<PAGE>   1                                            EXHIBIT 4.16
                          STOCK OPTION AGREEMENT


EFFECTIVE DATE:  August 19, 1996 (Subject to certain approval -- See 
                 Section 18)

PLACE:                   Tempe, Arizona 

PARTIES:                 RECONDITIONED SYSTEMS, INC., an Arizona corporation 
                         (the "Company"), and Scott W. Ryan ("Optionee")

RECITALS:
             Pursuant to resolutions of the Compensation Committee of the Board
of Directors of the Company duly adopted at a meeting on August 19, 1996,
Optionee is entitled to receive, as a bonus for his services in connection
with negotiating the recent conversion of the Company's Preferred Stock into
the Company's no par value common stock ("Common Stock"), options to acquire
up to 85,000 shares of Common Stock.

AGREEMENTS:

               In consideration of the mutual promises herein contained, the
parties agree as follows:

               1.   Grant of Option.  The Company hereby irrevocably grants to
Optionee the right and option (the "Option") to purchase all or any part of
an aggregate of up to eighty-five thousand (85,000) shares of Common Stock
(the "Shares") on the terms and conditions set forth herein.  

               2.   Purchase Price.  The purchase price of the Shares acquired
pursuant to the exercise of an Option shall be one dollar ($1.00) per Share,
which equals the fair market value of the Shares on the date of this grant. 
The purchase price shall be paid in the manner set forth in Paragraph 11.

               3.   Vesting.  Optionee's right to acquire Shares pursuant to 
the exercise of the Option as provided herein shall be fully vested as of the
date hereof; provided, however, that Optionee hereby agrees not to sell,
assign, transfer, pledge, hypothecate or otherwise dispose of any Shares
acquired upon exercise of this Option for a period of twelve (12) months
following the Effective Date of this Option.

               4.   Term of Option.  Subject to early termination of the Option 
as provided in Paragraphs 7, 8, and 9 hereof, the Option shall terminate as the
date ten (10) years after the date hereof.

               5.   Exercise of the Option.  Subject to earlier termination of 
the Option as provided in Paragraphs 7, 8 and 9 hereof, and to the lock-up
provisions contained in Paragraph 3 hereof, Optionee may exercise the Option
from time to time as to any part or all of the vested Shares covered hereby.



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              6.   Nontransferability.  The Option shall not be transferable
otherwise than by will or the laws of descent and distribution, and the
Option may be exercised, during the lifetime of Optionee, only by Optionee. 
More particularly, but without limiting the generality of the foregoing, and
except as otherwise specified, the Option may not be sold, assigned,
transferred, pledged, hypothecated, or disposed of in any manner, shall not
be assignable by operation of law, and shall not be subject to execution,
attachment, or similar process.  Any attempted sale, assignment, transfer,
pledge, hypothecation, or other disposition contrary to the provisions
hereof, and the levy of execution, attachment, or similar process upon the
Option, shall be null and void and without effect.

             7.   Termination as Chairman.  If Optionee's engagement as Chairman
of the Company is terminated (otherwise than by reason of death), the Option
may be exercised at any time within three (3) months after the date of such
termination, but not more than ten (10) years from the date hereof.  To the
extent the Option has not been exercised by such time, the Option shall
terminate.  Nothing in this Agreement shall confer upon Optionee any right to
continue as Chairman of the Company or interfere in any way with the right of
the Company to terminate Optionee's engagement as Chairman of the Company at
any time.

             8.   Death of Optionee.  If Optionee dies while Chairman of the
Company or within three (3) months after the termination of his engagement as
Chairman of the Company, the Option may be exercised by the legal
representative of his estate, or by any person or persons who shall have
acquired the Option directly from Optionee by bequest or inheritance, at any
time within one (1) year after the date of his death, but not more than ten
(10) years from the date hereof.  To the extent the Option has not been
exercised by such time, the Option shall terminate.

            9.   Dissolution or Liquidation of Company.  In the event of the
proposed dissolution or liquidation of the Company, or in the event of a
proposed sale of substantially all of the assets of the Company, or in the
event of a merger or consolidation with another corporation in any manner in
which the Company is not the surviving corporation and the surviving
corporation does not agree to assume the Option granted hereunder, the Option
will terminate immediately before the consummation of such proposed action,
unless sooner terminated as of a date fixed by the Board of Directors, in
which event Optionee shall be given the right to exercise the Option as to
all or any part of the Shares subject to this Agreement.

           10.  Rights as Stockholder.  Optionee shall not by reason of the
Option have any rights of a stockholder of the Company until Optionee shall,
from time to time, have exercised the Option, and, upon each such exercise,
Optionee shall have, with respect to the number of Shares as to which the
Option is then exercised, all rights of a stockholder of record from the date
of such exercise, irrespective of whether certificates to evidence the Shares
with respect to which the Option was exercised shall have been issued on such
date.                                                                 
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          11.  Method of Exercising.

               (a)  Notice of Exercise/Payment of Purchase Price.  Subject to
the terms and conditions of this Agreement, the Option may be exercised by
written notice to the Secretary of the Company, at the Company's main office,
or at such other address as the Company, by written notice to Optionee, may
designate from time to time.  Such notice shall state the election to
exercise the Option and the number of Shares in respect of which the Option
is being exercised, and shall be signed by the person or persons exercising
the Option.  Such notice shall be accompanied by payment of the full purchase
price of such Shares, by cashier's or certified check, or by such other form
of consideration, if any, as may be approved by the Company's Board of
Directors.  In addition to the foregoing, the purchase price for the Shares
may be paid through a sale and remittance procedure by which Optionee shall
provide concurrent irrevocable written instructions to:  (i) a Company
designated brokerage firm to effect the immediate sale of the purchased
Shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the purchase price for the Shares
acquired pursuant to exercise of the Option, and (ii) the Company to deliver
the certificates for the purchased Shares directly to such brokerage firm to
complete the sale transaction.

               (b)  Stock Certificates.  Upon the exercise of an Option, the
Company shall deliver a certificate or certificates representing any Shares
acquired hereunder as soon as practicable after the notice and payment shall
be received.  Except if issued through the sale and remittance procedure
described in Paragraph 11(a), the certificate or certificates for the Shares
as to which the Option shall have been so exercised shall be registered in
the name of Optionee or in the name of any other person or entity specified
in writing by Optionee.  If an Option shall be exercised by the legal
representative of Optionee's estate, or by any person or persons who shall
have acquired the Option directly from Optionee as a result of Optionee's
death, whether by bequest, inheritance, or otherwise, such notice shall be
accompanied by appropriate proof of the right of such person or persons to
exercise the Option.  All Shares that shall be purchased upon the exercise of
an Option as provided herein shall be fully paid and nonassessable.

          12.  Reservation of Shares.  The Company shall at all times during
the term of the Option reserve and keep available such number of shares of
Common Stock as will be sufficient to satisfy the requirements of this
Agreement, shall pay all fees, expenses, and taxes necessarily incurred by
the Company in connection therewith, and shall, from time to time, use its
good faith efforts to comply with all laws, rules, and regulations which, in
the opinion of counsel for the Company, shall be applicable thereto.

          13.  Registration of Shares.  The Company shall register the Shares
issuable upon exercise of the Option with the Securities and Exchange
Commission (the "Commission") by filing a Registration Statement on Form S-8
with the Commission.

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          14.  Adjustment for Recapitalization.  In the event of any stock
dividend, stock split, combination of shares, recapitalization or other
change in the capital structure of the Company or any merger, consolidation,
spin-off, split-off, split-up, reorganization, partial or complete
liquidation or other distribution of assets, issuance of warrants or other
rights to purchase securities or any other corporate transaction or event
having an effect similar to any of the foregoing, appropriate adjustments
shall be made by the Board of Directors of the Company to the number and kind
of Shares and the price per Share subject to this Agreement.

          15.  Taxes.  Optionee agrees, no later than the date as of which
the value of any Option or Shares acquired pursuant to this Agreement first
becomes includible in the gross income of Optionee for federal income tax
purposes, to pay to the Company, or make arrangements satisfactory to the
Company regarding payment of, any federal, state or local taxes of any kind
required by law to be withheld with respect to the Option or such Shares. 
The obligations of the Company under this Agreement shall be conditional on
such payment or arrangements, and the Company shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment of any kind
otherwise due to Optionee.

          16.  Action Taken in Good Faith.  No member of the Board of
Directors, nor any officer or employee of the Company acting on behalf of the
Board, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to this Agreement.

          17.  Miscellaneous.

               (a)  Waiver.  The waiver of any provision of this Agreement
will not be effective unless in writing and executed by the party against
whom enforcement of the waiver is sought.

               (b)  Entire Agreement.  This Agreement constitutes the entire
integrated agreement among the parties pertaining to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties.  This Agreement may not
be amended except by written instrument executed by the parties.

               (c)  Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three (3) arbitrators in Phoenix,
Arizona in accordance with the rules of the American Arbitration Association
then in effect.  The decision of the arbitrators shall be final and binding
on the parties, and judgment may be entered on the arbitrators' award in any
court having jurisdiction.  The costs and expenses of such arbitration,
including but not limited to attorneys' and other professionals' fees, shall
be borne in accordance with the determination of the arbitrators.

                (d)  Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona without regard
to its conflict of laws principles.     



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                (e)  Severability.  If any provision of this Agreement is held
to be unenforceable by a court of competent jurisdiction, the remainder of
this Agreement shall be severable and not affected thereby.

                (f)  Counterparts.  This Agreement may be executed in one or
more counterparts each of which shall be deemed an original, but all of which
shall constitute one and the same instrument.

                (g)  Delays or Omissions.  No delay or omission to exercise
any right, power, or remedy accruing to any party hereunder or any breach or
default under this Agreement shall impair any such right, power, or remedy,
nor shall it be construed as a waiver of or acquiescence to any such breach
or default, or of or in any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any
other breach or default occurring before or after the waiver.  Any waiver,
permit, consent, or approval of any kind of any breach or default under this
Agreement or of any provision or condition of this Agreement must be in
writing and shall be effective only to the extent specifically stated in such
writing.  All remedies, either under this Agreement or by law or otherwise
afforded to any party shall be cumulative.

                 (h)  Headings.  The headings in this Agreement have been
inserted for convenience only and shall not affect the meaning or
interpretation of any provision in this Agreement.

                 (i)  Assignment.  The rights and obligations of the Company
and Optionee hereunder shall inure to the benefit of and shall be binding on
their successors and assigns.

          18.  Effective Date.  Subject to the approval of Norwest Business
Credit, Inc., a Minnesota corporation ("Norwest"), pursuant to that certain
Credit and Security Agreement dated as of February 26, 1996 between the
Company and Norwest, this Option shall be effective as of August 19, 1996.

          IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement.

COMPANY:                            OPTIONEE:

RECONDITIONED SYSTEMS, INC., 
an Arizona corporation


By /s/  Wayne R. Collignon           /s/  Scott W. Ryan
   ______________________________   ________________________________
   Wayne R. Collignon,              Scott W. Ryan
   President and Chief Executive
   Officer
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