SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
[X] Filed by the Registrant
[ ] File by a Party other than the Registrant
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e) (2))
[ ] Definitive Additional Materials
[ ] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to sec.240.14a-11 (c) or sec.240.14a-12
RECONDITIONED SYSTEMS, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid: $
Fee paid previously with preliminary materials.
Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.[ ]
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
RECONDITIONED SYSTEMS, INC.
444 WEST FAIRMONT
TEMPE, ARIZONA 85282
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 14, 1998
To the Stockholders of Reconditioned Systems, Inc.:
The 1998 Annual Meeting of the Stockholders of Reconditioned Systems,
Inc., an Arizona corporation (the "Company"), will be held at Reconditioned
Systems, Inc., 444 West Fairmont, Tempe, Arizona 85282, on Friday, August 14,
1998 at 8:00 a.m., Mountain Standard Time, for the following purposes:
1. To elect four directors to the Board of Directors;
2. To consider and act upon a proposal to ratify the appointment of
Semple & Cooper, PLC as the Company's independent public accountants for the
fiscal year ending March 31, 1999; and
3. To transact such other business as may properly come before the
meeting.
Only Stockholders of record at the close of business on June 19, 1998
are entitled to notice of and to vote at the Annual Meeting. Holders of Common
Stock as of such date are entitled to vote on all of the above proposals. Shares
can be voted at the meeting only if the holder is present or represented by
proxy. A list of Stockholders entitled to vote at the Annual Meeting will be
open for inspection at the Annual Meeting and will be open for inspection at the
office of Reconditioned Systems, Inc., 444 West Fairmont, Tempe, Arizona 85282
during ordinary business hours for ten days prior to the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY MAIL THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
Dirk D. Anderson, Secretary
Tempe, Arizona
July 1, 1998
PROXY STATEMENT
OF
RECONDITIONED SYSTEMS, INC.
444 WEST FAIRMONT
TEMPE, ARIZONA 85282
---------------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Reconditioned Systems, Inc., an Arizona corporation
(the "Company"), of proxies for use at the 1998 Annual Meeting of Stockholders
to be held on August 14, 1998, at 8:00 a.m., Mountain Standard Time. The Annual
Meeting will be held at Reconditioned Systems, Inc., 444 West Fairmont, Tempe,
Arizona 85282.
This Proxy Statement and the accompanying form of proxy are being first
mailed to Stockholders on or about July 1, 1998. The Stockholder giving the
proxy may revoke it at any time before it is exercised at the meeting by: (i)
delivering to the Secretary of the Company a written instrument of revocation
bearing a date later than the date of the proxy; (ii) duly executing and
delivering to the Secretary a subsequent proxy relating to the same shares; or
(iii) attending the meeting and voting in person (attendance at the meeting will
not in and of itself constitute revocation of a proxy). Any proxy which is not
revoked will be voted in accordance with the recommendations of the Board of
Directors as to such items. The proxy card gives authority to the proxies to
vote shares in their discretion on any other matter properly presented at the
Annual Meeting.
Proxies will be solicited from the Company's Stockholders by mail. The
Company will pay all expenses in connection with the solicitation, including
postage, printing and handling, and the expenses incurred by brokers,
custodians, nominees and fiduciaries in forwarding proxy material to beneficial
owners. It is possible that directors, officers and regular employees of the
Company may make further solicitation personally or by telephone, telegraph or
mail. Directors, officers and regular employees of the Company will receive no
additional compensation for any such further solicitation.
Only holders (the "Stockholders") of the Company's Common Stock, no par
value (the "Common Stock") at the close of business on June 19, 1998 (the
"Record Date"), are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, there were 1,473,950 shares of Common Stock outstanding.
Each share of Common Stock is entitled to one vote on each matter to be
considered at the Annual Meeting. A majority of the outstanding shares of Common
Stock, present in person or represented by proxy at the Annual Meeting, will
constitute a quorum for the transaction of business at the Annual Meeting.
The affirmative vote of holders of a plurality of the outstanding
shares of Common Stock of the Company entitled to vote and present in person or
by proxy at the Annual Meeting is required for approval of election of directors
pursuant to Proposal One. The affirmative vote of holders of a majority of the
outstanding shares of Common Stock of the Company entitled to vote and present
in person or by proxy at the Annual Meeting is required for approval of
Proposals Two and Three. Votes that are withheld will have the effect of a
negative vote. Abstentions may be specified on all proposals except Proposal One
relating to the election of directors. Abstentions are included in the
determination of the number of shares represented for a quorum. Abstentions will
have the effect of a negative vote on a proposal. Broker non-votes are not
counted for purposes of determining whether a quorum is present or whether a
proposal has been approved. With regard to the election of directors, votes may
be cast in favor of or withheld from each nominee. Stockholders voting on the
election of directors may cumulate their votes and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which the Stockholder's shares are entitled, or may distribute their
votes on the same principle among as many candidates as being solicited. In
order to cumulate votes, at least one Stockholder must announce, prior to the
casting of votes for the election of directors, that he or she intends to
cumulate votes. Proxies will be tabulated by the Company with the assistance of
the Company's transfer agent. The Company will, in advance of the Annual
Meeting, appoint one or more Inspectors of Election to count all votes and
ballots at the Annual Meeting and make a written report thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of June 19,
1998, with respect to the number of shares of the Company's equity securities
beneficially owned by individual directors, by all directors and officers of the
Company as a group and by persons known by the Company to own more than 5% of
the Company's Common Stock.
Percent
Name and Address of Common of
Beneficial Owner Shares Total**
---------------- ------ -------
Granite Capital 331,117 18.7%
126 East 56th Street
25th Floor
New York, NY 10022
Scott W. Ryan 304,929* 17.2%
111 Presidential Boulevard
Suite 246
Bala Cynwyd, PA 19004
Dirk Anderson 150,750* 8.5%
444 W. Fairmont
Tempe, AZ 85282
Wayne Collignon 150,017* 8.4%
444 W. Fairmont
Tempe, AZ 85282
E. & W. Zachs Partnership 144,443 8.1%
40 Woodland Street
Hartford, CT 06105
Warren Palitz 89,548 5.1%
328 Euclid Avenue
Haddonfield, NJ 08033
All directors and officers as 605,696** 34.2%
a group (three persons)
-------------
* Includes options to purchase 100,000 shares that are presently
exercisable.
** Includes options to purchase 300,000 shares that are presently
exercisable.
-2-
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
The Board of Directors currently consists of four members holding seats
to serve as members until the next Annual Meeting of Stockholders or until their
respective successors are duly elected and qualified, unless they earlier resign
or are removed from office. The Company's Articles of Incorporation presently
provide for a Board of Directors of not less than three (3) nor more than nine
(9) in number, with the exact number to be fixed as provided by the Company's
Bylaws. The term of office of all current directors will expire at the 1998
Annual Meeting of Stockholders.
On May 8, 1998, the Company's Board of Directors nominated Messrs.
Wayne R. Collignon, Dirk D. Anderson, and Scott W. Ryan and Ms. Susan J. Zinga
for election to the Board of Directors. Each of the nominees is currently
serving as a director and has no family relation to any of the other nominees. A
brief description of the business experience of each nominee is set forth below
in the table under the heading "Directors and Executive Officers." UNLESS
OTHERWISE INSTRUCTED, THE PERSONS NAMED IN THE ACCOMPANYING PROXY WILL VOTE FOR
THE ELECTION OF SUCH NOMINEES. All of the nominees have consented to being named
herein and have indicated their intention to serve if elected. If for any reason
any nominee should become unable to serve as a director, the accompanying proxy
may be voted for the election of a substitute nominee designated by the Board of
Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE NOMINEES.
-3-
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company as of July 1, 1998.
NAME AGE POSITION, TENURE AND EXPERIENCE
- ---- --- -------------------------------
Wayne R. Collignon 44 Mr. Collignon has been the Company's
President and Chief Executive Officer
since August 10, 1995 and a Director
since August 31, 1995. He was the
Company's General Manager from June,
1993 through August 10, 1995.
Previously, he served as Vice President
at All Makes Office Furniture in Omaha,
Nebraska where his career spanned
nineteen years.
Dirk D. Anderson 34 Mr. Anderson has been the Company's
Chief Financial Officer since August 10,
1995 and a Director since December,
1995. He was the Company's Controller
from August, 1993 through August 10,
1995. Previously, he served as an Audit
Manager at Semple & Cooper, PLC where
his career spanned seven years.
Scott W. Ryan 52 Mr. Ryan has been a Director since
December, 1995. Mr. Ryan is the
President of S.W. Ryan & Company, Inc.
which is a securities brokerage and
asset management firm located in Bala
Cynwyd, Pennsylvania that he founded in
1988. Previously, Mr. Ryan was with
other securities brokerage firms
including Walsh Greenwood & Co., Merrill
Lynch and Goldman, Sachs & Co. Mr. Ryan
is also a Board Member of NASD District
#9.
Susan J. Zinga 50 Ms. Zinga has served as a Director since
February, 1998. Ms. Zinga is President
and sole proprietor of Repeats 1 inc., a
modular furniture design and sales firm.
Prior to founding Repeats 1, Ms. Zinga
served as General Manager for a Haworth
dealership in Colorado, and as Design
Department Manager for All Makes Office
Furniture in Omaha, Nebraska. Ms.
Zinga's career in the office furniture
industry spans over twenty-seven years.
-4-
BOARD MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended March 31, 1998, the Board of Directors met
five times. The Board of Directors has established an Audit Committee and a
Compensation Committee. The Board does not have a Nominating Committee, and the
entire Board is responsible for recommending nominees to serve on the Board.
During the fiscal year ended March 31, 1998, the Board of Directors
appointed Scott W. Ryan and Susan J. Zinga to the Audit Committee. The functions
of the Audit Committee are to: receive reports with respect to loss
contingencies, which may be legally required to be publicly disclosed through
financial statement notation; annually review and examine those matters that
relate to the financial audit of the Company; recommend to the Company's Board
of Directors the selection, retention and termination of the Company's
independent accountants; review the professional services, proposed fees and
independence of such accountants; and provide for the periodic review and
examination of management performance in selected aspects of corporate
responsibility. The Audit Committee met once during the fiscal year ended March
31, 1998.
During the fiscal year ended March 31, 1998, the Board of Directors
appointed Scott W. Ryan and Susan J. Zinga to the Compensation Committee. The
functions of the Compensation Committee are to review annually the performance
of the Chief Executive Officer and President and of the other principal officers
whose compensation is subject to the Committee's review and report thereon to
the Company's Board of Directors. In addition, the Compensation Committee
reviews the compensation of outside directors for their services on the Board of
Directors and reports thereon to the Board of Directors. The Compensation
Committee met once during the fiscal year ended March 31, 1998.
During the fiscal year ended March 31, 1998, each incumbent director
attended 75% or more of the aggregate of (i) the total number of meetings of the
Board of Directors (held during the period for which such person was a director)
and (ii) the total number of meetings held by all committees on which such
director served (during the period for which such person was a director).
COMPENSATION OF DIRECTORS
The Company provides for quarterly compensation to its non-employee
directors of $1,250. In addition, the Company reimburses them for reasonable
expenses incurred in attending meetings.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued to the
current Chief Executive Officer and Chief Financial Officer (Named Executive
Officers) of the Company.
-5-
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
AWARDS
--------------------------------- ----------------------
NAME AND PRINCIPAL SECURITIES UNDERLYING
POSITION YEAR ENDED SALARY($) BONUS($) OPTIONS (#)
- --------- ---------- ---------- --------- ---------------------
Wayne R. Collignon March 31, 1998 $105,000 $47,185 0
CEO and President March 31, 1997 105,000 14,281 83,334
March 31, 1996 105,000 0 16,666 (1)
Dirk D. Anderson March 31, 1998 $ 75,000 $47,185 0
CFO March 31, 1997 75,000 14,281 83,334
March 31, 1996 75,000 0 16,666 (1)
- ------------------
(1) Restated to reflect 1-for-6 reverse split
OPTION GRANTS
The Company has adopted a stock option plan; however, no options were
granted during the fiscal year.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the number
of unexercised options held by the Named Executive Officers on March 31, 1998.
No options were exercised by the named Executive Officers during the fiscal year
ended March 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FY-END(#) -- OPTIONS AT FY-END ($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
Wayne R. Collignon 100,000/0 $231,300
Dirk D. Anderson 100,000/0 $231,300
-6-
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
On August 10, 1996, the Company entered into employment agreements with
Wayne Collignon and Dirk Anderson pursuant to which they serve as the Company's
President and Chief Executive Officer, and Chief Financial Officer,
respectively. Unless sooner terminated, the agreements continue through August
10, 1998, and are automatically extended for successive one year periods unless
either the Board of Directors or named executive officer gives written notice to
the other at least ninety days prior to the end of the initial or any renewal
term of its or his intention not to renew. Under the agreements, Mr. Collignon
receives a base annual salary of $105,000 and Mr. Anderson receives a base
annual salary of $75,000. Increases to the named executive officers' base
salaries and bonuses are at the discretion of the Company's Board of Directors.
Both Mr. Collignon and Mr. Anderson are entitled to participate in all
retirement and employee benefit plans that the Company may adopt for the benefit
of its senior executives, and are entitled to a car allowance of $300 per month.
The agreements also entitle the named executive officers to receive the options
described above under the heading "Aggregated Option Exercises and Fiscal
Year-End Option Values."
Under the agreements, if the named executive officer's employment is
terminated by reason of death, Disability or Retirement, upon expiration of the
term of the agreement, by the Company for Cause or by the named executive
officer without Good Reason (in each case as such terms are defined in the
agreements), the Company shall: (i) pay the named executive officer any base
salary which has accrued but has not been paid as of the termination date (the
"Accrued Base Salary"); (ii) reimburse the named executive officer for expenses
incurred by him prior to termination which are subject to reimbursement pursuant
to applicable Company policies (the "Accrued Reimbursable Expenses"); (iii)
provide to the named executive officer any accrued and vested benefits required
to be provided by the terms of any Company-sponsored benefit plans (the "Accrued
Benefits"); (iv) pay the named executive officer any discretionary bonus with
respect to a prior fiscal year which has accrued and been earned but has not
been paid (the "Accrued Bonus"); (v) permit the named executive officer to
exercise all vested, unexercised stock options outstanding at the termination
date; and (vi) to the extent permitted by the terms of the policies then in
effect, give the named executive officer a right of first refusal to cause the
transfer of the ownership of all key-man life insurance policies maintained by
the Company on the named executive officer to the named executive officer at the
named executive officer's expense (the "Right of First Refusal"). If the named
executive officer's employment is terminated by the Company without Cause or by
the named executive officer for Good Reason, the Company shall: (i) pay the
named executive officer the Accrued Base Salary; (ii) pay the named executive
officer the Accrued Reimbursable Expenses; (iii) pay the named executive officer
the Accrued Benefits; (iv) pay the named executive officer the Accrued Bonus;
(v) pay the named executive officer the base salary, as and when it would have
been paid had the termination not occurred, for a period of six months following
the termination date; (vi) maintain in effect, until the first to occur of (a)
his attainment of comparable benefits upon alternative employment or (b) six
months following the termination date, the employee benefits in which he was
entitled to participate immediately prior to such termination; (vii) permit the
named executive officer to exercise all vested, unexercised stock options in
accordance with the terms of the plans and agreements pursuant to which they
were issued; and (viii) give the named executive officer the Right of First
Refusal.
On August 19, 1996, the Company amended the employment agreements to
include compensation pursuant to a change in control. Under this agreement, if
the named executive officer's employment is terminated by the Company subsequent
to a Change of Control of the Company either by the new controlling party or by
the executive for Good Reason, the named executive officer will receive a
two-year consulting agreement at $100,000 per year in addition to the severance
pay detailed above.
-7-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers, and persons who
own more than 10% of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of the Company's equity securities. Officers,
directors and greater than 10% stockholders are required by SEC regulations to
provide the Company with the copies of such reports furnished to the Company and
written representations that no other reports were required. Based solely upon a
review of such reports and representations, the Company believes that all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than 10% stockholders were timely satisfied during the
fiscal year ended March 31, 1998.
-8-
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Company's Board of Directors has selected, and is submitting to the
Stockholders for ratification, the appointment of Semple & Cooper, PLC to serve
as independent public accountants to audit the financial statements of the
Company for the fiscal year ending March 31, 1999 and to perform other
accounting services as may be requested by the Company. Semple & Cooper, PLC has
acted as independent public accountants for the Company since its appointment
effective March 28, 1996.
The Company does not expect that representatives of Semple & Cooper,
PLC will be present at the 1998 Annual Meeting. If present, however, they will
have the opportunity to make a statement, and they will be available to respond
to appropriate questions.
Although it is not required to do so, the Board of Directors has
submitted the selection of Semple & Cooper, PLC to the Stockholders for
ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO.
-9-
OTHER MATTERS
The Company's Board of Directors is not aware of any other business to
be considered or acted upon at the Annual Meeting of the Stockholders other than
those described above. If other business requiring a vote of the Stockholders is
properly presented at the meeting, proxies will be voted in accordance with the
judgment on such matters of the person or persons acting as proxy. If any matter
not appropriate for action at the Annual Meeting should be presented, the holder
of the proxies will vote against consideration thereof or action thereon.
STOCKHOLDER PROPOSALS
The Company welcomes comments or suggestions from its Stockholders. If
a Stockholder desires to have a proposal formally considered at the 1999 Annual
Meeting of Stockholders, and evaluated by the Board for possible inclusion in
the Proxy Statement for that meeting, the proposal (which must comply with the
requirements of Rule 14a-8 promulgated under the Exchange Act) must be received
in writing by the Secretary of the Company at the address set forth on the first
page hereof on or before March 15, 1999.
ANNUAL REPORT
The Company's Annual Report to Stockholders and the Annual Report on
Form 10-KSB, with audited financial statements, accompanies this Proxy Statement
and was mailed this date to all Stockholders of record as of the Record Date.
The Company will furnish to any Stockholder submitting a request, without
charge, a copy of the Company's Annual Report on Form 10-KSB. Any exhibit to the
Annual Report on Form 10-KSB will be furnished to any Stockholder of the
Company. The fee for furnishing a copy of any exhibit will be 25 cents per page
plus $3.00 for postage and handling.
-10-