogers historical for the fiscal year ended September 30, 1995.
Kinark Historical
<TABLE>
<CAPTION>
For the Three Months
Ended March 31, For the Year Ended December 31,
1996 1995 1995(1)199419931992 1991(2)
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $10,417 $6,074 $25,246$26,223$25,542$26,338$29,369
Costs and expenses 9,885 6,355 25,76124,08722,83723,11923,830
Other expense 205 144 634 598 1,510850 477
Income tax expense (benefit)120 (155) (446)527 430 550 1,120
Minority Interest (83) - - - - - -
Discontinued Operations - (212) (1,176)(601)15 (377)(256)
Change in Accounting
Method - - - - 1,802- -
Net earnings (loss)(3) 124 (482) (1,879)4102,5821,4423,686
Net earnings (loss)
per common share 3) .02 (.13) (.50)(.11).68 .38 1.00
Weighted average
shares outstanding(4) 5,318 3,751 3,7473,7523,7553,7483,705
</TABLE>
<TABLE>
<CAPTION>
At and For the
Three Months
Ended At and For the Year Ended December 31,
March 31, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Working capital $2,857 $2,875$2,761$3,961$4,028$2,000
Total assets 31,328 18,37520,95420,93118,40216,841
Capital expenditures 365 1,0551,4102,4593,1862,311
Depreciation and Amortization538 1,4711,4691,3041,2381,305
Long-term obligations 7,057 5,9326,0097,7207,5486,417
Stockholders' equity 13,913 8,16510,0449,6347,0525,119
Per share 2.31 2.18 2.68 2.57 1.88 1.41
Common shares outstanding6,027 3,7473,7463,7463,7463,623
</TABLE>
(1) During August 1995, the Company finalized a formal plan to discontinue the
operations of its Kinpak subsidiary, comprising the Company's chemical
packaging business. Substantially all of the assets of Kinpak were
subsequently sold on February 27, 1996 for $1,840,000 consisting of
$850,000 cash and the assumption by the buyer of the capital lease on its
plant facilities which was financed by a $3,000,000 industrial revenue
bond issue. Included in the Discontinued Operation Loss of $1,176,000 is
a loss of $307,000 from operations in addition to the $1,264,000 loss on
disposal (before income taxes of $395,000) which includes $460,000 of
operating losses incurred during the third and fourth quarter of 1995 and
the period through February 27, 1996, the closing date, and a $804,000
loss on the sale of assets. Revenues from Kinpak were $6,346,236
(including revenues of $263,110 for the period through the closing date)
for the year ended December 31, 1995.
(2) The Company changed its method of valuing certain inventory from the
first-in first-out (FIFO) method to the last-in first-out (LIFO) method in
1991. This change increased 1991 net earnings by $300,000 or $.08 per
share.
(3) Earnings from continuing operations before cumulative effect of change in
accounting method.
(4) Weighted average shares outstanding include the dilutive effect of stock
options, if applicable.
Rogers Historical
<TABLE>
<CAPTION>
For the Six Months
Ended March 31,For the Year Ended September 30,
1996 1995 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C>
Sales $10,049$8,607 $17,614$12,625$11,544$10,907$11,575
Costs and expenses 9,5107,626 16,01412,24710,07010,09610,094
Other (income) expense 101 40 26 (50) (44) (8) (26)
Income tax expense 153 327 586 104 511 312 495
Earnings 285 614 988 324 1,007507 960
Dividends paid 113 113 225 459 225 225 284
</TABLE>
<TABLE>
<CAPTION>
At and For
the Six Months
Ended At and For the Year Ended September 30,
March 31, 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Working capital $982 $1,488$1,119$1,515$1,160$909
Total assets 10,150 8,4726,8525,5484,2984,157
Capital expenditures 1,125 1,276973 923 596 828
Depreciation and Amortization430 807 672 550 474 381
Long-term obligations 1,392 1,377812 305 360 233
Stockholders' equity 4,624 4,4513,6883,8243,0422,760
/TABLE
<PAGE>
RISK FACTORS
Prior to deciding to exercise the Rights and purchase the Common Stock in
the Rights Offering, potential investors should carefully consider the
following factors, together with other information contained in or incorporated
by reference into this Prospectus, in evaluating the Company and its
businesses.
CONCENTRATION OF OWNERSHIP IN MANAGEMENT - CERTAIN ANTI-TAKEOVER EFFECTS
Assuming the sale of all 6,066,536 shares offered hereby (the 100% Case),
the members of the Board of Directors and senior management of the Company
would beneficially own approximately 46.1% of the Common Stock if all such
persons exercised their subscription privileges to the fullest extent.
Assuming the sale of 3,033,268 of the shares offered hereby (the 50% Case), the
members of the Board of Directors and senior management would beneficially own
approximately 61.4% of the Common Stock if all such persons exercised their
subscription privileges to the fullest extent. Although it is unlikely that
the members of the Board of Directors and senior management will exercise their
Subscription Privileges to the fullest extent, this Common Stock ownership,
together with various provisions of the Company's Restated Certificate of
Incorporation may tend to deter non-negotiated tender offers or other efforts
to obtain control of the Company and thereby deprive stockholders of
opportunities to sell shares of Common Stock at prices higher than those
prevailing in the market. See "Description of Capital Stock - Certain
Certificate of Incorporation and Bylaw Provisions."
RECENT OPERATING LOSSES
During six of the last seven fiscal quarters, the Company experienced
operating losses due primarily to losses at Kinpak and diminished profitability
at Lake River, its chemical packaging and storage subsidiaries. The Company
divested itself of Kinpak on February 27, 1996. While the Company reported
positive earnings for the first quarter of 1996, and management expects the
Company's earnings to continue to improve after the divestiture of Kinpak and
if the Acquisition or the Merger is consummated, there can be no assurance that
the Company will be profitable over any particular time frame. Continued
losses will impair the Company's liquidity and capital resources and reduce the
value of the Common Stock. See "Business Strategy."
PRO FORMA LIQUIDITY AND CAPITAL RESOURCES
The Company's recent losses have reduced its liquidity and capital
resources. Depending upon the number of shares of Common Stock issued in the
Rights Offering, substantially all of the net proceeds from the Rights Offering
could be utilized in the Acquisition of the remaining Minority Stock. In
addition, the Company's outstanding borrowings under its bank term loan and
revolving credit facility mature on April 30, 1997, and there can be no
assurance that the maturity date can be extended or the borrowings refinanced.
Rogers has outstanding borrowings under two revolving lines of credit and
three term loans provided under a bank credit agreement, and notes payable to
unrelated companies for the purchase of equipment. The two revolving lines of
credit both mature on July 31, 1996. The three term loans mature at various
dates in October 1996, July 1997 and October 2000. The notes payable to
unrelated companies have maturities at various dates ranging from 1997 through
2015. There can be no assurance that any of these maturity dates can be
extended or the borrowings refinanced.
Unless the Company and Rogers are sufficiently profitable or the bank
borrowings are extended or refinanced, the Company and Rogers will likely have
to find additional sources of working capital to fund their operations. There
can be no assurance that these sources, if needed, will be found.
In addition, the Company's bank credit agreement provides that in the
event of certain defaults under the Rogers bank credit agreement, such defaults
would constitute a default under the Company's bank credit agreement and could
cause the maturity date of the Company's outstanding borrowings to be
accelerated. There can be no assurance that such a default by Rogers will not
occur.
CONDITIONS TO THE ACQUISITION OR MERGER
The Company's ability to complete the Acquisition or the Merger is
dependent upon its securing the necessary financing if the proceeds of the
Rights Offering are not sufficient. There can be no assurance that sufficient
funds from these sources will exist to complete the Acquisition or the Merger.
If sufficient funds are not made available through this Rights Offering and the
Company is not able to raise the additional funds necessary to complete the
Acquisition or the Merger, no shares will be sold in this Rights Offering and
all subscription payments will be returned promptly, without interest or
deduction. See "The Rights Offering - Conditions to The Rights Offering" and
"The Acquisition or Merger."
IMPACT OF RIGHTS OFFERING ON HOLDERS OF COMMON STOCK
The Rights entitle the holders of the Common Stock to purchase shares of
the Common Stock at a price below the prevailing market price of the Common
Stock immediately prior to the commencement of the Rights Offering. Holders of
the Common Stock who exercise their Rights will preserve, and may increase,
their proportionate interest in the equity ownership and voting power of the
Company. Holders who do not exercise their Rights will experience a decrease
in their proportionate interest in the equity ownership and voting power of the
Company. The consummation of the sale of the shares offered hereby would
increase the number of shares of Common Stock outstanding (on a pro forma basis
as of March 31, 1996) (i) by 6,066,536 shares (or 100%) to 12,133,072 shares,
assuming all of the shares offered hereby are issued (the 100% case), or (ii)
3,033,268 shares (or 50%) to 9,099,804 shares, assuming 50% of the shares
offered hereby are issued (the 50% case).
DISSENTERS' RIGHTS
In the event that some or all of the minority stockholders of Rogers
decline to accept the Company's offer to purchase the Minority Stock, the
Company intends to complete the Acquisition through the Merger. Upon
completion of the Merger, the minority stockholders of Rogers would receive
cash consideration for their Minority Stock in the amount of $7,100 a share.
The minority stockholders of Rogers would have the right to exercise
dissenters' rights under Delaware law, which would allow them to challenge the
amount of the cash consideration paid for their Minority Stock in the Merger.
The stockholders of the Company would have no such rights. The exercise of
dissenters' rights by the minority stockholders of Rogers would not prevent
consummation of the Merger, but the exercise of such rights could increase the
cost of the Merger and the Acquisition by increasing the amount the Company has
to pay for each share of Minority Stock if it were determined that the shares
should be valued at an amount greater than $7,100 a share and by increasing the
costs associated with the Merger due to the valuation costs related to the
issues raised by the dissenting stockholders. In the event the Company
completes the Acquisition through the Merger, there can be no assurance that
some or all of the minority stockholders of Rogers will not exercise their
dissenters' rights.
MARKET CONSIDERATIONS
There can be no assurance that the market price of the Common Stock will
not decline during the subscription period or that, following the issuance of
the Rights and the issuance of the underlying shares upon exercise of the
Rights, a subscribing Rights holder will be able to sell shares purchased in
the Rights Offering at a price equal to or greater than the Subscription Price.
The election of a Rights holder to exercise Rights in the Rights Offering is
irrevocable. Moreover, until certificates are delivered, subscribing Rights
holders may not be able to sell the Common Stock that they have purchased in
the Rights Offering. Certificates representing shares of the Common Stock
purchased pursuant to the Subscription Privilege will be delivered as soon as
practicable after the Expiration Date. No interest will be paid to Rights
holders on funds delivered to the Subscription Agent pursuant to the exercise
of Rights pending delivery of Common Stock acquired upon exercise of the Rights
or if the Rights Offering is terminated.
RIGHTS NOT TRANSFERABLE; NO MARKET FOR RIGHTS
The Rights are not transferable, and thus there will be no market or other
means for holders of the Rights to directly realize any value associated with
the Rights. Thus, holders of the Rights must exercise them and acquire
additional shares of the Common Stock in order to realize any such value. The
election of a Rights holder to exercise Rights in the Rights Offering is
irrevocable.
DEBT RESTRICTIONS
The terms of the Company's existing bank term loan and revolving credit
facility restrict certain aspects of the Company's operations. These
restrictions include specified minimum values for the net worth and working
capital and a maximum debt to net worth ratio for the Company, and limitations
on incurring additional debt or capital expenditures or engaging in
acquisitions and dispositions by the Company. There can be no assurance that
the Company will be able to comply with these restrictions without disrupting
its business.
The terms of Rogers' existing revolving lines of credit and term loans
restrict certain aspects of Rogers' operations. These restrictions include a
specified minimum value for the net worth of Rogers, limitations on the payment
of dividends and limitations on incurring additional debt or lease obligations.
There can be no assurance that Rogers will be able to comply with these
restrictions without disrupting its business.
COMPETITION
The independent hot dip galvanizing market is highly competitive. In
particular, during 1995, the Company's Boyles subsidiary was subject to
increasing price pressure from its competitors in certain of its geographic
markets, and a new independent galvanizer recently commenced operations in
Rogers' geographic market. Although prices have improved during 1996, the
current profitability of Boyles and Rogers, and hence the Company, will depend
in part on their ability to maintain current prices. There can be no assurance
that these prices can be maintained. See "Business Strategy."
GOVERNMENT REGULATION
The Company's operations are subject to various government regulations,
including those related to occupational safety and health (OSHA), workers'
compensation and environmental matters. Like their competitors in the
galvanizing and chemicals businesses, the Company and its subsidiaries,
including Rogers, will have regulatory compliance costs associated with past,
present and future operations, but the Company cannot presently quantify the
cost of complying with these regulations. While neither the Company, nor its
subsidiaries is presently the subject of any material claim or investigation
with respect to these regulations, there can be no assurance that the cost of
complying with these regulations in the future will not have a material adverse
effect on the Company or its subsidiaries.
BUSINESS STRATEGY
In May 1995, Michael T. Crimmins, currently the Chairman of the Board of
the Company, acquired 9.7% of the Company's Common Stock from Northbridge
Holdings, Inc. In connection with this acquisition, Mr. Crimmins assumed the
duties of Chairman of the Board of the Company and later became Chief Executive
Officer of the Company. Subsequently, in February 1996, Ronald J. Evans
assumed the duties of President of the Company.
Mr. Crimmins and the other members of the Board intend to lead the Company
toward a refocusing of its efforts on its galvanizing business. The Company
divested itself of its Kinpak specialty chemical subsidiary and has completed
the acquisition of a controlling interest in Rogers to expand its galvanizing
operations. Mr. Crimmins, Mr. Evans and Paul R. Chastain, all officers and
directors of the Company, now comprise the entire Board of Directors of Rogers
and control management of the Rogers business. The acquisition of a
controlling interest in Rogers has created the largest independent galvanizing
operation in North America, and management believes that the combined company
will have the largest share of the galvanizing market in the five-state region
comprised of Texas, Missouri, Kansas, Oklahoma and Arkansas. Rogers' sales
have increased steadily since 1990 due to a strong geographic niche in the
central Midwestern United States market and, based on its operating income for
the fiscal year ended September 30, 1995, Rogers would have been a major
contributor to the Company's profitability during this period.
A key part of the Company's business strategy is to grow its galvanizing
business. As part of its efforts to refocus on galvanizing, the Company is
proceeding toward consummation of the Acquisition or Merger and the full
integration and consolidation of Rogers into its operations. The Rights
Offering is an integral step in the financing of the Acquisition or Merger.
The acquisition of the remaining Minority Stock would allow the Company to
consolidate the financial results of Rogers with the Company's results for tax
purposes. Consolidation of the Company's and Rogers' financial results should
result in a favorable tax effect because it should increase the Company's
future taxable income (on a consolidated basis) which will allow the Company to
more quickly realize the tax benefit of certain tax loss carryforwards by
applying such tax loss carryforwards against its future taxable income.
Consolidation of financial results should also provide additional net earnings
for the Company which would strengthen its operating results. Currently, the
Company is able to present only 68.9% of the Rogers' net earnings in its
operating results. Based on the pro forma combined results of the Company for
the most recently completed fiscal year, management believes that the
consolidation of financial results will increase the revenues and earnings
generated by the Company's galvanizing operations.
Management believes that the acquisition of the remaining Minority Stock
will allow the Company to continue the assimilation of Rogers as a subsidiary
of the Company and allow the Company to realize some economies by consolidating
the corporate operations of Rogers. Management believes that consummation of
the Acquisition or the Merger and integration of Rogers with the Company will
provide additional opportunities to enhance profitability of its galvanizing
operations. The integration of Rogers should allow the Company to reduce
overhead by combining the administrative, personnel, accounting and purchasing
functions of Boyles and Rogers. Centralized purchasing is expected to result
in improved allocation and pricing for zinc raw material, chemicals and natural
gas supplies, key components utilized in the galvanizing process. The
integration of Rogers should also allow the Company to standardize operating
procedures and equipment in its galvanizing business to increase labor
productivity and improve service turn-around time, critical factors which have
a direct effect on daily production volume. Management also believes that
consummation of the Acquisition or Merger will allow the Company to more
effectively utilize the management teams of the combined operations and allow
the Company to fully integrate its sales and marketing programs in the
galvanizing business. In addition, the Acquisition or Merger should provide
the Company with greater financial and managerial resources necessary to
strengthen the competitive position of the Company which will enhance the
Company's ability to make future acquisitions of independent galvanizing
operations.
THE ACQUISITION OR MERGER
GENERAL
On August 3, 1994, the Company entered into an agreement (the "Rogers
Agreement") with the Trusts, which together owned 600 shares or 51.2% of the
capital stock (the "Trust Stock") of Rogers, to acquire their stock in Rogers
for approximately $4.3 million in cash or $7,100 a share. As part of the
Rogers Agreement, the Company agreed to offer to purchase the remaining shares
of Minority Stock from Rogers' minority stockholders for cash at a price per
share equivalent to that paid to the Trusts for the Trust Stock.
In February and March 1996, the Company acquired the Trust Stock and 208
shares of the Minority Stock with the proceeds of a private placement,
completed in April 1996, of 2,319,038 shares of the Company's Common Stock (the
"Private Placement"). The Private Placement represented the sale of
unregistered shares of the Company's Common Stock to certain accredited
investors at a sales price of $2.50 a share. The share price in the Private
Placement was based on the last reported sales price of the Common Stock on
December 14, 1995, the date the Private Placement was approved by the Company's
Board of Directors.
The Company currently owns 68.9% of the Rogers common stock and intends to
offer to acquire the remaining Minority Stock with a portion of the proceeds of
this Rights Offering at the same price per share paid for the Trust Stock. The
Company cannot determine how many additional minority stockholders of Rogers
will accept the Company's offer. In the event that some or all of the minority
stockholders of Rogers decline to accept the Company's offer to purchase the
Minority Stock, the Company intends to accomplish the Acquisition through a
merger which would be effected under Section 251 of the Delaware General
Corporation Law (the "Merger"). The Company would effect the Merger with a
wholly-owned subsidiary of the Company under Delaware law and all of the Rogers
stockholders, including the minority stockholders, would be paid cash
consideration for their Rogers common stock in the amount of $7,100 a share.
If all of the remaining Minority Stock is purchased at the proposed price
per share the acquisition price will be $2,584,400. Giving effect to the
payment of fees and expenses related to the Rights Offering and the
Acquisition, including certain expenses related to the acquisition of the Trust
Stock, the total cost associated with the Rights Offering and the Acquisition
is estimated to be approximately $3,688,000. See "Use of Proceeds." The cost
of the Merger should be equivalent to the cost of the Acquisition, unless
stockholders perfect their dissenters' rights and it is determined that the
shares should be valued at an amount greater than $7,100 a share. See "Risk
Factors - Dissenters' Rights." The cost of the Acquisition or the Merger would
be funded from the proceeds of the Rights Offering and other sources, if
required. The Company will also use a portion of the proceeds for capital
expenditures, for general corporate purposes and, if available, for future
acquisitions primarily of galvanizing operations and for repayment of the
Company's term loan. See "Use of Proceeds." There can be no assurance that
the Company will be able to acquire any or all of the remaining Minority Stock
if the Rights Offering is successful without having to effect the Merger as
described above, or that the Company will receive sufficient proceeds to fund
capital expenditures, for corporate purposes, to finance additional
acquisitions or to repay amounts outstanding under the term loan.
ROGERS' BUSINESS
Similar to the Company's Boyles subsidiary, Rogers provides corrosion
protection for metal components by means of hot dip galvanizing. Rogers was
incorporated in 1940 and competed with Boyles in the central midwestern United
States market. Although the two companies previously bid jobs for the same
customers, the primary markets of the two companies did not generally overlap
due to the diverse physical locations of the Boyles' and Rogers' plants.
Rogers galvanizes for more than 600 customers annually. Rogers' primary market
is in the Tulsa area, which generates approximately 65% of its annual tonnage.
Currently, 40% to 50% of Rogers' business is subject to a yearly contract or
blanket purchase order.
Rogers maintains and operates two galvanizing plants in Tulsa. On a
combined basis, Rogers operates three galvanizing kettles with 56,000 square
feet under roof. Combined capacity is 75,000 tons of galvanized steel per year
and, in the year ended December 31, 1995, Rogers galvanized approximately
54,000 tons of steel. Rogers employs approximately 235 full-time employees.
Rogers acquired a galvanizing company in Kansas City, Missouri in September
1995 which it operates as a wholly-owned subsidiary. This acquisition was
intended to expand Rogers' operations to better serve the geographic area of
the midwestern United States that it was already serving. A competitor of
Rogers recently built a new plant in the Tulsa area, and as a result the price
that Rogers can charge for galvanizing is expected to be subject to enhanced
competitive pressure.
In addition, Rogers conducts specialty galvanizing operations through two
subsidiaries, Spin-Galv, Inc. ("Spin-Galv") and Reinforcing Services, Inc.
("RSI"). Spin-Galv provides specialized centrifuge galvanizing for smaller
metal components by placing them in a basket-like container and "spinning" them
in a molten zinc solution. Markets targeted by Spin-Galv include fabricators,
original equipment manufacturers, and manufacturers of industrial fasteners and
connectors. RSI provides galvanized components primarily through a business
agreement with The Reinforced Earth Company ("RECO"). RSI purchases steel,
fabricates it to RECO's specifications and then galvanizes it using a highly
specialized and automated process that requires roughly one-third of the
personnel needed for more traditional galvanizing methods. This on-site
fabrication and galvanizing eliminates the in-bound transportation expense
normally incurred by RECO in shipping to the galvanizer. RSI's agreement with
RECO expires August 31, 1997. RSI plans to target other specialty
manufacturers, such as rebar manufacturers, to explore opportunities for adding
new galvanizing business.
USE OF PROCEEDS
The proceeds to the Company from the sale of the maximum number of shares
of Common Stock to be issued with respect to the Rights are estimated to be
approximately $___________, after deducting the estimated offering expenses
payable by the Company. However, there is no assurance that the Company will
receive any proceeds from the Rights Offering. The Company will use the net
proceeds of the Rights Offering and financing from other sources, if required,
to finance the Acquisition or the Merger, pay related fees and expenses, for
capital expenditures, for general corporate purposes and, if available, for
possible future acquisitions primarily in the galvanizing industry and for
repayment of the Company's term loan. The following table illustrates the
estimated sources and uses of funds, assuming that the Company acquired all the
remaining Minority Stock of Rogers on May 31, 1996, through either (i) the
issuance of all of the shares of Common Stock offered hereby (the "100% Case"),
or (ii) the issuance of 3,033,268 of the shares of Common Stock offered hereby
(the "50% Case"). There can be no assurance that the Company will receive any
proceeds from the Rights Offering.
<TABLE>
<CAPTION>
100% CASE 50% CASE
AMOUNT AMOUNT
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C>
SOURCES OF FUNDS: SOURCES OF FUNDS:
Common Stock offered hereby$ -- Common Stock offered hereby$ --
Other Sources(1) 11 Other Sources(1) 11
Total Sources of Funds$ -- Total Sources of Funds$ --
USES OF FUNDS: USES OF FUNDS:
Acquisition of Rogers $2,584 Acquisition of Rogers$2,584
Fees and expenses(2) 1,104 Fees and expenses(2)1,104
Capital Expenditures(3) -- Capital Expenditures(3) --
Acquisitions(4) --
Repayment of Term Loan(5) -- Repayment of Term Loan(5) --
Other corporate purposes -- Other corporate purposes --
Total Uses of Funds $ -- Total Uses of Funds$ --
</TABLE>
(1) Proceeds remaining from the Private Placement.
(2) This amount includes expenses for financial services related to the
initial acquisition of the Trust Stock which were not paid from the proceeds of
the Private Placement
(3) This amount would be used for capital improvements to upgrade or replace
existing galvanizing plants and operating equipment, to upgrade chemical
storage tanks and pipelines and for other projects to enhance the efficiencies
and profitability of the facilities operated by Boyles, Rogers and Lake River.
(4) This amount would be used to make strategic acquisitions primarily in the
galvanizing industry.
(5) This amount would be used to repay all or a portion of the outstanding
principal and interest relating to the Company's term loan from the Bank of
Oklahoma.
<PAGE>
CAPITALIZATION
The following table sets forth, assuming the acquisition of all of the
remaining Minority Stock, (i) the actual capitalization of the Company at March
31, 1996, (ii) the pro forma capitalization of the Company at March 31, 1996,
in the 100% Case, after deducting the estimated offering expenses and the
application of the net proceeds, and (iii) the pro forma capitalization of the
Company at March 31, 1996, in the 50% Case, after deducting the estimated
offering expenses and the application of the net proceeds.
<TABLE>
<CAPTION>
March 31, 1996
Pro Forma Pro Forma
Historical 100% Case 50% Case
(In thousands)
<S> <C> <C> <C>
Long-term obligations $7,057 $2,757 $6,057
Stockholders' equity
Common stock, $.10 par value,
Authorized: Actual - 18,000,000 shares;
Issued: Historical and Adjusted Historical -
7,479,600 shares(1)
Pro forma 100% Case - 12,133,072 shares(1)
Pro forma 50% Case - 9,099,804 -- shares(1)7481,213 910
Additional paid-in capital 15,927 27,254 18,458
Retained earnings 3,214 3,214 3,214
Less: Treasury stock at cost: Actual -
1,453,064 shares: Pro forma 100% Case and pro
forma 50% Case - no shares (5,976) 0 0
Total stockholders' equity 13,913 31,681 22,582
Total long-term obligations and
stockholders' equity $20,970 34,438 28,639
</TABLE>
- ------------
(1) Does not include shares issuable pursuant to currently exercisable options
to purchase Common Stock, which aggregate 77,125 shares or shares reserved
for issuance pursuant to the Plans. Reflects the sale of 40,000 shares of
treasury stock at $2.50 per share on April 4, 1996.
<PAGE>
COMMON STOCK DIVIDENDS AND PRICE RANGE
The Company has a longstanding policy of not paying cash dividends on its
Common Stock in order to reinvest earnings to support its business operations.
The Company presently intends to continue that policy. The terms of the
Company's bank borrowings also restrict the payment of dividends on its Common
Stock. The Company's Common Stock is listed for trading on the American Stock
Exchange (the "AMEX") under the symbol "KIN" and appears in the market reports
in The Wall Street Journal as "KinarkCp." The following table sets forth, for
the periods indicated, the high and low sales prices of the Common Stock as
reported by the AMEX:
Quarterly Stock Prices
First Second Third Fourth
1996
High $3 1/4 4 3/4(1) N/A N/A
Low 2 1/2 2 3/8(1) N/A N/A
1995
High $4 $3 15/16 3 7/16 3 1/4
Low 3 2 7/8 2 7/8 2 1/4
1994
High $4 11/16 $4 7/8 $4 1/2 $4 1/4
Low 3 3/4 4 3 1/2 3
1993
High $5 1/2 $5 1/2 $5 3/8 $4 1/4
Low 4 3/8 4 1/4 4 3 3/8
- ------------
(1) Through June 5, 1996.
On June 5, 1996, the closing price of the Common Stock on the AMEX was
$4.13 per share. On that date, there were approximately 2,446 record holders
of the Common Stock.
THE RIGHTS OFFERING
THE RIGHTS
The Company is offering up to 6,066,536 shares of its Common Stock through
the distribution of nontransferable Rights, at no cost, to the record holders
("Holders") of outstanding shares of the Common Stock as of the Record Date
(5:00 p.m. New York City time, on ________________, 1996). The Company will
distribute one Right for each one share of the Common Stock held on the Record
Date. Each such Right entitles the holder thereof to subscribe for shares of
the Common Stock pursuant to a Subscription Privilege. See "Subscription
Privileges." The Rights are evidenced by nontransferable Subscription Cards
(the "Subscription Cards").
The Subscription Price of $____ per share of the Common Stock represents a
discount of ____% from the closing price of $_______ for the shares of the
Common Stock listed on the AMEX immediately prior to the commencement of the
Rights Offering. There can be no assurance that shares of the Common Stock
will trade at prices above the Subscription Price. See "Risk Factors - Market
Considerations."
EXPIRATION DATE
The Rights will expire at 5:00 p.m. New York City time, on ____________,
1996, unless extended by the Company (the "Expiration Date"), after which time
all unexercised Rights will be null and void. The Company will not be
obligated to honor any purported exercise of Rights received by the
Subscription Agent after 5:00 p.m. New York City time, on the Expiration Date,
regardless of when the documents relating to such exercise were transmitted,
except when timely transmitted pursuant to the Guaranteed Delivery Procedures
described below. The Expiration Date will not be extended beyond ____________,
1996, and if the conditions to the Rights Offering have not been satisfied by
such date, or the Rights Offering is otherwise terminated, all subscription
payments will be returned promptly, without interest or deduction. See
"Amendments and Termination."
SUBSCRIPTION PRIVILEGES
Subscription Privilege. The Subscription Privilege entitles the holder of
each Right to purchase one share of the Common Stock upon payment of the
Subscription Price. Certificates representing shares of the Common Stock
purchased pursuant to the Subscription Privilege will be delivered to
subscribers as soon as practicable after the Expiration Date. The Company is
authorized to issue 18,000,000 shares of Common Stock, and 7,201,536 shares are
currently issued and outstanding or reserved for issuance pursuant to the
Company's stock option plans (collectively, the "Plans"). If each of the
Company's stockholders were to exercise its Subscription Privilege to the full
extent of current ownership, the number of shares of Common Stock issued and
outstanding and reserved for issuance pursuant to the Plans after the Rights
Offering would be 13,268,072 and the number of shares of Common Stock
authorized and available for future issuance after the Rights Offering would be
4,731,928. The Company believes that it is very unlikely that each stockholder
will decide to participate in the Rights Offering to the full extent of current
ownership, and therefore, the number of shares of Common Stock authorized and
available for future issuance will likely be greater than 4,731,928.
EXERCISE OF RIGHTS
Rights may be exercised by delivering to the Subscription Agent, at or
prior to the Expiration Date (5:00 p.m. New York City time, on ____________,
1996, unless extended), the properly completed and executed Subscription Card
evidencing those Rights with any required signature guarantees, together with
payment in full of the Subscription Price for each share of the Common Stock
subscribed for pursuant to the Subscription Privilege. Such payment must be
made by (a) check or bank draft drawn upon a U.S. bank or postal, telegraphic,
or express money order payable to Chemical Mellon Shareholder Services, L.L.C.,
as Subscription Agent, or (b) wire transfer of same day funds to the account
maintained by the Subscription Agent for such purpose at Mellon Bank, N.A., ABA
No. _______________, Account No. _____________________ (marked: "Kinark
Corporation Subscription"). Payment of the Subscription Price will be deemed
to have been received by the Subscription Agent only upon (i) clearance of any
uncertified check, (ii) receipt by the Subscription Agent of any certified
check or bank draft drawn upon a U.S. bank or any postal, telegraphic or
express money order or (iii) receipt of good funds in the Subscription Agent's
account designated above. HOLDERS WISHING TO PAY BY UNCERTIFIED PERSONAL CHECK
SHOULD NOTE THAT SUCH A CHECK MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR AND
SHOULD TRANSMIT THE CHECK SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO
ENSURE THAT IT IS RECEIVED AND CLEARS BY SUCH DATE OR CONSIDER PAYMENT BY MEANS
OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
The addresses to which the Subscription Cards and payment of the
Subscription Price should be delivered are:
By Mail: Chemical Mellon Shareholder Services, L.L.C.
Reorganization Department
P.O. Box 817
Midtown Station
New York, NY 10018
By Hand or
Overnight: Chemical Mellon Shareholder Services, L.L.C.
Reorganization Department
120 Broadway
13th Floor
New York, NY 10271
If a Rights holder wishes to exercise Rights, but time will not permit such
holder to cause the Subscription Cards evidencing such Rights to reach the
Subscription Agent on or prior to the Expiration Date, such Rights may
nevertheless be exercised if all of the following conditions (the "Guaranteed
Delivery Procedures") are met:
(i) such holder has caused payment in full of the Subscription Price
for each share of the Common Stock being subscribed for pursuant to the
Subscription Privilege to be received (in the manner set forth above) by
the Subscription Agent on or prior to the Expiration Date;
(ii) the Subscription Agent receives, on or prior to the Expiration
Date, a guarantee notice (a "Notice of Guaranteed Delivery"),
substantially in the form provided with the Instructions as to Use of
Kinark Corporation Subscription Cards (the "Instructions") distributed
with the Subscription Cards, from a member firm of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. (the "NASD"), or from a commercial bank or trust company
having an office or correspondent in the United States (each, an "Eligible
Institution"), stating the name of the exercising Rights holder, the
number of Rights represented by the Subscription Cards held by such
exercising Rights holder, the number of shares of the Common Stock being
subscribed for pursuant to the Subscription Privilege, and guaranteeing
the delivery to the Subscription Agent of any Subscription Cards
evidencing such Rights within three AMEX trading days following the date
of the Notice of Guaranteed Delivery; and
(iii) the properly completed Subscription Card evidencing the Rights
being exercised, with any required signatures guaranteed, is received by
the Subscription Agent within three AMEX trading days following the date
of the Notice of Guaranteed Delivery relating thereto. The Notice of
Guaranteed Delivery may be delivered to the Subscription Agent in the same
manner as Subscription Cards at the addresses set forth above, or may be
transmitted to the Subscription Agent by telegram or facsimile
transmission (telecopier no. (201) 329-8936) confirmed by telephone
(telephone no. (201) 286-4983). Additional copies of the form of Notice
of Guaranteed Delivery are available upon request from the Information
Agent, whose address and telephone number are set forth below under
"Information Agent."
Funds received in payment of the Subscription Price for shares subscribed
for pursuant to the Rights will be held in a segregated account pending
issuance of such shares.
Unless a Subscription Card (i) provides that the shares of the Common
Stock to be issued pursuant to the exercise of Rights represented thereby are
to be delivered to the record holder of such Rights or (ii) is submitted for
the account of an Eligible Institution, signatures on such Subscription Card
must be guaranteed by a commercial bank, trust company, securities broker or
dealer, credit union, savings association or other eligible guarantor
institution which is a member of or a participant in a signature guarantee
program acceptable to the Subscription Agent.
Holders who hold shares of the Common Stock for the account of others,
such as brokers, trustees or depositaries for securities, should notify the
respective beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights. If the beneficial owner so instructs, the record holder of such
Right should complete Subscription Cards and submit them to the Subscription
Agent with the proper payment. In addition, beneficial owners of shares of the
Common Stock or Rights held through such a holder should contact the holder and
request the holder to effect transactions in accordance with the beneficial
owner's instructions.
The instructions accompanying the Subscription Cards should be read
carefully and followed in detail. DO NOT SEND SUBSCRIPTION CARDS TO THE
COMPANY.
THE METHOD OF DELIVERY OF SUBSCRIPTION CARDS AND PAYMENT OF THE
SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND RISK
OF THE RIGHTS HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH
SUBSCRIPTION CARDS AND PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED,
WITH RETURN RECEIPT REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED
TO ENSURE DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO
5:00 P.M. NEW YORK CITY TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY
URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK,
MONEY ORDER OR WIRE TRANSFER OF FUNDS.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company in its sole discretion may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Subscriptions will not be deemed to have been received or accepted
until all irregularities have been waived or cured within such time as the
Company determines in its sole discretion. Neither the Company nor the
Subscription Agent will be under any duty to give notification of any defect or
irregularity in connection with the submission of Subscription Cards or incur
any liability for failure to give such notification.
The Company will pay the fees and expenses of the Subscription Agent, and
has also agreed to indemnify the Subscription Agent from any liability which it
may incur in connection with the Rights Offering.
INFORMATION AGENT
The Company has appointed Morrow & Co., Inc. as Information Agent for the
Rights Offering. Any questions or requests for assistance concerning the
method of exercising Rights or additional copies of this Prospectus, the
Instructions or the Notice of Guaranteed Delivery may be directed to the
Information Agent at the telephone number and address below.
Morrow & Co., Inc.
909 Third Avenue
20th Floor
New York, New York 10022-4799
or
CALL TOLL-FREE
(800) 566-9601
The Company will pay the fees and expenses of the Information Agent and
has also agreed to indemnify the Information Agent from certain liabilities
which it may incur in connection with the Rights Offering. Joseph J. Morrow, a
member of the Company's Board of Directors and the beneficial owner of
1,782,538 shares, or 29.6%, of the Common Stock as of the Record Date, is the
chief executive officer of the Information Agent. Mr. Morrow purchased
1,759,083 shares of Common Stock in the Company's Private Placement in January
1996.
NO REVOCATION
ONCE A HOLDER OF RIGHTS HAS EXERCISED THE SUBSCRIPTION PRIVILEGE, SUCH
EXERCISE MAY NOT BE REVOKED.
CONDITIONS TO THE RIGHTS OFFERING
The issuance of shares pursuant to the exercise of the Rights is subject
to the following conditions: (i) the absence of any suit or other action
seeking to enjoin the Rights Offering, the Acquisition or the Merger; and (ii)
the determination by the Board of Directors of the Company that sufficient
funds are available to the Company from the proceeds of this Rights Offering,
and other sources, if required, to enable it to complete the Acquisition or the
Merger. In the event that the foregoing conditions to the Rights Offering have
not been satisfied by _________, 1996, all subscription payments will be
returned promptly, without interest or deduction.
AMENDMENT AND TERMINATION
The Company may extend the Rights Offering and otherwise amend the terms
of the Rights Offering or terminate the Rights Offering at any time prior to
the Expiration Date or thereafter in the Board of Directors' discretion or if
the conditions to the Rights Offering have not been satisfied.
SHARES OF THE COMMON STOCK OUTSTANDING AFTER THE RIGHTS OFFERING
Assuming the issuance of all of the shares offered hereby, 6,066,536
shares of the Common Stock will be issued in connection with the Rights
Offering. Based on the 6,066,536 shares of the Common Stock outstanding as of
March 31, 1996, the issuance of such shares pursuant to the Rights Offering
would result (on a pro forma basis as of such date) in a 100% increase in the
number of outstanding shares of the Common Stock. Assuming the issuance of 50%
of the shares offered hereby, the issuance of such shares would result (on a
pro forma basis as of March 31, 1996) in a 50% increase in the number of
outstanding shares of the Common Stock.
FOREIGN AND CERTAIN OTHER STOCKHOLDERS
Subscription Cards will not be mailed to holders whose addresses are
outside the United States or who have an APO or FPO address, but will be held
by the Subscription Agent for their account. To exercise such Rights, such
holders must notify the Subscription Agent on or prior to 5:00 p.m. New York
City time, on ________________, 1996.
FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Nelson Mullins Riley & Scarborough, L.L.P., the material
United States federal income tax consequences to holders of shares of the
Common Stock upon the issuance (the "Issuance") of the Rights, and to holders
of the Rights upon the exercise, lapse or disposition of the Rights, will be as
set forth below. The following summary is qualified in its entirety by
reference to, and is based upon, laws, regulations, rulings and decisions
currently in effect on the date of this Prospectus and as those laws,
regulations, rulings and decisions were interpreted on such date. The
following summary does not discuss all aspects of federal income taxation that
may be relevant to a particular investor or to certain types of investors
subject to special treatment under the federal income tax laws (for example,
and without limitation, banks, dealers in securities, life insurance companies,
tax exempt organizations and foreign taxpayers), and does not discuss any
aspect of state, local or foreign tax laws. The following discussion is
limited to holders who will hold the Rights and any shares of the Common Stock
received therefor upon exercise as capital assets.
Issuance of the Rights. Holders of shares of the Common Stock will not
recognize taxable income, for federal income tax purposes, in connection with
the receipt of the Rights.
Basis and Holding Period of the Rights. Except as provided in the
following sentence, the basis of the Rights received by a holder of Common
Stock as a distribution with respect of such holder's shares of Common Stock
will be zero. If either (i) the fair market value of the Rights on the date of
Issuance is 15% or more of the fair market value (on the date of Issuance) of
the shares of the Common Stock with respect to which they are received or
(ii) the holder of Common Stock elects, in his or her federal income tax return
for the taxable year in which the Rights are received, to allocate part of the
basis of such shares of the Common Stock to the Rights, then upon exercise or
sale of the Rights, the holder's basis in such shares of the Common Stock will
be allocated between the shares of the Common Stock and the Rights in
proportion to the fair market values of each on the date of Issuance. The
holding period of the Rights received by a holder as a distribution on such
holder's shares of the Common Stock will include the holder's holding period
(as of the date of Issuance) for the shares of the Common Stock with respect to
which the Rights were issued.
Lapse of the Rights. Holders of shares of the Common Stock who allow the
Rights received by them at the Issuance to lapse will not recognize any gain or
loss, and no adjustment will be made to the basis of the shares of the Common
Stock, if any, owned by such holders of the Rights.
Exercise of the Rights; Basis and Holding Period of Shares of the Common
Stock. Holders of the Rights will not recognize any gain or loss upon the
exercise of such Rights. The basis of the shares of the Common Stock acquired
through exercise of the Rights will generally be equal to the sum of the
Subscription Price therefor and the holder's basis in such Rights (if any).
The holding period for the shares of the Common Stock acquired through exercise
of the Rights will begin on the date such Rights are exercised.
THE FOREGOING IS INCLUDED FOR GENERAL INFORMATION ONLY. ACCORDINGLY, EACH
HOLDER OF SHARES OF THE COMMON STOCK IS URGED TO CONSULT WITH HIS OR HER OWN
TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THE RIGHTS OFFERING ON HIS
OR HER OWN PARTICULAR TAX SITUATION, INCLUDING THE APPLICATION AND EFFECT OF
STATE AND LOCAL INCOME AND OTHER TAXES.
OTHER MATTERS
The Rights Offering is not being made in any state or other jurisdiction
in which it is unlawful to do so, nor is the Company selling or accepting any
offers to purchase any shares of the Common Stock from Rights holders who are
residents of any such state or other jurisdiction. The Company may delay the
commencement of the Rights Offering in certain states or other jurisdictions in
order to comply with the securities law requirements of such states or other
jurisdictions. It is not anticipated that there will be any changes in the
terms of the Rights Offering. The Company, if it so determines in its sole
discretion, may decline to make modifications to the terms of the Rights
Offering requested by certain states or other jurisdictions, in which event
Rights holders resident in those states or jurisdictions will not be eligible
to participate in the Rights Offering.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The authorized capital stock of the Company consists of 18,000,000 shares
of Common Stock, $.10 par value per share. As of March 31, 1996, the Company
had issued or reserved for issuance 7,201,536 shares of Common Stock, 6,066,536
of which were outstanding and 1,135,000 of which were reserved for issuance
pursuant to the Plans. Holders of Common Stock are entitled to one vote per
share on all matters on which the holders of Common Stock are entitled to vote
and do not have any cumulative voting rights. The holders of Common Stock are
entitled to receive such dividends as may be declared from time to time by the
Board of Directors. The Company has a longstanding policy of not paying cash
dividends on the Common Stock in order to reinvest earnings to support its
business operations. The terms of the Company's secured credit facilities also
restricts the payment of dividends on the Common Stock. See "Common Stock
Dividends and Price Range."
Holders of Common Stock have no preemptive, conversion, redemption or
sinking fund rights. In the event of a liquidation, dissolution or winding-up
of the Company, holders of Common Stock are entitled to share equally and
ratably in the assets of the Company, if any, remaining after the payment of
all debts and liabilities of the Company. The outstanding shares of Common
Stock are, and the shares of Common Stock issuable upon exercise of the Rights
when issued will be, fully paid and nonassessable.
For a description of the Rights to be distributed by the Company, see "The
Rights Offering."
CERTAIN CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS
The provisions of the Company's Restated Certificate of Incorporation (the
"Certificate"), the Company's Amended and Restated Bylaws (the "Bylaws") and
the Delaware Corporation Law summarized in the following paragraphs may be
deemed to have anti-takeover effects and may delay, defer or prevent a tender
offer or takeover attempt that a stockholder might consider to be in such
stockholder's best interest, including those attempts that might result in a
premium over the market price for the shares held by stockholders, and may make
removal of management more difficult.
Authorized but Unissued Stock. After completion of the Rights Offering
the Company will have authorized but unissued shares of Common Stock available
for future issuance without stockholder approval. These additional shares may
be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans. The existence of authorized but unissued and unreserved Common
Stock may enable the Board of Directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of the Company by means of a proxy contest, tender offer,
merger or otherwise, and thereby protect the continuity of the Company's
management.
The Board of Directors may also create and issue, without stockholder
approval, rights or options entitling the holders thereof to purchase from the
Company shares of the Company's Common Stock.
Number of Directors. The Certificate provides that the number of
directors of the Company shall be as provided in the Bylaws, but may not be
less than three and shall be seven if the Bylaws do not provide a number. The
Bylaws currently provide that the maximum number of directors which shall
constitute the entire Board of Directors shall be seven, with the exact number
of directors to be established by resolution of the Board from time to time.
The maximum number of directors may be increased or decreased from time to time
by amendment of the Bylaws, subject to the provisions of the Certificate.
Advance Notice Requirements for Stockholder Proposals and Director
Nominations. The Bylaws establish advance notice procedures with regard to
stockholder proposals and the nomination, other than by or at the direction of
the Board of Directors or a committee thereof, of candidates for election as
directors. These procedures provide that the notice of stockholder proposals
and stockholder nominations for the election of directors at any annual meeting
of stockholders must be in writing and be received at the principal executive
offices of the Company not less than 90 days in advance of the annual meeting.
The requirement to deliver notice to the Corporation a set number of days in
advance of an annual meeting shall mean that such notice must be delivered such
number of days in advance of the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than 30 days or delayed more than 60 days
from such anniversary, 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 day on which notice
of such meeting is first given to stockholders. For the purposes of this
Section, notice of an annual meeting shall be deemed to first be given to
stockholders when disclosure of such date is first made in a press release
reported by the Dow Jones News Services, Associated Press or comparable
national news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934, as amended. The Chairman of an annual
meeting shall, if the facts warrant, determine and declare to the annual
meeting that business was not properly brought before the meeting and if he
should so determine, he shall so declare to the annual meeting and any such
business not properly brought before the annual meeting shall not be
transacted. At any special meeting of the stockholders, only such business
shall be conducted as shall have been brought before the meeting by or at the
direction of the Board of Directors.
Approval of Business Combinations. The Certificate provides that subject
to certain exceptions summarized below and in addition to any affirmative vote
required by law or by the Certificate, approval of any Business Combination (as
hereinafter defined) requires the affirmative vote of at least two-thirds of
the outstanding Voting Shares (as hereinafter defined). For these purposes,
"Business Combination" shall mean:
(A) Any merger or consolidation of the Company or any subsidiary
with or into (i) any Interested Stockholder (as hereinafter defined) or
(ii) any other corporation which is, or after such merger or
consolidation, would be an Interested Stockholder or an affiliate of an
Interested Stockholder;
(B) Any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with any Interested Stockholder or any affiliate of any
Interested Stockholder of any assets of the Company or any subsidiary
having an aggregate Fair Market Value of $1,000,000 or more in one
transaction or a series of related transactions;
(C) The issuance or transfer by the Company or any subsidiary of any
securities of the Company or any subsidiary to any Interested Stockholder
or any affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate Fair Market Value of $1,000,000 or more in one transaction or a
series of related transactions; or
(D) The adoption of any plan for the liquidation or dissolution of
the Company proposed by or on behalf of an Interested Stockholder or any
affiliate of any Interested Stockholder.
"Voting Shares" shall mean all issued and outstanding shares of equity
securities and all rights to acquire any equity securities which are generally
entitled to vote in the election of directors.
The two-thirds voting requirement shall not apply to a particular Business
Combination if (i) any noncash consideration to be paid to holders of Common
Stock in such Business Combination is in the same form and bears the same
percentage to the total consideration as previously paid by the Interested
Stockholder in connection with its acquisition of beneficial ownership of
shares of Common Stock of the Company and (ii) the aggregate amount of cash and
the Fair Market Value of noncash consideration, determined as of the date of
the consummation of the Business Combination, to be received per share by the
holders of Common Stock in such Business Combination is at least equal to the
highest of the following:
(A) The highest per share price (including any brokerage
commissions, transfer taxes and soliciting dealers' fees) paid by the
Interested Stockholder for any Voting Shares acquired by it (1) within the
two-year period immediately prior to the date of the first public
announcement of the proposed Business Combination or (2) in the
transaction in which it became an Interested Stockholder, whichever is
higher;
(B) The Fair Market Value per share of Common Stock on the date of
the first public announcement of the proposed Business Combination or on
the date on which the Interested Stockholder became an Interested
Stockholder, whichever is higher; and
(C) The per share book value of the Common Stock as reported at the
end of the fiscal quarter immediately preceding the date of the first
public announcement of the proposed Business Combination.
The two-thirds voting requirement shall also not apply to a particular Business
Combination if the Business Combination has been approved by two-thirds of the
directors of the Company.
"Fair Market Value" shall mean: (i) in the case of stock, the highest
closing sale price during the 30-day period immediately preceding the date in
question of a share of such stock on the Composite Tape for New York Stock
Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape,
on the New York Stock Exchange, or, if such stock is not listed on such
Exchange, on the principal United States securities exchange registered under
the Securities Exchange Act of 1934 on which such stock is listed, or, if such
stock is not listed on any such exchange, the highest closing bid quotation
with respect to a share of such stock during the 30-day period preceding the
date in question on the National Association of Securities Dealers, Inc.
Automated Quotations System or any system then in use, or if no such quotations
are available, the Fair Market Value on the date in question of a share of such
stock as determined by a majority of the whole Board of Directors in good
faith; and (ii) in the case of property other than cash or stock, the Fair
Market Value of such property on the date in question as determined in good
faith by a majority of the whole Board of Directors.
"Interested Stockholder" shall mean any Person (other than the Company or
any corporation of which a majority of each class of equity securities is
owned, directly or indirectly, by the Company) which, as of the record date for
the determination of stockholders entitled to notice of and to vote on a
Business Combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares; or
(B) is an affiliate of the Company and at any time within two years
prior thereto was the beneficial owner, directly or indirectly, of not
less than 10% of the then outstanding Voting Shares; or
(C) is an assignee of or successor in interest to any shares of
capital stock of the Company which were at any time within two years prior
thereto beneficially owned by any Interested Stockholder, and such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
A majority of the whole Board of Directors shall have the power and duty
to determine on the basis of information known to them whether a person is an
Interested Stockholder, the number of Voting Shares beneficially owned by any
person, whether a person is an affiliate of another, whether a person has the
power to vote or dispose of Voting Shares or to direct the voting or
disposition of Voting Shares, whether the assets subject to any Business
Combination or the consideration received for the issuance or transfer of
securities by the corporation or any subsidiary or any Business Combination has
an aggregate Fair Market Value of $1,000,000 or more, or whether a person has
the right to acquire beneficial ownership of Voting Shares. The affirmative
vote of the holders of at least two-thirds of the Voting Shares shall also be
required to amend, repeal or adopt any provisions inconsistent with the two-
thirds votes required for Business Combinations.
Section 203 of the Delaware Corporation Law. Subject to certain
exclusions summarized below, Section 203 of the Delaware Corporation Law
("Section 203") prohibits any "Interested Stockholder" from engaging in a
"Business Combination" with a Delaware corporation for three years following
the date such person became an Interested Stockholder. For purposes of this
subsection, "Interested Stockholder" generally includes: (a)(i) any person who
is the beneficial owner of 15% or more of the outstanding voting stock of the
corporation or (ii) any person who is an affiliate or associate of the
corporation and who was the beneficial owner of 15% or more of the outstanding
voting stock of the corporation at any time within three years before the date
on which such person's status as an Interested Stockholder is determined; and
(b) the affiliates and associates of such person. For purposes of this
subsection and subject to certain exceptions, a "Business Combination" includes
(i) any merger or consolidation of the corporation or a majority-owned
subsidiary of the corporation, (ii) the sale, lease, exchange, mortgage,
pledge, transfer or other disposition of assets of the corporation or a
majority-owned subsidiary of the corporation having an aggregate market value
equal to 10% or more of either the aggregate market value of all assets of the
corporation determined on a consolidated basis or the aggregate market value of
all the outstanding stock of the corporation, (iii) any transaction that
results in the issuance or transfer by the corporation or a majority-owned
subsidiary of the corporation of any stock of the corporation or the subsidiary
to the Interested Stockholder, except pursuant to a transaction that effects a
pro rata distribution to all stockholders of the corporation, (iv) any
transaction involving the corporation or a majority-owned subsidiary of the
corporation that has the effect of increasing the proportionate share of the
stock of any class or series, or securities convertible into the stock of any
class or series, of the corporation or the subsidiary that is owned by the
Interested Stockholder, and (v) any receipt by the Interested Stockholder of
the benefit (except proportionately as a stockholder) of any loans, advances,
guarantees, pledges or other financial benefits provided by or through the
corporation or a majority-owned subsidiary of the corporation.
Section 203 does not apply to a Business Combination if (i) before a
person became an Interested Stockholder, the Board of Directors of the
corporation approved either the transaction in which the Interested Stockholder
became an Interested Stockholder or the Business Combination, (ii) upon
consummation of the transaction that resulted in the person becoming an
Interested Stockholder, the Interested Stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (other than certain excluded shares), or (iii) following a
transaction in which the person became an Interested Stockholder, the Business
Combination is (a) approved by the Board of Directors of the corporation and
(b) authorized at a regular or special meeting of stockholders (and not by
written consent) by the affirmative vote of the holders of at least two-thirds
of the outstanding voting stock of the corporation not owned by the Interested
Stockholder.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
Chemical Mellon Shareholder Services, L.L.C., Ridgefield Park, New Jersey.
LEGAL MATTERS
The legality of the Common Stock offered hereby has been passed upon for
the Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.
Certain tax matters relating to this offering will be passed upon for the
Company by Nelson Mullins Riley & Scarborough, L.L.P., Atlanta, Georgia.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this Prospectus by reference from Kinark Corporation's
Annual Report on Form 10-K for the year ended December 31, 1995, as amended,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report which is incorporated herein by reference (which report expresses
an unqualified opinion and includes explanatory paragraphs discussing the
Company's change in accounting for income taxes and the acquisition of Rogers
Galvanizing Company and the related private placement financing that occurred
subsequent to December 31, 1995). The consolidated financial statements of
Rogers Galvanizing Company as of and for the years ended September 30, 1995,
1994, and 1993, set forth in this Prospectus have been audited by Hogan &
Slovacek, PC, independent auditors, as indicated in their report set forth
herein. The financial statements and financial statement schedule referred to
above have been incorporated by reference or included in reliance upon the
reports of such firms given upon their authority as experts in accounting and
auditing.
With respect to the unaudited interim financial information of Kinark
Corporation for the periods ended March 31, 1996 and 1995 which is incorporated
herein by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their report included in the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1996 and incorporated by reference
herein, they did not audit and they do not express an opinion on that interim
financial information. Accordingly, the degree of reliance on their reports on
such information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is
not a "report" or a "part" of the registration statement prepared or certified
by an accountant within the meaning of Sections 7 and 11 of the Act.<PAGE>
INDEX TO FINANCIAL STATEMENTS
______________
Page
KINARK CORPORATION
Pro Forma
Pro Forma Consolidated Financial Data (Unaudited) F-2
Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1996 (Unaudited) F-3
Pro Forma Condensed Consolidated Statements of Operations for
the Three Months Ended March 31, 1996 (Unaudited) F-5
Pro Forma Condensed Consolidated Statements of Operations for
The Year Ended December 31, 1995 (Unaudited) F-6
Notes to Pro Forma Condensed Consolidated Financial Statements
for the Three Months Ended March 31, 1996, Year Ended
December 31, 1995 (Unaudited) F-7
ROGERS GALVANIZING COMPANY
Unaudited
Condensed Consolidated Balance Sheet (Unaudited) as of
March 31, 1996 F-10
Condensed Consolidated Statements of Income and Retained Earnings
(Unaudited) for the Three and Six Months Ended
March 31, 1996 and March 31, 1995 F-11
Condensed Consolidated Statements of Cash Flows (Unaudited) for
the Three and Six Months Ended March 31, 1996 and
March 31, 1995 F-12
Notes to Condensed Consolidated Financial Statements (Unaudited)
for the Three and Six Months Ended March 31, 1996 F-13
Audited
Independent Auditors' Report F-14
Consolidated Balance Sheets as of September 30, 1995 and 1994 F-15
Consolidated Statements of Income and Retained Earnings for
the Years Ended September 30, 1995, 1994 and 1993 F-17
Consolidated Statements of Cash Flows for the Years Ended
September 30, 1995, 1994, and 1993 F-18
Notes to Consolidated Financial Statements for the Years
Ended September 30, 1995, 1994 and 1993 F-20
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL DATA
(UNAUDITED)
The following Pro Forma Consolidated Financial Data of Kinark Corporation (the
"Company") consists of a Pro Forma Condensed Consolidated Balance Sheet
(unaudited) as of March 31, 1996 (the "Pro Forma Balance Sheet"), and the Pro
Forma Condensed Consolidated Statements of Operations (unaudited) for the three
months ended March 31, 1996, and for the year ended December 31, 1995 (the
"1996 Pro Forma Statement of Operations" and "1995 Pro Forma Statement of
Operations," respectively).
The Pro Forma Balance Sheet reflects the combination of the balance sheets of
the Company and Rogers Galvanizing Company ("Rogers") as of March 31, 1996.
The Pro Forma Balance Sheet is presented as if the Rogers acquisition and the
Private Placement had been consummated on March 31, 1996.
The 1996 Pro Forma Statement of Operations reflects the combination of the
income statements of the Company and Rogers for the three months ended March
31, 1996, as if the transaction was consummated on January 1, 1996. The 1995
Pro Forma Statement of Operations reflects the combination of the income
statements of the Company for the year ended December 31, 1995, and of Rogers
for its fiscal year ended September 30, 1995, as if the transaction was
consummated on January 1, 1995.
The Company has not completed the purchase accounting for the acquisition,
including its assessment of the fair values of Rogers' assets and liabilities,
which, with the exception of a pro-rata adjustment to eliminate the LIFO
valuation reserve on Roger's zinc inventory, are reflected at Rogers'
historical cost in the accompanying Pro Forma Balance Sheet. The Company
expects to finalize its fair value assessment in 1996. Accordingly, the final
consolidated amounts may differ from those set forth herein.
The Pro Forma Consolidated Financial Data should be read in conjunction with
the separate historical financial statements of the Company, the related notes
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, as amended, as well as the historical consolidated
financial statements of Rogers appearing in this Form S-3. The Pro Forma
Consolidated Financial Data is based upon currently available information and
upon certain assumptions that the Company believes are reasonable under the
circumstances. The Pro Forma Consolidated Financial Data does not purport to
represent what the Company's financial position or results of operations would
actually have been if the aforementioned transactions in fact had occurred on
such date or at the beginning of the periods indicated or to project the
Company's financial position or results of operations at any future date or for
any future period.
<PAGE>
KINARK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF
MARCH 31, 1996 (Unaudited) (in thousands)
<TABLE>
<CAPTION>
100% Case 50% Case
Kinark Pro-Forma Pro-Forma Pro-Forma Pro-Forma
HistoricalAdjustments ConsolidatedAdjustmentsConsolidated
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $380 $18,016(c) $9,012 $8,917 (j)$5,213
(6,800)(g) (1,500)(o)
(2,584)(f) (2,584)(m)
Accounts receivable,
net 6,964 6,964 6,964
Net assets of
discontinued operation43 43 43
Inventories 4,081 4,081 4,081
Prepaid assets 425 (248)(c) 177 (248)(j) 177
Total current assets11,8938,384 20,277 4,585 16,478
Property, plant
and equipment 36,734 (1,094)(d) 35,640 (1,094)(k)35,640
Less accumulated
depreciation 23,066 1,094(d) 21,972 1,094(k) 21,972
Property, plant and
equipment, net 13,668 0 13,668 0 13,668
Other assets:
Deferred income taxes2,309 2,309 2,309
Other assets 383 383 383
Excess of cost over fair
value of net
assets acquired3,075 1,376(f) 4,451 1,376 (m) 4,451
Total other assets5,7671,376 7,143 1,376 7,143
Total $31,328 $9,760 $41,088 $5,961 $37,289
</TABLE>
See notes to pro forma condensed consolidated financial statements.(Continued)<PAGE>
KINARK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1996 (Unaudited) (in thousands)
<TABLE>
<CAPTION>
100% Case 50% Case
Kinark Pro-Forma Pro-Forma Pro-Forma Pro-Forma
Historical AdjustmentsConsolidated AdjustmentsConsolidated
<S> <C> <C> <C> <C> <C>
LIABILITIES AND
SHAREHOLDERS'
EQUITY
LIABILITIES:
Current liabilities:
Long-term debt - current
portion $2,667 (2,500)(g)$167 (500)(o) $2,167
Accrued retirement
liabilities 26 114 (f) 140 114 (m) 140
Accounts payable 2,780 2,780 2,780
Accrued expenses - other3,443 3,443 3,443
Accrued income taxes120 120 120
Total current liabilities9,036(2,386) 6,650 (386) 8,650
Long-term debt 6,202 (4,300)(g)1,902 (1,000)(o)5,202
Accrued retirement 77 77 77
Lease obligations 662 662 662
Deferred income taxes116 116 116
Total long-term liabilities7,057(4,300) 2,757 (1,000) 6,057
Total liabilities16,093 (6,686) 9,407 (1,386) 14,707
MINORITY INTEREST 1,322 (1,322)(f)-- (1,322)(m)--
SHAREHOLDERS' EQUITY:
Common Stock 748 465 (c) 1,213 162 (j) 910
Additional paid-in capital15,927 11,327 (c)27,254 2,531(j) 18,458
Treasury Stock (5,976) 5,976 (c) -- 5,976 (j) --
Retained earnings 3,214 --- 3,214 -- 3,214
Shareholders' equity13,913 17,768 31,681 8,669 22,582
Total $31,328 $9,760 $41,088 $5,961 $37,289
</TABLE>
See notes to pro forma condensed consolidated financial statements.(Concluded)<PAGE>
KINARK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 (Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Historical 100% Case 50% Case
KinarkRogers(a) Pro-Forma Pro-Forma Pro-Forma Pro-Forma
AdjustmentsConsolidatedAdjustmentsConsolidated
<S> <C> <C> <C> <C> <C> <C>
SALES $10,417$1,603 $12,020 $12,020
COSTS AND EXPENSES:
Cost of sales 8,1541,390 9,544 9,544
Selling, general and
administrative 1,193289 $(55)(e) 1,427 $(55)(l) 1,427
Depreciation and
amortization 538 73 10(e) 621 10 (l) 621
Operating earnings (loss)532(149) 45 428 45 428
OTHER (INCOME) EXPENSE:
Interest expense, net20525 (157)(g) 73 (35)(o) 195
Other (income) expense, net--(4) -- (4) -- (4)
Other expenses, net20521 (157) 69 (35) 191
Earnings (loss) before
income taxes and minority
interest 327 (170) 202 359 80 237
Income Taxes 120 (65) 74(h) 129 29 (n) 84
Income (loss) before
minority interest 207 (105) 128 230 51 153
Minority interest 83 -- (83)(f) --- (83)(m) --
Net earnings (loss) $124 $(105) $211 $230 134 $153
Net earnings (loss) per share$.02 N/M $.02 N/M $.02
Weighted average shares
outstanding 5,318 6,815 12,133(i) 3,782 9,100(p)
</TABLE>
See notes to pro forma condensed consolidated financial statements.<PAGE>
KINARK CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 (Unaudited) (in thousands, except per
share data)
<TABLE>
<CAPTION>
Historical 100% Case 50% Case
Pro Forma Pro Forma Pro Forma Pro Forma
Kinark(b) Rogers(a) AdjustmentsConsolidatedAdjustmentsConsolidated
<S> <C> <C> <C> <C> <C> <C>
SALES $25,246 $17,614 $42,860 $42,860
COSTS AND EXPENSES:
Cost of sales20,524 12,764 33,288 33,288
Selling, general and
administrative3,766 2,443 $(300)(e) 5,909 $(300)(l) 5,909
Depreciation and
amortization1,471 807 120(e) 2,398 120(l) 2,398
Operating earnings
(loss) (515) 1,600 180 1,265 180 1,265
OTHER (INCOME) EXPENSE:
Interest expense, net634133 (629)(g) 138 (139)(o) 628
Other (income) expense,
net -- (107) (107) (107)
Other expenses,
net 634 26 (629) 31 (139) 521
Earnings (loss) from
continuing operations
before income taxes(1,149)1,574 809 1,234 319 744
Income Taxes (446) 586 295(h) 435 116(n) 256
Income (loss) from
continuing operations$(703)$988 $514 $799 $203 $488
Earnings (loss) per
share from continuing
operations $(.19) N/M $.07 N/M $.05
Weighted average shares
outstanding 3,747 8,386 12,133(i) 5,353 9,100(p)
/TABLE
<PAGE>
KINARK CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1996, YEAR ENDED DECEMBER 31, 1995
(UNAUDITED) (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(a)
The historical information for Rogers Galvanizing Company ("Rogers") in the
accompanying pro forma condensed consolidated statement of operations for the
three months ended March 31, 1996 reflects the month of January 1996 only, and
the year ended December 31, 1995 is based on that company's September 30, 1995
fiscal year.
(b)
During August 1995, the Company finalized a formal plan to discontinue the
operations of its Kinpak subsidiary, comprising the Company's chemical
packaging business. Substantially all of the assets of Kinpak were
subsequently sold on February 27, 1996 for $1,840,000 consisting of $850,000
cash and the assumption by the buyer of the capital lease on its plant
facilities which was financed by a $3,000,000 industrial revenue bond issue.
Included in the Discontinued Operation Loss of $1,176,000 is a loss of $307,000
from operations in addition to the $1,264,000 loss on disposal (before income
taxes of $395,000) which includes $460,000 of operating losses incurred during
the third and fourth quarter of 1995 and the period through February 27, 1996,
the closing date, and a $804,000 loss on the sale of assets. Revenues from
Kinpak were $6,346,236 (including revenues of $263,110 for the period through
the closing date) for the year ended December 31, 1995.
Pro Forma Adjustments - 100% Case:
(c)
Reflects the issuance of 6,066,536 shares of the Company's common stock at
$3.00 per share through the Rights Offering and the sale of 40,000 shares of
treasury stock at $2.50 per share resulting in aggregate net proceeds of
$18,016, an increase in common stock of $465 and additional paid in capital of
$11,327 (net of cost of treasury stock sold or retired and stock issuance costs
of $531, of which $248 was prepaid).
(d)
To adjust property, plant and equipment to preliminary estimate of fair value.
(e)
Adjustments to reflect (i) the amortization of the excess of cost over fair
value of net assets acquired in the Rogers acquisition using a straight-line
method over 25 years and (ii) the elimination of salary and benefits relating
to Rogers' Chairman of the Board.
(f)
Adjustment to reflect the purchase of the remaining 31.1% of Rogers' common
stock. For purposes of these pro forma statements, the historical amounts of
Rogers' assets and liabilities have not been adjusted to fair value. Based
upon current estimates, fair values are not expected to differ materially from
such historical cost amounts. Adjustments based upon final determination of
the fair values of assets acquired and liabilities assumed will be made during
1996. The excess of costs over fair value of net assets acquired attributable
to the 31.1% interest acquired is as follows:
Purchase Cost:
Purchase price for remaining
31.1% of Rogers' common stock $2,584
Liabilities assumed (minority interest in
funding of retirement trust) 114
Minority interest (1,322)
Excess of cost over fair value of net
assets acquired $1,376
(g)
Adjustment reflects reduction of the term loan using excess proceeds of $6,800
of Rights Offering and the resultant decrease in interest expense. Interest on
the term loan is assumed to have an effective rate of 9.25% for the year ended
December 31, 1995 and for the three months ended March 31, 1996.
(h)
To reflect the tax effects of pro forma adjustments using a 36.5% effective tax
rate.
(i)
Reflects the historical weighted average shares outstanding adjusted for
issuance of 6,066,536 shares under the Rights Offering and for issuance of
2,279,038 shares under the Private Placement as of March 31, 1996, and the sale
of 40,000 shares of treasury stock, as discussed in Note (c).
Pro Forma Adjustments - 50% Case:
(j)
Reflects the issuance of 3,033,268 shares of the Company's common stock at
$3.00 per share through the Rights Offering and the sale of 40,000 shares of
treasury stock at $2.50 per share resulting in aggregate net proceeds of
$8,917, an increase in common stock of $162 and additional paid in capital of
$2,531 (net of cost of treasury stock sold or retired and stock issuance costs
of $531, of which $248 was prepaid).
(k)
To adjust property, plant and equipment to preliminary estimate of fair value.
(l)
Adjustments to reflect (i) the amortization of the excess of cost over fair
value of net assets acquired in the Rogers acquisition using a straight-line
method over 25 years and (ii) the elimination of salary and benefits relating
to Roger's Chairman of the Board.
(m)
Adjustment to reflect the purchase of the remaining 31.1% of Rogers' common
stock. For purposes of these pro forma statements, the historical cost amounts
of Rogers' assets and liabilities have not been adjusted to fair value. Based
upon current estimates, fair values are not expected to differ materially from
such historical amounts. Adjustments based upon final determination of the
fair values of assets acquired and liabilities assumed will be made during
1996. The excess costs over fair value of net assets acquired attributable to
the 31.1% interest acquired is as follows:
Purchase Cost:
Purchase price for remaining
31.1% of Rogers' common stock $2,584
Liabilities assumed (minority interest in
funding of retirement trust) 114
Minority interest (1,322)
Excess of cost over fair value of net
assets acquired $1,376
(n)
To reflect the tax effects of pro forma adjustments using a 36.5% effective tax
rate.
(o)
Adjustment reflects reduction of the term loan using excess proceeds of $1,500
of Rights Offering and the resultant decrease in interest expense. Interest on
the term loan is assumed to have an effective rate of 9.25% for the year ended
December 31, 1995 and for the three months ended March 31, 1996.
(p)
Reflects the historical weighted average shares outstanding adjusted for
issuance of 3,033,268 shares under the Rights Offering and for issuance of
2,279,038 shares under the Private Placement as of March 31, 1996, and the sale
of 40,000 shares of treasury stock, as discussed in Note (j).<PAGE>
ROGERS GALVANIZING COMPANY
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS OF MARCH 31, 1996 (in thousands)
ASSETS
CURRENT ASSETS:
Cash $265
Accounts receivable, net 3,375
Inventories 1,154
Deferred Income Taxes 202
Prepaid expenses 125
Total current assets 5,116
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 175
Galvanizing plants and equipment 7,861
Other 489
Construction in progress 8,525
Less accumulated depreciation 3,661
Total property, plant and equipment 4,864
Intangible assets 170
$10,150
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $2,036
Accounts payable 1,169
Accrued liabilities 929
Total current liabilities 4,134
DEFERRED INCOME TAXES 116
LONG-TERM DEBT 1,276
COMMITMENTS AND CONTINGENCIES ---
SHAREHOLDERS' EQUITY:
Common shares, $100 par value, 1,967 shares
authorized, 1,172 shares outstanding 117
Capital surplus 103
Retained earnings 4,404
Total shareholders' equity 4,624
$10,150
See notes to consolidated financial statements.
ROGERS GALVANIZING COMPANY
CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995 (in
thousands)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31 MARCH 31
1996 1995 1996 1995
Sales $5,537 $4,512 $10,049 $8,607
Costs and expenses:
Costs of sales 4,402 3,200 7,878 6,127
Selling, general and
administrative 624 561 1,202 1,078
Depreciation and
amortization 214 219 430 421
Operating earnings 297 532 539 981
Other (income) expense:
Interest expense, net 71 54 128 100
Other (income) expense (13) (46) (27) (60)
Earnings before income
taxes 239 524 438 941
Income tax expense 78 185 153 327
Net earnings 161 339 285 614
Retained earnings,
beginning of period 4,299 3,686 4,231 3,467
Less: Dividends paid (56) (57) (112) (113)
Retained earnings,
end of period $4,404 $3,968 $4,404 $3,968
See notes to consolidated financial statements.<PAGE>
ROGERS GALVANIZING COMPANY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1996 AND MARCH 31, 1995
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31 MARCH 31
<S> <C> <C> <C> <C>
1996 1995 1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $161 $339 $285 $614
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization214 219 430 421
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable(617)101 (955) (294)
(Increase) decrease in inventories(82)(24) (175) (168)
(Increase) decrease in prepaid expenses(19)12 (41) (40)
Increase (decrease) in accounts payable22(52) 362 9
Increase (decrease) in accrued liabilities150117 33 131
Total adjustments (332) 373 (346) 59
Net cash provided (used) by operating expenses(171)712 (61) 673
CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to property, plant and equipment(350)(297) (1,125) (457)
Net cash used in investing activities(350)(297) (1,125) (457)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (57) (57) (113) (113)
Proceeds from (Payments on) debt 578 (95) 1,117 47
Net cash provided (used) by financing activities521(152)1,004 (66)
INCREASE (DECREASE) IN CASH 0 263 (182) 150
CASH, BEGINNING OF PERIOD 265 288 447 401
CASH, END OF PERIOD $265 $551 $265 $551
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $73 $58 $133 $108
Income taxes paid $85 $125 $147 $168
</TABLE>
See notes to consolidated financial statements.<PAGE>
ROGERS GALVANIZING COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1996
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by
Rogers Galvanizing Company (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission for interim
reporting and include all normal and recurring adjustments which are, in
the opinion of management, necessary for a fair presentation. These
financial statements have not been audited by an independent accountant.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, Reinforcing Services, Inc., Spin-Galv, Inc. and
Rogers Galvanizing Company - Kansas City, Inc., which was acquired on
September 27, 1995. All significant intercompany balances and
transactions have been eliminated in consolidation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such
rules and regulations for interim reporting. The Company believes that
the disclosures are adequate to make the information presented not
misleading. However, these consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto for the years ended September 30, 1995, 1994, and 1993, included
elsewhere in this Form S-3. The financial data for the interim periods
presented may not necessarily reflect the results to be anticipated for
the complete year.
2. INVENTORIES
Inventories are composed primarily of raw zinc "pigs," molten zinc in
galvanizing kettles and other chemicals and materials used in the
galvanizing process. Molten zinc is stated at the lower of cost or
market, with cost determined by the last-in, first-out (LIFO) method. All
other inventories are stated at the lower of cost or market, with cost
determined by the first-in, first-out (FIFO) method.
3. ACQUISITION BY KINARK CORPORATION
On February 5, 1996, Kinark Corporation ("Kinark") acquired 51.2% of the
outstanding common stock of the Company for $4.3 million in cash from
Trusts that held such stock, and assumed control of the Board of
Directors. Additionally, in February and March 1996, Kinark acquired an
additional 16% and 1.7%, respectively, of the Company's outstanding common
stock at the same price per share paid for the common stock held by the
Trusts. The acquisition has been accounted for using the purchase method
of accounting.
Under the purchase agreement with the Trusts, Kinark has agreed to
purchase the Company's remaining outstanding shares of common stock from
its minority stockholders for cash at a price per share equivalent to that
paid in the transactions described above.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Rogers Galvanizing Company:
We have audited the accompanying consolidated balance sheets of Rogers
Galvanizing Company and subsidiaries as of September 30, 1995 and 1994, and the
related consolidated statements of income and retained earnings and cash flows
for each of the three years in the period ended September 30, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Rogers Galvanizing
Company and subsidiaries as of September 30, 1995 and 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended September 30, 1995 in conformity with generally accepted accounting
principles.
/s/ Hogan & Slovacek, PC
HOGAN & SLOVACEK, PC
November 20, 1995<PAGE>
ROGERS GALVANIZING COMPANY
Consolidated Balance Sheets
September 30, 1995 and 1994
ASSETS
1995 1994
CURRENT ASSETS:
Cash $312,326 $327,202
Cash-workers' compensation reserve 84,667 23,904
Certificate of deposit 50,000 50,000
Accounts receivable, less reserve for
doubtful accounts of $58,181 in 1995
and $45,138 in 1994 2,414,986 2,156,576
Inventories 978,931 639,495
Income taxes receivable - 37,000
Deferred income taxes 202,000 178,500
Prepaid expenses 88,456 58,111
Total current assets 4,131,366 3,470,788
PROPERTY, PLANT AND EQUIPMENT, at cost:
Land 175,172 175,172
Buildings 951,234 795,858
Shop equipment 5,584,697 4,883,002
Office equipment 238,876 216,631
Plant yard 198,868 177,898
Automobiles and trucks 123,009 108,481
Construction in progress 163,554 32,618
7,435,410 6,389,660
Less-accumulated depreciation 3,227,538 3,008,592
Total property, plant and equipment 4,207,872 3,381,068
OTHER ASSETS 132,341 -
$8,471,579 $6,851,856
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $934,488 $877,464
Accounts payable 780,379 858,816
Accrued workers' compensation liability 334,504 310,680
Accrued employee health liability 110,718 79,953
Accrued retirement 27,347 25,252
Accrued payroll and payroll taxes 316,125 182,770
Other accrued liabilities 25,876 16,515
Income taxes payable 113,757 -
Total current liabilities 2,643,194 2,351,450
DEFERRED INCOME TAXES 115,800 61,500
ACCRUED RETIREMENT 68,625 95,973
LONG-TERM DEBT 1,192,462 654,800
COMMITMENTS AND CONTINGENCIES - -
SHAREHOLDERS' EQUITY:
Common shares, $100 par value, 1,967
shares authorized, 1,172 shares
outstanding 117,200 117,200
Capital surplus 103,451 103,451
Retained earnings, per accompanying
statements 4,230,847 3,467,482
Total shareholders' equity 4,451,498 3,688,133
$8,471,579 $6,851,856
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROGERS GALVANIZING COMPANY
Consolidated Statements of Income and Retained Earnings
For the Years Ended September 30, 1995, 1994 and 1993
1995 1994 1993
Sales $17,614,234 $12,624,796 $11,544,123
Costs and expenses:
Costs of sales 12,764,067 9,447,974 7,806,927
Selling, general &
administrative 2,443,072 2,127,505 1,713,037
Depreciation 807,278 671,681 550,108
Operating earnings 1,599,817 377,636 1,474,051
Other (income) expense:
Interest expense, net 133,497 19,290 22,466
Other (107,869) (69,427) (66,389)
Earnings before income taxes 1,574,189 427,773 1,517,974
Income tax expense 585,800 104,000 511,000
Net earnings 988,389 323,773 1,006,974
Retained earnings, beginning
of year 3,467,482 3,603,133 2,821,183
Dividends paid ($192 per
share in 1995, $392 per
share in 1994 and $192
per share in (1993) (225,024) (459,424) (225,024)
Retained earnings, end of
year $4,230,847 $3,467,482 $3,603,133
The accompanying notes are an integral part of these financial statements.
<PAGE>
ROGERS GALVANIZING COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1995, 1994 AND 1993
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $988,389 $323,773 $1,006,974
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 807,278 671,681 550,108
Deferred income taxes 30,800 (29,000) (61,000)
Changes in operating assets and
liabilities:
(Increase) in accounts receivable (258,410) (424,173) (470,087)
(Increase) in inventories (339,436) (71,951) (62,672)
(Increase) decrease in income
taxes receivable 37,000 (17,000) 27,598
(Increase) in prepaid expenses (30,345) (20,365) (19,638)
Increase (decrease) in accounts
payable (78,437) 321,371 95,965
Increase in workers' compensation
liability 23,824 57,827 118,702
Increase (decrease) in accrue
employee health liability 30,765 (17,325) 97,278
Increase (decrease) in accrued
payroll and payroll taxes 133,355 (142,875) 130,255
Increase (decrease) in other
accrued liabilities 9,361 (10,836) 8,265
Increase (decrease) in income
taxes payable 113,757 (129,745) 129,745
(Decrease) in accrued retirement (25,253) (23,317) (88,170)
Total adjustments 454,259 164,292 456,349
Net Cash provided by
operating activities 1,442,648 488,065 1,463,323
CASH FLOWS USED IN INVESTING ACTIVITIES:
Additions to property, plant
and equipment (1,144,082) (972,825) (922,582)
Purchase of other assets (132,341) - -
Net cash used in investing activities (1,276,423) (972,825) (922,582)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (225,024) (459,424) (225,024)
Proceeds from debt 1,226,917 900,000 -
Payments on debt (1,122,231) (83,375) (24,554)
Net cash provided by (used in)
financing activities (120,338) 357,201 (249,578)
NET INCREASE (DECREASE) IN CASH 45,887 (127,559) 291,163
CASH, beginning of year 401,106 528,665 237,502
CASH, end of year $446,993 $401,106 $528,665
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Interest paid $149,759 $34,255 $29,941
Income taxes paid $397,835 $214,742 $414,657
The Accompanying notes are an integral part of these financial statements.
<PAGE>
ROGERS GALVANIZING COMPANY
Notes to Consolidated Financial Statements
For the Years Ended September 30, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Rogers Galvanizing Company and its subsidiaries ("Rogers") is engaged in the
hot dip galvanizing of steel structures and components to customer
specifications. On September 27, 1995, Rogers acquired the business and
operating assets of another galvanizing company.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Rogers and its wholly-owned subsidiaries, Reinforcing Services, Inc., Spin-
Galv, Inc. and Rogers Galvanizing Company - Kansas City, Inc. All significant
intercompany balances and transactions have been eliminated in consolidation.
Inventories
Inventories are composed, primarily, of raw zinc "pigs", molten zinc in
galvanizing kettles and other chemicals and materials used in the galvanizing
process. Molten zinc is stated at the lower of cost or market, with cost
determined by the last-in, first-out (LIFO) method. All other inventories are
stated at the lower of cost or market, with cost determined by the first-in,
first-out (FIFO) method.
The molten zinc valued on a LIFO basis in the September 30, 1995 and 1994
financial statements was $661,631 and $503,623, respectively. The
corresponding approximate replacement cost for this inventory was $1,258,970
and $952,300 at September 30, 1995 and 1994, respectively.
Property, Plant and Equipment
Depreciation is provided using accelerated and straight-line methods over the
estimated useful lives of the related property, ranging from three to 20 years.
During 1994, Rogers capitalized $15,619 of interest incurred after entering
into a capitalized equipment lease obligation until the equipment was placed in
service.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Profit Sharing Plan
Rogers has a qualified 401(k) profit sharing plan for eligible employees.
Eligible employees may defer a portion of their salary. At the discretion of
the Board of Directors, Rogers may make annual contributions to the plan, but
is not required to do so. Rogers made no contributions in 1994 or 1995.
Other Assets
Other assets represent goodwill, capitalized acquisition costs and a non-
compete agreement relating to the formation of a wholly-owned subsidiary and
the acquisition of the business and operating assets of another galvanizing
company. The capitalized acquisition costs and non-compete agreement are being
amortized over five years and the acquired goodwill is being amortized over
fifteen years.
2. INCOME TAXES
The provision for income taxes consists of the following for the years ended
September 30,
1995 1994 1993
Current:
Federal $542,700 $133,000 $572,000
State 12,300 - -
555,000 133,000 572,000
Deferred:
Federal 30,800 (29,000) (61,000)
State - - -
$585,800 $104,000 $511,000
The income tax rate for financial reporting purposes varies from the federal
statutory rate as follows:
1995 1994 1993
Percent of pretax income:
Federal statutory income
tax rate 34.0 % 34.0 % 34.0 %
State income taxes, net
of federal benefit .8 - -
Non-deductible permanent
differences .4 1.7 .4
Adjustment of prior
year's estimated liability - (9.7) -
Other items 2.0 (1.7) (.7)
Effective income tax rate
for the year 37.2 % 24.3 % 33.7 %
Significant components of Rogers' deferred tax liabilities and assets at
September 30 are as follows:
1995 1994
Deferred tax liabilities:
Tax over book depreciation $142,400 $98,500
Deferred tax assets:
Accrued retirement 37,200 46,900
Self-insured insurance programs 168,800 151,100
Reserve for doubtful accounts 22,600 17,500
228,600 215,500
Net deferred tax assets $86,200 $117,000
Based on Rogers' history of operating earnings and its expectations for future
operations, management believes that operating income will be sufficient to
allow the full realization of deferred tax assets.
3. ACCRUED RETIREMENT
At September 30, 1992, Rogers was making monthly retirement payments to two
retired company executives. During the year ended September 30, 1993, one of
the retired executives died. The liability to the remaining executive was
adjusted to estimated remaining payments to be made as calculated by an
insurance company using standard mortality tables and recorded at net present
value using an 8 percent interest rate.
4. LINE OF CREDIT AND LONG-TERM DEBT
Rogers' line of credit and long-term debt consisted of the following at
September 30:
1995 1994
Combined revolving bank line of credit,
up to $3,000,000 through July 31, 1996,
interest payable monthly at floating prime
plus .5%, (9.25% at September 30, 1995)
secured by certain of Rogers' machinery
and equipment, and its inventories and
accounts receivable, restricts payment of
cash dividends to not more than net income,
line is limited to $2,425,000 by a $575,000
workers' compensation self-insurance letter
of credit required by Oklahoma's Workers'
Compensation Court as discussed in Note 5 $511,608 $650,000
Note payable to bank in monthly installments of
$3,097 including interest at 7.2%, final payment
due October, 1996, secured by specific equipment 30,411 69,029
Note payable to bank in monthly installments of
$4,684 including interest at floating prime plus
.5% (9.25% at September 30, 1995), final payment
due June, 1997, secured by equipment, receivables,
and inventory 95,749 142,828
Note payable to an unrelated company, payable in
monthly installments of $3,331 including interest
at 3.5%, final payment due July, 1997, unsecured 70,875 107,661
Unsecured note payable to a company, payable in
monthly installments of $3,000, including interest
at 8%, through March, 1998 80,957 109,324
Revolving bank line of credit, up to $750,000
through September, 2000, payable in monthly
installments of principal and interest of $15,660
at floating prime plus .5% (9.25% at September 30,
1995) secured by certain of Rogers' machinery and
equipment and its inventories and accounts receivable,
restricts payment of cash dividends to not more than
net income. 448,489 -
Note payable to unrelated party in monthly installments
of $6,475 including interest at 10% through September,
2000, at which time unpaid principal is due. 490,000 -
Note payable to Tulsa County Industrial Authority
in monthly installments of $237 including interest
at 6.8% due September, 2015, joint and severally
guaranteed by co-makers 30,764 -
Capitalized lease obligation for equipment 368,097 453,422
2,126,950 1,532,264
Less current maturities 934,488 877,464
$1,192,462 $654,800
The aggregate maturities of this debt are as follows:
1996 $ 934,488
1997 410,463
1998 288,777
1999 115,422
2000 350,501
Thereafter 27,299
$2,126,950
5. WORKERS' COMPENSATION INSURANCE
Rogers utilizes a self-insured program for workers' compensation. This program
is limited to losses of $300,000 per claim, and aggregate losses of $5,000,000
over a two-year period through the use of a stop-loss policy. As required by
Oklahoma's Workers' Compensation Court, Rogers has a $575,000 letter of credit
with a bank to ensure Rogers' ability to pay workers' compensation claims.
This letter of credit is included in the $3,000,000 revolving bank line of
credit described in Note 4. Claims are accrued based on Rogers' estimate of
the aggregate liability for claims made and for potential claims. Rogers
provided $658,340, $813,195, and $329,499 for workers' compensation claims for
the years ended September 30, 1995, 1994, and 1993, respectively. In addition,
Rogers incurred $83,574, $67,546, and $68,573 for reinsurance and
administrative expenses for the years ended September 30, 1995, 1994, and 1993,
respectively.
6. EMPLOYEE HEALTH INSURANCE
Rogers adopted a self-insured program for employee health benefits on June 1,
1993. Under this program, responsibility for employee health care costs are
assumed by Rogers with incurred costs above a specified amount covered by a
stop-loss insurance policy. For the years ended September 30, 1995, 1994, and
1993, respectively, Rogers provided $571,523, $475,615, and $155,228 for
employee health care costs and paid out $293,754, $334,669, and $1,404 in
employee health care claims and incurred $247,003, $158,241, and $56,725 in
administrative costs and stop-loss insurance premiums.
7. NON-CASH TRANSACTIONS
During 1994, Rogers entered into a capital lease obligation for equipment
totalling $466,519. In addition, Rogers purchased inventory of $113,673 by
issuing a note payable to an unrelated company. In 1995, Rogers purchased the
operating assets of another galvanizer for cash and the issuance of a note
payable to an unrelated party in the amount $490,000.
8. COMMITMENTS AND CONTINGENCIES
Rogers is involved in various claims and legal actions arising from time to
time in the ordinary course of business. In the opinion of management, the
ultimate disposition of these matters will not have a material adverse effect
on Rogers' financial position, liquidity or results of operations.
Rogers has long-term operating lease agreements for the use of facilities at
its subsidiaries which were entered into during 1994. Future related lease
obligations are as follows for the years ended September 30, 1996 - $156,000,
1997 - $68,000, 1998 - $27,000, 1999 - $27,000, 2000 - $27,000 and $134,775
thereafter. Rent expense for these facilities during 1995 and 1994 were
$134,227 and $29,210, respectively.
9. OBLIGATIONS UNDER CAPITAL LEASE
Rogers acquired certain equipment under provisions of a long-term lease. For
financial reporting purposes, minimum lease rentals for the assets have been
capitalized. The following is a schedule of leased equipment under the capital
lease:
Capitalized cost $466,519
Less accumulated depreciation 68,034
$398,485
The following is a schedule by years of future minimum lease payments,
including renewal options, together with the present value of the net minimum
lease payments as of September 30, 1995:
Year Ended September 30,
1996 $116,514
1997 116,514
1998 116,514
1999 75,838
Total minimum lease payments 425,380
Less amount representing interest 57,283
Present value of net minimum lease payments $368,097
Current portion $ 90,331
Long-term portion 277,766
$368,097
The present value of net minimum lease payments are combined with other long-
term debt in the accompanying financial statements and Note 4.<PAGE>
___________ Shares
KINARK CORPORATION
Common Stock
PROSPECTUS
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and any information or representation not contained herein must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or solicitation of an offer to buy any
securities other than the securities to which it relates, or an offer to sell
or a solicitation of an offer to buy such securities in any jurisdiction in
which such offer or solicitation may not be legally made. Neither the delivery
of this Prospectus nor any sale made hereunder shall under any circumstances
create any implication that the information herein is correct as of any date
subsequent to the date hereof.
TABLE OF CONTENTS
Prospectus Summary 3
Summary Pro Forma and Selected Consolidated 8
Financial Information
Risk Factors 11
Business Strategy 13
The Acquisition or Merger 14
Use of Proceeds 16
Capitalization 17
Common Stock Dividends and Price Range 18
The Rights Offering 18
Description of Legal Stock 23
Legal Matters 27
Experts 27
Financial Statements F-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses (other than underwriting commissions) of the sale of
the shares of Common Stock are as follows:
Registration Fee $ 7,760
AMEX Application Fee 17,500
Blue Sky Fees and Expenses 1,000
Printing and Engraving 45,000
Subscription Agent's Fees and Expenses 10,000
Information Agent's Fees and Expenses 22,500
Legal Fees and Expenses 175,000
Accounting Fees and Expenses 40,000
Miscellaneous Disbursements 2,240
TOTAL $321,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Certificate of Incorporation (the "Certificate") of the Company
contains a provision which, subject to certain exceptions described below,
eliminates the liability of a director to the Company or its stockholders for
monetary damages for any breach of duty as a director. This provision does not
eliminate the liability of the director (i) for violations of his duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or involving intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law (the
"Delaware Corporation Law") relating to unlawful dividends and distributions,
or (iv) for any transaction from which the director derived an improper
personal benefit.
The Certificate and the Bylaws (the "Bylaws") of the Company require
the Company to indemnify any person who was, is, or is threatened to be made a
named defendant or respondent in any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
by reason of service by such person as a director, officer, employee or agent
of the Company or any other corporation for which he served as such at the
request of the Company. Such persons are entitled to be indemnified against
judgments, penalties, fines, settlements, and reasonable expenses actually
incurred by the director in connection with the proceeding, except that no
payments may be made with respect to liability which is not eliminated pursuant
to the provision of the Certificate described in the preceding paragraph. Such
persons are also entitled to have the Company advance any such expenses prior
to final disposition of the proceeding, upon delivery of a written undertaking
to repay the amounts advanced if it is ultimately determined that the standard
of conduct has not been met.
In addition to the Certificate and Bylaws of the Company, Section
145(c) of the Delaware Corporation Law requires the Company to indemnify any
director who has been successful on the merits or otherwise in defending any
proceeding described above. The Delaware Corporation Law also provides that a
court may order indemnification of a director if it determines that the
director is fairly and reasonably entitled to such indemnification.
The Company has the power, under the Certificate and Bylaws, to
obtain insurance on behalf of any director, officer, employee, or agent of the
Company against any liability asserted against or incurred by such person in
any such capacity, whether or not the Company has the power to indemnify such
person against such liability at that time under the Certificate or Bylaws.
ITEM 16. EXHIBITS
The following documents are filed as exhibits to this Registration
Statement:
3.1 The Company's Restated Certificate of Incorporation, as amended
on June 6, 1996.
3.2 The Company's Bylaws (incorporated by reference to Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q dated March 31,
1996).
4.1 Provisions in the Company's Restated Certificate of
Incorporation and Bylaws defining the rights of holders of the
Company's Common Stock.
4.2 Form of Letter to Stockholders.
4.3 Form of Letter to Securities Dealers, Commercial Banks, Trust
Companies and other Nominees.
4.4 Form of Instructions as to the Use of Kinark Corporation
Subscription Cards.
4.5 Form of Subscription Card.
4.6 Form of Letter to Clients from Securities Dealers, Commercial
Banks, Trust Companies and other Nominees.
4.7 Form of Notice of Guaranty Delivery.
4.8 Form of Nominee Holder Certification.
4.9 Form of Special Notice to Holders of Kinark Corporation Common
Stock whose Addresses are Outside the United States.
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P. as to the
legality of the securities being registered.
15.1 Letter Regarding Unaudited Interim Financial Information.
23.1 Consent of Deloitte & Touche LLP, independent auditors of the
Company.
23.2 Consent of Hogan & Slovacek, P.C., independent auditors of
Rogers Galvanizing Company.
23.3 Consent of Nelson Mullins Riley & Scarborough, L.L.P. (contained
in the opinion included at Exhibit 5.1).
24.1 Power of Attorney of certain officers and directors of the
Company (see page II-5).
ITEM 17. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(d) If the registrant is a foreign private issuer, to file a post-
effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of this chapter at the start of any
delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3) of the
Act need not be furnished, provided, that the registrant includes in the
prospectus, by means of a post-effective amendment, financial statements
required pursuant to this paragraph (a)(4) and other information necessary
to ensure that all other information in the prospectus is at least as
current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a post-
effective amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Act or Rule 3-19 of this
chapter if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Form F-3.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the registrant as described in Item 14 or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer, or controlling person of the
registrant in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
4. The undersigned registrant hereby undertakes that:
(a) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(b) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Ponte Vedra Beach, State of Florida, on June 7,
1996.
KINARK CORPORATION
By: /s/ Ronald J. Evans
Ronald J. Evans, President and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ronald J. Evans and Paul R. Chastain, and each
of them, his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, and each of them or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following in the capacities and
on the dates indicated.
Signature Title Date
/s/ Michael T. Crimmins* Chief Executive Officer (principal June 7, 1996
Michael T. Crimmins executive officer) and Chairman
of the Board
/s/ Ronald J. Evans President and Director June 7, 1996
Ronald J. Evans
/s/ Paul R. Chastain* Vice President, Chief Financial June 7, 1996
Paul R. Chastain Officer (principal financial
officer and principal accounting
officer) and Director
/s/ Richard C. Butler* Director June 7, 1996
Richard C. Butler
/s/ Mark E. Walker* Director June 7, 1996
Mark E. Walker
/s/ Joseph J. Morrow Director June 7, 1996
Joseph J. Morrow
/s/ John H. Sununu Director June 7, 1996
John H. Sununu
* Ronald J. Evans, by signing his name hereto, does hereby sign this
amendment to this Registration Statement on behalf of each of the directors and
officers of the Company after whose typed names asterisks appear pursuant to a
power of attorney duly executed by such directors and officers and filed with
the Securities and Exchange Commission as part of the Registration Statement.
<PAGE>
EXHIBIT INDEX
Ex. No. Description Page
3.1 The Company's Restated Certificate of Incorporation,
as amended on June 6 1996.
3.2 The Company's Bylaws (incorporated by reference to
Exhibit 3.1 to the Company's Quarterly Report on
Form 10-Q dated March 31, 1996).
4.1 Provisions in the Company's Restated Certificate of
Incorporation and Bylaws defining the rights of holders
of the Company's Common Stock.
4.2 Form of Letter to Stockholders.
4.3 Form of Letter to Securities Dealers, Commercial Banks,
Trust Companies and other Nominees.
4.4 Form of Instructions as to the Use of Kinark Corporation *
Subscription Cards.
4.5 Form of Subscription Card. *
4.6 Form of Letter to Clients from Securities Dealers,
Commercial Banks, Trust Companies and other Nominees.
4.7 Form of Notice of Guaranty Delivery.
4.8 Form of Nominee Holder Certification. *
4.9 Form of Special Notice to Holders of Kinark Corporation
Common Stock whose Addresses are Outside the United States. *
5.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P.
as to the legality of the securities being registered.
15.1 Letter Regarding Unaudited Interim Financial Information. *
23.1 Consent of Deloitte & Touche LLP, independent auditors
of the Company.
23.2 Consent of Hogan & Slovacek, P.C., independent auditors
of Rogers Galvanizing Company.
23.3 Consent of Nelson Mullins Riley & Scarborough, L.L.P.
(contained in the opinion included at Exhibit 5.1).
24.1 Power of Attorney of certain officers and directors
of the Company (see page II-5).
* Exhibit previously filed.
EXHIBIT 3.1<PAGE>
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
KINARK CORPORATION
Kinark Corporation, a corporation organized and existing under the General
Corporation Law of the State of Delaware (the "Corporation"), does hereby
certify as follows:
1. The name of the Corporation is Kinark Corporation. The Corporation's
Restated Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on June 2, 1994.
2. Article "Fourth" of the Restated Certificate of Incorporation is
amended to read in its entirety as follows:
"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."
3. The foregoing amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by Ronald J. Evans, its President, this 5th day of June,
1996.
By:/s/ Ronald J. Evans
Ronald J. Evans, President
ATTEST:/s/ Carolyn A. Fredrich
Carolyn A. Fredrich, Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION
Kinark Corporation, a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the
"Corporation"),
DOES HEREBY CERTIFY THAT:
1. The name of the Corporation is Kinark Corporation. Kinark Corporation was
originally incorporated under the name The Kin-Ark Oil & Gas Company and the
original Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on January 27, 1955.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the Certificate of Incorporation of the
Corporation.
3. At a meeting of the Board of Directors of the Corporation, resolutions
were duly adopted setting forth proposed amendments of the Restated Certificate
of Incorporation, as amended, of the Corporation, declaring said amendments to
be advisable and calling a meeting of the stockholders of the Corporation for
consideration thereof. The resolution setting forth the proposed amendments is
as follows:
RESOLVED, that the Corporation's Restated Certificate of Incorporation, as
amended, be amended and restated in its entirety as follows:
FIRST: The name of the Corporation is KINARK CORPORATION.
SECOND: The principal office or place of business of the Corporation in
the State of Delaware is located at Corporation Trust Center, 1209 Orange
Street, in the City of Wilmington, County of New Castle. The name and address
of its resident agent is The Corporation Trust Company, Corporation Trust
Center, 1209 Orange Street, Wilmington, Delaware 19801.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is Twelve Million (12,000,000) shares of Common
Stock of a par value of Ten Cents ($.10) per share.
FIFTH: The minimum amount of capital with which the Corporation will
commence business is One Thousand Dollars ($1,000).
SIXTH: All of any part of the shares of stock of any class of the
Corporation may be issued and sold, from time to time, by the Corporation,
without further action by the stockholders, for such consideration (but in the
case of any class of stock having par value, not less than the par value
thereof) and on such terms and to such person or persons as may, from time to
time, be fixed by the Board of Directors of the Corporation.
The Board of Directors shall have the power at any time and from time to
time (without any action by the stockholders of the Corporation) to create and
issue, whether or not in connection with the issue or sale of any shares of
stock or bonds, debentures or securities of the Corporation, rights or options
entitling the holders thereof to purchase from the Corporation shares of its
stock of any class, such rights or options to be evidenced by or in such
warrants or other instruments as shall be approved by the Board of Directors.
The terms upon which, the time or times, which may be limited or unlimited in
duration, at or within which such rights or options shall be issued shall be
such as shall be fixed and stated in the resolution or resolutions adopted by
the Board of Directors providing for the creation and issue of such rights or
options.
No stockholder shall be entitled as a matter of right to subscribe for,
purchase or receive any shares of the stock or any rights or options of the
Corporation which it may issue or sell, whether out of the number of shares
authorized by this Certificate of Incorporation or by amendment thereof, or
other proceedings, or out of the shares of the stock of the Corporation
acquired by it after the issuance thereof, nor shall any stockholder be
entitled as a matter of right to purchase or subscribe for or receive any
bonds, debentures or other obligations which the Corporation may issue or sell
that shall be convertible into or exchangeable for stock or to which shall be
attached or appertain any warrant or warrants or other instrument or
instruments that shall confer upon the holder or owner of such obligation the
right to subscribe for or purchase from the Corporation any share of its
capital stock. All such additional issues of stock, rights, options, or of
bonds, debentures or other obligations convertible into or exchangeable for
stock or to which warrants shall be attached or appertain or which shall confer
upon the holder the right to subscribe for or purchase any shares of stock, may
be issued and disposed of by the Board of Directors to such persons, firms,
associations and corporations and upon such terms, subject to any provisions of
law in regard thereto, as in their absolute discretion they may deem advisable.
SEVENTH: The Corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatsoever.
NINTH: The number of Directors of the Corporation which shall constitute
the whole Board of Directors shall be such number as from time to time shall be
fixed by or in the manner provided in the Bylaws, but in no case shall the
number be less than three (3). Unless and until a different number of
Directors is established by or in the manner provided in the Bylaws, the number
shall be seven (7). Directors shall be elected for terms of office to expire
at the annual meeting of stockholders after their election and until their
successors shall be elected and shall be qualified. No decrease in number
shall have the effect of removing a Director prior to the expiration of his
term of office.
All corporate powers of the Corporation shall be exercised by the Board of
Directors except as otherwise provided herein or by law.
IN FURTHERANCE AND NOT IN LIMITATION OF THE POWERS CONFERRED BY STATUTE
THE BOARD OF DIRECTORS IS EXPRESSLY AUTHORIZED:
(a) To fix, determine and vary from time to time the amount to be
maintained as surplus and the amount or amounts to be set apart as working
capital.
(b) To set apart out of any of the funds of the Corporation legally
available for dividends a reserve or reserves for any proper purposes and/or to
abolish any such reserve or reserves in the manner in which created.
(c) To make, amend, alter, change, add to or repeal by-laws of the
Corporation, without any action on the part of the stockholders. The by-laws
made by the directors may be amended, altered, changed, added to or repealed by
a majority of a quorum of the stockholders.
(d) To authorize and cause to be executed mortgages and liens, with
or without limit as to amount, upon the real or personal property of the
Corporation.
(e) From time to time to determine whether and to what extent, at
what time and place, and under what conditions and regulations the accounts and
books of the Corporation, or any of them, shall be open to the inspection of
any stockholder and no stockholder shall have any right to inspect any account
or book or document of the Corporation except as conferred by statute or by-
laws or as authorized by resolution of the stockholders or Board of Directors.
(f) To authorize the payment of compensation to the directors for
services to the Corporation, including fees and expenses for attendance at
meetings of the Board of Directors, the Executive Committee and other
committees and/or salaries for serving as such directors or committee members,
and to determine the amount of such compensation.
(g) From time to time to formulate, establish, promote and carry
out, and to amend, alter, change, revise, recall, repeal or abolish a plan or
plans for the participation by all or any of the employees, including directors
and officers, of the Corporation, or of any corporation, company, association,
trust or organization in which or in the welfare of which the Corporation has
any interest, and those actively engaged in the conduct of the Corporation's
business, in the profits, gains or business of the Corporation or of any branch
or division thereof, as part of the Corporation's legitimate expenses and for
the furnishing to such employees, directors, officers or persons, or any of
them, at the Corporation's expense, of medical services, insurance against
accident, sickness or death, pensions during old age, disability or
unemployment, education, housing, social services, recreation or other similar
aids for their relief or general welfare, in such manner and upon such terms
and conditions as the Board of Directors shall determine.
(h) By resolution passed by a majority of the whole Board of
Directors, to designate one or more committees, each committee to consist of
two or more of the directors of the Corporation, which, to the extent provided
in the resolution or in the by-laws of the Corporation, shall have and may
exercise the powers of the Board of Directors in the management of the business
and affairs of the Corporation, and may authorize the seal of the Corporation
to be affixed to all papers which may require it. Such committee or committees
shall have such name or names as may be stated in the by-laws of the
Corporation or as may be determined from time to time by resolution adopted by
the Board of Directors.
TENTH: (a) No contract or other transaction between the Corporation and
any other corporation and no other act of the Corporation with relation to any
other corporation shall, in the absence of fraud, in any way be invalidated or
otherwise affected by the fact that any one or more of the directors of the
Corporation are pecuniarily or otherwise interested in, or are directors or
officers of, such other corporations. Any director of the Corporation may vote
upon any contract or other transaction between the Corporation and any
subsidiary or affiliated corporation without regard to the fact that he is also
a director of such subsidiary or affiliated corporation. Any director of the
Corporation individually, or any firm or association of which any director may
be a member, may be a party to, or may be pecuniarily or otherwise interested
in any contract or transaction of the Corporation and shall not be liable to
account to the Corporation for any profit realized by him from or through any
such contract or transaction of the Corporation by reason of his interest in
such contract or transaction, provided that the fact that he individually or as
a member of such firm or association is such a party or so interested shall be
disclosed or shall have been known to the Board of Directors or a majority of
such members thereof as shall be present at any meeting of the Board of
Directors at which action upon any such contract or transaction shall be taken;
and in any case described in this paragraph (a) any such director may be
counted in determining the existence of a quorum at any meeting of the Board of
Directors which shall authorize any such contract or transaction and may vote
thereat to authorize any such contract or transaction.
(b) Any contract, transaction or act of the Corporation or of the
Board of Directors which shall be ratified by a majority of a quorum of the
stockholders entitled to vote at any annual meeting or at any special meeting
called for that purpose shall be as valid and binding as though ratified by
every stockholder of the Corporation; provided, however, that any failure of
the stockholders to approve or ratify such contract, transaction or act, when
and if submitted, shall not be deemed in any way to invalidate the same or to
deprive the Corporation, its directors or officers of their right to proceed
with such contract, transaction or act.
(c) Regardless of any provision in this or any other Article or
provision of this Certificate of Incorporation to the contrary, no merger or
consolidation between this Corporation and an "Acquirer", as defined in this
subparagraph, nor any sale, lease, or exchange (a "transfer" herein) of all or
substantially all of the assets of this Corporation or such an Acquirer to the
other may be effected unless: (i) two-thirds or more of the whole Board of
Directors of this Corporation shall adopt a resolution approving any such
action; and (ii) a meeting of the shareholders of this Corporation is held to
act thereon and the votes of holders of voting securities of this Corporation
representing not less than two-thirds of the votes entitled to vote thereon
shall vote in favor of such action. As used in this subparagraph, the term
"Acquirer" shall mean any person, firm, or corporation other than this
Corporation which is a party or a proposed party to any merger, consolidation,
or transfer as described herein, if such person, firm, or corporation or any
person, firm, or corporation controlling, controlled by, or under common
control with such party, or any group of which such person, firm, or
corporation is a member, or any other group acting in concert with such party,
owns in the aggregate of record and/or beneficially, directly or indirectly,
more than ten percent (10%) of any class of equity security of this
Corporation. As used in this subparagraph, the term "group" includes persons,
firms, and corporations acting in concert, whether or not as a formal group,
and the term "equity security" means any share of stock or similar voting
security convertible, with or without consideration, into such a security, or
carrying any warrant to subscribe to or purchase such a security, or any such
warrant or right. The foregoing provision is in addition to the requirements
of the General Corporation Law of the State of Delaware and may not be amended
or repealed without a favorable vote of not less than two-thirds of the holders
of the issued and outstanding stock of the Corporation entitled to vote thereon
authorizing such amendment or repeal.
(d) The provisions of this Article TENTH shall be in addition to and
not in limitation of any other rights, indemnities, or limitations of liability
to which any director or officer may be entitled as a matter of law or under
any by-law, agreement, vote of stockholders or otherwise.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said Court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
TWELFTH: Meetings of stockholders may be held outside the State of
Delaware, if the by-laws so provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the by-laws of the Corporation. Elections of
directors need not be by ballot unless the by-laws of the Corporation shall so
provide.
THIRTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
officers, directors and stockholders herein are granted subject to this
reservation.
FOURTEENTH: (a) In addition to any affirmative vote required by law, by
this Certificate of Incorporation, or otherwise, and except as expressly
provided in paragraph (b) of this Article Fourteenth, approval of any Business
Combination shall require the affirmative vote of at least two-thirds of the
outstanding Voting Shares, notwithstanding that no vote may be required or some
lesser percentage may be specified by law, agreement, or otherwise.
(b) Paragraph (a) of this Article Fourteenth shall not apply to a
particular Business Combination, if all of the conditions specified in either
subparagraphs (1) or (2) below are met:
(1) The Business Combination has been approved by two-thirds of
the whole Board of Directors; or
(2) Both of the following conditions are met:
(A) The aggregate amount of cash and the Fair Market Value
of consideration other than cash, determined as of the date of the
consummation of the Business Combination, to be received per share by
holders of Common Stock in such Business Combination shall be at least
equal to the highest of the following:
(i) The highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any Voting Shares acquired by
it (1) within the two-year period immediately prior to the date of
the first public announcement of the proposed Business Combination or
(2) in the transaction in which it became an Interested Stockholder,
whichever is higher;
(ii) The Fair Market Value per share of Common
Stock on the date of the first public announcement of the proposed
Business Combination or on the date on which the Interested
Stockholder became an Interested Stockholder, whichever is higher;
and
(iii) The per share book value of the Common Stock
as reported at the end of the fiscal quarter immediately preceding
the date of the first public announcement of the proposed Business
Combination; and
(B) The consideration to be received by holders of Common
Stock in the Business Combination shall be either all cash or cash and
noncash consideration in the same form as previously paid by the
Interested Stockholder in connection with its acquisition of Beneficial
Ownership of shares of Common Stock of the Corporation. If the
consideration paid for the Common Stock by the Interested Stockholder
varied as to form, the form of consideration to be paid in the Business
Combination shall be either cash or the same type of consideration used to
acquire the largest number of shares of Common Stock previously acquired
by the Interested Stockholder. The noncash portion, if any, of the
consideration to be paid in the Business Combination shall not be greater
than the non-cash portion of consideration paid by the Interested
Stockholder in connection with its acquisition of Beneficial Ownership of
the largest number of shares of Common Stock of the Corporation. The
value of any non-cash consideration to be paid in the Business Combination
shall be determined as of the date of consummation of the Business
Combination.
(C) For the purpose of this Article Fourteenth, the
following terms when capitalized shall the following meanings:
(1) "Affiliate" shall mean a Person that directly or
indirectly, or through one or more intermediaries, controls, or is
controlled by, or is under common control with the Person including
without limitation an officer, director, general partner or beneficial
owner of 10% or more of any class of equity securities of such Person or
any parent or Subsidiary thereof, and the spouse or other relative who has
the same home as such Person.
(2) "Beneficial Owner" of a Voting Share shall mean a Person
and its Affiliates who, directly or indirectly, have:
(A) The power to vote or direct the voting of a Voting
Share; or
(B) Investment power to dispose of or direct the
disposition of a Voting Share; or
(C) The right to acquire Beneficial Ownership of a Voting
Share within 60 days.
(3) "Business Combination" shall mean any of the following:
(A) Any merger or consolidation of the Corporation or any
subsidiary with or into (i) any Interested Stockholder or (ii) any other
corporation which is, or after such merger or consolidation, would be an
Interested Stockholder or an Affiliate of an Interested Stockholder; or
(B) Any sale, lease, exchange, mortgage, pledge, transfer
or other disposition to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the Corporation
or any Subsidiary having an aggregate Fair Market Value of $1,000,000 or
more in one transaction or a series of related transactions; or
(C) The issuance or transfer by the Corporation or any
Subsidiary of any securities of the Corporation or any Subsidiary to any
Interested Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $1,000,000 or more in one
transaction or a series of related transactions; or
(D) The adoption of any plan for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(E) Any reclassification of securities (including any
stock split or reverse stock split) or recapitalization of the
Corporation, or any merger or consolidation of the Corporation with any
Subsidiary or any similar transaction (whether or not with or into or
otherwise involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested Stockholder.
(4) "Fair Market Value" shall mean: (i) in the case of stock,
the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the Composite
Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not
quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934
on which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of
such stock during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of such stock as
determined by a majority of the whole Board of Directors in good faith;
and (ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined in good faith
by a majority of the whole Board of Directors.
(5) "Interested Stockholder" shall mean any Person (other than
the Corporation or any corporation of which a majority of each class of
equity securities is owned, directly or indirectly, by the Corporation)
which, as of the record date for the determination of stockholders
entitled to notice of and to vote on a Business Combination, or
immediately prior to the consummation of any such transaction;
(A) Is the Beneficial Owner, directly or indirectly, of
more than 10% of the Voting Shares; or
(B) Is an Affiliate of the Corporation and at any time
within two years prior thereto was the Beneficial Owner, directly or
indirectly, of not less than 10% of the then outstanding Voting Shares; or
(C) Is an assignee of or successor in interest to any
shares of capital stock of the Corporation which were at any time within
two years prior thereto Beneficially Owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
The number of shares of Voting Shares deemed to be outstanding
shall include shares deemed Beneficially Owned by the Interested
Stockholder, but shall not include any other shares of Voting Shares which
may be issuable to other persons pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options,
or otherwise.
(6) "Person" shall mean any individual, corporation,
partnership or other entity.
(7) "Subsidiary" shall mean any corporation of which a majority
of the outstanding shares of any class of equity securities is owned
directly or indirectly by the Corporation.
(8) "Voting Shares" shall mean all issued and outstanding
shares of equity securities and all rights to acquire any equity
securities which are generally entitled to vote in the election of
directors.
(d) A majority of the whole Board of Directors shall have the power
and duty to determine for the purposes of this Article Fourteenth on the basis
of information known to them, (1) whether a Person is an Interested
Stockholder, (2) the number of Voting Shares Beneficially Owned by any Person,
(3) whether a Person is an Affiliate of another, (4) whether a Person has the
power to vote or dispose of Voting Shares or to direct the voting or
disposition of Voting Shares, (5) whether the assets subject to any Business
Combination or the consideration received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business Combination has
an aggregate Fair Market Value of $1,000,000 or more, or (6) whether a Person
has the right to acquire Beneficial Ownership of Voting Shares.
(e) Nothing contained in this Article Fourteenth shall be construed
to relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
(f) Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative vote of the
holders of at least two-thirds of the Voting Shares shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article Fourteenth
or any provisions thereof.
FIFTEENTH: To the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, a director of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. No amendment to
or repeal of this Article Fifteenth shall apply to, or have any effect on, the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
SIXTEENTH: (a) The Corporation shall indemnify any person who is or was
a party (which shall include for purposes of this Article Sixteenth the giving
of testimony or similar involvement) or is threatened to be made a party to or
is involved in any threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative, or investigative (hereinafter a
"proceeding") by reason of the fact that such person was or is an "authorized
representative" (as defined below) against expenses (which shall include
attorneys' fees), judgments, ERISA excise taxes or penalties, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such proceeding to the fullest extent permitted under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment).
As used in this Article Sixteenth, the term "authorized representative" shall
mean a Director, officer, employee or agent of the Corporation, or a person
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans.
(b) Expenses incurred by a person in defending a proceeding
(including permissive and compulsory counterclaims and affirmative defenses)
brought by reason of the fact that such person is or was an authorized
representative shall be paid by the Corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf
of such person to repay such amount if it shall be ultimately determined that
such person is not entitled to be indemnified under this Article Sixteenth or
otherwise. The Corporation shall advance all expenses which the person's
defense counsel certifies by an affidavit to the Corporation as being
reasonable and incurred in defending a proceeding.
(c) If a claim under Sections (a) or (b) of this Article Sixteenth
is not paid in full by the Corporation within thirty (30) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the Corporation
to indemnify the claimant for the amount claimed, but the burden of proving
such defense shall be on the Corporation.
(d) The indemnification and advancement of expenses authorized by
this Article Sixteenth shall (i) not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be entitled
under any statute, provision of the Certificate, agreement, vote of
stockholders or directors or otherwise, (ii) continue as to a person who has
ceased to be an authorized representative, and (iii) inure to the benefit of
the heirs, executors and administrators of an authorized representative.
(e) Each person who shall act as an authorized representative of the
Corporation shall be deemed to be doing so in reliance upon the rights of
indemnification and advancement of expenses provided by this Article Sixteenth,
and the provisions of this Article Sixteenth shall be deemed a contract between
the Corporation and the authorized representative. Any repeal or modification
of the provisions of this Article Sixteenth shall not affect any rights or
obligations then existing.
(f) The Corporation may, but shall not be obligated to, purchase and
maintain insurance at its expense, to protect itself and any person who is or
was an authorized representative against any liability asserted against him in
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability.
4. Thereafter, pursuant to resolution of its Board of Directors, an annual
meeting of the stockholders of the Corporation was duly called and held, upon
notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware at which meeting the necessary number of shares as required
by statute were voted in favor of the amendments.
5. The amendments were duly adopted in accordance with the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the Corporation has caused this Restated Certificate
to be signed by Paul R. Chastain, its President, and Carolyn A. Fredrich, its
Secretary, this 26th day of May, 1994.
By: /s/ Paul R. Chastain
Paul R. Chastain, President
Attest: /s/ Carolyn A. Fredrich
Carolyn A. Fredrich, Secretary
EXHIBIT 4.1<PAGE>
EXHIBIT 4.1
INSTRUMENTS DEFINING THE RIGHTS
OF SECURITY HOLDERS
A. Relevant Portions of the Restated Certificate of Incorporation of Kinark
Corporation:
FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is Eighteeen Million (18,000,000) shares of
Common Stock of a par value of Ten Cents ($.10) per share.
SIXTH: All of any part of the shares of stock of any class of the
Corporation may be issued and sold, from time to time, by the Corporation,
without further action by the stockholders, for such consideration (but in the
case of any class of stock having par value, not less than the par value
thereof) and on such terms and to such person or persons as may, from time to
time, be fixed by the Board of Directors of the Corporation.
The Board of Directors shall have the power at any time and from time to
time (without any action by the stockholders of the Corporation) to create and
issue, whether or not in connection with the issue or sale of any shares of
stock or bonds, debentures or securities of the Corporation, rights or options
entitling the holders thereof to purchase from the Corporation shares of its
stock of any class, such rights or options to be evidenced by or in such
warrants or other instruments as shall be approved by the Board of Directors.
The terms upon which, the time or times, which may be limited or unlimited in
duration, at or within which such rights or options shall be issued shall be
such as shall be fixed and stated in the resolution or resolutions adopted by
the Board of Directors providing for the creation and issue of such rights or
options.
No stockholder shall be entitled as a matter of right to subscribe for,
purchase or receive any shares of the stock or any rights or options of the
Corporation which it may issue or sell, whether out of the number of shares
authorized by this Certificate of Incorporation or by amendment thereof, or
other proceedings, or out of the shares of the stock of the Corporation
acquired by it after the issuance thereof, nor shall any stockholder be
entitled as a matter of right to purchase or subscribe for or receive any
bonds, debentures or other obligations which the Corporation may issue or sell
that shall be convertible into or exchangeable for stock or to which shall be
attached or appertain any warrant or warrants or other instrument or
instruments that shall confer upon the holder or owner of such obligation the
right to subscribe for or purchase from the Corporation any share of its
capital stock. All such additional issues of stock, rights, options, or of
bonds, debentures or other obligations convertible into or exchangeable for
stock or to which warrants shall be attached or appertain or which shall confer
upon the holder the right to subscribe for or purchase any shares of stock, may
be issued and disposed of by the Board of Directors to such persons, firms,
associations and corporations and upon such terms, subject to any provisions of
law in regard thereto, as in their absolute discretion they may deem advisable.
TENTH: (c) Regardless of any provision in this or any other Article or
provision of this Certificate of Incorporation to the contrary, no merger or
consolidation between this Corporation and an "Acquirer", as defined in this
subparagraph, nor any sale, lease, or exchange (a "transfer" herein) of all or
substantially all of the assets of this Corporation or such an Acquirer to the
other may be effected unless: (i) two-thirds or more of the whole Board of
Directors of this Corporation shall adopt a resolution approving any such
action; and (ii) a meeting of the shareholders of this Corporation is held to
act thereon and the votes of holders of voting securities of this Corporation
representing not less than two-thirds of the votes entitled to vote thereon
shall vote in favor of such action. As used in this subparagraph, the term
"Acquirer" shall mean any person, firm, or corporation other than this
Corporation which is a party or a proposed party to any merger, consolidation,
or transfer as described herein, if such person, firm, or corporation or any
person, firm, or corporation controlling, controlled by, or under common
control with such party, or any group of which such person, firm, or
corporation is a member, or any other group acting in concert with such party,
owns in the aggregate of record and/or beneficially, directly or indirectly,
more than ten percent (10%) of any class of equity security of this
Corporation. As used in this subparagraph, the term "group" includes persons,
firms, and corporations acting in concert, whether or not as a formal group,
and the term "equity security" means any share of stock or similar voting
security convertible, with or without consideration, into such a security, or
carrying any warrant to subscribe to or purchase such a security, or any such
warrant or right. The foregoing provision is in addition to the requirements
of the General Corporation Law of the State of Delaware and may not be amended
or repealed without a favorable vote of not less than two-thirds of the holders
of the issued and outstanding stock of the Corporation entitled to vote thereon
authorizing such amendment or repeal.
ELEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for this Corporation under the provisions of Section 279 of Title 8
of the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, to be summoned in such manner as the said Court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the Court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
THIRTEENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
officers, directors and stockholders herein are granted subject to this
reservation.
FOURTEENTH: (a) In addition to any affirmative vote required by law, by
this Certificate of Incorporation, or otherwise, and except as expressly
provided in paragraph (b) of this Article Fourteenth, approval of any Business
Combination shall require the affirmative vote of at least two-thirds of the
outstanding Voting Shares, notwithstanding that no vote may be required or some
lesser percentage may be specified by law, agreement, or otherwise.
(b) Paragraph (a) of this Article Fourteenth shall not apply to a
particular Business Combination, if all of the conditions specified in either
subparagraphs (1) or (2) below are met:
(1) The Business Combination has been approved by two-thirds of
the whole Board of Directors; or
(2) Both of the following conditions are met:
(A) The aggregate amount of cash and the Fair Market Value
of consideration other than cash, determined as of the date of the
consummation of the Business Combination, to be received per share by
holders of Common Stock in such Business Combination shall be at least
equal to the highest of the following:
(i) The highest per share price (including any
brokerage commissions, transfer taxes and soliciting dealers' fees)
paid by the Interested Stockholder for any Voting Shares acquired by
it (1) within the two-year period immediately prior to the date of
the first public announcement of the proposed Business Combination or
(2) in the transaction in which it became an Interested Stockholder,
whichever is higher;
(ii) The Fair Market Value per share of Common
Stock on the date of the first public announcement of the proposed
Business Combination or on the date on which the Interested
Stockholder became an Interested Stockholder, whichever is higher;
and
(iii) The per share book value of the Common Stock
as reported at the end of the fiscal quarter immediately preceding
the date of the first public announcement of the proposed Business
Combination; and
(B) The consideration to be received by holders of Common
Stock in the Business Combination shall be either all cash or cash and
noncash consideration in the same form as previously paid by the
Interested Stockholder in connection with its acquisition of Beneficial
Ownership of shares of Common Stock of the Corporation. If the
consideration paid for the Common Stock by the Interested Stockholder
varied as to form, the form of consideration to be paid in the Business
Combination shall be either cash or the same type of consideration used to
acquire the largest number of shares of Common Stock previously acquired
by the Interested Stockholder. The noncash portion, if any, of the
consideration to be paid in the Business Combination shall not be greater
than the non-cash portion of consideration paid by the Interested
Stockholder in connection with its acquisition of Beneficial Ownership of
the largest number of shares of Common Stock of the Corporation. The
value of any non-cash consideration to be paid in the Business Combination
shall be determined as of the date of consummation of the Business
Combination.
(C) For the purpose of this Article Fourteenth, the
following terms when capitalized shall the following meanings:
(1) "Affiliate" shall mean a Person that directly or
indirectly, or through one or more intermediaries, controls, or is
controlled by, or is under common control with the Person including
without limitation an officer, director, general partner or beneficial
owner of 10% or more of any class of equity securities of such Person or
any parent or Subsidiary thereof, and the spouse or other relative who has
the same home as such Person.
(2) "Beneficial Owner" of a Voting Share shall mean a Person
and its Affiliates who, directly or indirectly, have:
(A) The power to vote or direct the voting of a Voting
Share; or
(B) Investment power to dispose of or direct the
disposition of a Voting Share; or
(C) The right to acquire Beneficial Ownership of a Voting
Share within 60 days.
(3) "Business Combination" shall mean any of the following:
(A) Any merger or consolidation of the Corporation or any
subsidiary with or into (i) any Interested Stockholder or (ii) any other
corporation which is, or after such merger or consolidation, would be an
Interested Stockholder or an Affiliate of an Interested Stockholder; or
(B) Any sale, lease, exchange, mortgage, pledge, transfer
or other disposition to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the Corporation
or any Subsidiary having an aggregate Fair Market Value of $1,000,000 or
more in one transaction or a series of related transactions; or
(C) The issuance or transfer by the Corporation or any
Subsidiary of any securities of the Corporation or any Subsidiary to any
Interested Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination thereof)
having an aggregate Fair Market Value of $1,000,000 or more in one
transaction or a series of related transactions; or
(D) The adoption of any plan for the liquidation or
dissolution of the Corporation proposed by or on behalf of an Interested
Stockholder or any Affiliate of any Interested Stockholder; or
(E) Any reclassification of securities (including any
stock split or reverse stock split) or recapitalization of the
Corporation, or any merger or consolidation of the Corporation with any
Subsidiary or any similar transaction (whether or not with or into or
otherwise involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities of the
Corporation or any Subsidiary which is directly or indirectly owned by any
Interested Stockholder or any Affiliate of any Interested Stockholder.
(4) "Fair Market Value" shall mean: (i) in the case of stock,
the highest closing sale price during the 30-day period immediately
preceding the date in question of a share of such stock on the Composite
Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not
quoted on the Composite Tape, on the New York Stock Exchange, or, if such
stock is not listed on such Exchange, on the principal United States
securities exchange registered under the Securities Exchange Act of 1934
on which such stock is listed, or, if such stock is not listed on any such
exchange, the highest closing bid quotation with respect to a share of
such stock during the 30-day period preceding the date in question on the
National Association of Securities Dealers, Inc. Automated Quotations
System or any system then in use, or if no such quotations are available,
the fair market value on the date in question of a share of such stock as
determined by a majority of the whole Board of Directors in good faith;
and (ii) in the case of property other than cash or stock, the fair market
value of such property on the date in question as determined in good faith
by a majority of the whole Board of Directors.
(5) "Interested Stockholder" shall mean any Person (other than
the Corporation or any corporation of which a majority of each class of
equity securities is owned, directly or indirectly, by the Corporation)
which, as of the record date for the determination of stockholders
entitled to notice of and to vote on a Business Combination, or
immediately prior to the consummation of any such transaction;
(A) Is the Beneficial Owner, directly or indirectly, of
more than 10% of the Voting Shares; or
(B) Is an Affiliate of the Corporation and at any time
within two years prior thereto was the Beneficial Owner, directly or
indirectly, of not less than 10% of the then outstanding Voting Shares; or
(C) Is an assignee of or successor in interest to any
shares of capital stock of the Corporation which were at any time within
two years prior thereto Beneficially Owned by any Interested Stockholder,
and such assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933.
The number of shares of Voting Shares deemed to be outstanding
shall include shares deemed Beneficially Owned by the Interested
Stockholder, but shall not include any other shares of Voting Shares which
may be issuable to other persons pursuant to any agreement, arrangement or
understanding, or upon exercise of conversion rights, warrants or options,
or otherwise.
(6) "Person" shall mean any individual, corporation,
partnership or other entity.
(7) "Subsidiary" shall mean any corporation of which a majority
of the outstanding shares of any class of equity securities is owned
directly or indirectly by the Corporation.
(8) "Voting Shares" shall mean all issued and outstanding
shares of equity securities and all rights to acquire any equity
securities which are generally entitled to vote in the election of
directors.
(d) A majority of the whole Board of Directors shall have the power
and duty to determine for the purposes of this Article Fourteenth on the basis
of information known to them, (1) whether a Person is an Interested
Stockholder, (2) the number of Voting Shares Beneficially Owned by any Person,
(3) whether a Person is an Affiliate of another, (4) whether a Person has the
power to vote or dispose of Voting Shares or to direct the voting or
disposition of Voting Shares, (5) whether the assets subject to any Business
Combination or the consideration received for the issuance or transfer of
securities by the Corporation or any Subsidiary in any Business Combination has
an aggregate Fair Market Value of $1,000,000 or more, or (6) whether a Person
has the right to acquire Beneficial Ownership of Voting Shares.
(e) Nothing contained in this Article Fourteenth shall be construed
to relieve any Interested Stockholder from any fiduciary obligation imposed by
law.
(f) Notwithstanding any other provisions of this Certificate of
Incorporation or the Bylaws of the Corporation (and notwithstanding the fact
that a lesser percentage may be specified by law, this Certificate of
Incorporation or the Bylaws of the Corporation), the affirmative vote of the
holders of at least two-thirds of the Voting Shares shall be required to amend
or repeal, or adopt any provisions inconsistent with, this Article Fourteenth
or any provisions thereof.
FIFTEENTH: To the fullest extent permitted by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, a director of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director. No amendment to
or repeal of this Article Fifteenth shall apply to, or have any effect on, the
liability or alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to such
amendment or repeal.
SIXTEENTH: (a) The Corporation shall indemnify any person who is or was
a party (which shall include for purposes of this Article Sixteenth the giving
of testimony or similar involvement) or is threatened to be made a party to or
is involved in any threatened, pending or completed action, suit or proceeding
whether civil, criminal, administrative, or investigative (hereinafter a
"proceeding") by reason of the fact that such person was or is an "authorized
representative" (as defined below) against expenses (which shall include
attorneys' fees), judgments, ERISA excise taxes or penalties, fines and amounts
paid in settlement actually and reasonably incurred by such person in
connection with such proceeding to the fullest extent permitted under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment).
As used in this Article Sixteenth, the term "authorized representative" shall
mean a Director, officer, employee or agent of the Corporation, or a person
serving at the request of the Corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans.
(b) Expenses incurred by a person in defending a proceeding
(including permissive and compulsory counterclaims and affirmative defenses)
brought by reason of the fact that such person is or was an authorized
representative shall be paid by the Corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf
of such person to repay such amount if it shall be ultimately determined that
such person is not entitled to be indemnified under this Article Sixteenth or
otherwise. The Corporation shall advance all expenses which the person's
defense counsel certifies by an affidavit to the Corporation as being
reasonable and incurred in defending a proceeding.
(c) If a claim under Sections (a) or (b) of this Article Sixteenth
is not paid in full by the Corporation within thirty (30) days after a written
claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the Corporation
to indemnify the claimant for the amount claimed, but the burden of proving
such defense shall be on the Corporation.
(d) The indemnification and advancement of expenses authorized by
this Article Sixteenth shall (i) not be deemed exclusive of any other rights to
which those seeking indemnification and advancement of expenses may be entitled
under any statute, provision of the Certificate, agreement, vote of
stockholders or directors or otherwise, (ii) continue as to a person who has
ceased to be an authorized representative, and (iii) inure to the benefit of
the heirs, executors and administrators of an authorized representative.
(e) Each person who shall act as an authorized representative of the
Corporation shall be deemed to be doing so in reliance upon the rights of
indemnification and advancement of expenses provided by this Article Sixteenth,
and the provisions of this Article Sixteenth shall be deemed a contract between
the Corporation and the authorized representative. Any repeal or modification
of the provisions of this Article Sixteenth shall not affect any rights or
obligations then existing.
(f) The Corporation may, but shall not be obligated to, purchase and
maintain insurance at its expense, to protect itself and any person who is or
was an authorized representative against any liability asserted against him in
such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability.
B. Relevant provisions of the Amended and Restated Bylaws of Kinark
Corporation:
ARTICLE I
Stockholder's Meetings
SECTION 5. Advance Notice of Stockholder Business. At an annual meeting
of the stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors,
(b) otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (c) otherwise properly brought before the annual meeting
by a stockholder of record and constitute a proper subject to be brought before
such meeting. For business to be properly brought before an annual meeting by
a stockholder (other than the election of directors), the stockholder must have
given timely notice thereof in writing to the Secretary of the Corporation. A
stockholder's notice to the Secretary shall set forth as to each matter (other
than the election of directors) the stockholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and record address of the stockholder proposing
such business, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder, (d) a representation that the
stockholder is a holder of record of capital stock of the Corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
annual meeting to present such business, and (e) any material interest of the
stockholder in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at an annual meeting except in
accordance with the procedures set forth in this Section. The Chairman of an
annual meeting shall, if the facts warrant, determine and declare to the annual
meeting that business was not properly brought before the meeting and in
accordance with the provisions of this Section, and if he should so determine,
he shall so declare to the annual meeting and any such business not properly
brought before the annual meeting shall not be transacted. At any special
meeting of the stockholders, only such business shall be conducted as shall
have been brought before the meeting by or at the direction of the Board of
Directors.
With respect to stockholder business to be brought before an annual
meeting of stockholders (other than a request for inclusion of a proposal in
the Corporation's proxy statement pursuant to Rule 14a-8 of the Securities
Exchange Act of 1934, as amended), to be timely, a stockholder's notice must be
delivered to or mailed to and received at the principal executive offices of
the Corporation, not less than ninety (90) days in advance of such meeting.
For purposes of this Section, reference to a requirement to deliver notice
to the Corporation a set number of days in advance of an annual meeting shall
mean that such notice must be delivered such number of days in advance of the
first anniversary of the preceding year's annual meeting; provided, however,
that in the event that the date of the annual meeting is advanced by more than
30 days or delayed more than 60 days from such anniversary, 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 day on which notice of such meeting is first given to
stockholders. For the purposes of this Section, notice of an annual meeting
shall be deemed to first be given to stockholders when disclosure of such date
is first made in a press release reported by the Dow Jones News Services,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant
to Sections 13, 14 and 15(d) of the Securities Exchange Act of 1934, as
amended.
SECTION 6. Quorum at Stockholders' Meetings. At any meeting of the
stockholders, a majority in interest of the capital stock issued and
outstanding and entitled to vote thereat represented by stockholders of record
in person or by proxy, shall constitute a quorum, but if a quorum is not
present, a majority in interest of those present may adjourn any meeting from
time to time. When a quorum is present at any meeting, a majority of the
number of shares of stock entitled to vote represented thereat shall decide any
questions brought before such meeting unless the question is one upon which by
express provision of law or of the Corporation's Restated Certificate of
Incorporation or these Bylaws a larger or different vote is required, in which
case such express provision shall govern.
SECTION 7. Proxy and Voting. The term "Certificate" whenever used in
these Bylaws shall be deemed to refer to the Restated Certificate of
Incorporation of the Corporation as from time to time amended. Subject to the
provisions of Section 3 of Article VIII hereof, the holders of record of the
capital stock of the Corporation shall be entitled to one vote for each share
thereof so held by them of record. Shares of its own capital stock belonging
to the Corporation shall not be voted, directly or indirectly. Stockholders of
record entitled to vote may vote at any meeting either in person or by proxy in
writing, which shall be filed with the Secretary of the meeting before being
voted. Such proxies shall entitle the holders thereof to vote at any
adjournment of such meeting. Stockholders entitled to vote may also be
represented by a general power of attorney produced at any meeting until it is
revoked. No proxy or power of attorney shall be voted after three years from
its date, unless said proxy or power of attorney provides for a longer period.
SECTION 9. Consent of Stockholders in Lieu of Meeting.
(a) Any action required to be taken at any annual or special meeting of
stockholders of the Corporation, or any action which may be taken at any annual
or special meeting of the stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the Corporation by
delivery to its registered office in Delaware, its principal place of business,
or an officer or agent of the Corporation having custody of the book in which
proceedings of meetings of stockholders are recorded. Delivery made to the
Corporation's registered office shall be made by hand or by certified or
registered mail, return receipt requested.
(b) Every written consent shall bear the date of the signature of each
stockholder who signs the consent and no written consent shall be effective to
take the corporate action referred to therein unless, within sixty (60) days of
the date the earliest dated consent is delivered to the Corporation, a written
consent or consents signed by a sufficient number of holders to take action are
delivered to the Corporation in the manner prescribed in paragraph (e) of this
Section.
(c) In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten (10) days after the date
upon which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record seeking to have the stockholders
authorize or take corporate action by written consent shall, by written notice
to the Secretary, request the Board of Directors to fix a record date. The
Board of Directors shall promptly, but in all events within ten (10) days after
the date on which such a request is received, adopt a resolution fixing the
record date. If no record date has been fixed by the Board of Directors within
ten (10) days of the date on which such a request is received, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
Corporation in accordance with paragraphs (a) and (b) of this Section. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by applicable law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
(d) Within five (5) business days after receipt of the earliest dated
consent delivered to the Corporation in the manner provided in this Section,
the Corporation shall retain nationally recognized independent inspectors of
election for the purpose of performing a ministerial review of the validity of
consents and any revocations thereof. The cost of retaining inspectors of
election shall be borne by the Corporation.
(e) At any time that stockholders soliciting consents in writing to
corporate action have a good faith belief that the requisite number of valid
and unrevoked consents to authorize or take the action specified has been
received by them, the consents shall be delivered by the soliciting
stockholders to the Corporation's registered office in the State of Delaware or
principal place of business or to the Secretary of the Corporation, together
with a certificate stating their belief that the requisite number of valid and
unrevoked consents has been received as of a specific date, which date shall be
identified in the certificate. In the event that delivery is made to the
Corporation's registered office in Delaware, such delivery shall be made by
hand or by certified or registered mail, return receipt requested. Upon
receipt of such consents, the Corporation shall cause the consents to be
delivered promptly to the inspectors of election. The Corporation also shall
deliver promptly to the inspectors of election any revocations of consents in
its possession, custody or control as of the time of receipt of the consents.
(f) As promptly as practicable after the consents and revocations are
received by them, the inspectors of election shall issue a preliminary report
to the Corporation and the soliciting stockholders stating: (i) the number of
shares represented by valid and unrevoked consents; (ii) the number of shares
represented by valid revocations, (iii) the number of shares represented by
invalid consents; (iv) the number of shares represented by invalid revocations;
(v) the number of shares entitled to submit consents as of the record date; and
(vi) whether, based on their preliminary count, the requisite number of valid
and unrevoked consents has been obtained to authorize or take the action
specified in the consents. Unless the Corporation and the soliciting
stockholders agree to a shorter or longer period, the Corporation and the
soliciting stockholders shall have five (5) days to review the consents and
revocations and to advise the inspectors and the opposing party in writing as
to whether they intend to challenge the preliminary report. If no timely
written notice of an intention to challenge the preliminary report is received,
the inspectors shall certify the preliminary report (as corrected or modified
by virtue of the detection by the inspectors of clerical errors) as their final
report and deliver it to the Corporation and the soliciting stockholders. If
the Corporation or the soliciting stockholders give written notice of an
intention to challenge the preliminary report, a challenge session shall be
scheduled by the inspectors as promptly as practicable. A transcript of the
challenge session shall be recorded by a certified court reporter. Following
completion of the challenge session, the inspectors shall issue as promptly as
practicable their final report and deliver it to the Corporation and the
soliciting stockholders. A copy of the final report shall be included in the
book in which the proceedings of meetings of stockholders are recorded.
(g) The Corporation shall give prompt notice to the stockholders of the
results of any consent solicitation or the taking of corporate action without a
meeting by less than unanimous written consent.
(h) This Section shall in no way impair or diminish the right of any
stockholder or director, or any officer whose title to office is contested, to
contest the validity of any consent or revocation thereof, or to take any other
action with respect thereto.
ARTICLE II
Board of Directors
SECTION 9. Notice of Stockholder Nominees. Only persons who are
nominated in accordance with the procedures set forth in this Section shall be
eligible for election as Directors. Nominations of persons for election to the
Board of Directors of the Corporation may be made at a meeting of stockholders
by or at the direction of the Board of Directors by any nominating committee or
person appointed by the Board of Directors or by any stockholder of the
Corporation entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. Such stockholder's notice shall set forth (a) as to each
person whom the stockholder proposes to nominate for election or re-election as
a Director, (i) the name, age, business address and residence address of such
person, (ii) the principal occupation or employment of such person, (iii) the
class and number of shares of the Corporation which are beneficially owned by
such person, and (iv) any other information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors,
or is otherwise required, in each case pursuant to Regulation 14A promulgated
under the Securities Exchange Act of 1934, as amended (including without
limitation such person's written consent to being named in the proxy statement
as a nominee and to serving as a Director if elected); and (b) as to the
stockholder giving the notice (i) the name and record address of such
stockholder, and (ii) the class and number of shares of the Corporation which
are beneficially owned by such stockholder. No person shall be eligible for
election as a Director of the Corporation unless nominated in accordance with
the procedures set forth in this Section. The Chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination
was not made in accordance with the procedures prescribed by the Bylaws, and if
he should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
With respect to an election to be held at an annual meeting of
stockholders, to be timely, a stockholder's notice shall be delivered to or
mailed and received at the principal executive offices of the Corporation, not
less than ninety (90) days in advance of such meeting. With respect to an
election to be held at a special meeting of stockholders for the election of
directors, stockholder's notice shall be given before the close of business on
the tenth day following the date on which notice of such meeting is first given
to stockholders. For purposes of this Section, reference to a requirement to
deliver notice to the Corporation a set number of days in advance of an annual
meeting shall mean that such notice must be delivered such number of days in
advance of the first anniversary of the preceding year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than 30 days or delayed more than 60 days from such
anniversary, 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 day on which notice of such
meeting is first given to stockholders. For the purposes of this Section,
notice of an annual or special meeting shall be deemed to first be given to
stockholders when disclosure of such date is first made in a press release
reported by the Dow Jones News Services, Associated Press or comparable
national news service or in a document publicly filed by the Corporation with
the Securities and Exchange Commission pursuant to Sections 13, 14 and 15(d) of
the Securities Exchange Act of 1934, as amended.
ARTICLE VIII
Capital Stock
SECTION 1. Certificates of Stock, Transfer Agents and Registrars. Every
stockholder shall be entitled to a certificate or certificates of capital stock
of the Corporation in such form as may be prescribed by the Board of Directors,
duly numbered and setting forth the number and kind of shares. Each
certificate shall be signed by the President or a Vice President and by the
Secretary or an Assistant Secretary, and may have affixed thereto an impression
of the corporate seal. Before issue, a record of each certificate shall be
entered on the books of the Corporation. The Board of Directors may also
appoint one or more Transfer Agents and/or Registrars for its stock of any
class or classes and for the transfer and registration of certificates
representing the same and may require stock certificates to be countersigned by
one or more of them. If certificates of capital stock of the Corporation are
signed by a Transfer Agent or by a Registrar, the signatures thereon of the
President or a Vice President and of the Secretary or an Assistant Secretary of
the Corporation and the corporate seal may be facsimiles, engraved or printed.
Any provisions of these Bylaws with reference to the signing of stock
certificates shall include, in cases above-permitted, such facsimile
signatures. If any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such certificate
or certificates, shall cease to be such officer or officers of the Corporation,
whether because of death, resignation, or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures shall have been used
thereon had not ceased to be such officer or officers of the Corporation. The
Board of Directors may, from time to time, make such additional rules and
regulations as it may deem expedient concerning the issue, transfer and
registration of certificates for shares of stock of the Corporation.
SECTION 2. Transfers of Stock and Addresses of Stockholders. Shares of
stock may be transferred by delivery of the certificate therefor accompanied
either by an assignment in writing on the back of the certificate or by a
written power of attorney to sell, assign and transfer the same on the books of
the Corporation, signed by the person appearing by the certificate to be the
owner of the shares represented thereby, and such shares of stock shall be
transferable on the books of the Corporation upon surrender thereof so assigned
or endorsed. The person registered on the books of the Corporation as the
owner of any shares of stock shall exclusively be entitled as the owner of such
shares to receive dividends, to vote and to exercise all other rights and
privileges as such owner in respect thereof. It shall be the duty of every
stockholder to notify the Corporation of his mailing address and of any changes
thereto. The latest address furnished by each stockholder shall be entered on
the books of the Corporation, and the latest address appearing on such books
shall be conclusively deemed to be the mailing address and/or the last known
mailing address of such stockholder. If any stockholder shall fail to notify
the Corporation of his mailing address, it shall be sufficient to send
corporate notices to such stockholder at the address, if any, understood by the
Secretary to be his mailing address.
SECTION 3. Transfer Books. The Board of Directors shall have power to
close the stock transfer books of the Corporation for a period not exceeding
sixty (60) days preceding the date of any meeting of stockholders, the date for
payment of any dividend, the date for the allotment of rights, or the date when
any change or conversion or exchange of capital stock shall go into effect, or
for a period not exceeding sixty (60) days in connection with obtaining the
consent of the stockholders for any purpose; provided, however, that in lieu of
closing the stock transfer books as aforesaid, the Board of Directors may fix
in advance a date not exceeding sixty (60) days preceding the date of any
meeting of stockholders, the date for the payment of any dividend, the date for
the allotment of rights, the date when any change or conversion or exchange of
capital stock shall go into effect, or a date in connection with obtaining such
consent, as a record date for the determination of the stockholders entitled to
notice of, and to vote at, any such meeting and any adjournment thereof, to
receive payment of any such dividend, to any such allotment of rights, to
exercise the rights in respect of any such change, conversion or exchange of
capital stock, or to give such consent, and such stockholders and only such
stockholders as shall be stockholders of record on the date so fixed shall be
entitled to such notice of, and to vote at, such meeting and any adjournment
thereof, or to receive payment of such dividend, or to receive such allotment
of rights, or to exercise such rights, or to give such consent, as the case may
be, notwithstanding any transfer of any stock on the books of the Corporation
after such record date is fixed as aforesaid. Except where the transfer books
of the Corporation shall have been closed or a date shall have been fixed as
the record date for the determination of the stockholders entitled to vote, as
hereinbefore provided, no share of stock shall be voted at any election for
Directors which shall have been transferred on the books of the Corporation
within twenty (20) days next preceding such election of Directors.
ARTICLE X
Indemnification and Insurance
SECTION 1. Right to Indemnification. The Corporation shall indemnify any
person who is or was a party (which shall include for purposes of this Article
X the giving of testimony or similar involvement) or is threatened to be made a
party to or is involved in any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding") by reason of the fact that such person was or is
an "authorized representative" (as defined below) against expenses (which shall
include attorneys' fees), judgments, ERISA excise taxes or penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such proceeding to the fullest extent permitted under the
Delaware General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights
than said law permitted the Corporation to provide prior to such amendment).
As used in this Article X, the term "authorized representative" shall mean a
Director, officer, employee or agent of the Corporation, or a person serving at
the request of the Corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans.
SECTION 2. Advancing Expenses. Expenses incurred by a person in
defending a proceeding (including permissive and compulsory counterclaims and
affirmative defenses) brought by reason of the fact that such person is or was
an authorized representative shall be paid by the Corporation in advance of the
final disposition of such proceeding upon receipt of an undertaking by or on
behalf of such person to repay such amount if it shall be ultimately determined
that such person is not entitled to be indemnified under this Article X or
otherwise. The Corporation shall advance all expenses which the person's
defense counsel certifies by an affidavit to the Corporation as being
reasonable and incurred in defending a proceeding.
SECTION 3. Right of Claimant to Bring Suit. If a claim under Sections 1
or 2 of this Article X is not paid in full by the Corporation within thirty
(30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or part, the
claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking has been tendered to
the Corporation) that the claimant has not met the standards of conduct which
make it permissible under the Delaware General Corporation Law for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation.
SECTION 4. Scope of Article. The indemnification and advancement of
expenses authorized by this Article X shall (i) not be deemed exclusive of any
other rights to which those seeking indemnification and advancement of expenses
may be entitled under any statute, provision of the Certificate, agreement,
vote of stockholders or directors or otherwise, (ii) continue as to a person
who has ceased to be an authorized representative, and (iii) inure to the
benefit of the heirs, executors and administrators of an authorized
representative.
SECTION 5. Reliance on Provisions. Each person who shall act as an
authorized representative of the Corporation shall be deemed to be doing so in
reliance upon the rights of indemnification and advancement of expenses
provided by this Article X, and the provisions of this Article X shall be
deemed a contract between the Corporation and the authorized representative.
Any repeal or modification of the provisions of this Article X shall not affect
any rights or obligations then existing.
SECTION 6. Insurance. The Corporation may, but shall not be obligated
to, purchase and maintain insurance at its expense, to protect itself and any
person who is or was an authorized representative against any liability
asserted against him in such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability.
EXHIBIT 4.2<PAGE>
KINARK CORPORATION
6,066,536 Shares of Common Stock
Offered Pursuant to Rights
Distributed to Stockholders of
Kinark Corporation
____________, 1996
This notice is being distributed to all holders of shares of the Common
Stock, par value $.10 per share (the "Common Stock"), of record on
______________, 1996 (the "Record Date"), of Kinark Corporation (the
"Company"), in connection with a distribution of nontransferable subscription
rights (the "Rights") to acquire shares of the Common Stock at a subscription
price of $______ per share.
Each beneficial owner of Common Stock is entitled to one Right for each
share of Common Stock owned on the Record Date. No fractional Rights will be
issued and no cash in lieu thereof will be paid.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Subscription Card representing your Rights;
3. The "Instructions as to Use of Kinark Corporation Subscription Cards"
(including Guidelines For Certification of Taxpayer Identification
Number on Substitute Form W-9);
4. A Notice of Guaranteed Delivery for Subscription Cards issued by
Kinark Corporation; and
5. A return envelope addressed to Chemical Mellon Shareholder Services,
L.L.C., the Subscription Agent.
Your prompt action is requested. The Rights will expire at 5:00 PM., New
York City time, on ____________, 1996, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, properly completed and executed Subscription Cards
(unless the guaranteed delivery procedures are complied with) and payment in
full for all Rights exercised must be delivered to the Subscription Agent as
indicated in the Prospectus prior to 5:00 PM., New York City time, on the
Expiration Date.
Additional copies of the enclosed materials may be obtained from Morrow &
Co., Inc. the Information Agent. The Information Agent's toll-free telephone
number is (800) 566-9061.
By Order of the Board of Directors
EXHIBIT 4.3<PAGE>
KINARK CORPORATION
6,066,536 Shares of Common Stock
Offered Pursuant to Rights
Distributed to Stockholders of
Kinark Corporation
To Securities Dealers, Commercial Banks,
Trust Companies and Other Nominees:
This letter is being distributed to securities dealers, commercial banks,
trust companies and other nominees in connection with the offering by Kinark
Corporation (the "Company") of 6,066,536 shares of common stock, par value $.10
per share (the "Common Stock"), of the Company, at a subscription price of
$____ per share, pursuant to nontransferable subscription rights (the
"Rights") distributed to holders of record of Common Stock as of the close of
business on _________________, 1996 (the "Record Date"). The Rights are
described in the Prospectus and evidenced by a Subscription Card registered in
your name or the name of your nominee.
Each beneficial owner of Common Stock registered in your name or the name
of your nominee is entitled to one Right for each share of Common Stock owned
by such beneficial owner. No fractional Rights will be issued and no cash in
lieu thereof will be paid.
We are asking you to contact your clients for whom you hold Common Stock
registered in your name or in the name of your nominee to obtain instructions
with respect to the Rights.
Enclosed are copies of the following documents:
1. The Prospectus;
2. Subscription Card(s) evidencing Rights;
3. The "Instructions as to Use of Kinark Corporation Subscription Cards"
(including Guidelines For Certification of Taxpayer Identification
Number on Substitute Form W-9);
4. A form of letter which may be sent to your clients for whose accounts
you hold Common Stock registered in your name or the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Rights;
5. A Notice of Guaranteed Delivery for Subscription Cards issued by
Kinark Corporation;
6. A return envelope addressed to Chemical Mellon Shareholder Services,
L.L.C., the Subscription Agent; and
7. Nominee Holder Certification.
Your prompt action is requested. The Rights will expire at 5:00 PM., New
York City time, on ______________, 1996, unless extended by the Company (the
"Expiration Date").
To exercise the Rights, properly completed and executed Subscription Cards
(unless the guaranteed delivery procedures are complied with) and payment in
full for all Rights exercised must be delivered to the Subscription Agent as
indicated in the Prospectus prior to 5:00 PM., New York City time, on the
Expiration Date.
Additional copies of the enclosed materials, as well as the certification
needed to round up fractional shares, may be obtained from Morrow & Co., Inc.,
the Information Agent. The Information Agent's toll-free telephone number is
(800) 566-9061.
Very truly yours,
KINARK CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
OTHER PERSON AS AN AGENT OF KINARK CORPORATION OR ANY OTHER PERSON MAKING OR
DEEMED TO BE MAKING OFFERS OF THE COMMON SHARES ISSUABLE UPON VALID EXERCISE OF
THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR STATEMENTS MADE
IN THE PROSPECTUS.
EXHIBIT 4.6<PAGE>
KINARK CORPORATION
6,066,536 SHARES OF COMMON STOCK
OFFERED PURSUANT TO RIGHTS
DISTRIBUTED TO STOCKHOLDERS OF
KINARK CORPORATION
To Our Clients:
Enclosed for your consideration is a Prospectus, dated ________________,
1996, and the "Instructions as to Use of Kinark Corporation Subscription Cards"
relating to the offer by Kinark Corporation (the "Company") of 6,066,536 shares
of Common Stock, par value $.10 per share (the "Common Stock"), of the Company,
at a subscription price of $_________ per share for each share of Common Stock,
in cash, pursuant to nontransferable subscription rights (the "Rights")
initially distributed to holders of record ("Record Owners") of Common Stock as
of the close of business on _________________, 1996 (the "Record Date").
As described in the accompanying Prospectus, you will receive one
nontransferable Right for each share of Common Stock carried by us in your
account as of the Record Date. Each Right will entitle you to subscribe for
one share of Common Stock (the "Subscription Privilege") at a subscription
price of $__________ per share (the "Subscription Price").
THE MATERIALS ENCLOSED ARE BEING FORWARDED TO YOU AS THE BENEFICIAL OWNER
OF COMMON STOCK CARRIED BY US IN YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME.
EXERCISES OF RIGHTS MAY BE MADE BY ONLY US AS THE RECORD OWNER AND PURSUANT TO
YOUR INSTRUCTIONS. Accordingly, we request instructions as to whether you wish
us to elect to subscribe for any shares of Common Stock, to which you are
entitled pursuant to the terms and subject to the conditions set forth in the
enclosed Prospectus and Proxy Statement and the related Instructions as to Use
of Kinark Corporation Subscription Cards. However, we urge you to read these
documents carefully before instructing us to exercise Rights.
YOUR INSTRUCTIONS TO US SHOULD BE FORWARDED AS PROMPTLY AS POSSIBLE IN
ORDER TO PERMIT US TO EXERCISE RIGHTS ON YOUR BEHALF IN ACCORDANCE WITH THE
PROVISIONS OF THE OFFERING. THE OFFERING WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON __________________, 1996, UNLESS THE OFFERING IS EXTENDED BY THE
COMPANY. ONCE YOU HAVE EXERCISED A RIGHT, SUCH EXERCISE MAY NOT BE REVOKED.
If you wish to have us, on your behalf, exercise the Rights for any shares
of Common Stock, please so instruct us by completing, executing and returning
to us the instruction form on the reverse side of this letter.
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING SHOULD BE
DIRECTED TO MORROW & CO., INC., THE INFORMATION AGENT, AT THE FOLLOWING
TELEPHONE NUMBER: (800) 566-9061.
<PAGE>
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
materials referred to therein relating to the offering of shares of common
stock, par value $.10 per share (the "Common Stock"), of Kinark Corporation
(the "Company").
This will instruct you whether to exercise Rights to purchase shares of
Common Stock distributed with respect to the Company's Common Stock held by you
for the account of the undersigned, pursuant to the terms and subject to the
conditions set forth in the Prospectus and Proxy Statement and the related
Instructions as to Use of Kinark Corporation Subscription Cards.
Box 1. [ ] Please DO NOT EXERCISE RIGHTS for shares of Common Stock.
Box 2. [ ] Please EXERCISE RIGHTS for shares of Common Stock as set forth
below.
NUMBER OF SUBSCRIPTION TOTAL
SHARES PRICE PAYMENT
Subscription Right: _________ X $_________ = $________ (must equal
total of
amounts in
Boxes 3
and 4.)
Box 3. [ ] Payment in the amount of $________________ has been arranged
by:
[ ] enclosing a check
(bank and account number:)
[ ] wire transfer of funds
(name of transferor institution:)
Box 4. [ ] Please deduct payment from the following account maintained by
you as follows:
____________________________________ _________________________________
Type of Account Account No.
Amount to be deducted: $______________
Date:________________________, 1996 ________________________________
________________________________
Signature(s)
Please type or print name(s) below
________________________________
________________________________
EXHIBIT 4.7<PAGE>
NOTICE OF GUARANTEED DELIVERY
for
SUBSCRIPTION CERTIFICATIONS
issued by
KINARK CORPORATION
This form, or one substantially equivalent hereto, must be used to
exercise Rights pursuant to the Rights Offering described in the Prospectus
dated _______________________, 1996, (the "Prospectus"), of Kinark Corporation,
a Delaware corporation (the "Company"), if a holder of Rights cannot deliver
the Subscription Card(s) evidencing the Rights (the "Subscription Card(s)"), to
the Subscription Agent listed below (the "Subscription Agent") at or prior to
5:00 p.m. New York City time on ____________________, 1996, unless extended
(the "Expiration Date"). Such form must be delivered by hand or sent by
facsimile transmission or mail to the Subscription Agent, and must be received
by the Subscription Agent on or prior to the Expiration Date. See "The Rights
Offering - Exercise of Rights" in the Prospectus. Payment of the Subscription
Price of $________ per share for each share of Common Stock subscribed for upon
exercise of such Rights must be received by the Subscription Agent in the
manner specified in the Prospectus at or prior to 5:00 p.m. New York City time
on the Expiration Date even if the Subscription Card evidencing such Rights is
being delivered pursuant to the procedure for guaranteed delivery thereof.
The Subscription Agent is
Chemical Mellon Shareholder Services, L.L.C.
By Mail: Reorganization Department
P. O. Box 817
Midtown Station
New York, New York 10018
By Hand Reorganization Department
or 120 Broadway
Overnight: 13th Floor
New York, New York 10271
Facsimile Transmission: (201) 329-8936
Confirm by Telephone: (201) 296-4983
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Card(s) representing ____________ Rights and that such
Subscription Card(s) cannot be delivered to the Subscription Agent at or before
5:00 p.m., New York City time on the Expiration Date. Upon the terms and
subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise the Subscription
Privilege to subscribe for one share of Common Stock per Right with respect to
each of ___________ Rights represented by such Subscription Card. The
undersigned understands that payment of the Subscription Price of $________ per
share for each Common Share subscribed for pursuant to the Subscription
Privilege must be received by the Subscription Agent at or before 5:00 p.m. New
York City time on the Expiration Date and represents that such payment, in the
aggregate amount of $__________, either (check appropriate box):
[ ] is being delivered to the Subscription Agent herewith; or
[ ] has been delivered separately to the Subscription Agent;
and is or was delivered in the manner set forth below (check appropriate box
and complete information relating thereto):
[ ] wire transfer of funds
- name of transferor institution _______________________________
- date of transfer______________________________________________
- confirmation number (if available)____________________________
[ ] uncertified check (Payment by uncertified check will not be deemed to
have been received by the Subscription Agent until such check has
cleared. Holders paying by such means are urged to make payment
sufficiently in advance of the Expiration Date to ensure that such
payment clears by such date.)
[ ] certified check
[ ] bank draft (cashier's check)
[ ] money order
- name of maker________________________________________________
- date of check, draft or money order__________________________
- check, draft or money order number___________________________
- bank on which check is drawn or issuer of money order________
Signature(s)____________________________ Address__________________________
________________________________________ _________________________________
Name(s)_________________________________ _________________________________
________________________________________ Area Code and Tel No(s)._________
Please Type or Print _________________________________
Subscription Card
No(s). (if available)
GUARANTEE OF DELIVERY
(Not to be used for Subscription Card signature guarantee)
The undersigned, a member firm of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc. or
a commercial bank or trust company having an office or correspondent in the
United States, guarantees that the undersigned will deliver to the Subscription
Agent the certificates representing the Rights being exercised hereby, with any
required signature guarantees and any other required documents, all within
three American Stock Exchange trading days after the date hereof.
_______________________________________ Dated:__________, 1996
_______________________________________ ____________________________
(Address) (Name of Firm)
_______________________________________ ____________________________
(Area Code and Telephone Number) (Authorized Signature)
The institution which completes this form must communicate the guarantee
to the Subscription Agent and must deliver the Subscription Card(s) to the
Subscription Agent within the time period shown herein. Failure to do so could
result in a financial loss to such institution.
EXHIBIT 5.1<PAGE>
LAW OFFICES
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
400 COLONY SQUARE
SUITE 2200
1201 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30361
TELEPHONE (404) 817-6000
TELECOPIER (404) 817-6050
OTHER OFFICES:
Charleston, South Carolina
Charlotte, North Carolina
Columbia, South Carolina
Florence, South Carolina
Greenville, South Carolina
Myrtle Beach, South Carolina
June 7, 1996
Kinark Corporation
7060 South Yale
Tulsa, Oklahoma 74136
Ladies and Gentlemen:
We have acted as counsel to Kinark Corporation, a Delaware corporation
(the "Company"), in connection with the filing of a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended, covering the offering of up to 6,066,536 shares (the "Shares") of the
Company's common stock, $.10 par value per share. In connection therewith, we
have examined such corporate records, certificates of public officials and
other documents and records as we have considered necessary or proper for the
purpose of this opinion.
This opinion is limited by and is in accordance with the January 1, 1992,
edition of the Interpretive Standards applicable to Legal Opinions to Third
Parties in Corporate Transactions adopted by the Legal Opinion Committee of the
Corporate and Banking Law Section of the State Bar of Georgia.
Based on the foregoing, and having regard to legal considerations which we
deem relevant, we are of the opinion that the Shares, when issued and delivered
as described in the Registration Statement, will be legally issued, fully paid
and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus contained in the Registration Statement.
Very truly yours,
NELSON MULLINS RILEY & SCARBOROUGH, L.L.P.
A REGISTERED LIMITED LIABILITY PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
EXHIBIT 23.1<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Pre-Effective Amendment
No. 1 to the Registration Statement No 333-4937 of Kinark Corporation on Form
S-3 of our report dated February 27, 1996, except as to the second paragraph of
the Long-Term Debt footnote, for which the date is April 1, 1996, (which
expresses an unqualified opinion and includes explanatory paragraphs discussing
Kinark Corporation's change in accounting for income taxes and the acquisition
of Rogers Galvanizing Company and the related private placement financing)
appearing in the Annual Report on Form 10-K of Kinark Corporation for the year
ended December 31, 1995, as amended, and to the reference to us under the
heading "Experts" in the Prospectus, which is a part of this Registration
Statement.
/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Tulsa, Oklahoma
June 7, 1996
EXHIBIT 23.2<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Pre-Effective Amendment No. 1 to Registration
Statement of Kinark Corporation on Form S-3 of our report dated November 20,
1995, on the consolidated financial statements of Rogers Galvanizing Company
for the years ended September 30, 1995, 1994 and 1993, appearing in the
Prospectus which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Hogan & Slovacek, PC
Hogan & Slovacek, PC
Tulsa, Oklahoma
June 7, 1996
