RECONDITIONED SYSTEMS, INC.
444 West Fairmont
Tempe, Arizona 85282
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 2004
To the Stockholders of Reconditioned Systems, Inc.:
The 2004 Annual Meeting of the Stockholders of Reconditioned Systems, Inc., an Arizona corporation (the “Company”), will be held at Beck Office Systems, Inc. at 5300 Eagle Rock Avenue NE, Albuquerque, New Mexico, 87113, on Wednesday, June 9, 2004, at 10:00 a.m., Mountain Standard Time, for the following purposes:
1. To elect seven directors to the Board of Directors;
4.2.
To transact such other business as may
properly come before the meeting.
Only Stockholders of record at the close of business on May 3, 2004 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 proposal one. 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 offices 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,
Tempe, Arizona Kerrie A. Leach, Secretary
May 10, 2004
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 2004 Annual Meeting of Stockholders to be held on June 9, 2004, at 10:00 a.m., Mountain Standard Time. The Annual Meeting will be held at the corporate offices of Beck Office Systems, Inc. at 5300 Eagle Rock Avenue NE, Albuquerque, New Mexico 87113.
This Proxy Statement and the accompanying form of proxy are being first mailed to Stockholders on or about May 10, 2004. 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 May 3, 2004 (the “Record Date”), are entitled to notice of, and to vote at, the Annual Meeting. On the Record Date, there were 1,367,131 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. Votes that are withheld will have the effect of a negative vote. Broker non-votes are not counted for purposes of determining whether a quorum is present or whether a proposal has been approved. 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.
The following table sets forth certain information, as of May 3, 2004, with respect to the number of shares of the Company’s Common Stock beneficially owned by individual directors, by individual executive officers, by all directors and executive 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.
Amount
And Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Owner Total ***
Scott
W. Ryan 403,423* 24.94%
920
Ford Street, Suite 200
West
Conshohocken, PA 19428
Granite
Capital 365,056 22.57%
C/O
Walter Harrison
25th
Floor
126
W. 56th Street
New
York, NY 10022
Dirk
Anderson 144,622* 8.94%
444
West Fairmont
Tempe,
Arizona 85282
Daniel
R. Beck 111,002 6.86%
5300
Eagle Rock Avenue NE
Albuquerque,
NM 87113
Frank
E. Hart 81,017** 5.01%
333
Sandy Springs Court
Suite 230
Atlanta, GA 30328
All directors and officers as 659,087*** 40.75%
a
group (three persons)
____________________
* Includes
options to purchase 120,211 shares that are presently exercisable.
** Includes options to purchase 5,000 shares that are
presently exercisable.
*** Includes options to purchase 240,422 shares that are
presently exercisable.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors currently consists of seven 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 2004 Annual Meeting of Stockholders.
On April 6, 2004, the Company’s Board of Directors nominated Scott W. Ryan, Dirk D. Anderson, Daniel R. Beck, Carl Grending, Melissa Kimball, Kerrie A. Leach, and H. Ronald Ziegler for election to the Board of Directors. All seven directors are currently serving as directors. None of the nominees has a 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.
The following table sets
forth certain information with respect to the directors and executive officers
of the Company as of May 10, 2004.
Name Age Position, Tenure and Experience
Scott W. Ryan 58 Mr. Ryan has been a
Director since December 1995
and served as
the Company’s President and Chief Executive Officer from November 1999 to
August 2000. Mr. Ryan is also the Chief
Operating Officer of Ryan & Company, LP. which is an investment firm located
in West
Dirk D. Anderson 40 Mr. Anderson has been a Director since December
1995 and the Company’s President and Chief Executive Officer since August 2000. He served as the Company’s Chief Operating Officer from November 1999 to August 2000 and as the Chief Financial Officer from August 1995 through October 1999 and prior to that was employed as the Company’s Controller for approximately two years. Previously, he served as Audit Manager at Semple & Cooper, LLP, where his career spanned seven years.
Daniel R. Beck 55 Mr. Beck opened Beck Office Systems (BOS) in April
1983 and has acted as its President for over 20 years. Prior to opening BOS, he was a qualifying real estate broker for an Albuquerque real estate company with fifteen agents. Other experience includes working for a home furniture company for seven years and a four year tour of duty with the US Navy. Mr. Beck graduated from the University of New Mexico in 1976 with a BBA in Finance.
Carl Grending 35 Mr. Grending has been a Director since December 2003 and employed with Beck Office System since March 1991. He served in Beck’s production warehouse from March 1991 to September 1992 and transitioned into the sales department as a Sales Associate from September 1992 to October 1993. Since October 1993, he has served as Beck’s General Manager.
Melissa Kimball 38 Ms. Kimball has been a Director since December 2003 and has acted as Manager of the Company’s Wholesale division since 1994. Ms. Kimball was the Company’s Design Director from 1993 to 1994. Prior to joining RSI, she worked in the commercial design and office furniture industries as a designer. Ms. Kimball graduated from Florida State University with a BS in Interior Design in 1988. She received an MBA from Florida Atlantic University in 1992.
Kerrie A. Leach 39 Ms. Leach has been a Director since December 2003 and acted as the Company’s Secretary since February 2004. She has served as the Company’s Chief Financial Officer since July 2003. Prior to that, she served as the Company’s Controller from 1995 through 2004 and as Assistant Controller for approximately two years. Previously, she spent approximately two years with Semple & Cooper, LLP as a staff accountant. Ms. Leach graduated from Arizona State University in 1991 with a BS in Accountancy and has been a Certified Public Accountant since October 1995.
H. Ronald Ziegler 43 Mr. Ziegler has been a Director since August 2002 and has acted as a Vice President of Total Office Interiors – Los Angeles since January 2002. Previously Mr. Ziegler was a consultant for the BRG Group, a $200 million national office furniture company. From 1996 to 2001, Mr. Ziegler was president and CEO of the Business Outlet, Inc., a remanufacturer of Herman Miller workstations located in West Reading, Pennsylvania.
During the fiscal year ended March 31, 2004, the Board of Directors met seven times. The Board does not have a Nominating Committee, and the entire Board is responsible for recommending nominees to serve on the Board.
During the fiscal year ended March 31, 2004, each incumbent director attended 75% or more of the aggregate of (i) the total number of meetings of the Board of Directors and (ii) the total number of meetings held by all committees on which such director served.
During the fiscal year ended March 31, 2004, the Company did not offer direct compensation to its outside directors. However, the Company does reimburse them for reasonable expenses incurred in attending meetings.
The following table sets forth the compensation paid
or accrued to the current Named Executive Officers of the Company.
|
|
|
Annual Compensation
|
Long-Term Compensation Awards |
|
|
|
Name and Principal Position |
Year Ended
|
Salary ($) |
Bonus ($) |
Securities Underlying Options (#)* |
All Other Compensation |
|
|
|
|
|
|
|
|
Dirk
D. Anderson |
March
31, 2004 |
$100,000 |
$0 |
0 |
$ 0 |
|
CEO |
March
31, 2003 |
$93,900 |
$
3,575 |
0 |
$ 0 |
|
|
March
31, 2002 |
$100,000 |
$0 |
0 |
$ 0 |
|
|
|
|
|
|
|
There were no options or SARs granted to the Chief Executive Officer (Named Executive Officer) of the Company during the last 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 Officer on March 31, 2004. No options were exercised by the Named Executive Officer during the fiscal year ended March 31, 2004.
Aggregated Option Exercises in Last Fiscal Year and FY-End Option Values
|
|
Number of Securities Underlying
Unexercised Options at FY-End (#) |
Value of UnexercisedIn-the Money Options at FY-End ($) |
Name
|
Exercisable/Unexercisable
|
Exercisable/Unexercisable
|
|
Dirk D. Anderson |
120,211/0 |
$60,106/$0 |
On August 10, 1996, the Company entered into an employment agreement with Dirk Anderson pursuant to which he serves as the Company’s Chief Executive Officer. The agreement is automatically extended for successive one year periods unless either the Board of Directors or Mr. Anderson 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 agreement automatically renewed on August 10, 2003, and since no written notice was given by the Company ninety days prior to August 10, 2004, the agreement will again be automatically extended. Under the agreement, Mr. Anderson receives a base annual salary of $75,000. Increases to Mr. Anderson’s base salary and bonuses are at the discretion of the Company’s Board of Directors. Mr. Anderson is entitled to participate in all retirement and employee benefit plans that the Company may adopt for the benefit of its senior executives. On March 24, 1999, the Board of Directors and Mr. Anderson agreed to change the base annual salary of Mr. Anderson to $100,000, effective April 1, 1999. The agreement also entitles Mr. Anderson to receive the options described above under the heading “Aggregated Option Exercises and Fiscal Year-End Option Values.”
Under the agreement, if Mr. Anderson’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 Mr. Anderson without Good Reason (in each case as such terms are defined in the agreement), the Company shall: (i) pay Mr. Anderson any base salary which has accrued but has not been paid as of the termination date (the “Accrued Base Salary”); (ii) reimburse Mr. Anderson 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 Mr. Anderson any accrued and vested benefits required to be provided by the terms of any Company-sponsored benefit plans (the “Accrued Benefits”); (iv) pay Mr. Anderson 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 Mr. Anderson 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 Mr. Anderson a right of first refusal to cause the transfer of the ownership of all key-man life insurance policies maintained by the Company on Mr. Anderson to Mr. Anderson at his expense (the “Right of First Refusal”). If Mr. Anderson’s employment is terminated by the Company without Cause or by Mr. Anderson for Good Reason, the Company shall: (i) pay Mr. Anderson the Accrued Base Salary; (ii) pay Mr. Anderson the Accrued Reimbursable Expenses; (iii) pay Mr. Anderson the Accrued Benefits; (iv) pay Mr. Anderson the Accrued Bonus; (v) pay Mr. Anderson 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 Mr. Anderson 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 Mr. Anderson the Right of First Refusal.
On August 19, 1996 the Company amended the employment agreement to include compensation pursuant to a change in control. Under the amendment, if Mr. Anderson’s employment is terminated by the Company subsequent to a Change of Control by the Company either by the new controlling party or by the executive for Good Reason, Mr. Anderson will receive a two-year consulting agreement at $100,000 per year in addition to the severance pay detailed above.
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 report of ownership and reports of changes in ownership of the Company’s equity securities. Based solely upon the copies of such reports furnished to the Company and certain written representations, the Company believes that all Section 16(a) filing requirement applicable to the Company’s officers, directors and greater than 10% stockholders were timely satisfied during the fiscal year ended March 31, 2004.
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 judgement on such matters of the person or persons acting as proxies. If any matter not appropriate for action at the Annual Meeting is 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 2005 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, 2005. 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 25, 2005.
ANNUAL REPORT
The Company’ Annual Report to Stockholders with un-audited financial statements, accompanies this Proxy Statement and was mailed on or about this date to all Stockholders of record as of the Record Date.