-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkaBChGXYX3UuHIYnT8/GgtvxdZUZy5IEvv5pnUu6UB3XExFY9N1GSwfD3xIGHYU WniP7bzm91Ec2KyNKc+prw== 0000942708-96-000055.txt : 19961004 0000942708-96-000055.hdr.sgml : 19961004 ACCESSION NUMBER: 0000942708-96-000055 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19961003 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINARK CORP CENTRAL INDEX KEY: 0000055805 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 710268502 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-04937 FILM NUMBER: 96638969 BUSINESS ADDRESS: STREET 1: 7060 S YALE CITY: TULSA STATE: OK ZIP: 74136 BUSINESS PHONE: 9184940964 MAIL ADDRESS: STREET 1: 7060 SOUTH YALE STREET 2: STE 603 CITY: TULSA STATE: OK ZIP: 741365723 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL CO DATE OF NAME CHANGE: 19690601 FORMER COMPANY: FORMER CONFORMED NAME: KIN ARK OIL & GAS CO DATE OF NAME CHANGE: 19680906 S-3/A 1 Registration No. 333-4937 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- PRE-EFFECTIVE AMENDMENT NO. 4 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) --------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE --------- 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
Title of Each Class of Amount to be Maximum Maximum Amount of Securities to be Registered Registered Price Per Share Aggregate Offering Price Registration Fee(1) Common Stock, $.10 par value 6,066,536 $3.00 $18,199,608 $O
(1) The registration fee has been paid with the Company's initial filing made on May 31, 1996, and the Company's amended filing made on June 7, 1996. - --------- 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. 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 Cover Pages of Prospectus Inside Front and Outside Back Cover Pages 3. Summary Information, Risk Factors and Ratio Summary; Risk Factors; Summary Pro Forma of Earnings to Fixed Charges and Selected Financial Data 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 Registered Description of Capital Stock 10. Interests of Named Experts and Counsel Legal Matters; Experts 11. Material Changes Summary; Business Strategy; The Acquisition or Merger 12. Incorporation of Certain Information by Inside Front Cover Page; Description of Reference Capital Stock 13. Disclosure of Commission Position on Indemnification for Securities Act Liabilities *
*Omitted because answer is negative or not applicable PROSPECTUS KINARK CORPORATION 6,066,536 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 September 27, 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 $3.00 per share (the "Subscription Price"). The Rights will expire at 5:00 p.m. New York City time, on November 8, 1996, unless extended as provided herein (the "Expiration Date"). Based on the Company's 18,000,000 authorized shares of Common Stock and the 7,176,536 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 13,243,072 and the number of shares of Common Stock authorized and available for future issuance after the Rights Offering would be 4,756,928. 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. The Rights Offering will not close until the Company receives subscriptions for at least $1,500,000 (the "Minimum Proceeds"). Once a holder has exercised any Rights, such exercise may not be revoked, unless there is a material amendment to the terms of this Rights Offering. See "Amendment, Extension and Termination." 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 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, and, if available, for capital expenditures, for general corporate purposes, for possible future acquisitions primarily in the galvanizing industry and for repayment of the Company's bank loans. 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"). The Company believes that one minority stockholder may decline to accept the Company's offer, which would require the Merger to allow the Company to own 100% of the Rogers stock. In the Merger, all of the minority stockholders of Rogers would receive cash for their shares of Rogers stock. The closing of the Rights Offering is contingent upon satisfaction or waiver of certain conditions, including the receipt by the Company of the Minimum Proceeds from the exercise of Rights in this Rights Offering. The Minimum Proceeds represent the funds necessary to acquire shares of Rogers stock exceeding 11.1% of the issued and outstanding Rogers stock, which will allow the Company to own over 80% of Rogers and to consolidate Rogers with the Company for tax purposes and to pay fees and expenses relating thereto and to this Rights Offering. If the Company receives only the Minimum Proceeds, it will immediately offer to acquire up to 188 shares of Rogers stock and use other sources of funds to attempt to complete the Acquisition or Merger as soon as practicable. There are no assurances that the Company will receive the Minimum Proceeds in this Offering. In the event the conditions to the Rights Offering, including receipt of the Minimum Proceeds, have not been satisfied by the Expiration Date, 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 the Record Date was $3.00. 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 13 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.
Underwriting Discounts Proceeds to the Price to Public and Commissions(1) Company(2) Per Share $3.00 N/A $3.00 Total $18,199,608 N/A $18,199,608
(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 $300,350. See "Use of Proceeds." - -------- The date of this Prospectus is October 4, 1996. 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 (File No. 001-03920) are incorporated herein by reference: (a) the Company's Annual Report on Form 10-K for the year ended December 31, 1995, filed with the Commission on April 1, 1996, as amended by Form 10-K/A filed with the Commission on April 4, 1996, and as further amended by Form 10-K/A filed with the Commission on July 30, 1996; (b) the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, filed with the Commission on May 15, 1996, as amended by Form 10-Q/A filed with the Commission on July 30, 1996; (c) the Company's Current Report on Form 8-K dated February 5, 1996, filed with the Commission on February 20, 1996, as amended by Form 8-K/A filed with the Commission on April 19, 1996; (d) the Company's Current Report on Form 8-K dated February 27, 1996, filed with the Commission on March 13, 1996, as amended by Form 8-K/A filed with the Commission on March 21, 1996, and as further amended by Form 8-K/A filed with the Commission on April 5, 1996; (e) the Company's Current Report on Form 8-K dated April 10, 1996, filed with the Commission on May 8, 1996; (f) the Company's Current Report on Form 8-K dated May 14, 1996, filed with the Commission on May 22, 1996; and (g) the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996, filed with the Commission on August 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. In February and March 1996, the Company acquired 808 shares, representing 68.9%, of the outstanding capital stock of Rogers Galvanizing Company with the proceeds of a private placement. See "Private Placement and Acquisition of Rogers Stock." The Company intends to offer to acquire the remaining 364 shares, or 188 shares if the Company receives the Minimum Proceeds, of outstanding Rogers stock with the proceeds of this Rights Offering or funds from other sources if only the Minimum Proceeds are received (the "Acquisition") at the same price per share paid for the Trust Stock (as defined below). See "Use of Proceeds." 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"). If the Company receives only the Minimum Proceeds it will offer to acquire 188 shares of Minority Stock and will use other sources of funds to attempt to complete the Acquisition or Merger as soon as practicable. See "The Acquisition or Merger." PRIVATE PLACEMENT AND ACQUISITION OF ROGERS STOCK 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 (together, 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, with a portion of the proceeds of a private placement of 2,319,038 shares of the Company's Common Stock at a purchase price of $2.50 a share (the "Private Placement"). Sales pursuant to the Private Placement closed in January and March 1996, with gross proceeds of $5,797,595. In February and March 1996, the Company acquired an additional 208 shares of the Minority Stock, representing an additional 17.7% of the outstanding capital stock of Rogers, with a portion of the proceeds of the Private Placement. Gross proceeds from the Private Placement totalled $5,797,595. The purchase price for 68.9% of the Rogers stock acquired by Kinark with these proceeds was $5,736,800. See "The Private Placement and Acquisition of Rogers Stock." 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, based on tonnage galvanized, 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 has had net profits each year since 1987, with its sales increasing from approximately $7 million in 1987 to $17.6 million for 1995. Acquisition of a portion of the Minority Stock exceeding 11.1% of the outstanding Rogers stock will allow the Company to consolidate the financial results of Rogers with the Company's results for tax purposes. If Rogers earnings continue to increase as described above and earnings for its other subsidiaries continue to increase, this tax consolidation will allow the Company to utilize approximately $5,309,000 in net operating loss carryforwards against future taxable income which will result in tax savings to the Company. Acquisition of all of the remaining Minority Stock would result in the Company owning 100% of Rogers and allow inclusion of 100% of Rogers' future net earnings in the Company's financial statements. Based on Rogers' past earnings and the current favorable market conditions in the galvanizing industry resulting in higher sales, consolidation of Rogers' financial results with the Company's should 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, with approximately $225,000 of Rogers net earnings for the period February 1, 1996 through June 30, 1996 attributable to the Minority Stock currently excluded from the Company's consolidated net earnings. As discussed above, the acquisition of all of the remaining Minority Stock would result in the Company owning 100% of Rogers and allow inclusion of 100% of Rogers future net earnings in the Company's financial statements. Additionally, 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 also 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 has not determined any specific amount of savings that may result from the integration of Rogers with its Boyles subsidiary, however, the Company is exploring a number of opportunities to reduce expenses and operating costs, including the elimination of duplicate functions, combining administrative functions and redefining the optimum staffing level for each of its eleven (11) galvanizing plants. Management believes that completion of the Acquisition or the Merger and integration of Rogers with the Company will provide additional opportunities to enhance profitability of its galvanizing operations, in part, through the Company's planned standardization of galvanizing processes and operating equipment to achieve more efficient plant operations. These standards will reflect selection of the best production and engineering practices from Rogers and the Company's Boyles subsidiary. Improvement will be measured by reduced raw material costs, increased tonnage output per manhour and reduced operating overhead. In terms of new business development, an integrated sales function should be able to compete more effectively by capitalizing on the strength of the Company's expanded production capacity, faster turn-around service and diverse locations. 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. In addition, completion of the Acquisition or Merger should provide the Company with additional 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 based on Rogers' financial position, even if proceeds are not available from this Rights Offering for such purposes. Rogers' total debt to net worth ratio is .61 and debt maturities are staggered to facilitate future refinancing requirements. Approximately 15% of Rogers' term debt bears interest at fixed rates below current market rates. Bank revolving lines of credit totaling $3 million are adequate for current working capital needs, and have unused capacity. In addition, as business opportunities evolve, these revolving lines could be increased by approximately one-third based on Rogers' current asset base. As a measure of the financial performance to be added by the completion of the Acquisition or Merger, Rogers' pre-tax earnings provide better than a 10 times coverage of debt interest expense. The management team is drawn from the experienced management pool available within Rogers and Boyles. Each of these companies will contribute unique functional expertise to complement a new organizational structure with the management depth and capacity to support continued growth in galvanizing, internally and through acquisitions. 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 also acquired an additional 208 shares of the Minority Stock for $7,100 per share for a total of $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 same 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 of approximately $300,350, the total cost associated with the Rights Offering and the Acquisition or Merger, if necessary, is estimated to be approximately $3,000,000. See "Use of Proceeds." The Company believes that one minority stockholder may decline to accept the Company's offer to acquire its Minority Stock. If this stockholder or any other minority stockholders of Rogers decline to accept the Company's offer to purchase the remaining Minority Stock, the Company intends to effect 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 if any. See "Risk Factors - Dissenters' Rights." 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. However, based on the sales of the Trust Stock and Minority Stock in February and March 1996 at $7,100 a share, the Company believes that the $7,100 per share price represents the value of remaining shares of Minority Stock. See "Risk Factors - Dissenters' Rights." The completion of the Acquisition or the Merger will be funded from the proceeds of the Rights Offering and, if only the Minimum Proceeds are raised, from other sources. The Company will also use a portion of the proceeds of the Rights Offering, if available, for capital expenditures, general corporate purposes, future acquisitions primarily of galvanizing operations and repayment of the Company's loans. See "Use of Proceeds" and "Loan Repayments." 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 bank loans. If the Company does not raise the Minimum Proceeds before the Expiration Date of this Rights Offering, all funds received will be promptly returned to the subscribers without any interest thereon or deduction. See "Summary Pro Forma and Selected Consolidated Financial Information" and "The Acquisition or Merger." THE RIGHTS OFFERING 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. Rights The Company is offering up to 6,066,536 shares of Common Stock to holders of record on September 27, 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 7,176,536 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 13,243,072 and the number of shares of Common Stock authorized and available for future issuance after the Rights Offering would be 4,756,928. The Rights are evidenced by nontransferable Subscription Cards (the "Subscription Cards"). See "The Rights Offering - The Rights" and "The Rights Offering - Subscription Privileges." Minimum Proceeds The Rights Offering will close if the Company receives subscription payments for at least $1,500,000 of Common Stock. If these Minimum Proceeds are not received on or before the Expiration Date, the Company will promptly return such payments to subscribers without any interest thereon or deduction. Subscription Price $3.00 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 Rights The Rights are nontransferable. Record Date September 27, 1996, at 5:00 p.m. New York City time. Expiration Date November 8, 1996, at 5:00 p.m. New York City time, unless extended (the "Expiration Date"). The Expiration Date will not be extended beyond December 9, 1996, and if the conditions to the Rights Offering have not been satisfied by December 9, 1996, or the Rights Offering is otherwise terminated, all subscription payments will be returned promptly, without interest or deduction. The Company will notify stockholders of any extension of the Expiration Date of the Rights Offering through the issuance of a press release indicating such extension. See "The Rights Offering - Expiration Date." Procedure for Exercising Rights Rights may be exercised by the holder by properly 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 ChaseMellon 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 UNLESS THE COMPANY FILES A POST-EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT RELATED TO THIS RIGHTS OFFERING WHICH INCLUDES A MATERIAL CHANGE IN THE TERMS OF THE RIGHTS OFFERING (A "MATERIAL AMENDMENT"). IN THE CASE OF A MATERIAL AMENDMENT, THE COMPANY WILL EXTEND THE EXPIRATION DATE FOR A REASONABLE PERIOD OF TIME (AT LEAST TEN (10) DAYS) TO ALLOW THE HOLDERS OF RIGHTS TO EVALUATE THE MATERIAL AMENDMENT AND TO REVOKE THE EXERCISE OF THEIR RIGHTS, IF DESIRED. See "The Rights Offering - Exercise of Rights" and "The Rights Offering - Revocation." Procedure for Exercising Rights by Foreign and Certain Other Stockholders Subscription Cards will not be mailed to holders of Common Stock 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 the Rights represented thereby, such holders must contact the Subscription Agent on or prior to 5:00 p.m. New York City time, on the Expiration Date. See "The Rights Offering - Foreign and Certain Other Stockholders." Persons Holding Common Stock and Wishing to Exercise Rights Through Others Holders who hold shares of the Common Stock for the account of others, such as brokers, trustees or depositories 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 holder of such Right shall complete Subscription Cards and submit them to the Subscription Agent with the proper payment. 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 ChaseMellon Shareholder Services, L.L.C. Information Agent Morrow & Co., Inc. (Telephone number: (800) 566-9061). Common Stock to be Outstanding After the Rights Offering The exact number of shares outstanding after completion of the Rights Offering depends upon the number of shares sold herein. Two scenarios are presented: (i) 12,133,072 shares assuming the issuance of all of the shares offered hereby; and (ii) 6,566,536 shares assuming the issuance of 500,000 (or 8.0%) of the shares offered hereby, representing the number of shares that would be issued if subscriptions were received for the Minimum Proceeds. See "The Rights Offering - Shares of Common Stock Outstanding After the Rights Offering" and "Risk Factors - Impact of Rights Offering on Holders of Common Stock." None of the officers or directors of the Company have indicated to the Company whether or not they intend to exercise their Rights, and therefore, there can be no assurance that the Company will receive any proceeds from this Rights Offering. AMEX Symbol for the Common Stock KIN Use of Proceeds The proceeds from the sale of the Common Stock in the Rights Offering will be used by the Company to acquire shares of Rogers stock exceeding 11.1% of Rogers' issued and outstanding stock if only the Minimum Proceeds are received, and if available, to complete the Acquisition or the Merger, to pay related fees and expenses, to pay for capital expenditures, for future acquisitions primarily of galvanizing operations and for repayment of outstanding amounts pursuant to the Company's loans. The Company may attempt to acquire shares of Minority Stock before the closing of this Rights Offering through the use of funds from a bridge loan or by issuing a promissory note for the purchase price of such shares. If the Company pursues one of these alternatives, a portion of the proceeds from this Rights Offering will be used to repay such bridge loan or promissory note. 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 Offering The issuance of shares pursuant to the Rights Offering is subject to the following conditions: (i) the receipt of the Minimum Proceeds; and (ii) the absence of any suit or other action seeking to enjoin the Rights Offering, the Acquisition or the Merger. In the event that the foregoing conditions to the Rights Offering have not been satisfied by the Expiration Date, 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." Amendment, Extension and The Company may amend, extend or terminate Termination the Rights Offering at any time prior to the Expiration Date in the Board of Directors' discretion or if the conditions to the Rights Offering have not been satisfied. See "The Rights Offering - Amendment, Extension and Termination." The Company will file a post-effective amendment to its Registration Statement related to this Rights Offering to reflect any Material Amendment. Any extension of the Rights Offering will relate to providing additional time (at least ten (10) days) for shareholders to evaluate a Material Amendment and to revoke the exercise of their Rights, if desired. The Company will not terminate the Rights Offering after receipt of the Minimum Proceeds unless a suit or other action seeking to enjoin the Rights Offering, Merger or Acquisition is filed. The Company will issue a press release with respect to any amendment, extension or termination of the Rights Offering. 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 "Maximum Case") or (ii) by the proceeds of the sale of 500,000 of the shares offered hereby, assuming a Subscription Price of $3.00 per share to achieve the Minimum Proceeds (the "Minimum 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
For the Six Months Ended June 30, 1996 Maximum Case(2) Minimum Case(3) Kinark Rogers Pro Forma Pro Forma Pro Forma Pro Forma Historical Historical(1) Adjustments Combined Adjustments Combined Sales $23,754 $1,603 $- $25,357 $- $25,357 Costs and expenses 21,947 1,752 (15) 23,684 (33) 23,666 Other expenses 428 21 (272) 177 - 449 Income tax expense (benefit) 494 (65) 114 543 13 442 Minority Interest (228) - 228 - 39 (189) Net earnings (Loss) 657 (105) 401 953 59 611 Net earnings (Loss) per common shares .11 - - .08 - .09 Weighted average shares outstanding(4) 5,713 - 6,420 12,133 853 6,566 For the Year Ended December 31, 1995 Maximum Case(2) Minimum Case(3) Kinark Rogers Pro Forma Pro Forma Pro Forma Pro Forma Historical(5) Historical(6) Adjustments Combined Adjustments Combined Sales $25,246 $17,614 $- $42,860 $- $42,860 Costs and expenses 25,761 16,014 (120) 41,655 (150) 41,625 Other expenses 634 26 (543) 117 - 660 Income tax expense (benefit) (446) 586 308 448 110 250 Minority Interest - - - - 164 164 Discontinued Operation (Loss) (1,176) - 1,176 - 1,176 - Net earnings (loss) (1,879) 988 1,531 640 1,052 161 Net earnings (loss) per common share (.50) - - .05 - .02 Weighted average shares outstanding(4) 3,747 - 8,386 12,133 2,819 6,566
(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 500,000 of the shares of the Common Stock offered in this offering (assuming a Subscription Price of $3.00 per share to represent the Minimum Proceeds), and (ii) the acquisition of at least 11.1% of the issued and outstanding 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
For the Six Months Ended June 30, For the Year Ended December 31, 1996 1995 1995 (1) 1994 1993 1992 1991 (2) Sales $23,754 $12,770 $25,246 $26,223 $25,542 $26,338 $29,369 Costs and expenses 21,947 13,265 25,761 24,087 22,837 23,119 23,830 Other expense 428 310 634 598 1,510 850 477 Income tax expense (benefit) 494 (293) (446) 527 430 550 1,120 Minority Interest (228) - - - - - - Discontinued Operations - (232) (1,176) (601) 15 (377) (256) Change in Accounting Method - - - - 1,802 - - Net earnings (loss) 657 (744) (1,879) 410 2,582 1,442 3,686 Net earnings (loss) per common share .11 (.20) (.50) .11 .68 .38 1.00 Weighted average shares outstanding(3) 5,713 3,747 3,747 3,752 3,755 3,748 3,705 At and For the Six Months Ended At and For the Year Ended December 31, June 30, 1996 1995 1994 1993 1992 1991 Working capital $2,178 $2,875 $2,761 $3,961 $4,028 $2,000 Total assets 32,013 18,375 20,954 20,931 18,402 16,841 Capital expenditures 1,035 1,055 1,410 2,459 3,186 2,311 Depreciation and Amortization 1,178 1,471 1,469 1,304 1,238 1,305 Long-term obligations 5,518 5,932 6,009 7,720 7,548 6,417 Stockholders' equity 14,546 8,165 10,044 9,634 7,052 5,119 Per share 2.40 2.18 2.68 2.57 1.88 1.41 Common shares outstanding 6,066 3,747 3,746 3,746 3,746 3,623
(1) During August 1995, the Company finalized a formal plan to discontinue the operations of its Kinpak subsidiary, comprising all of 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) Weighted average shares outstanding include the dilutive effect of stock options, if applicable. Rogers Historical
For the Nine Months Ended June 30, For the Year Ended September 30, 1996 1995 1995 1994 1993 1992 1991 Sales $16,096 $13,292 $17,614 $12,625 $11,544 $10,907 $11,575 Costs and expenses 14,777 11,991 16,014 12,247 10,070 10,096 10,094 Other (income) expense 152 80 26 (50) (44) (8) (26) Income tax expense 415 415 586 104 511 312 495 Earnings 752 806 988 324 1,007 507 960 Dividends paid 169 188 225 459 225 225 284 At and For the Nine Months Ended At and For the Year Ended September 30, June 30, 1996 1995 1994 1993 1992 1991 Working capital $ 1,152 $1,488 $1,119 $1,515 $1,160 $ 909 Total assets 10,504 8,472 6,852 5,548 4,298 4,157 Capital expenditures 1,525 1,276 973 923 596 828 Depreciation and Amortization 669 807 672 550 474 381 Long-term obligations 1,196 1,377 812 305 360 233 Stockholders' equity 5,035 4,451 3,688 3,824 3,042 2,760
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 The members of the Board of Directors and senior management currently own approximately 2,790,087 shares of Common Stock, or 46% of the issued and outstanding Common Stock. Assuming the sale of all 6,066,536 shares offered hereby, the members of the Board of Directors and senior management of the Company would beneficially own approximately 5,580,174 shares or 46% of the Common Stock if all such persons exercised their subscription privileges to the fullest extent. Assuming the sale of 500,000 shares which would result in the receipt of the Minimum Proceeds, the members of the Board of Directors and senior management would beneficially own approximately 50% of the Common Stock if the members of the Board of Directors and senior management exercised their Subscription Privileges and acquired all 500,000 shares. 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 eight 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 all of its chemical packaging operations through its sale of the assets of Kinpak on February 27, 1996. While the Company reported positive earnings for the first half 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 or the Merger. 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. See "Loan Repayments." 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 were both scheduled to mature on July 31, 1996 and have been extended to October 31, 1997. 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. OPERATIONS Galvanizing is a business that is closely tied to the economic growth of several industries such as highway and transportation, communications and energy. During recessionary periods in these industries, the demand for galvanizing can decline. Profitability in the galvanizing industry is also dependent to a certain extent on zinc prices and pricing structures are directly related to zinc prices. Increases in zinc prices lead to increased costs and prices for galvanizing and decreases in zinc prices lead to reductions in galvanizing costs and prices. Equipment at the Company's galvanizing plants requires periodic replacement due to age or obsolescence. These replacement costs may adversely affect the profitability of these galvanizing operations. The Company is committed to complying with all federal, state and local environmental laws and regulations and using its best management practices to anticipate and satisfy future requirements. As is typical in the galvanizing and chemicals businesses, the Company's subsidiaries will have environmental compliance costs associated with past, present and future operations. Although management has committed resources to discovering and eliminating environmental issues as they arise, the Company does not have sufficient information to attempt to quantify these potential costs. The Company's largest customer of its chemical storage business, which accounted for 33% of its 1994 sales, failed to renew its contract during the fourth quarter of 1994. Although this subsidiary has aggressively increased its sales efforts and implemented cost cutting measures, there can be no assurance that all of these efforts will successfully replace this lost business. Additionally, this subsidiary has several leases that expire beginning in 1999, and renewal at higher prices, or the inability to renew such leases, could adversely affect its operations. Rogers has recently formed two subsidiaries to provide specialty galvanizing applications. Start-up costs have already been incurred and will likely continue into 1996. One of these subsidiaries must purchase steel and fabricate it before galvanizing the end product which is subject to fluctuations in steel prices. Although the Company expects these combined operations to be profitable in 1996, there can be no assurance that this time frame will be met. Competition for the business provided by these subsidiaries could also adversely affect profitability. CONDITIONS TO THE ACQUISITION OR MERGER The Company's ability to complete the Acquisition or the Merger and own 100% of Rogers is dependent upon the receipt of at least $3,000,000 in subscriptions or its receipt of the Minimum Proceeds and its securing the necessary additional financing, as soon as practicable, for such completion. The Acquisition will require $2,584,400 for all of the remaining Minority Stock and the Merger could require some additional funds if any holders of the Minority Stock dissent and their shares are revalued at more than $7,100 a share. The Company is not able to determine how much, if any, the shares might be revalued. See "Dissenters' Rights." There can be no assurance that sufficient funds from these sources will exist to complete the Acquisition or the Merger. If the Company is not able to raise the Minimum Proceeds, 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 average closing price of the Common Stock over the ninety (90) day period ended on the Record Date. 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 June 30, 1996) (i) by 6,066,536 shares to 12,133,072 shares, assuming all of the shares offered hereby are issued, or (ii) by 500,000 shares (or 8.0%) to 6,566,536 shares, assuming the number of shares needed to receive the Minimum Proceeds are issued. 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. The Company believes that one minority stockholder may decline to accept the Company's offer, which would require the Merger to allow the Company to own 100% of the Rogers stock. 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 Company believes that one minority stockholder may exercise dissenters' rights. The stockholders of the Company would have no such rights. The exercise of dissenters' rights by any 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. Based on the sales of the Trust Stock and Minority Stock in February and March 1996 at $7,100 a share, the Company believes that the $7,100 per share price represents the value of the remaining shares of Minority Stock and that the $3,000,000 necessary to complete the Acquisition or Merger allows for reasonable amounts that may be required to effect the Merger after the payment of approximately $2,584,400 for all of the remaining Minority Stock and the payment of expenses relating thereto and to this Rights Offering. 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 successfully exercise their dissenters' rights and require such increased amounts. 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, except in the case of Material Amendment. See "The Rights Offering - Revocation." 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, except in the case of a Material Amendment. See "The Rights Offering - Revocation." 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 continued 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, based on tonnage galvanized, 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 1987 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 continued integration and consolidation of Rogers into its operations. Rogers has had net profits each year since 1987, with its sales increasing from approximately $7 million in 1987 to $17.6 million for 1995. Acquisition of a portion of the Minority Stock exceeding 11.1% of the outstanding Rogers stock will allow the Company to consolidate the financial results of Rogers with the Company's results for tax purposes. If Rogers earnings continue to increase as described above and earnings for its other subsidiaries continue to increase, this tax consolidation will allow the Company to utilize approximately $5,309,000 in net operating loss carryforwards against future taxable income which will result in tax savings to the Company. Acquisition of all of the remaining Minority Stock would result in the Company owning 100% of Rogers and allow inclusion of 100% of Rogers' future net earnings in the Company's financial statements. Based on Rogers' past earnings and the current favorable market conditions in the galvanizing industry resulting in higher sales, consolidation of Rogers' financial results with the Company's should provide additional net earnings for the Company which would strengthen its operating results. Currently, the Company is able to include only 68.9% of Rogers net earnings in its operating results. As a result, approximately $225,000 of Rogers net earnings for the period February 1, 1996 through June 30, 1996 attributable to the Minority Stock have been excluded from the Company's consolidated net earnings. As discussed above, the acquisition of all of the remaining Minority Stock would result in the Company owning 100% of Rogers and allowing inclusion of 100% of Rogers future net earnings in the Company's financial statements. Additionally, 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 also 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 has not determined any specific amount of savings that may result from the integration of Rogers with its Boyles subsidiary, however, the Company is exploring a number of opportunities to reduce expenses and operating costs, including the elimination of duplicate functions, combining administrative functions and redefining the optimum staffing level for each of its eleven (11) galvanizing plants. Management believes that completion of the Acquisition or the Merger and integration of Rogers with the Company will provide additional opportunities to enhance profitability of its galvanizing operations, in part, through the Company's planned standardization of galvanizing processes and operating equipment to achieve more efficient plant operations. These standards will reflect selection of the best production and engineering practices from Rogers and the Company's Boyles subsidiary. Improvement will be measured by reduced raw material costs, increased tonnage output per manhour and reduced operating overhead. In terms of new business development, an integrated sales function should be able to compete more effectively by capitalizing on the strength of the Company's expanded production capacity, faster turn-around service and diverse locations. 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. In addition, completion of the Acquisition or Merger should provide the Company with additional financial and managerial resources which should enhance the Company's ability to make future acquisitions of independent galvanizing operations and its ability to make capital expenditures based on Rogers' financial position, even if proceeds are not available from this Rights Offering for such purposes. Rogers' total debt to net worth ratio is .61 and debt maturities are staggered to facilitate future refinancing requirements. Approximately 15% of Rogers' term debt bears interest at fixed rates below current market rates. Bank revolving lines of credit totaling $3 million are adequate for current working capital needs, and have unused capacity. In addition, as business opportunities evolve, these revolving lines could be increased by approximately one-third based on Rogers' current asset base. As a measure of the financial performance to be added by the completion of the Acquisition or Merger, Rogers' pre-tax earnings provide better than a 10 times coverage of debt interest expense. The management team is drawn from the experienced management pool available within Rogers and Boyles. Each of these companies will contribute unique functional expertise to complement a new organizational structure with the management depth and capacity to support continued growth in galvanizing, internally and through acquisitions. See "Business Strategy." THE PRIVATE PLACEMENT AND ACQUISITION OF ROGERS STOCK On August 3, 1994, the Company entered into the Rogers Agreement with the Trusts, which together owned the Trust Stock consisting of 600 shares or 51.2% of the capital 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 1996, the Company acquired the Trust Stock with a portion of the proceeds of the Private Placement of 2,319,038 shares of the Company's Common Stock. 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 an average of reported sales prices of the Common Stock in December 1995, when the Company's Board of Directors agreed to pursue the Private Placement. Sales pursuant to the Private Placement closed in January and March 1996, with gross proceeds of $5,797,595. In February and March 1996, the Company acquired 208 shares of Minority Stock, representing an additional 17.7% of the outstanding Rogers stock, with a portion of the proceeds of the Private Placement. The Company intends to offer to acquire shares of Rogers stock exceeding at least 11.1% of the outstanding Rogers stock with the Minimum Proceeds and to complete the acquisition of Rogers through the Acquisition or Merger upon receipt of at least $3,000,000 from this Rights Offering, or from other sources if only the Minimum Proceeds are raised. THE ACQUISITION OR MERGER The Company currently owns 68.9% of the Rogers stock and intends to offer to acquire the remaining Minority Stock 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 and believes that one stockholder may decline to accept such offer. If this stockholder or any other 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 or Merger is estimated to be approximately $3,000,000. 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 may attempt to acquire shares of Minority Stock before the closing of this Rights Offering through the use of funds from a bridge loan or by issuing a promissory note for the purchase price of such shares. If the Company pursues one of these alternatives, a portion of the proceeds from this Rights Offering will be used to repay such bridge loan or promissory note. The Company will also use a portion of the proceeds, if available, for capital expenditures, general corporate purposes, future acquisitions primarily of galvanizing operations and repayment of the Company's bank loans. 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 results in at least $3,000,000 in proceeds 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 bank loans. 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 July 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 $17,899,000, after deducting the estimated offering expenses payable by the Company. 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, and, if available, for capital expenditures, general corporate purposes, possible future acquisitions primarily in the galvanizing industry and repayment of the Company's bank loans. The following table illustrates the estimated sources and uses of funds, assuming that the Company (i) receives the maximum proceeds through the issuance of all of the shares of Common Stock offered hereby (the "Maximum Proceeds"), or (ii) receives the Minimum Proceeds through the issuance of 500,000 of the shares of Common Stock offered hereby. There can be no assurance that the Company will receive any proceeds from the Rights Offering.
MAXIMUM PROCEEDS MINIMUM PROCEEDS AMOUNT AMOUNT (IN THOUSANDS) (IN THOUSANDS) SOURCES OF FUNDS: SOURCES OF FUNDS: Common Stock offered hereby $18,199 Common Stock offered hereby $1,500 Other Sources(1) 11 Other Sources(1) 11 Total Sources of Funds $18,210 Total Sources of Funds $1,511 USES OF FUNDS: USES OF FUNDS: Acquisition of portion of minority Acquisition of Rogers $ 2,584 Rogers Stock(2) $1,335 Fees and expenses(3) 300 Fees and expenses(3) 176 Capital Expenditures(4) 1,500 Acquisitions(5) 7,500 Repayment of Bank Loan(6) 5,868 Other corporate purposes 458 Total Uses of Funds $18,210 Total Uses of Funds $1,511
(1) Cash from operating funds. (2) These funds, along with other sources available to the Company will be used to acquire 188 shares of Minority Stock which would result in the Company owing more than 80% of the outstanding Rogers Stock. If the Company receives at least $3,000,000 in gross proceeds from this Rights Offering, it will be able to complete the Acquisition or the Merger for approximately $2,584,500 and pay related fees and expenses of $300,350, resulting in the Company's ownership of 100% of the outstanding Rogers stock. If the Company does not raise at least $3,000,000 in the Rights Offering, it intends to complete the Acquisition or Merger as soon as practicable with funds from other sources. The Company may attempt to acquire shares of Minority Stock before the closing of this Rights Offering through the use of funds from a bridge loan or by issuing a promissory note for the purchase price of such shares. If the Company pursues one of these alternatives, a portion of the proceeds from this Rights Offering will be used to repay such bridge loan or promissory note. (3) This amount includes expenses comprised of the registration fee for this Rights Offering, blue sky fees and expenses, AMEX application fees, printing and engraving costs, expenses of subscription agents and information agents and legal and accounting fees and expenses. If the Company receives only the Minimum Proceeds, it will pay $176,000 of these expenses from the proceeds, with the remaining funds coming from other sources. (4) 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. (5) This amount would be used to make strategic acquisitions primarily in the galvanizing industry. (6) This amount would be used to repay all or a portion of the outstanding principal and interest relating to the Company's revolving line of credit and term loan from the Bank of Oklahoma. See "Loan Repayments." LOAN REPAYMENTS If the Company receives the Maximum Proceeds, it intends to use a portion of such proceeds to repay all or a portion of the outstanding principal and interest relating to the Company's Term Loan (as defined below) and revolving Line of Credit (as defined below). The Company operates under that certain Revolving Line of Credit and Term Loan Agreement, dated as of March 24, 1992, among The Bank of Oklahoma (the "Bank"), the Company, Boyles and Lake River Corporation, as amended (the "Loan Agreement"). The Loan Agreement provides for a $4,250,000 maximum revolving line of credit (the "Line of Credit") and a term loan in the original principal amount of $5,000,000 (the "Term Loan"), both of which mature and become due and payable on April 30, 1997, unless extended. The approximate principal balances on the promissory notes evidencing the Line of Credit and the Term Loan as of June 30, 1996 were $2,921,000 and $2,839,000, respectively. Amounts borrowed on the Term Loan and the Line of Credit bear interest at a rate of 1% over the prime rate, resulting in an effective rate of 9.25% on both the Term Loan and the Line of Credit as of June 30, 1996. The Term Loan and the Line of Credit can be repaid at any time or from time to time without penalty or premium. The Loan Agreement was most recently amended on April 1, 1996, which amendment extended the maturity date of the Term Loan and the Line of Credit to April 30, 1997. The Line of Credit is a working capital line of credit and the Term Loan is used to finance capital expenditures. CAPITALIZATION The following table sets forth the actual capitalization of the Company at June 30, 1996. June 30, 1996 Historical (In thousands) Long-term obligations $ 5,518 Stockholders' equity Common stock, $.10 par value, Authorized: Actual - 18,000,000 shares; Issued: 7,479,600 shares(1) 748 Additional paid-in capital 15,863 Retained earnings 3,747 Less: Treasury stock at cost: 1,413,064 shares (5,812) Total stockholders' equity 14,546 Total long-term obligations and stockholders' equity $20,064 - ------------ (1) Does not include shares issuable pursuant to currently exercisable options to purchase Common Stock, which aggregate 76,000 shares or shares reserved for issuance pursuant to the Plans. 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 $4 1/2 N/A Low 2 1/2 2 3/8 2 7/8 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 ------------ On the Record Date, the closing price of the Common Stock on the AMEX was $3.00 per share. On the Record 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 September 27, 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 $3.00 per share of the Common Stock represents a discount of 16% from the average closing price of $3.59 for the shares of the Common Stock listed on the AMEX over the ninety (90) day period ended on the Record Date. 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 November 8, 1996, unless extended by the Company (the "Expiration Date"), after which time all unexercised Rights will be null and void. The Company will notify stockholders of any extension of the Expiration Date of the Rights Offering through the issuance of a press release indicating such extension. 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 December 9, 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 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 7,176,536 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 13,243,072 and the number of shares of Common Stock authorized and available for future issuance after the Rights Offering would be 4,756,928. 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 4,756,928. 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 November 8, 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 ChaseMellon 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, Pittsburgh, PA, ABA No. 043000261, Attn: ChaseMellon Shareholder Services, L.L.C., Reorg. A/C 100-2331 (Kinark Corporation Subscription), Attn: Evelyn O'Conner, Telephone (201) 296-4515. 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: ChaseMellon Shareholder Services, L.L.C. Reorganization Department P.O. Box 817 Midtown Station New York, NY 10018 By Hand or Overnight: ChaseMellon 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 and this Prospectus, 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) 296-4983). 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. 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) 566-9061 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 29.4%, 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 UNLESS THE COMPANY FILES A POST-EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT RELATED TO THIS RIGHTS OFFERING WHICH INCLUDES A MATERIAL AMENDMENT. IN THE CASE OF A MATERIAL AMENDMENT, THE COMPANY WILL EXTEND THE EXPIRATION DATE FOR A REASONABLE PERIOD OF TIME (AT LEAST TEN (10) DAYS) TO ALLOW THE HOLDERS OF RIGHTS TO EVALUATE THE MATERIAL AMENDMENT AND TO REVOKE THE EXERCISE OF THEIR RIGHTS, IF DESIRED. CONDITIONS TO THE RIGHTS OFFERING The issuance of shares pursuant to the exercise of the Rights is subject to the following conditions: (i) receipt of the Minimum Proceeds; and (ii) the absence of any suit or other action seeking to enjoin the Rights Offering, the Acquisition or the Merger. In the event that the foregoing conditions to the Rights Offering have not been satisfied by the Expiration Date, all subscription payments will be returned promptly, without interest or deduction. AMENDMENT, EXTENSION AND TERMINATION The Company may amend, extend 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. The Company will file a post-effective amendment to its Registration Statement relating to this Rights Offering to reflect any Material Amendment. Any extension of the Rights Offering will relate to providing additional time (at least ten (10) days) for shareholders to evaluate a Material Amendment and to revoke the exercise of their Rights, if desired. The Company will not terminate the Rights Offering after receipt of the Minimum Proceeds unless a suit or other action seeking to enjoin the Rights Offering, Merger or Acquisition is filed. The Company will issue a press release with respect to any amendment, extension or termination of the Rights Offering. 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 June 30, 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 500,000 of the shares offered hereby, representing the number of shares that would be issued if subscriptions were received for the Minimum Proceeds, the issuance of such shares would result (on a pro forma basis as of June 30, 1996) in a 8.0% 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 the Expiration Date. 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. 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 June 30, 1996, the Company had issued or reserved for issuance 7,176,536 shares of Common Stock, 6,066,536 of which were outstanding and 1,110,000 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 ChaseMellon 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 has been 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 and June 30, 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 reports included in the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996 and June 30, 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 reports on the unaudited interim financial information because those reports are not "reports" or a "part" of the registration statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. 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 June 30, 1996 (Unaudited)F-3 Pro Forma Condensed Consolidated Statements of Operations for the Six Months Ended June 30, 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 Six Months Ended June 30, 1996, Year Ended December 31, 1995 (Unaudited)F-7 ROGERS GALVANIZING COMPANY Unaudited Condensed Consolidated Balance Sheet (Unaudited) as of June 30, 1996F-10 Condensed Consolidated Statements of Income and Retained Earnings (Unaudited) for the Three and Nine Months Ended June 30, 1996 and 1995F-11 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three and Nine Months Ended June 30, 1996 and 1995F-12 Notes to Condensed Consolidated Financial Statements (Unaudited) for the Three and Nine Months Ended June 30, 1996F-13 Audited Independent Auditors' ReportF-14 Consolidated Balance Sheets as of September 30, 1995 and 1994F-15 Consolidated Statements of Income and Retained Earnings for the Years Ended September 30, 1995, 1994 and 1993F-17 Consolidated Statements of Cash Flows for the Years Ended September 30, 1995, 1994, and 1993F-18 Notes to Consolidated Financial Statements for the Years Ended September 30, 1995, 1994 and 1993F-20 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 June 30, 1996 (the "Pro Forma Balance Sheet"), and the Pro Forma Condensed Consolidated Statements of Operations (unaudited) for the six months ended June 30, 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 June 30, 1996. The Pro Forma Balance Sheet is presented as if the Rogers acquisition and the Private Placement had been consummated on June 30, 1996. The 1996 Pro Forma Statement of Operations reflects the combination of the income statements of the Company and Rogers for the six months ended June 30, 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 acquisition has been accounted for using the purchase method of accounting, and, accordingly, the purchase price has been allocated to the assets purchased and the liabilities assumed based upon the estimated fair values at the dates of acquisition including an adjustment to eliminate the LIFO valuation reserve on Rogers' zinc inventory. The excess of the purchase price over the fair values of the net assets acquired was approximately $3 million and has been recorded as goodwill, which is being amortized on a straight-line basis over 25 years. It is the Company's policy to account for costs in excess of fair value of assets purchased and other intangible assets at the lower of amortized cost or estimated fair value. On a periodic basis, management reviews the valuation and amortization of such assets. As part of its ongoing review, management estimates the fair value of the Company's intangible assets, taking into consideration any events and circumstances which might have diminished fair value. No valuation allowances have been recorded as a result of these analyses. Management has not completed its determination of the fair value of Rogers' assets and liabilities, but does not believe that the historical amounts of such items differ materially from fair value. The net purchase price was preliminarily allocated as follows: (Dollars in Thousands) Estimated fair value of assets, not including cash $9,374 Goodwill 3,095 Liabilities (6,701) Purchase Price, net of cash received $5,768 The Company is uncertain as to the level of stockholder participation in the Rights Offering. The "minimum case" shown in the pro forma statements represents the minimum amount of rights that must be exercised by stockholders for the Rights Offering to close. If additional rights are exercised, the Company will first use the proceeds to acquire the remaining minority interest in Rogers (approximately $1.4 million). Proceeds received in excess of the amount necessary to acquire the minority interest in Rogers and pay Rights Offering fees and expenses of $300,350 will be used primarily to reduce the Company's debt. 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. KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 (Unaudited) (in thousands)
Maximum Case Minimum Case Kinark Pro-Forma Pro-Forma Pro-Forma Pro-Forma HistoricalAdjustments Consolidated AdjustmentsConsolidated ASSETS Current assets: Cash $592 $17,900(c) $10,040 $1,200(j) $585 (5,868)(g) (2,584)(f) (1,207)(m) Accounts receivable, net 7,182 7,182 7,182 Net assets of discontinued operation -- -- -- Inventories 4,421 4,421 4,421 Prepaid assets 482 (248)(c) 234 (248)(j) 234 Total current assets12,677 9,200 21,877 (255) 12,422 Property, plant and equipment 31,105 (1,094)(d) 30,011 (1,094)(k) 30,011 Less accumulated depreciation 17,371 1,094(d) 16,277 1,094(k) 16,277 Property, plant and equipment, net 13,734 0 13,734 0 13,734 Other assets: Deferred income taxes 2,180 2,180 2,180 Other assets 356 356 356 Excess of cost over fair value of net assets acquired 3,066 1,248(f) 4,314 630(m) 3,696 Total other assets 5,602 1,248 6,850 630 6,232 Total $32,013 $10,448 $42,461 $375 $32,388 See notes to pro forma condensed consolidated financial statements. (Continued) /TABLE KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET JUNE 30, 1996 (Unaudited) (in thousands)
Maximum Case Minimum Case Kinark Pro-Forma Pro-Forma Pro-Forma Pro-Forma HistoricalAdjustments Consolidated AdjustmentsConsolidated LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Current liabilities: Long-term debt - current portion $3,960 (988)(g) $2,972 $3,960 Accrued retirement liabilities 20 114(f) 134 60(m) 80 Accounts payable 2,490 2,490 2,490 Accrued expenses - other 3,936 3,936 3,936 Accrued income taxes 93 93 93 Total current liabilities 10,499 (874) 9,625 60 10,559 Long-term debt 4,880 (4,880)(g) -- 4,880 Accrued retirement 75 75 75 Lease obligations 447 447 447 Deferred income taxes 116 116 116 Total long-term liabilities 5,518 (4,880) 638 5,518 Total liabilities 16,017 (5,754) 10,263 60 16,077 MINORITY INTEREST 1,450 (1,450)(f) __ (637)(m) 813 SHAREHOLDERS' EQUITY: Common Stock 748 465(c) 1,213 748 Additional paid-in capital 15,863 11,375(c) 27,238 (1,104(j) 14,759 Treasury Stock (5,812) 5,812(c) -- 2,056(j) (3,756) Retained earnings 3,747 -- 3,747 -- 3,747 Shareholders' equity 14,546 17,652 32,198 952 15,498 Total $32,013 $10,448 $42,461 $375 $32,388 See notes to pro forma condensed consolidated financial statements. (Concluded) /TABLE KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1996 (Unaudited) (in thousands, except per share data)
Historical Maximum Case Minimum Case Kinark Rogers(a) Pro-Forma Pro-Forma Pro-Forma Pro-Forma AdjustmentsConsolidatedAdjustmentsConsolidated SALES $23,754 $1,603 $25,357 $25,357 COSTS AND EXPENSES: Cost of sales 18,226 1,390 19,616 19,616 Selling, general and administrative 2,543 289 $(55)(e) 2,777 $(55)(l) 2,777 Depreciation and amortization 1,178 73 40(e) 1,291 22(l) 1,273 Operating earnings (loss) 1,807 (149) 15 1,673 33 1,691 OTHER (INCOME) EXPENSE: Interest expense, net 428 25 (272)(g) 181 453 Other (income) expense, net -- (4) -- (4) -- (4) Other expenses, net 428 21 (272) 177 449 Earnings (loss) before income taxes and minority interest 1,379 (170) 287 1,496 33 1,242 Income Taxes 494 (65) 114(h) 543 13(n) 442 Income (loss) before minority interest 885 (105) 173 953 20 800 Minority interest 228 -- (228)(f) -- (39)(m) 189 Net earnings (loss) $657 $(105) $401 $953 59 $611 Net earnings (loss) per share $.11 N/M $.08 N/M $.09 Weighted average shares outstanding 5,713 6,420 12,133(i) 853 6,566(o) See notes to pro forma condensed consolidated financial statements. /TABLE KINARK CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 (Unaudited) (in thousands, except per share data)
Historical Maximum Case Minimum Case Pro-Forma Pro-Forma Pro-Forma Pro-Forma Kinark(b) Rogers(a) AdjustmentsConsolidateAdjustmentsConsolidated SALES $25,246 $17,614 $42,860 $42,860 COSTS AND EXPENSES: Cost of sales 20,524 12,764 33,288 33,288 Selling, general and administrative 3,766 2,443 $(300)(e) 5,909 $(300)(l) 5,909 Depreciation and amortization 1,471 807 180(e) 2,458 150(l) 2,428 Operating earnings (loss) (515) 1,600 120 1,205 150 1,235 OTHER (INCOME) EXPENSE: Interest expense, net 634 133 (543)(g) 224 767 Other (income) expense, net -- (107) (107) (107) Other expenses, net 634 26 (543) 117 660 Earnings (loss) from continuing operations before income taxes and minority interest (1,149) 1,574 663 1,088 150 575 Income Taxes (446) 586 308(h) 448 110(n) 250 Income (loss) from continuing operations before minority interests (703) 988 355 640 40 325 Minority interest -- -- -- 164 164 Earnings (loss) from continuing operations (703) 988 355 640 (124) 161 Earnings (loss) per share from continuing operations $(.19) N/M $.05 N/M $.02 Weighted average shares outstanding 3,747 8,386 12,133(i) 2,819 6,566(o) /TABLE KINARK CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 1996, YEAR ENDED DECEMBER 31, 1995 (UNAUDITED) (a) The historical information for Rogers Galvanizing Company ("Rogers") in the accompanying pro forma condensed consolidated statement of operations for the six months ended June 30, 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 - Maximum 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 resulting in aggregate net proceeds of $17,900,000, an increase in common stock of $465,000 and additional paid in capital of $11,376,000 (net of treasury stock or retired and stock issuance costs of $548,000, of which $248,000 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: In Thousands 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 (1,450) Excess of cost over fair value of net assets acquired $1,248 (g) Adjustment reflects reduction of the bank loans using excess proceeds of $5,868,000 of Rights Offering and the resultant decrease in interest expense. Interest on the bank loans is assumed to have an effective rate of 9.25% for the year ended December 31, 1995 and for the six months ended June 30, 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 2,319,038 shares under the Private Placement. Pro Forma Adjustments - Minimum Case: (j) Reflects the issuance of 500,000 shares of the Company's common stock at $3.00 per share through the Rights Offering resulting in aggregate net proceeds of $1,200,000, a decrease in treasury stock of $2,055,000 and additional paid in capital of $1,103,000 (net of stock issuance costs of $548,000 of which $248,000 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 an additional 14.5% 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 14.5% interest acquired is as follows: In Thousands Purchase Cost: Purchase price for additional Rogers' common stock $1,207 Liabilities assumed (minority interest in funding of retirement trust) 60 Minority interest (637) Excess of cost over fair value of net assets acquired $630 (n) To reflect the tax effects of pro forma adjustments using a 36.5% effective tax rate. (o) Reflects the historical weighted average shares outstanding adjusted for issuance of 500,000 shares under the Rights Offering and for issuance of 2,319,038 shares under the Private Placement. ROGERS GALVANIZING COMPANY CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) AS OF JUNE 30, 1996 (in thousands) ASSETS CURRENT ASSETS: Cash $324 Accounts receivable, net 3,243 Inventories 1,423 Deferred Income Taxes 202 Prepaid expenses 117 Total current assets 5,309 PROPERTY, PLANT AND EQUIPMENT, at cost: Land 175 Galvanizing plants and equipment 7,956 Other 796 8,927 Less accumulated depreciation 3,896 Total property, plant and equipment 5,031 Intangible assets 164 $10,504 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt $423 Accounts payable 1,155 Accrued liabilities 979 Total current liabilities 2,557 DEFERRED INCOME TAXES 116 LONG-TERM DEBT 2,796 COMMITMENTS AND CONTINGENCIES --- SHAREHOLDERS' EQUITY: Common shares, $100 par value, 1,967 shares authorized, 1,172 shares outstanding 117 Capital surplus 103 Retained earnings 4,815 Total shareholders' equity 5,035 $10,504 See notes to consolidated financial statements. ROGERS GALVANIZING COMPANY CONDENSED CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995 (in thousands) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30 JUNE 30 1996 1995 1996 1995 Sales $6,047 $4,685 $16,096 $13,292 Costs and expenses: Costs of sales 4,531 3,529 12,409 9,656 Selling, general and administrative 503 584 1,705 1,662 Depreciation and amortization 233 252 663 673 Operating earnings 780 320 1,319 1,301 Other (income) expense: Interest expense, net 83 54 211 154 Other (income) expense (32) (14) (59) (74) Earnings before income taxes 729 280 1,167 1,221 Income tax expense 262 88 415 415 Net earnings 467 192 752 806 Retained earnings, beginning of period 4,403 3,962 4,231 3,462 Less: Dividends paid (56) (74) (169) (188) Retained earnings, end of period $4,814 $4,080 $4,814 $4,080 See notes to consolidated financial statements. ROGERS GALVANIZING COMPANY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995 (in thousands) THREE MONTHS ENDED NINE MONTHS ENDED JUNE 30 JUNE 30 1996 1995 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $467 $192 $752 $802 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 233 252 663 673 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable 127 (48) (828) (342) (Increase) decrease in inventories (269) (54) (444) (222) (Increase) decrease in prepaid expenses 13 83 (28) 43 Increase (decrease) in accounts payable (15) (1) 347 8 Increase (decrease) in accrued liabilities 58 52 91 183 Total adjustments 147 284 (199) 343 Net cash provided (used) by operating expenses 614 476 553 1,149 CASH FLOWS USED IN INVESTING ACTIVITIES: Additions to property, plant and equipment (398) (256) 1,523 (713) Net cash used in investing activities (398) (256) 1,523 (713) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (56) (75) (169) (188) Proceeds from (Payments on) debt 100 (235) 1,017 (188) Net cash provided (used) by financing activities (156) (310) 848 (376) INCREASE (DECREASE) IN CASH 60 (90) (122) 60 CASH, BEGINNING OF PERIOD 265 551 447 401 CASH, END OF PERIOD $325 $461 $325 $461 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $85 $59 $218 $167 Income taxes paid $270 $226 $417 $394 See notes to consolidated financial statements. ROGERS GALVANIZING COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 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. 4. DEBT OBLIGATIONS During July 1996, Rogers renewed two revolving lines of credit for $3,000,000 with terms and conditions unchanged. The two revolving lines of credit, scheduled to expire July 31, 1996, have been renewed through October 31, 1997. 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 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 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. 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. 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 accrued 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. 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 third-party estimates of the aggregate liability for claims made and for potential claims. Such claims are not discounted. 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. Accrued claims are based on unpaid amounts at year end and an estimate of incurred but not reported claims ("IBNR"). IBNR is based upon Rogers' historical experience and a review of claims received subsequent to year end. 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. 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 6,066,536 SHARES 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. KINARK _______________________________ CORPORATION TABLE OF CONTENTS Page Prospectus Summary 3 Summary Pro Forma and Selected Consolidated Financial Information 10 Risk Factors 12 Business Strategy 15 The Private Placement and Acquisition of Rogers Stock 17 The Acquisition or Merger 17 COMMON STOCK Use of Proceeds 18 Loan Repayments 19 Capitalization 20 Common Stock Dividends and Price Range 21 The Rights Offering 21 Description of Capital Stock 26 ------- Legal Matters 30 PROSPECTUS Experts 30 ------- 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 $ 9,350 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 25,000 Legal Fees and Expenses 175,000 Accounting Fees and Expenses 15,000 Miscellaneous Disbursements 2,500 TOTAL $300,350 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. 8.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P. as to the federal tax consequences to shareholders. 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 opinions included at Exhibits 5.1 and 8.1). 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. 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. 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. 4 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 October 3, 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 October 3, 1996 Michael T. Crimmins executive officer) and Chairman of the Board /s/ Ronald J. Evans President and Director October 3, 1996 Ronald J. Evans /s/ Paul R. Chastain* Vice President, Chief Financial October 3, 1996 Paul R. Chastain Officer (principal financial officer and principal accounting officer) and Director /s/ Richard C. Butler* Director October 3, 1996 Richard C. Butler /s/ Mark E. Walker* Director October 3, 1996 Mark E. Walker /s/ Joseph J. Morrow* Director October 3, 1996 Joseph J. Morrow /s/ John H. Sununu* Director October 3, 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. 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. 8.1 Opinion of Nelson Mullins Riley & Scarborough, L.L.P. as to the federal tax consequences to shareholders. 15.1 Letter Regarding Unaudited Interim Financial Information. * 23.1 Consent of Deloitte & Touch 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 opinions included at Exhibits 5.1 and 8.1). 24.1 Power of Attorney of certain officers and directors of the Company (see page II-5). * Exhibit previously filed.
EX-4 2 EXHIBIT 4.2 KINARK CORPORATION 6,066,536 Shares of Common Stock Offered Pursuant to Rights Distributed to Stockholders of Kinark Corporation October 4, 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 September 27, 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 $3.00 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 ChaseMellon 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 November 8, 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 EX-4 3 EXHIBIT 4.3 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 $3.00 per share, pursuant to nontransferable subscription rights (the "Rights") distributed to holders of record of Common Stock as of the close of business on September 27, 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 ChaseMellon 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 November 8, 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. EX-4 4 EXHIBIT 4.4 INSTRUCTIONS AS TO USE OF KINARK CORPORATION SUBSCRIPTION CARDS CONSULT THE INFORMATION AGENT, YOUR BANK OR BROKER AS TO ANY QUESTIONS The following instructions relate to a rights offering (the "Rights Offering") by Kinark Corporation, a Delaware corporation (the "Company"), to the holders of shares of its common stock, par value $.10 per share (the "Common Stock"), as described in the Company's Prospectus dated October 4, 1996, (the "Prospectus"). Holders of record of Common Stock at the close of business on September 27, 1996 (the "Record Date"), are receiving one nontransferable subscription right (a "Right") for each share of Common Stock held by them on the Record Date. No fractional Rights will be issued and no cash in lieu thereof will be paid. Each Right is exercisable, upon payment of $3.00 in cash (the "Subscription Price"), to purchase one share of Common Stock (the "Subscription Privilege"). See "The Rights Offering" in the Prospectus. The Rights will expire at 5:00 p.m., New York City time, on November 8, 1996, unless extended (the "Expiration Date"). The number of Rights to which you are entitled and the number of shares purchasable thereunder are printed on the face of your Subscription Card. You should indicate your wishes with regard to the exercise of your Rights by completing the Subscription Card and returning it to the Subscription Agent in the envelope provided. YOUR SUBSCRIPTION CARDS MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, OR GUARANTEED DELIVERY REQUIREMENTS WITH RESPECT TO YOUR SUBSCRIPTION CARDS MUST BE COMPLIED WITH, AND PAYMENT OF THE SUBSCRIPTION PRICE, INCLUDING FINAL CLEARANCE OF ANY CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, ON OR BEFORE 5:00 PM., NEW YORK CITY TIME, ON THE EXPIRATION DATE. YOU MAY NOT REVOKE ANY EXERCISE OF A RIGHT UNLESS THE COMPANY FILES A POST-EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT RELATED TO THIS RIGHTS OFFERING WHICH INCLUDES A MATERIAL CHANGE IN THE TERMS OF THE RIGHTS OFFERING. 1. SUBSCRIPTION PRIVILEGES. To exercise Rights, send your properly completed and executed Subscription Card, together with payment in full of the Subscription Price for each share of Common Stock subscribed for pursuant to the Subscription Privilege, to the Subscription Agent. Payment of the Subscription Price must be made in U.S. dollars for the full number of shares of Common Stock being subscribed for by (a) check or bank draft drawn upon a U.S. bank or postal, telegraphic or express money order payable to ChaseMellon 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, Pittsburgh, PA, ABA No. 043000261, Attn: ChaseMellon Shareholder Services, L.L.C., Reorg. A/C 100-2331 (Kinark Corporation Subscription), Attn: Evelyn O'Conner, Telephone: (201) 296-4515. The Subscription Price will be deemed to have been received by the Subscription Agent only upon (i) the clearance of any uncertified check, (ii) the 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) the receipt of good funds in the Subscription Agent's account designated above. IF PAYING BY UNCERTIFIED PERSONAL CHECK, PLEASE NOTE THAT THE FUNDS PAID THEREBY MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR. ACCORDINGLY, HOLDERS OF RIGHTS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF UNCERTIFIED PERSONAL CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY SUCH DATE AND ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS. Alternatively, you may cause a written guarantee substantially in the form delivered with these instructions (the "Notice of Guaranteed Delivery") from 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 (each of the foregoing being an "Eligible Institution"), to be received by the Subscription Agent at or prior to the Expiration Date together with payment in full of the applicable Subscription Price. Such Notice of Guaranteed Delivery must state your name, the number of Rights represented by your Subscription Card and the number of shares of Common Stock being purchased pursuant to the Subscription Privilege, and will guarantee the delivery to the Subscription Agent of your properly completed and executed Subscription Card within three American Stock Exchange trading days following the date of the Notice of Guaranteed Delivery. If this procedure is followed, your Subscription Cards must be received by the Subscription Agent within three American Stock Exchange trading days of the Notice of Guaranteed Delivery. Additional copies of the Notice of Guaranteed Delivery may be obtained upon request from the Information Agent at the address, or by calling the telephone number, indicated below. BANKS, BROKERS AND OTHER NOMINEE HOLDERS OF RIGHTS WHO EXERCISE RIGHTS ON BEHALF OF BENEFICIAL OWNERS OF RIGHTS WILL BE REQUIRED TO CERTIFY TO THE SUBSCRIPTION AGENT AND THE COMPANY (BY DELIVERING TO THE SUBSCRIPTION AGENT A NOMINEE HOLDER CERTIFICATION SUBSTANTIALLY IN THE FORM AVAILABLE FROM THE SUBSCRIPTION AGENT) THE AGGREGATE NUMBER OF RIGHTS THAT HAVE BEEN EXERCISED BY EACH BENEFICIAL OWNER OF RIGHTS ON WHOSE BEHALF SUCH NOMINEE HOLDER IS ACTING. The addresses and facsimile number of the Subscription Agent are as follows: By Mail: ChaseMellon Shareholder Services, L.L.C. Reorganization Department P. O. Box 817 Midtown Station New York, New York 10018 By Hand ChaseMellon Shareholder Services, L.L.C. or Reorganization Department Overnight: 120 Broadway 13th Floor New York, New York 10271 Facsimile Transmission: (201) 329-8936 Confirmation by Telephone: (201) 296-4983 The address and telephone number of Morrow & Co., Inc., the Information Agent, is as follows: Morrow & Co., Inc. 909 Third Avenue 20th Floor New York, New York 10022-4799 CALL TOLL-FREE (800) 566-9061 If you have not indicated the number of Rights being exercised, or if you have not forwarded full payment of the Subscription Price for the number of Rights that you have indicated are being exercised, you will be deemed to have exercised the Subscription Privilege with respect to the maximum number of whole Rights which may be exercised for the Subscription Price payment delivered by you. To the extent that the Subscription Price payment delivered by you exceeds the product of the Subscription Price multiplied by the number of Rights evidenced by the Subscription Cards delivered by you (such excess being the "Subscription Excess"), such Subscription Excess will be refunded to you. 2. DELIVERY OF COMMON SHARES. The following deliveries and payments will be made to the address shown on the face of your Subscription Card unless you provide instructions to the contrary in Part II of the Subscription Card. (a) Shares of Common Stock. As soon as practicable after the Expiration Date, the Subscription Agent will mail to each Rights holder who validly exercises Rights the number of shares of Common Stock issuable to such Rights holder pursuant to the Subscription Privilege. See "The Rights Offering - Subscription Privileges" in the Prospectus. (b) Cash Payments. As soon as practicable after the Expiration Date, the Subscription Agent will mail to each Rights holder the amount of any Subscription Excess payable to such Rights holder. 3. EXECUTION. (a) Execution by Registered Holder. The signature on the Subscription Card must correspond with the name of the registered holder exactly as it appears on the face of the Subscription Card without any alteration or change whatsoever. Persons who sign the Subscription Card in a representative or other fiduciary capacity must indicate their capacity when signing and, unless waived by the Company in its sole and absolute discretion, must present to the Subscription Agent satisfactory evidence of their authority to so act. (c) Execution by Person Other than Registered Holder. If the Subscription Card is executed by a person other than the holder named on the face of the Subscription Card, proper evidence of authority of the person executing the Subscription Card must accompany the same unless, for good cause, the Company dispenses with proof of authority. (d) Signature Guarantees. Your signature must be guaranteed by an Eligible Institution if you specify special payment or delivery instructions pursuant to Part II of the Subscription Card. 4. METHOD OF DELIVERY. The method of delivery of Subscription Cards and payment of the Exercise Price to the Subscription Agent will be at the election and risk of the Rights holder, but, if sent by mail, it is recommended that they 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 the clearance of any checks sent in payment of the Exercise Price prior to 5:00 p.m., New York City time, on the Expiration Date. 5. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE DEPOSITORY TRUST COMPANY. In the case of holders of Rights that are held of record through The Depository Trust Company ("DTC"), exercises of the Subscription Privilege may be effected by instructing DTC to transfer Rights (such Rights being "DTC Exercised Rights") from the DTC account of such holder to the DTC account of the Subscription Agent, together with payment of the Subscription Price for each Common Share subscribed for pursuant to the Subscription Privilege. 6. SUBSTITUTE FORM W-9. Each Rights holder who elects to exercise Rights should provide the Subscription Agent with a correct Taxpayer Identification Number ("TIN") on Substitute Form W-9, which is included as Exhibit A hereto. Additional copies of Substitute Form W-9 may be obtained upon request from the Subscription Agent or the Information Agent indicated above. Failure to provide the information on the form may subject such holder to 31% federal income tax withholding with respect to dividends or other distributions that may be paid by the Company on shares of Common Stock purchased upon the exercise of Rights. EXHIBIT A IMPORTANT TAX INFORMATION Under United States federal income tax law, dividend payments and other distributions that may be made by the Company on Common Shares issued upon the exercise of Rights may be subject to backup withholding, and each Rights holder who either exercises Rights should provide the Subscription Agent (as the Company's agent) with such Rights holder's correct taxpayer identification number on Substitute Form W-9 below. If such Rights holder is an individual, the taxpayer identification number is his social security number If the Subscription Agent, which is also the transfer agent for the Company, is not provided with the correct taxpayer identification number in connection with such payments, the Rights holder may be subject to a $50 penalty imposed by the Internal Revenue Service. Exempt Rights holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In general, in order for a foreign individual to qualify as an exempt recipient, such Rights holder must submit a statement, signed under the penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Subscription Agent. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies, the Company or the Subscription Agent, as the case may be, will be required to withhold 31 percent of any such payments made to the Rights holder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding, a Rights holder is required to notify the Subscription Agent of his correct taxpayer identification number by completing the form below certifying that the taxpayer identification number provided on Substitute Form W-9 is correct (or that such Rights holder is awaiting a taxpayer identification number). WHAT NUMBER TO GIVE THE SUBSCRIPTION AGENT Each Rights holder is required to give the Subscription Agent the social security number or employer identification number of the record owner of the Rights. If the Rights are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidelines on which number to report. PAYER'S NAME: ChaseMellon Shareholder Services, L.L.C. SUBSTITUTE PART I - Taxpayer Part II - FORM W-9 Identification No. Exempt from Backup Department of the Enter your taxpayer Withholding identification (see enclosed number in the appropriate Guidelines) box. For most individuals, _______________ this is your social security Social Security number. If you do not have a Number Social Security number, see How to Obtain a "TIN" in the enclosed Guidelines. Payer's Request Note: If the account is in Taxpayer more than one name, see the _______________ Identification chart on page 2 of enclosed Employer Number (TIN) Guidelines to determine what Identification number to give. Certification - Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the IRS has notified me that I am no longer subject to backup withholding. Certification Guidelines - You must cross out item (2) above if you have been notified by the IRS that you are subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). SIGNATURE ____________________________________ DATE_______________, 1996 NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU. PLEASE REVIEW ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W- 9 FOR ADDITIONAL DETAILS. GUIDELINES FOR CERTIFICATE OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Guidelines for Determining the Proper Identification Number to Give the Payer. Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. GIVE THE NAME AND FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY NUMBER 1. Individual The individual 2. Two or more individuals The actual owner of the account (joint account) or, if combined funds, the first individual on the account (1) 3. Custodian account of a minor The minor (2) (Uniform Gift to Minors Act) 4. a. The usual revocable savings The grantor-trustee (1) trust (grantor is also trustee) b. the so-called trust account The actual owner(1) that is not a legal or valid trust under State law 5. Sole proprietorship The owner (4) GIVE THE NAME AND FOR THIS TYPE OF ACCOUNT: EMPLOYER IDENTIFICATION NUMBER OF 6. A valid trust, estate or pension Legal entity (do not furnish the trust identification number of the personal representative or trustee unless the legal entity itself is not designates in the account title (3) 7. Corporation The corporation 8. Association, club, religious, The organization charitable, education or other tax-exempt organization 9. Partnership The partnership 10. A broker or registered nominee The broker or nominee 11. Account with the department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments. (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) List first and circle the name of the legal trust, estate or pension trust. (4) Show the name of the owner. Note: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. OBTAINING A NUMBER If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under section 403(b)(7). - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, a political subdivision of a foreign government, or any agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A dealer in securities or commodities registered in the United States or a possession of the United States. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a non-exempt trust described in section 4947(a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payment of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the United States and which have at least one non-resident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the Payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to nonresident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. Exempt payees described above should file Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041(a), 6042, 6044, 6045, 6049, 6050A and 6060N. Privacy Act Notice. Section 6109 requires most recipients of dividends, interest or other payments to give taxpayer identification numbers to payers who must report the payments to IRS. The IRS uses the numbers for identification purposes, and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) Penalty for Failure to Furnish Taxpayer Identification Number. If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) Civil Penalty for False Information With Respect to Withholding. If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) Criminal Penalty for Falsifying Information. Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-4 5 EXHIBIT 4.5 SEQUENCE# ACCOUNT KEY SUBSCRIPTION RIGHTS# SHS ELIGIBLE TO SUBSCRIBE KINARK CORPORATION SUBSCRIPTION CARD FOR RIGHTS OFFERING FOR HOLDERS OF RECORD ON SEPTEMBER 27, 1996. Kinark Corporation (the "Company") is conducting a rights offering (the "Rights Offering") which entitles each holder of the Company's common stock, $.10 par value per share (the "Common Stock"), on September 27, 1996 (the "Record Date"), to receive one nontransferable right (a "Right") for each share of Common Stock held of record on the Record Date. No fractional Rights will be issued and no cash in lieu thereof will be paid. Each Right is exercisable, upon payment of $3.00 in cash (the "Subscription Price"), to purchase one share of Common Stock (the "Subscription Privilege"). Set forth above is the number of shares of Common Stock held by such holder; and the number of shares to which such holder is entitled to subscribe pursuant to the Subscription Privilege. FOR A MORE COMPLETE DESCRIPTION OF THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING, PLEASE REFER TO THE PROSPECTUS DATED OCTOBER 4, 1996, (THE "PROSPECTUS"), WHICH IS INCORPORATED HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM MORROW & CO., INC. (THE "INFORMATION AGENT") AT 909 THIRD AVENUE, 20TH FLOOR, NEW YORK, NEW YORK 10072-4799 (TOLL FREE (800) 566-9061). CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED TO SUCH TERMS IN THE PROSPECTUS. THIS SUBSCRIPTION CARD MUST BE RECEIVED BY CHASEMELLON SHAREHOLDER SERVICES, L.L.C. (THE "SUBSCRIPTION AGENT") WITH PAYMENT IN FULL BY 5:00 PM., NEW YORK TIME, ON NOVEMBER 8, 1996, UNLESS EXTENDED IN THE SOLE DISCRETION OF THE COMPANY TO A TIME NOT LATER THAN 5:00 PM., NEW YORK TIME, ON DECEMBER 9, 1996 (AS IT MAY BE EXTENDED, THE "EXPIRATION DATE"). ANY RIGHTS NOT EXERCISED PRIOR TO THE EXPIRATION DATE WILL EXPIRE. ANY SUBSCRIPTION FOR SHARES OF COMMON STOCK IN THE RIGHTS OFFERING MADE HEREBY IS IRREVOCABLE UNLESS THE TERMS OF THE OFFERING ARE SUBSEQUENTLY MATERIALLY AMENDED, AS PROVIDED IN THE PROSPECTUS. INFORMATION: Complete Part I of the Subscription Card and, if applicable, the Part II special issuance and delivery instructions, SIGN THIS SUBSCRIPTION CARD, and complete the enclosed Substitute Form W-9. All questions concerning the timeliness, validity, form and eligibility of Subscription Cards received or any exercise of Rights will be determined by the Company, whose determination will be final and binding. SUBSCRIPTION PRICE: $3.00 PER SHARE By ChaseMellon Shareholder Services, L.L.C., a Subscription Agent THE SHAREHOLDER RIGHTS EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON NOVEMBER 8, 1996 UNLESS EXTENDED BY THE COMPANY. SUBSCRIPTION TO PURCHASE SHARES OF COMMON STOCK OFFERED BY KINARK CORPORATION RETURN TO: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand/Overnight Delivery: ChaseMellon Shareholder Services, L.L.C. ChaseMellon Shareholder Services, Post Office Box 817, Midtown Station L.L.C. New York, New York 10018 120 Broadway, 13th Floor Attn: Reorganization Dept. New York, New York 10271 Attn: Reorganization Dept. PART I - SUBSCRIPTION FOR SHARES OF COMMON STOCK IN THE RIGHTS OFFERING: The undersigned hereby irrevocably subscribes for the number of shares of Common Stock in the Rights Offering as indicated below, on the terms and subject to the conditions specified herein and in the Prospectus, receipt of which is hereby acknowledged. NUMBER OF SUBSCRIPTION TOTAL SHARES PRICE PAYMENT Subscription Right: ________ X $3.00 = $________ (must equal total of amounts in Lines 1 and 2 below) *If the aggregate Subscription Price paid by an exercising holder of Rights ("Rights Holder") is insufficient or exceeds the amount necessary to purchase the number of shares of Common Stock that such holder indicates are being subscribed for, or if an exercising Rights Holder does not specify the number of shares of Common Stock to be purchased, then such Rights Holder will be deemed to have exercised the Subscription Privilege to the full extent of the payment tendered, subject to the limits set forth in the Prospectus. If the aggregate Subscription Price paid by a Rights Holder exceeds the amount necessary to purchase the number of shares of Common Stock for which the Rights Holder has indicated an intention to subscribe, the Rights Holder will receive promptly by mail a refund equal to the excess payment without interest or deduction. Method of Payment: CHECK ONE [ ] Enclosed is my check or money order payable to "ChaseMellon Shareholder Services, L.L.C." $___________ (Line 1) [ ] Payment has been made by wire transfer to Subscription Agent's account. (Wire instructions are in the Prospectus). $___________ (Line 2) PART II - SPECIAL ISSUANCE INSTRUCTIONS Complete ONLY if new certificate is to be issued in a name which differs from the name on the surrendered certificate(s). (See Paragraphs 2 and 3(c) of the Instructions.) (COMPLETE THE GUARANTEE OF SIGNATURE(S) SECTION BELOW.) Name: Address: Social Security or TAX ID# PART II - SPECIAL DELIVERY INSTRUCTIONS Complete ONLY if new certificate is to be mailed to some address other than the address shown on the reverse. (See Paragraphs 2 and 3(c) of Instructions.) (COMPLETE THE GUARANTEE OF SIGNATURE(S) SECTION BELOW.) Name: Address: Social Security or TAX ID# ACKNOWLEDGEMENT THE SUBSCRIPTION CARD IS NOT VALID UNLESS YOU SIGN BELOW I/We acknowledge receipt of the Prospectus and understand that after delivery to the Company, I/we may not modify or revoke this Subscription Card unless the terms of the Rights Offering are subsequently materially amended. Under penalties of perjury, I/we certify that the information contained herein, including the social security number of taxpayer identification number if given above, is correct. If Part II Special Issuance Instructions are completed, I/we certify that although the certificate representing the Common Stock is to be issued in a name other than the registered holder, beneficial ownership of the Common Stock will not change. The signature(s) below must correspond with the name of the registered holder(s) exactly as it appears on the books of the Company's transfer agent without any alteration or change whatsoever. SIGN HERE Dated: , 1996 Dated: , 1996 Signature(s) of Registered Holder If signature is by trustee(s), executor(s), administrator(s), guardian(s), attorney(s)-in-fact, agent(s), officer(s) of a corporation or another acting in a fiduciary or representative capacity, please provide the following information (Please Print). See Instructions. Date: Name Title (if any) Day Phone: ( ) Taxpayer ID# Eve Phone: ( ) GUARANTEE OF SIGNATURE(S) Signature(s) Guaranteed: THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN Authorized Signature ELIGIBLE GUARANTOR INSTITUTION (BANKS, NOTE: The signature must STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS correspond with the name as AND CREDIT UNIONS WITH MEMBERSHIP IN AN written and the name must be APPROVED MEDALLION SIGNATURE GUARANTEE that of the registered owner. PROGRAM), PURSUANT TO S.E.C. RULE 17Ad.15. EX-4 6 EXHIBIT 4.6 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 October 4, 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 $3.00 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 September 27, 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 $3.00 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 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 NOVEMBER 8, 1996, UNLESS THE OFFERING IS EXTENDED BY THE COMPANY. ONCE YOU HAVE EXERCISED A RIGHT, SUCH EXERCISE MAY NOT BE REVOKED UNLESS THE COMPANY FILES A POST-EFFECTIVE AMENDMENT TO ITS REGISTRATION STATEMENT RELATED TO THIS RIGHTS OFFERING WHICH INCLUDES A MATERIAL CHANGE IN THE TERMS OF THE RIGHTS OFFERING. 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. 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 $3.00 = $________ (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 ________________________________ ________________________________ EX-4 7 EXHIBIT 4.7 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 October 4, 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 November 8, 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 $3.00 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 ChaseMellon 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. 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 $3.00 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. EX-4 8 EXHIBIT 4.8 KINARK CORPORATION NOMINEE HOLDER CERTIFICATION The undersigned, a bank, broker or other nominee holder of Rights ("Rights") to purchase shares of common stock, par value $.10 per share (the "Common Stock"), of Kinark Corporation (the "Company") pursuant to the Rights Offering described and provided for in the Company's Prospectus dated October 4, 1996, (the "Prospectus"), hereby certifies to the Company and to ChaseMellon Shareholder Services, L.L.C., as Subscription Agent for such Rights Offering, that the undersigned has exercised, on behalf of the beneficial owners thereof (which may include the undersigned), the number of Rights specified below pursuant to the Subscription Privilege (as described in the Prospectus), listing separately below each such Subscription (without identifying any such beneficial owner): Number of Shares Purchased Pursuant to Exercise of Subscription Rights Certificate Privilege Number 1. _________________________________ _________________________ 2. _________________________________ _________________________ 3. _________________________________ _________________________ 4. _________________________________ _________________________ 5. _________________________________ _________________________ 6. _________________________________ _________________________ 7. _________________________________ _________________________ 8. _________________________________ _________________________ 9. _________________________________ _________________________ 10. _________________________________ _________________________ (Attach additional beneficial owner list if necessary) ________________________________ Name of Nominee Holder Provide the following information if applicable: ________________________________ Address _______________________________ Depository Trust Company ("DTC") By:_____________________________ Participant Number ________________________________ ________________________________ DTC Subscription Confirmation (Please Print Name) Number(s) ________________________________ Date:___________________________, (Title) 1996 _______________________________ (Date) EX-4 9 EXHIBIT 4.9 SPECIAL NOTICE TO HOLDERS OF KINARK CORPORATION Common Stock WHOSE ADDRESSES ARE OUTSIDE THE UNITED STATES Dear Shareholder: Enclosed you will find materials relating to the rights offering (the "Offering") of Kinark Corporation (the "Company"). Holders of Common Stock at the close of business on September 27, 1996, (the "Record Date") will receive nontransferable rights ("Rights") to subscribe for and purchase shares of Common Stock on the basis of one Right for each share of Common Stock held of record on the Record Date. A Subscription Card representing Rights to subscribe for shares of the Company's Common Stock at $3.00 per share is not included in this mailing, but instead is being held on your behalf by the Subscription Agent, ChaseMellon Shareholder Services, L.L.C. If you wish to exercise any or all of these Rights, you must so instruct the Subscription Agent in the manner described in the accompanying Prospectus and Instructions as to Use of Subscription Cards by 5:00 p.m., New York time, on November 8, 1996, unless the Offering is extended by the Company to a date not later than 5:00 p.m., New York time on December 9, 1996. Rights not exercised by such time will expire. ANY QUESTIONS OR REQUESTS FOR ASSISTANCE CONCERNING THE OFFERING SHOULD BE DIRECTED TO MORROW & CO., INC., THE INFORMATION AGENT, AT (800) 566-9061. 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 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 $3.00 = $__________ (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 ____________________________________ ____________________________________ EX-5 10 EXHIBIT 5.1 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 October 3, 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. 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, /S/ NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. EX-8 11 EXHIBIT 8.1 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 FACSIMILE (404) 817-6050 OTHER OFFICES: Charleston, South Carolina Charlotte, North Carolina Columbia, South Carolina Florence, South Carolina Greenville, South Carolina Myrtle Beach, South Carolina October 3, 1996 Kinark Corporation 7060 South Yale Ave. Tulsa, OK 74136 Ladies and Gentlemen: We have served as counsel to Kinark Corporation, a Delaware corporation (the "Company"), in connection with the issuance of stock rights (the "Rights") relating to the Company's common stock, $ .10 par value (the "Common Stock"), as described in the Form S-3 Registration Statement under the Securities Act of 1933 filed by the Company with the Securities and Exchange Commission, as amended by Pre-Effective Amendment No. 1, Pre-Effective Amendment No. 2 and Pre-Effective Amendment No. 3 (the "Registration Statement"). In connection therewith, you have requested our opinion as to certain federal income tax matters relating to the Rights, as set forth below. The terms used herein which are defined in the Registration Statement shall have the respective meaning set forth in the Registration Statement, unless otherwise defined herein. In giving the opinion set forth below, we have relied upon certifications and letters provided to us by governmental officials. As to matters of fact set forth below, and matters of fact which form the basis for any opinion set forth below, we have relied, with your permission, solely upon one or more of (i) certificates presented to us and statements of officers, employees, and independent accountants of the Company, and (ii) the statements and matters set forth in the Registration Statement. In giving the opinion set forth below, we have not attempted, and undertake no responsibility, to independently verify any factual matters in connection with the giving of the opinion set forth below. In giving the opinion set forth below, we have made the following assumptions: 1. The Company is a corporation, validly existing and in good standing under the laws of the State of Delaware and all other applicable laws to which it is subject. The Company has full power and authority to consummate the transactions described in the Registration Statement. All transactions described in the Registration Statement, and all acts required in connection therewith, have been duly authorized by all necessary corporate action on the part of the Company. All documents and instruments executed by the Company in connection therewith have been duly executed and delivered on behalf of, and are binding upon and enforceable against, the Company. 2. The signatures of all persons signing any document or instrument delivered in connection with the consummation of the transactions contemplated by the Registration Statement are genuine, and all such persons executing such documents have been duly authorized to execute and deliver such documents and instruments. 3. All natural persons executing any document or instrument delivered in connection with the consummation of the transactions contemplated by the Registration Statement have legal competency to do so. All documents submitted to us as originals are authentic and all documents submitted to us as certified or photostatic copies conform to the original documents which are themselves authentic. 4. No event will take place subsequent to the date hereof which would cause any act taken in connection with the transactions contemplated by the Registration Statement to fail to comply with any law, rule, regulation, order, judgment, decree, or duty. 5. Any certificate, representation, telegram, or other document on which we have relied that is given or dated on or prior to the date hereof continues to remain accurate, insofar as relevant to such opinion, from such earlier date through and including the date of this letter. 6. Upon exercise of, and otherwise in relation to, the Rights, the applicable holder of Common Stock exercising the Rights shall be entitled to receive only Common Stock issued by the Company, and no person shall be entitled to receive any other property, rights or entitlements from the Company or any other person (except that holders of Common Stock who exercise the Rights may designate in writing that the Common Stock to be issued as a result of such exercise shall be issued in the name of one or more other persons). The issuance of Common Stock pursuant to the exercise of any of the Rights will not result, and no circumstance or arrangement in respect of the Rights will result, directly or indirectly, in the receipt of other than Common Stock by holders of Common Stock. No circumstance or event relating directly or indirectly to the Rights will result in the receipt of other than Common Stock by holders of Common Stock. The issuance of the Rights, and transactions and entitlements associated with the Rights do not relate to other than Common Stock, and do not involve, directly or indirectly, with respect to the exercise of the Rights, other than the issuance of Common Stock. 7. The issuance of the Rights, and the rights and obligations of and the limitations upon holders of the Rights in respect of the Rights, will be solely as set forth in the Registration Statement. 8. At no time (past, present or future) has or will any circumstance, event or arrangement in relation to the Rights give rise to any conversion ratio, redemption rights or other features, or any other transaction or arrangement (including, without limitation, a recapitalization) having an effect similar to any or all of the foregoing in respect of the Common Stock. On the basis of such assumptions, and subject to the limitations and qualifications set forth herein, we are of the opinion that it is more likely than not that, under the federal income tax laws of the United States of America: 1. Holders of Common Stock will not recognize gross income, for federal income tax purposes, as a direct result of the receipt of the Rights. 2. Except as provided in the following sentence, the federal income tax basis of the Rights received by a holder of Common Stock as a distribution with respect to the Common Stock held by such holder will be zero. However, if either (i) the fair market value of the Rights on the date of issuance thereof is 15% or more of the fair market value (on the date of issuance) of the Common Stock with respect to which they are received, or (ii) the holder of the 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, upon exercise or sale of the Rights, the holder's federal income tax basis in such Common Stock will be allocated between the Common Stock and the Rights in proportion to the fair market value of each on the date of issuance. 3. The holding period of the Rights received by each holder as a distribution on such holder's 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. 4. Holders of the Common Stock who allow the Rights received by them at the issuance to lapse will not recognize any gain or loss for federal income tax purposes, and no adjustment will be made to the federal income tax basis of the shares of Common Stock, if any, owned by such holders of the Rights. 5. Holders of the Rights will not recognize any gain or loss for federal income tax purposes upon the exercise of such Rights. The federal income tax basis 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). 6. The holding period for the Common Stock acquired through the exercise of the Rights will begin on the date such Rights are exercised. The opinion set forth in this letter is expressly limited and qualified as follows, in addition to the other limitations and qualifications set forth in this letter: a. The opinion expressed herein is limited to matters of the federal income tax laws of the United States of America, with respect to the issuance by the Company of the Rights. No opinion is expressed as to any issue which is governed by any other laws. b. Our opinion is limited to the matters expressly stated herein, and no opinion may be inferred or implied beyond the matters expressly stated. c. This opinion has been prepared solely for the Company's use in connection with the filing of the Registration Statement on the date of this opinion and should not be quoted in whole or in part or otherwise be referred to, nor filed with or furnished to any governmental agency or other person or entity, without the prior written consent of this firm. d. Our opinion is qualified in its entirety by reference to, and is based upon, applicable laws, regulations, rulings and decisions currently in effect on the date of this letter, as those laws, regulations, rulings and decisions are interpreted on such date. We undertake no responsibility to revise or supplement this letter to reflect any changes in the law, regulations, rulings or decisions, or any interpretation of one or more of the foregoing, after the date of this letter. Our opinion 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 United States' federal income tax laws (for example, without limitation, banks, dealers in securities, life insurance companies, tax exempt organizations and foreign taxpayers), and does not address any aspect of state, local or foreign tax laws. Our opinion does not discuss any matters other than certain matters expressly discussed in such opinion in relation to holders of Common Stock who will receive the Rights and any Common Stock received therefor upon exercise as capital assets. e. We have acted as counsel to the Company pursuant to the Rights, and this letter is given solely in our capacity as counsel to the Company. We have not acted as counsel to any other person in connection with the Rights. 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, /s/ NELSON MULLINS RILEY & SCARBOROUGH, L.L.P. EX-23 12 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 4 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 September 30, 1996 EX-23 13 EXHIBIT 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Pre-Effective Amendment No. 4 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 September 30, 1996 -----END PRIVACY-ENHANCED MESSAGE-----