975718v4
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
[X] Definitive Proxy Statement the Commission Only (as
[_] Definitive Additional Materials permitted by
[_] Soliciting Material Pursuant to Rule 14a-6(e)(2))
(ss.)240.14a-11(c) or (ss.)240.14a-12
VSI LIQUIDATION CORP.
(Name of Registrant as Specified In Its Charter)
N/A
(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)(1) 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:
975718v4
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VSI Liquidation Corp.
2170 Piedmont Road, NE
Atlanta, Georgia 30324
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of Stockholders of VSI Liquidation Corp., formerly
named Valley Systems, Inc. ("VSI"), will be held at the Sheraton Buckhead Hotel
Atlanta, 3405 Lenox Road, NE, Atlanta, Georgia 30326 on Monday, January 24,
2000, at 8:00 a.m., Atlanta time, for the purpose of considering and acting upon
the following:
1. The election of two directors to the Board of Directors; and
2. To transact such other business as may properly come before the annual
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on December 3,
1999 as the record date for determination of stockholders of VSI entitled to
receive notice of and to vote at the annual meeting or any adjournments thereof.
Your vote is important! Whether you expect to attend the meeting or
not, please date, sign, complete, and return the accompanying proxy in the
enclosed self-addressed envelope as promptly as possible.
By Order of the Board of Directors
/s/ Joe M. Young
Joe M. Young
Director
Date: December 13, 1999
A copy of the Annual Report of VSI Liquidation Corp. for the fiscal
year ended June 30, 1999, containing financial statements, is enclosed.
<PAGE>
VSI Liquidation Corp.
2170 Piedmont Road NE
Atlanta, Georgia 30324
----------------------------------------
1999 Annual Meeting of Stockholders
Proxy Statement
----------------------------------------
General Information
This proxy statement is furnished for the solicitation of proxies by
the Board of Directors of VSI Liquidation Corp., formerly named Valley Systems,
Inc., for its Annual Meeting of Stockholders to be held on January 24, 2000, at
8:00 a.m., Atlanta time, at the Sheraton Buckhead Hotel Atlanta, 3405 Lenox
Road, NE, Atlanta, Georgia 30326.
This proxy statement and the accompanying form of proxy are being first
mailed to stockholders on or about December 13, 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 VSI 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 at the annual meeting in accordance with the stockholder's instructions.
If a stockholder returns a properly signed and dated proxy card but does not
mark any choices on one or more items, his or her shares 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 VSI's stockholders by mail. VSI 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. VSI does not
intend to employ a proxy solicitation firm to solicit proxies in connection with
the annual meeting. It is possible that directors, officers and regular
employees of VSI may make further solicitation personally or by telephone,
telegraph or mail. Directors and officers of VSI will receive no additional
compensation for any such further solicitation.
Only holders of record of VSI's common stock at the close of business
on December 3, 1999 are entitled to notice of, and to vote at, the annual
meeting. At the close of business on December 3, 1999, VSI had outstanding a
total of 7,906,617 shares of common stock. Each such share will be entitled to
one vote (non-cumulative) 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.
Votes cast by proxy or in person at the annual meeting will be counted
by the persons appointed by VSI to act as election inspectors for the meeting.
The inspectors will ascertain the number of shares outstanding and the voting
power of each of such shares, determine the shares represented at the meeting
and the validity of proxies and ballots, count all votes and ballots and perform
certain other duties as required by law.
Nominees for election as directors will be elected by a plurality of
the votes cast by the holders of shares entitled to vote in the election.
Accordingly, the two nominees receiving the highest vote totals will be elected
as directors of VSI at the annual meeting. It is expected that shares held by
executive officers and directors of VSI, which in the aggregate represent
approximately 78.7% of the outstanding shares of common stock, will be voted for
the director nominees. With respect to election of directors, abstentions, votes
"withheld" and broker non-votes will be disregarded and have no effect on the
outcome of the vote.
<PAGE>
There are no rights of appraisal or similar dissenters' rights with
respect to any matter to be acted upon pursuant to this proxy statement.
SALE OF SUBSTANTIALLY ALL OF VSI'S ASSETS
On September 8, 1998, VSI entered into a Second Amended and Restated
Asset Purchase Agreement with HydroChem Industrial Services, Inc. ("HydroChem")
which provided for the sale of substantially all of VSI's assets to HydroChem
and the assumption by HydroChem of substantially all of VSI's liabilities. The
purchase price was approximately $30.0 million. $4.0 million of the proceeds
were placed in escrow to secure and indemnify HydroChem for any breach of VSI's
covenants and for any environmental liabilities. Escrow funds, to the extent not
needed to indemnify HydroChem, will be released over the approximately three
year period following the closing (the "Closing"), which occurred on January 5,
1999 and was effective as of January 1, 1999. $1.0 million of the escrowed
amount may be released when VSI provides certain environmental assurances to
HydroChem, which environmental assurances are expected to be provided sometime
during fiscal year 2000.
VSI changed its name from Valley Systems, Inc. to VSI Liquidation Corp.
after the Closing and does not have and will not have any business operations in
the future other than those associated with the winding up and dissolution of
VSI, including distribution of any escrow funds released to VSI.
ELECTION OF DIRECTORS
The proxy holders intend to vote "FOR" election of the nominees named
below (who are currently members of the Board) as directors of VSI, unless
otherwise specified in the proxy. Directors of VSI elected at the annual meeting
to be held on January 24, 2000 will hold office until the next annual meeting or
until their successors are elected and qualified.
Each of the nominees has consented to serve on the Board of Directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election of such other person as the Board may recommend.
The individuals listed below as nominees for the Board of Directors were
directors of VSI during fiscal 1999. The name and age of each nominee, the
period during which such person has served as a director and each nominee's
principal occupation during the last five years is set forth below:
Director
Name Age Since Principal Occupation
---- --- ----- --------------------
Allen O. Kinzer 59 1991 President of BMW Manufacturing
Corp. and President of A.O.
Kinzer and Associates, Inc.
Joe M. Young 70 1992 General Manager of Rollins
Investment Fund
Recommendation of the Board of Directors
The Board of Directors of VSI recommends a vote FOR the election of
each of the nominees named below for election as director.
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COMMITTEES AND MEETINGS OF THE BOARD
The Board of Directors has established three committees, the Audit
Committee, the Stock Option Committee and the Compensation Committee. However,
the Board currently performs all functions of these three committees. During the
fiscal year ended June 30, 1999, the Board of Directors met 2 times, including
actions taken by unanimous written consent of the directors. All of VSI's
current directors attended 100% of the meetings of the Board during fiscal year
1999.
Each non-employee director receives a $6,000 annual retainer, and
$2,000 for each Board meeting actually attended, as well as reimbursement for
actual expenses of such attendance.
Notwithstanding anything to the contrary set forth in any of VSI's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934,
that might incorporate other VSI filings, including this proxy statement, in
whole or in part, the following Report and Performance Graph shall not be
incorporated by reference into any such filings.
REPORT OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
The Board of Directors as a whole performed the functions of the
Compensation Committee throughout the 1999 fiscal year.
Prior to the Closing, the Board made subjective salary decisions in
annual reviews. This annual review considered the decision-making
responsibilities of each position, the experience and work performance. The
Board subjectively viewed work performance as the most important measurement
factor. The remaining measurement factors, decision-making responsibilities and
experience were weighted equally. Subsequent to the Closing, no compensation has
been paid to any executive officer of VSI, except as set forth below.
Prior to the Closing, VSI's total compensation program for the CEO and
the other executive officers was determined in accordance with the manner
discussed above. Mr. Strickland was named CEO in October 1993. VSI did not
compensate Mr. Strickland for his services in fiscal 1994. Beginning in October
1994, Mr. Strickland began drawing a nominal salary. In accordance with the
above policy, the Board determined that the bulk of his compensation would be in
the form of stock options, which were granted at the market price in 1994 and
vested over five years. All of these options were redeemed in connection with
the sale of VSI to HydroChem. Mr. Strickland will be paid a nominal annual
consulting fee, currently $10,000.00 per year, for his services until such time
as VSI is dissolved.
BOARD OF DIRECTORS
Joe M. Young
Allen O. Kinzer
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PERFORMANCE GRAPH
The following graph sets forth the cumulative stockholder return to VSI's
stockholders during the five years ended June 30, 1999, as well as an overall
stock market index (CRSP Total Return Index for The Nasdaq Stock Market: US
Companies) and VSI's peer group index (CRSP Total Return Index for The Nasdaq
Stock Market: Non-Financial Stocks). The stock performance graph assumes $100
was invested on July 1, 1994 and reinvestment of all dividends.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
VALUE OF $100 INVESTED ON JULY 1, 1994 AT:
7/1/94 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99
------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
VSI Liquidation Corp. 100.00 56.25 56.25 81.25 51.55 7.01
NASDAQ Non-Financial Stocks 100.00 137.43 174.47 227.55 267.67 394.33
NASDAQ Market Index-U.S. Cos. 100.00 133.48 171.38 208.42 274.43 393.58
Total return assumes reinvestment of dividends.
</TABLE>
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by VSI to VSI's
Chief Executive Officer and the one other executive officer of VSI during the
1999 fiscal year whose total compensation exceeded $100,000 for that year. No
other executive officer received compensation in excess of $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
Securities
Other Annual Underlying LTIP All Other
Name and Principal Salary Bonus Compensation Options/SARs Payouts Compensation
Position Year ($) ($) ($) (#) ($) ($)
------------------ ---- ------ ----- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ed Strickland (1) 1999 24,077 -0- -0- -0- -0- 160,000 (3)
President and Chief 1998 40,000 -0- -0- -0- -0- -0-
Executive Officer 1997 40,000 -0- -0- -0- -0- -0-
Dennis D. Sheets (2) 1999 81,194 25,000 -0- -0- -0- 195,625 (4)
Vice President and 1998 128,654 15,000 -0- -0- -0- -0-
Chief Financial Officer 1997 117,885 30,000 -0- -0- -0- -0-
</TABLE>
(1) Mr. Strickland, age 52, was appointed President and Chief Executive Officer
in October 1993. He is also an officer of LOR, Inc., which is owned by
Rollins Investment Fund, the majority owner of the common stock of VSI, and
has held this position for the past six years. Mr. Strickland manages
several other companies for LOR, Inc. VSI does not pay Rollins Investment
Fund or LOR, Inc. a management fee for his services.
(2) Mr. Sheets, age 44, joined VSI in April 1993 as Controller. Mr. Sheets was
appointed Vice President, Treasurer, and Chief Financial Officer of VSI in
July 1993, and Secretary in September 1994. He resigned those positions
effective December 31, 1998 in connection with the sale of VSI to
HydroChem.
(3) Consists of $100,000 for redemption of stock options and $50,000 retention
bonus received in connection with the sale of VSI to HydroChem, and $10,000
consulting fee for services rendered in fiscal 1999.
(4) Consists of $158,125 severance pay, $25,000 for redemption of stock options
and $12,500 retention bonus which were received in connection with the sale
of VSI to HydroChem.
Options/SAR Grants In Last Fiscal Year
There were no option/SAR grants made during the 1999 fiscal year to the
executive officers.
Aggregated Options/Sar Exercises In Last Fiscal Year And Fiscal Year-End
Options/Sar Values
There were no option/SAR exercises in the 1999 fiscal year. In
connection with the sale of VSI to HydroChem, all outstanding options for
employees and directors were redeemed.
Long Term Incentive Plans And Retirement Plans
VSI has never had any long term incentive plans or retirement plans.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
After the Closing of the sale of VSI to HydroChem, VSI used
approximately $5.5 million of the proceeds of the sale to redeem the outstanding
shares of Series C Preferred Stock (which were owned by an affiliate of Rollins
Investment Fund, the majority stockholder of VSI), approximately $380,000 to
redeem outstanding employee stock options and approximately $165,000 to pay
retention bonuses to certain officers and employees.
The executive officers and directors of VSI had their outstanding
options to purchase VSI common stock (an aggregate of 175,000 shares) redeemed
by VSI at a price of $2.50 per option share, a price determined by VSI's Board
of Directors to be the fair market value of such options, less the exercise
price thereof ($1.50 per share in each instance) as follows: Ed Strickland,
President and Chief Executive Officer, 100,000 shares, Dennis D. Sheets, Vice
President and Chief Financial Officer, 25,000 shares, Joe M. Young, Director,
30,000 shares, Allen O. Kinzer, Director, 20,000 shares. In addition, the
officers set forth below received retention bonuses following the Closing of the
sale of VSI to HydroChem in the following respective amounts: Mr. Strickland,
$50,000, and Mr. Sheets, $12,500.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires VSI's
executive officers and directors, and persons who beneficially own more than ten
percent of VSI's stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than ten percent beneficial owners are
required by SEC regulations to furnish VSI with copies of all Section 16(a)
forms they file.
Based solely on a review of the copies of reports furnished to VSI or
written representations from reporting persons, VSI believes that with respect
to the fiscal year ended June 30, 1999 all of such filing requirements were
complied with, except that Ed Strickland, Joe M. Young, Allen O. Kinzer and
Dennis D. Sheets each filed a late Form 5 reporting the redemption of
outstanding options.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
The following table sets forth certain information as of October 28,
1999 with respect to the beneficial ownership of the common stock of VSI by each
beneficial owner of more than 5% of the outstanding shares. In addition, this
table includes the outstanding voting securities beneficially owned by the
executive officers and directors and the number of shares owned by executive
officers and directors as a group. Unless otherwise indicated, the owners have
sole voting and investment power with respect to their respective shares.
Number of Shares Percentage
Name and Address of Beneficially of Shares
Beneficial Owner Owned Owned
------------------- ---------------- ----------
Rollins Investment Fund (1) 8,003,945(2) (3) 77.6%
R. Randall Rollins (1) 8,003,945(2) (3) 77.6%
Gary W. Rollins (1) 8,003,945(2) (3) 77.6%
Ed Strickland (4) 112,000 1.1%
Joe M. Young (1) (5) 0 0%
Allen O. Kinzer (4) 1,800 *
All executive officers and directors
as a group (3 persons) 8,287,745(2) (3) (5) 78.7%
----------------------------
* Owns less than one percent.
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<PAGE>
(1) Addresses are c/o Rollins Investment Fund, P.O. Box 647, Atlanta, Georgia
30301.
(2) Includes 2,314,000 shares that are subject to outstanding warrants
currently exercisable by Rollins Investment Fund ("RIF").
(3) RIF beneficially owns an aggregate 8,003,945 shares (including the
2,314,000 shares subject to outstanding warrants currently exercisable by
RIF) of VSI's common stock with respect to which RIF has sole voting and
dispositive power. Given his respective interest in RIF as a general
partner thereof, as co-executor of the Estate of O. Wayne Rollins (Estate)
(with the power to control the Estate in its entirety), and as sole trustee
of five trusts of which his five children are beneficiaries, R. Randall
Rollins has shared voting and dispositive power with respect to the entire
8,003,945 shares held by RIF. Given his respective interest in RIF as a
general partner thereof, as co-executor of the Estate (with the power to
control the Estate in its entirety), and as sole trustee of four trusts of
which his four children are beneficiaries, Gary W. Rollins has shared
voting and dispositive power with respect to the entire 8,003,945 shares
held by RIF. Given each individual's ability to influence the disposition
of all of RIF's holdings, they have deemed it appropriate to report
beneficial ownership on a shared basis for the entire number of shares held
by RIF.
(4) Addresses are c/o VSI Liquidation Corp., 2170 Piedmont Road NE, Atlanta,
Georgia 30324.
(5) Joe M. Young, presently a director of VSI, and a nominee for director of
VSI, is General Manager of RIF and was appointed to the Board of Directors
of VSI pursuant to a right guaranteed to RIF in connection with its
purchase of common stock of VSI in December 1991. Mr. Young disclaims
beneficial ownership of the shares held by RIF, although due to his
affiliation with RIF, and RIF's right to name a director of VSI, those
shares are included in the total reported for all officers and directors as
a group.
INDEPENDENT PUBLIC ACCOUNTANTS
PricewaterhouseCoopers LLP served as the independent public accountants
providing auditing services for fiscal year 1999. Approval or selection of the
independent certified public accountants will not be submitted to the annual
meeting of stockholders. The Board of Directors will select the independent
certified public accountants and believes that it would be to the detriment of
VSI and its stockholders for there to be any impediment (such as selection or
ratification by the stockholders) to exercising its judgment to select the
independent certified public accountants or to remove them if, in its opinion,
such removal is in the best interest of VSI and its stockholders.
Representatives of PricewaterhouseCoopers LLP will not be present at
the annual meeting.
STOCKHOLDER PROPOSALS
Appropriate proposals of stockholders intended to be presented at VSI's
2001 Annual Meeting of Stockholders pursuant to Rule 14a-8 promulgated under the
Securities Exchange Act of 1934 must be received by VSI by August 15, 2000 for
inclusion in its proxy statement and form of proxy relating to that meeting. In
addition, all stockholder proposals submitted outside of the stockholder
proposal rules promulgated pursuant to Rule 14a-8 under the Exchange Act must be
received by VSI by October 29, 2000 in order to be considered timely. If such
stockholder proposals are not timely received, proxy holders will have
discretionary voting authority with regard to any such stockholder proposals
which may come before the annual meeting. With regard to such stockholder
proposals, if the date of the 2001 annual meeting is subsequently advanced or
delayed by more than 30 calendar days from the date of the 2000 annual meeting
to which this proxy statement relates, VSI shall, in a timely manner, inform
stockholders of the change and the date by which proposals must be received.
OTHER BUSINESS
While management of VSI does not know of any matters that may be
brought before the annual meeting, other than as set forth in the Notice of
Annual Meeting, the proxy confers discretionary authority with respect to the
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<PAGE>
transaction of any other business. It is expected that the proxies will be voted
in support of management on any question that may properly be submitted to the
annual meeting.
Upon The Written Request Of Any Record Or Beneficial Owner Of Common
Stock Of VSI Whose Proxy Was Solicited In Connection With The 2000 Annual
Meeting Of Stockholders, VSI Will Furnish Such Owner, Without Charge, A Copy Of
Its Annual Report On Form 10-K Without Exhibits For Its Fiscal Year Ended June
30, 1999. Request For A Copy Of Such Annual Report On Form 10-K Should Be
Addressed To Joe M. Young, VSI Liquidation Corp., 2170 Piedmont Road, NE,
Atlanta, Georgia 30324.
It Is Important That Proxies Be Returned Promptly. Stockholders Who Do
Not Expect To Attend The Meeting In Person Are Urged To Sign, Complete, Date And
Return The Proxy Card In The Enclosed Envelope, To Which No Postage Need Be
Affixed.
By Order of the Board of Directors
/s/ Joe M. Young
Joe M. Young, Director
Dated: December 13, 1999
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<PAGE>
VSI LIQUIDATION CORP.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING ON JANUARY 24, 2000
The undersigned stockholder hereby appoints JOE M. YOUNG and ALLEN O.
KINZER, or any of them, with full power of substitution, to act as proxy for,
and to vote the stock of, the undersigned at the Annual Meeting of Stockholders
of VSI LIQUIDATION CORP. to be held on January 24, 2000, and any adjournments
thereof.
The undersigned acknowledges receipt of Notice of the Annual Meeting
and Proxy Statement, each dated December 13, 1999, and grants authority to said
proxies, or their substitutes, and ratifies and confirms all that said proxies
may lawfully do in the undersigned's name, place and stead. The undersigned
instructs said proxies to vote as indicated below.
1. ELECTION OF DIRECTORS:
|_| FOR election of the individuals set |_| REFRAIN FROM VOTING FOR
forth below as director nominees election of the individuals
(except as marked to the contrary) set forth as director nominees
NOMINEES: Joe M. Young and Allen O. Kinzer
(INSTRUCTIONS: To withhold authority to vote for any individual nominee(s),
write that person's name on the space provided below.)
2. Upon such other matters as may properly come before the meeting.
THE PROXIES SHALL VOTE AS SPECIFIED ABOVE, OR IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR EACH OF THE LISTED NOMINEES.
Date: _______________________, 2000
------------------------------------
(Signature)
------------------------------------
(Signature if held jointly)
(Stockholders should sign exactly as
name appears on stock. Where there
is more than one owner each should
sign. Executors, Administrators,
Trustees and others signing in a
representative capacity should so
indicate.) Please enter your Social
Security Number or Federal Employer
Identification Number here:
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
975718v4
