SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission
Only (as Permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Reconditioned Systems, Inc.
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(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
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pursuant to Exchange Act Rule 0-11 (set forth the amount on
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[ ] 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
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RECONDITIONED SYSTEMS, INC.
444 WEST FAIRMONT
TEMPE, ARIZONA 85282
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 6, 1999
To the Stockholders of Reconditioned Systems, Inc.:
The 1999 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 6, 1999 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 adopt the Reconditioned
Systems, Inc. 1999 Employee Stock Purchase Plan;
3. To consider and act upon a proposal to ratify the appointment of
Semple & Cooper, LLP as the Company's independent public accountants
for the fiscal year ending March 31, 2000; and
4. To transact such other business as may properly come before the
meeting.
Only Stockholders of record at the close of business on June 11, 1999 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,
/s/ Dirk D. Anderson
Dirk D. Anderson, Secretary
Tempe, Arizona
July 7, 1999
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 1999 Annual Meeting of Stockholders
to be held on August 6, 1999, 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 7, 1999. 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 11, 1999 (the
"Record Date"), are entitled to notice of, and to vote at, the Annual Meeting.
On the Record Date, there were 1,401,816 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 the 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
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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 11, 1999,
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 19.5%
126 East 56th Street
25th Floor
New York, NY 10022
Scott W. Ryan 304,929* 17.9%
111 Presidential Boulevard
Suite 246
Bala Cynwyd, PA 19004
Dirk Anderson 150,750* 8.9%
444 W. Fairmont
Tempe, AZ 85282
Wayne Collignon 150,017* 8.8%
444 W. Fairmont
Tempe, AZ 85282
Warren Palitz 160,000 9.4%
328 Euclid Avenue
Haddonfield, NJ 08033
E. & W. Zachs Partnership 144,443 8.5%
40 Woodland Street
Hartford, CT 06105
All directors and officers as 765,696** 45.0%
a group (four persons)
-------------
* Includes options to purchase 100,000 shares that are presently
exercisable.
** Includes options to purchase 300,000 shares that are presently
exercisable.
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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 1999
Annual Meeting of Stockholders.
On May 8, 1998, the Company's Board of Directors nominated Messrs. Dirk D.
Anderson, Wayne R. Collignon, Warren Palitz, and Scott W. Ryan 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.
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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 7, 1999.
Name Age Position, Tenure and Experience
- ---- --- -------------------------------
Dirk D. Anderson 35 Mr. Anderson has been the Company's Chief
Financial Officer since August, 1995 and a
Director since December, 1995. He was the
Company's Controller from August, 1993
through August, 1995. Previously, he served as
an Audit Manager at Semple & Cooper, LLP, where
his career spanned seven years.
Wayne R. Collignon 45 Mr. Collignon has been the Company's President
and Chief Executive Officer since August, 1995
and a Director since August, 1995. He was the
Company's General Manager from June, 1993
through August, 1995. Previously, he served
as Vice President at All Makes Office Furniture
in Omaha, Nebraska, where his career spanned
nineteen years.
Warren Palitz 54 Mr. Palitz has been a Director since August, 1998.
Mr. Palitz is the President of Heritage
Investments, a private investment company located
in Haddonfield, New Jersey. Mr. Palitz also
serves as a Director of HMR Capital Management,
an investment advisory company and is a member of
the Advisory Board of The Rittenhouse Trust
Company.
Scott W. Ryan 53 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.
BOARD MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended March 31, 1999, the Board of Directors met
seven 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.
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During the fiscal year ended March 31, 1999, the Board of Directors
appointed Scott W. Ryan and Warren Palitz 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, 1999.
During the fiscal year ended March 31, 1999, the Board of Directors
appointed Scott W. Ryan and Warren Palitz 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 twice during the fiscal year ended March 31, 1999.
During the fiscal year ended March 31, 1999, 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 $1,250. In addition, the Company reimburses them for reasonable
expenses incurred in attending meetings.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued to the
current Chief Executive Officer and Chief Financial Officer (Named Executive
Officers) of the Company.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term Compensation
---------------------- Awards
----------------------
Name and Principal Securities Underlying
Position Year Ended Salary ($) Bonus ($) Options (#)
- ------------------ ---------- ---------- --------- ----------------------
Wayne R. Collignon March 31, 1999 $105,000 $ 58,036 0
CEO and President March 31, 1998 105,000 47,185 0
March 31, 1997 105,000 14,281 83,334
Dirk D. Anderson March 31, 1999 $ 75,000 $ 58,036 0
CFO March 31, 1998 75,000 47,185 0
March 31, 1997 75,000 14,281 83,334
- ------------------
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OPTION GRANTS
The Company has adopted a stock option plan; however, no options were
granted to Named Executive Officers 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, 1999. No
options were exercised by the Named Executive Officers during the fiscal year
ended March 31, 1999.
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 $175,000
Dirk D. Anderson 100,000/0 $175,000
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. The agreements 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. The agreements were
automatically renewed on August 10, 1998, and since no written notice was given
by the Company ninety days prior to August 10, 1999, they will again be
automatically extended. 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. On March 24, 1999 the
Board of Directors and the Named Executive Officers agreed to change the base
annual salaries of Mr. Collignon and Mr. Anderson to $100,000 each, effective
April 1, 1999. 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. 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
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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 the amendments, 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.
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, 1999.
7
PROPOSAL TWO
RATIFICATION OF RECONDITIONED SYSTEMS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
On April 28, 1999, the Board of Directors of the Company adopted the 1999
Employee Stock Purchase Plan (the "Plan), which is set forth in Exhibit "A" to
this Proxy Statement. The Plan must be approved by the holders of record of a
majority of the shares of Common Stock present in person or represented by proxy
at the annual meeting of shareholders.
This plan is intended to encourage stock ownership by all eligible
employees of the Company and participating subsidiaries so that they may share
in the fortunes of the Company by acquiring a, or increasing their, proprietary
interest in the Company. The Plan is designed to encourage eligible employees to
remain in the employ of the Company.
The following discussion of the principal features and effects of the plan
is qualified in its entirety by reference to the text of the Plan set forth in
Exhibit "A" hereto.
ADMINISTRATION OF THE PLAN
Primary authority for administration of the Plan is held by the Board, but
the Board in its discretion may establish a committee composed of members of the
Board to administer the Plan (such administrative body hereinafter referred to
as the "Plan Administrator"). If the Board establishes a Plan Administrator, the
Plan Administrator shall have such of the power and authority vested in the
Board under the Plan as the Board may delegate to it, including the power and
authority to interpret any provision of the Plan or any option under it.
SHARES SUBJECT TO THE PLAN
The shares of Common Stock of the Company subject to the Plan shall be
shares of the Company's authorized but unissued Common Stock. The aggregate
number of shares which may be issued pursuant to the Plan is 200,000, subject to
increase or decrease by reason of stock splits, reclassification, stock
dividends, changes in par value and the like. The aggregate number of shares
which may be issued pursuant to the Plan in any given offering period is limited
to 20,000, subject to the increases or decreases noted above.
EMPLOYEES ELIGIBLE TO PARTICIPATE; NEW PLAN BENEFITS
Any person who is in the employ of the Company or any of its participating
subsidiaries is eligible to receive options under the Plan, except (a) employees
whose customary employment is less than eight (8) hours per week and (b)
employees whose customary employment is not more than five (5) months in any
calendar year; provided, however, that no employee who after the grant of
options hereunder own shares (including all shares which may be purchased under
outstanding options granted under the Plan) possessing 5% or more of the total
combined voting power or value of all classes of shares of the Company or its
parent or subsidiary corporations shall be eligible to participate. An eligible
employee may become a participant by completing, signing and filing an
enrollment agreement and any other necessary papers with the Company at least
ten (10) days prior to the commencement of the particular offering in which he
wishes to participate. Payroll deductions for a participant shall commence the
first pay date after the Offering Date (as defined below) and shall end on the
last pay date before the termination date of such offering, unless earlier
terminated by the employee. Participation in one Offering Period (as defined
below) under the Plan shall neither limit, nor require, participation in any
other Offering Period.
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As of July 7, 1999, there are approximately 65 employees eligible for
participation in the Plan. Because participation in the Plan is voluntary, the
benefits or amounts that will be received by or allocated to employees is not
determinable.
OFFERINGS: OPTION
On each Offering Date, this Plan shall be deemed to have granted to the
participant an option for as many full and fractional shares as he shall be able
to purchase with the payroll deductions credited to his account during his
participation in that Offering Period. An Offering Date is the first day of each
Offering Period unless another date is set by the Board. The first offering
under this Plan shall commence on July 1, 1999 and terminate on September 30,
1999. Thereafter, offerings shall commence on the first day of each subsequent
calendar quarter and terminate on the last day of each such quarter (each an
"Offering Period") until this Plan is terminated by the Board or no additional
shares of Common Stock of the Company are available for purchase under the Plan.
Notwithstanding the foregoing, no employee shall be granted an option which
permits his rights to purchase Common Stock under the Plan and any similar
employee stock purchase plans of the Company or any parent or subsidiary
corporations to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such option is granted) for each calendar
year which such option is outstanding at any time.
If the total number of shares for which options are to be granted on any
date exceeds the number of shares of Common Stock available, the Company shall
make a pro rata allocation of the shares remaining available in as nearly a
uniform manner as shall be practical and as it shall determine to be equitable.
PRICE
The purchase price per share shall be 85% of the lesser of the last offered
sale price of the Common Stock (1) on the first business day of the offering
quarter or (2) on the last business day of the offering quarter.
TERMINATION AND TRANSFERABILITY OF EMPLOYEE'S RIGHTS
An employee's rights under the Plan will terminate when he ceases to be an
employee because of resignation, lay off, discharge or change of status. A
withdrawal notice will be considered as having been received from the employee
on the day his employment ceases, and all payroll deductions not used will be
refunded.
If an employee's employment shall terminate by reason of normal retirement,
death or disability prior to the end of the current offering, he (or his
designated beneficiary, in the event of his death, or if none, his legal
representative) shall have the right, within ninety (90) days thereafter, to
elect to have the balance in his account either paid to him in cash or applied
at the end of the current offering toward the purchase of Common Stock.
No participant shall be permitted to sell, assign, transfer, pledge or
otherwise dispose of or encumber either the payroll deductions credited to his
account or any rights with regard to the exercise of an option or to receive
shares under the Plan other than by will or the laws of descent and
distribution, and such right and interest shall not be liable for, or subject
to, the debts, contracts or liabilities of the employee. If any such action is
taken by the participant, or any claim is asserted by any other party in respect
of such right and interest, whether by garnishment, levy, attachment or
otherwise, such action or claim will be treated as an election to withdraw
funds.
9
AMENDMENT OR DISCONTINUANCE OF THE PLAN
The Board shall have the right to amend, modify or terminate the Plan at
any time without notice; PROVIDED, HOWEVER, that no employee's existing rights
under any offering already made may be adversely affected thereby; and PROVIDED,
FURTHER, that no such amendment of the Plan shall, except, in the event of
certain changes in the Company's capital structure, increase above 200,000, the
total number of shares to be offered unless shareholder approval is obtained.
Upon any termination of the Plan, all payroll deduction not used to purchase
stock will be refunded.
FEDERAL INCOME TAX CONSEQUENCES
It is intended that options issued pursuant to this Plan shall constitute
options issued pursuant to "an employee stock purchase plan" within the meaning
of Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
ADDITIONAL GROSS INCOME. In accordance with Section 423(c) of the Code, in
the event of any disposition of the shares of Common Stock by participating
employees, there shall be included as compensation in his or her gross income
for the taxable year in which such disposition is made, assuming the holding
period requirements of Section 423(a) of the Code are satisfied, or for the
taxable year following the death of the participating employee, an amount equal
to the lesser of: (i) the excess of the fair market value of the Common Stock at
the time of such disposition or death over the amount paid for such share under
the Plan; or (ii) the excess of the fair market value of the Common Stock at the
time the option was granted over the option price.
WITHHOLDING OF ADDITIONAL FEDERAL INCOME TAX. The Company, in accordance
with Section 3401(a) of the Code and the regulations and rulings promulgated
thereunder, will withhold from the wages of all participants, in all payroll
periods following and in the same calendar year as the date on which
compensation is deemed received by the participants, additional income taxes in
respect of the amount that is considered compensation includable in the
participant's gross income.
SUMMARY OF TAX CONSEQUENCES. The foregoing outline is a summary of the
federal income tax provisions relating to the grant and exercise of options
under the Plan and the sale of shares acquired under the Plan. Individual
circumstances may vary these results. The federal income tax laws and
regulations are constantly being amended, and each participant should rely upon
his own tax counsel for advice concerning the federal income tax provisions
applicable to the Plan.
VOTING REQUIREMENTS
Each holder of Common Stock is entitled to one vote per share held. 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 Proposal Two. Shareholders are not
entitled to cumulate votes.
FOR THIS PURPOSE, A SHAREHOLDER VOTING THROUGH A PROXY WHO ABSTAINS WITH
RESPECT TO APPROVAL OF PROPOSAL TWO IS CONSIDERED TO BE PRESENT AND ENTITLED TO
VOTE ON THE APPROVAL OF PROPOSAL TWO AT THE MEETING, AND IS IN EFFECT A NEGATIVE
VOTE, BUT A STOCKHOLDER (INCLUDING A BROKER) WHO DOES NOT GIVE AUTHORITY TO A
PROXY TO VOTE ON THE APPROVAL OF PROPOSAL TWO SHALL NOT BE CONSIDERED PRESENT
AND ENTITLED TO VOTE ON PROPOSAL TWO.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL TWO.
10
PROPOSAL THREE
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, LLP to serve
as independent public accountants to audit the financial statements of the
Company for the fiscal year ending March 31, 2000 and to perform other
accounting services as may be requested by the Company. Semple & Cooper, LLP 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, LLP
will be present at the 1999 Annual Meeting. If present, however, they will have
the opportunity to make a statement and 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, LLP to the Stockholders for ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL THREE.
11
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 proxies. 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 2000 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, 2000. If a stockholder desires to have a
proposal formally considered at such meeting, but outside the process of Rule
14a-8, the proposal must be received in writing by the Secretary of the Company
at the address set forth on the first page hereof on or before May 24, 2000.
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 a copy of any
exhibit to the Annual Report on Form 10-KSB. The fee for furnishing a copy of
any exhibit will be 25 cents per page plus $3.00 for postage and handling.
Please direct any and all such requests to Investor Relations, 444 West
Fairmont, Tempe, AZ 85282.
12
EXHIBIT A
RECONDITIONED SYSTEMS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN. This Employee Stock Purchase Plan (the "Plan") is
intended to encourage stock ownership by all eligible employees of Reconditioned
Systems, Inc. (the "Company") and participating subsidiaries so that they may
share in the fortunes of the Company by acquiring a, or increasing their,
proprietary interest in the Company. The Plan is designed to encourage eligible
employees to remain in the employment of the Company. It is intended that
options issued pursuant to this Plan shall constitute options issued pursuant to
an "employee stock purchase plan" within the meaning of Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code")
2. DEFINITIONS
2.1 "Account" shall mean the funds accumulated with respect to an
individual employee as a result of deductions from his paycheck for the purpose
of purchasing stock under the Plan. The funds allocated to an employee's account
shall remain the property of the respective employee at all times during each
offering.
2.2 "Base Pay" means regular straight time earnings plus compensation
for overtime, incentive bonuses and other additional compensation, except to the
extent that any such item is specifically excluded by the Board of Directors of
the Company (the "Board")
2.3 "Fair Market Value" means the lowest offering sale price for the
common stock, no par value per share (the "Common Stock") of the Company as
reported on the NASDAQ Stock Market System, or if the stock is traded on a stock
exchange, the closing price for the Common Stock on such exchange.
2.4 "Offering Date" means the commencement date of the offering if such
date is a regular business day of the first business day following such
commencement date. A different date may be set by resolution of the Board.
2.5 "Participating Subsidiaries" means any subsidiary of the Company
which is designated by the Board to participate in the Plan. The Board shall
have the power to make such designation before or after the Plan is approved by
the Shareholders.
3. EMPLOYEES ELIGIBLE TO PARTICIPATE. Any person who is in the employment of the
Company or any of its Participating Subsidiaries is eligible to receive options
under the Plan, except (a) employees whose customary employment is less than
eight (8) hours per week and (b) employees whose customary employment is not
more than five (5) months in any calendar year; provided, however, that no
employee who after the grant of options hereunder owns shares (including all
shares which may be purchased under outstanding options granted under the Plan)
possessing 5% or more of the total combined voting power or value of all classes
or shares of the Company or its parents or subsidiary corporations shall be
eligible to participate. For this purpose, the rules of Section 425 (d) of the
Code shall apply in determining share ownership.
4. OFFERINGS. The first offering under this Plan shall commence on July 1, 1999
and terminate on the last day of each such quarter (each an "Offering Period")
until this Plan is terminated by the Board or no additional shares of Common
Stock of the Company are available for purchase under the Plan.
5. PRICE. The purchase price per share shall be 85% of the lesser of the fair
market value of the Common Stock (1) on the first business day of the offering
or (2) on the last business day of the offering.
6. STOCK SUBJECT TO THE PLAN. The stock subject to the options shall be shares
of the Company's authorized but unissued Common Stock or shares of Common Stock
reacquired by the Company, including shares purchased in the open market. The
aggregate number of shares which may be issued pursuant to the Plan is 200,000
shares, subject to increase or decrease by reason of stock splits, stock
dividend changes in par value and the like. The aggregate number of shares which
may be issued pursuant to the Plan in any given offering period is limited to
20,000 subject to the increases or decreases above-stated.
7. CHANGES IN CAPITAL STRUCTURE
7.1 In the event that the outstanding shares of Common Stock of the
Company are hereafter changed into or exchanged for a different number of or
kind of shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation or recapitalization,
appropriate adjustment shall be made by the Board in the number and kind of
shares as to which an option granted under this Plan shall be exercisable, to
the end that the participant's proportionate interest shall be maintained as
before the occurrence of such event. Any such adjustment made by the Board shall
be conclusive.
7.2 If the Company is not the surviving or resulting corporation in any
reorganization, merger, consolidation or recapitalization, each outstanding
option shall be assumed by the surviving or resulting corporation and each
option shall continue in full force and effect, and shall apply to the same
number and class of securities of the surviving corporation as a holder of the
number of shares of Common Stock subject to the option would be entitled under
the terms of the reorganization, merger, consolidation or recapitalization.
8. PARTICIPATION An eligible employee may become a participant by completing,
signing, and filing an Enrollment Agreement and any other necessary papers with
the Company at least ten (10) days prior to the commencement of the particular
offering in which he/she wishes to participate. Payroll deductions for a
participant shall commence the first pay date after the Offering in which he
wishes to participate and shall end on the last pay date before the termination
date of such offering, unless earlier terminated by the employee, as provided in
Section 14. Participation in one Offering Period under the Plan shall neither
limit, nor require, participation in any other Offering Period.
9. PAYROLL DEDUCTIONS
9.1 At the time a participant files his Enrollment Agreement, he shall
elect to have deductions made from his pay on each pay date during the time he
is a participant in any offering at not less that $5 or more than 10% of his
Base Pay.
9.2 All payroll deductions made for a participant shall be credited to
his Account under the Plan. A participant may not make any separate cash payment
into such Account nor may payment for shares be made other than by payroll
deduction.
9.3 A participant may discontinue his payroll deductions or
participation in the Plan, as provided in Section 14, but no other change can be
made during an Offering Period and, specifically, except as provided in Section
14, a participant may not alter the rate of his payroll deductions for that
Offering Period.
2
10. GRANTING OF OPTION
10.1 On the Offering Date, this Plan shall be deemed to have granted to
the participant an option for as many full and fractional shares as he shall be
able to purchase with the payroll deductions credited to this Account during his
participation in that Offering Period.
10.2 Notwithstanding the foregoing, no employee shall be granted an
option which permits his rights to purchase Common Stock under the Plan and any
similar employee stock purchase plans of the Company or any parent subsidiary
corporations to accrue at a rate which exceeds $25,000 of fair market value of
such stock ( determined at the time such option is granted) for each calendar
year which such option is outstanding. The purpose of the limitation in the
preceding sentence is to comply with Section 423(b) (8) of the Code.
10.3 If the total number of shares for which options are to be granted
on any date in accordance with Paragraph 10.1 exceeds the number of shares
available pursuant to Section 6 or allowed pursuant to Section 10.2 (after
deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the shares
remaining available in as nearly a uniform manner as shall be practical and as
it shall determine to be equitable.
11. EXERCISE OF OPTION. Each employee who continues to be a participant in an
Offering Period on the last business day of that Offering Period shall be deemed
to have exercised his option on such date and shall be deemed to have purchased
from the Company such number of full or fractional shares of Common Stock
reserved for the purpose of the Plan as his accumulated payroll deductions on
such date will pay for at the purchase price, subject to only the limitations
set forth in Section 10.2.
12. EMPLOYEE'S RIGHTS AS A SHAREHOLDER
12.1 No participating employee shall have any right as a shareholder
with respect to any shares under the Plan until the shares have been purchased
in accordance with Section 11 above and the stock certificate has actually been
issued.
12.2 Shares purchased by a participant under the Plan will be recorded
on the participant's statement or if the participant so directs, by written
notice to the Company prior to the termination date of the pertinent offering,
in the names of the participant and one such other person as may be designated
by the participant, as joint tenants with right of survivorship, tenants in
common, or as community property, to the extent and in the manner permitted by
applicable law.
13. DELIVERY. Certificates for stock issued to participants will be delivered
only upon written request. The participant statement is to be considered the
record of holdings for the participant and will be delivered as soon as
practicable after the end of each offering period ("quarterly statements").
14. WITHDRAWAL.
14.1 An employee may withdraw from the Plan, in whole but not in part,
at any time prior to the last business day of each Offering Period by delivering
a Withdrawal Notice to the Company, in which event the Company will refund the
entire balance of his Account as soon as practicable thereafter.
14.2 To re-enter the Plan, an employee who has previously withdrawn
must file a new Enrollment Agreement in accordance with Section 8. His re-entry
into the Plan cannot, however, become effective before the beginning of the next
Offering Period following his withdrawal.
3
14.3 An employee may elect to discontinue his payroll deductions during
the course of a particular offering, at any time prior to the last business day
preceding the final pay day during such offering, by delivering an Election to
Discontinue Deductions to the Company, and such elections shall not constitute a
withdrawal for the purposes of Section 14. In the event that an employee elects
to discontinue his payroll deductions pursuant to this Paragraph 14.3, the
employee shall remain a participant in such Offering Period and shall be
entitled to purchase from the Company such number of full shares of Common Stock
as set forth in and in accordance with Section 11.
15. CARRYOVER OF ACCOUNT. At the termination of each Offering Period the Company
shall return to the employee the balance of his Account unless the employee has
advised the Company otherwise by way of re-executing an Enrollment Agreement
before the commencement of the succeeding offering electing to have the balance
carried over to be applied against option exercises in such succeeding offering.
Upon termination of the Plan, the balance of each employee's Account shall be
returned to him.
16. RIGHTS NON-TRANSFERABLE. No participant shall be permitted to sell, assign,
transfer, pledge or otherwise dispose of or encumber either the payroll
deductions credited to his Account or any rights with regard to the exercise of
an option or to receive shares under the Plan other than by will or the laws of
descent and distribution, and such right and interest shall not be liable for,
or subject to, the debts, contracts or liabilities of the employee. If any such
action is taken by the participant, or any claim is asserted by any other party
in respect of such right and interest, whether by garnishment, levy, attachment
or otherwise, such action or claim will be treated as an election to withdraw
funds in accordance with Section 14.
17. TERMINATION OF EMPLOYEE'S RIGHTS. An employee's rights under the Plan will
terminate when he ceases to be an employee because of resignation, lay-off,
discharge or change of status. A Withdrawal Notice will be considered as having
been received from the employee on the day his employment ceases, and all
payroll deductions not used will be refunded.
If an employee's employment shall be terminated by reason of normal retirement,
death or disability prior to the end of the current offering, he ( or his
designated beneficiary, in the event of his death, or if none, his legal
representative) shall have the right within ninety (90) days thereafter, to
elect to have the balance in his account either paid to him in cash or applied
at the end of the current offering toward the purchase of Common Stock.
18. ADMINISTRATION OF THE PLAN. Primary authority for administration of the Plan
is held by the Board, but the Board in its discretion, may establish a committee
composed of members of the Board to administer the Plan (the "Committee) (such
administrative body hereinafter referred to as the "Plan Administrator"). The
Plan Administrator, if a Committee, shall have such of the power and authority
vested in the Board under the Plan as the Board may delegate to it, including
the power and authority to interpret any provision of the Plan or any option
under it. The Plan Administrator has the power to delegate administrative
functions such as record keeping and the purchase of securities in the open
market, to a third party agent.
19. AMENDMENT OR DISCONTINUANCE OF THE PLAN. The Board shall have the right to
amend, modify or terminate the Plan at any time without notice; provided,
however, that no employee's existing rights under any offering already made
under Section 4 may be adversely affected thereby; and provided, further, that
no such amendment of the Plan shall, except as provided in Section 7, increase
above 200,000 the total number of shares to be offered unless shareholder
approval is obtained. Upon any termination of the Plan, all payroll deductions
not used to purchase stock will be refunded.
4
20. LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE PLAN. The Plan is intended
to provide Common Stock for investment and not for resale. The Company does not,
however, intend to restrict or influence any participant in the conduct of his
own affairs. A participant, therefore, may sell stock purchased under the Plan
at any time he chooses, subject to compliance with any applicable federal or
state securities laws especially as concerning the consequences of a disposition
before the holding period in accordance with Section 423. Each participant will
agree by entering the Plan, to promptly give the Company notice of any such
stock disposed of within two years after the date of granting of applicable
option, showing the date of disposition and the number of shares disposed of.
The employee assumes the risk of any market fluctuations in the price of the
stock.
21. TAX CONSIDERATIONS FOR EARLY DISPOSITION. The disposition of a share of
stock is acquired by the exercise of a statutory option before the expiration of
the applicable holding period makes Section 423 inapplicable to the transfer of
such shares. The income attributable to such transfer shall be treated as
ordinary income receivable in the tax year in which such disposition occurs. To
qualify for the special tax treatment under Section 423 the individual must not
make a disposition of shares within two (2) years after the date of granting of
the option nor within one (1) year after the transfer of such shares to him. At
all times during the period beginning with the date of granting of the option
and ending on the day three (3) months before the date of such exercise, the
individual must be an employee of the corporation granting such option.
22. WITHHOLDING OF ADDITIONAL FEDERAL INCOME TAX. The Company, in accordance
with Section 3401 (a) of the Code and the Regulations and Rulings promulgated
thereunder, will withhold from the wages of all participants, in all payroll
periods following and in the same calendar year as the date on which
compensation is deemed appropriate to the amount that is considered compensation
includible in the participant's gross income.
23. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver shares
of the Company's Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization issuance of
sale of such shares.
24. APPROVAL OF SHAREHOLDERS. The Plan is subject to the approval of a majority
of the outstanding shares of Common Stock of the Company, which approval must
occur within twelve (12) months after the date the Plan is adopted by the Board.
5
[FORM OF PROXY CARD]
PROXY PROXY
RECONDITIONED SYSTEMS, INC.
444 WEST FAIRMONT, TEMPE, ARIZONA 85282
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned appoints Wayne Collignon and Dirk Anderson, and each of
them, as proxies, each with the power of substitution, and authorizes them to
represent and vote, as designated on the reverse side hereof, all shares of
Common Stock of Reconditioned Systems, Inc. held by the undersigned on June 11,
1999, at the 1999 Annual Meeting of Stockholders to be held on August 6, 1999.
In their discretion, the proxies are authorized to vote such shares upon such
other business as may properly come before the Annual Meeting and are authorized
to cumulate votes with respect to the election of directors.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR EACH OF THE LISTED PROPOSALS.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
(Continued and to be SIGNED on the reverse side.)
- --------------------------------------------------------------------------------
RECONDITIONED SYSTEMS, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. ( )
This Board of Directors recommends a vote FOR each of the proposals listed
below.
FOR ALL (Except
1. Election of Directors -- Nominees: FOR WITHHOLD Nominee(s)
Wayne R. Collignon, Dirk D. Anderson, ALL ALL written below)
Scott W. Ryan, and Warren Palitz. ( ) ( ) ( )
_____________________________________
2. Ratification of the adoption of the FOR AGAINST ABSTAIN
Reconditioned Systems, Inc., 1999 ( ) ( ) ( )
Employee Stock Purchase Plan.
3. Ratification of the appointment of FOR AGAINST ABSTAIN
Semple & Cooper, PLC as ( ) ( ) ( )
independent public accountants.
Dated: ________________________, 1999
Signature(s) ______________________________________
Signature if held jointly _________________________
Please sign exactly as name appears on reverse side.
When shares are held by joint tenants, both should
sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.