of the Securities Exchange Act of 1934
(Amendment No. )
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☒ Preliminary Proxy Statement ☐ Confidential, for Use |
Appliance Recycling Centers of America,the Commission Only (as permitted by Rule 14a-6(e)(2))
APPLIANCE RECYCLING CENTERS
325 E. Warm Springs Road, Suite 102
Minneapolis, Minnesota 55343
__________________________
Las Vegas, Nevada
OF
TO BE HELD NOVEMBER 21, 2017
__________________________
TO OUR SHAREHOLDERS:
STOCKHOLDERS
August 11, 2023
1. To elect four directors to |
Under the Minnesota Business Corporation Act, shareholdersCompany’s Board of Directors;
Only shareholders of record at the close of business on October 6, 2017, are entitled to notice of and to vote at the annual meeting andAnnual Meeting or any adjournment or postponement of the meeting.
Each of you is invited and urged to attend the annual meeting in person if possible. Whether or not you are able to attend in person, you are requested to submit your proxy or voting instructions as soon as possible to ensure that your shares are voted at the annual meeting in accordance with your instructions. For instructions on voting, please refer to the Proxy Card you received in the mail.
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October [●], 2017
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APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
175 Jackson Avenue North, Suite 102
Minneapolis, Minnesota 55343
PROXY STATEMENT
This proxy statement contains information relating to the annual meeting of shareholders of Appliance Recycling Centers of America, Inc. (the “Company”) to be held on Tuesday, November 21, 2017, beginning at 11:00 a.m., Pacific Standard Time, at 325 East Warm Springs Road, Suite 102, Las Vegas, Nevada 89119. Your proxy is solicited on behalf of theThe Board of Directors has fixed the close of business on August 11, 2023 as the Company for use at the 2017 annual meeting of shareholders and any adjournment or postponement of the meeting.
The Company has engaged Alliance Advisors, LLC to assist with the solicitation of proxy votes“Record Date” for the 2017 annual meeting of shareholders and will pay a fee for such services.
The approximate date on which this proxy statement and form of proxy will first be made available to shareholders is October [●], 2017.
About2023 Annual Meeting. Only the Meeting
What is the purpose of the annual meeting?
At the Company’s annual meeting, shareholders will act upon the matters described in the accompanying notice of annual meeting of shareholders. This includes the election of four directors, the ratification of the appointment of our independent registered public accounting firm and the approval of the reincorporation of the Company from the State of Minnesota to the State of Nevada.
Only shareholdersholders of record of outstandingour common stock, Series A-1 Convertible Preferred Stock, and/or preferred stockSeries S Convertible Preferred Stock as of the Company at the close of business on the record date, October 6, 2017,Record Date are entitled to receive notice of, and to vote at, the 2023 Annual Meeting and any adjournment thereof. We have also enclosed with this notice (i) our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and (ii) a Proxy Statement.
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325 E. Warm Springs Road, Suite 102
Las Vegas, Nevada 89119
(800) 977-6038
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 6, 2023
All The holders of common stock or Series AS Preferred Stock asare entitled to a total of the record date, or their duly appointed proxies, may attend the meeting.
vote?Evenvote my shares if you plan to attend the annual meeting youthey are encouraged to vote by proxy. You may vote by proxy by one of the following ways:1)Sign and date each proxy cardregistered directly in my name? receive and return it in the prepaid envelope;2)Vote by internet at the address listed on the proxy card; or3)Vote by telephone using the toll-free number listed on proxy card.If you vote by internet or telephone, your electronic vote authorizes the proxy holders in the same manner as if you signed, dated and returned your proxy card. If you vote by internet or telephone, do not return your proxy card.If you return your signed proxy card or vote by internet or telephone but do not give specific instructions as to how you wish to vote your shares at the Annual Meeting. votedFORall nomineesdelayed. Both the Internet and the telephone provide convenient, cost-effective alternatives to returning your proxy card by mail. There is no charge to vote your shares via the Internet, though you may incur costs associated with
Can I vote and change my vote after I return my proxy card or my internet or telephone vote?
Yes. Even aftermind?
• Returning a later-dated signed |
What are the Board’s recommendations?
The Board’s recommendations are set forth after the description of each proposal in this proxy statement. In summary, the Board recommends a vote:
If you submit your proxy card or vote by internetre-accessing the Internet voting site or telephone unless you give other instructions on your proxy card or your internet or telephone vote, the persons named as proxy holdersvoting number listed on the proxy cardcard;
With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, in their own discretion.
Foritem?
proxy, in favor of the proposal.
With respect to the approval of the reincorporation of the Company from the State of Minnesota to the State of Nevada,receives the affirmative vote of the holders of a majority of the outstanding voting power of the common stock and Series A Preferred Stock entitled to vote will be required for approval.
A properly executed proxy marked “ABSTAIN” with respect to any proposal will not be voted on that proposal, although it will be counted for purposes of determining the number of shares necessary forentitled to vote and represented at the Annual Meeting, present in person or by proxy, in favor of the proposal.
If you hold your shares in “street name” through a broker or other nominee, your broker or nominee may not be permitted to exercise voting discretion with respect to the proposal to be acted upon. Therefore, if you do not give your broker or nominee specific instructions, your shares may not be voted on the proposal and generally will not be counted in determining the number of shares necessary for approval of the proposal; however, since the proposal to reincorporate the Company from the State of Minnesota to the State of Nevada requires the approval of a majority of the outstanding voting power of the common stock and Series A Preferred Stock, a “broker non-vote” will have the effect of an “AGAINST” vote with respect to this proposal.
If yourdissent or exercise rights of appraisal?
proposals.
Stockholders are available at http://www.proxydocs.com/JAN.shareholderstockholder proposals for the 2018 annual meeting2024 Annual Meeting of shareholdersstockholders due?annual meetingAnnual Meeting to be held in 2018, shareholder2024, stockholder proposals must be received at the Company’s office no later than June [●][Deadline for 2024 proposals], 2018 or, in the event the Company changes the date of its annual meetingAnnual Meeting to be held in 20182024 by more than 30 days from the date of this year’s meeting, a reasonable time before the Company begins to print and send its proxy materials. Proposals must be in compliance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and must be submitted in writing and delivered or mailed to the Company’s Secretary, at Appliance Recycling Centers of America,JanOne Inc., 175 Jackson Avenue North,325 E. Warm Springs Road, Suite 102, Minneapolis, Minnesota 55343.Under Rule 14a-4(c)(1) of the Securities Exchange Act of 1934, as amended, any shareholder who wishes to have a proposal considered at the 2018 annual meeting of shareholders, but not submitted for inclusion in the Company’s proxy statement, must set forth such proposal in writing and file it with the Secretary of the Company no later than September [●], 2018 or, in the event the Company changes the date of its annual meeting to be held in 2018 by more than 30 days from the date of this year’s meeting, a reasonable time before the Company sends its proxy materials. Failure to notify the Company by that date would allow the Company’s proxy holders to use their discretionary voting authority (to vote for or against the proposal) when the proposal is raised at the annual meeting without any discussion of the matter being included in the Company’s proxy statement.solicitation?The expensesolicitation, including the preparation, assembly, printing, and mailing of this Proxy Statement, the proxy card, and any additional solicitation materials furnished to the stockholders. Copies of solicitation materials will be furnished to brokerage houses, fiduciaries, and custodians holding shares in their names that are beneficially owned by others so that they may forward the solicitation of proxies formaterial to such beneficial owners.annual meeting, including the cost of mailing, has been or will be borne by the Company. Arrangements will be made with brokerage houses and other custodian nominees and fiduciaries to send proxies and proxy materials to their principalsProxy Statement and the Company will reimburse them for their expense in so doing. In additionrelated materials online?solicitation of proxies over the internet and through the mail, proxies may be solicited in person or by telephone or fax by certain of the Company’s directors, officers and regular employees, without additional compensation. The Company has engaged Alliance Advisors, LLC to assist with the solicitation of proxy votes for the 2017 annual meeting of shareholders and will pay a fee in connection with such services.
Shareholders have the right to dissent from the proposed reincorporation from the State of Minnesota to the State of Nevada and demand payment in cash for their shares equal to the fair value of the shares as determined under Minnesota law. For a detailed description of the reincorporation and dissenters’ rights, see “Proposal 3: Approval of Reincorporation of the Company from the State of Minnesota to the State of Nevada.”
| Beneficial Owner | Position with Company | Number of Shares Beneficially Owned | Percent of Outstanding Common | |||||||
| Directors and executive officers: | ||||||||||
| Tony Isaac (4) | Director, Chief Executive Officer | 60,000 | * | |||||||
| Virland A. Johnson | Chief Financial Officer | – | * | |||||||
| Edward R. Cameron (3) (4) | Former President of ARCA Recycling, Inc. | 662,467 | 9.3% | |||||||
| Jeffery Ostapeic | Former Chief Financial Officer | – | * | |||||||
| Bradley S. Bremer (4) | President of ApplianceSmart, Inc. | 32,625 | * | |||||||
| Richard D. Butler (4) | Director | 40,000 | * | |||||||
| Timothy M. Matula (4) | Director | 10,000 | * | |||||||
| Dennis (De) Gao (4) | Director | 20,000 | * | |||||||
| All directors and executive officers as a group (9 persons) (4) | 851,342 | 12.1% | ||||||||
| Other 5% shareholders: | ||||||||||
| Isaac Capital Group, LLC (5) | 587,890 | 8.6% | ||||||||
| Abacab Capital Management (6) | 439,587 | 6.4% | ||||||||
| Energy Efficiency Investments, LLC (7) | 669,901 | 9.7% | ||||||||
_______________________
warrants or conversion of convertible securities to be outstanding for the purpose of computing the percentage ownership of such individual or group, but these shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person or group shown in the table. Percentage of ownership is based on 3,768,878 shares of Common Stock, approximately 209,706 shares of Series A-1 Preferred Stock (which are the voting equivalent of 3,564,995 shares of Common Stock), and 100,000 shares of Series S Preferred Stock outstanding on August 11, 2023. The information as to beneficial ownership was either (i) furnished to us by or on behalf of the persons named or (ii) determined based on a review of the beneficial owners’ Schedules 13D/G and Section 16 filings with respect to our Common Stock, Series A-1 Preferred Stock, and Series S Preferred Stock. As of the date of this Proxy Statement, no holder of Series A-1 Preferred Stock or Series S Preferred Stock has converted his or its shares of such preferred stock into shares of our Common Stock.
| Name of Beneficial Owner | | | Amount and Nature of Beneficial Ownership(1) | | | Percentage of Class(2) | | ||||||
| Named Executive Officers and Directors: | | | | | | | | | | | | | |
Tony Isaac, Director, President and Chief Executive Officer, Secretary(3) | | | | | 94,000 | | | | | | 2.5% | | |
Virland A. Johnson, Chief Financial Officer | | | | | — | | | | | | * | | |
Richard D. Butler, Director(3) | | | | | 18,000 | | | | | | * | | |
John Bitar, Director | | | | | 2,000 | | | | | | * | | |
Nael Hajjar, Director | | | | | — | | | | | | * | | |
| All Executive Officers and Directors as a group (6 persons) | | | | | 114,000 | | | | | | 3.0% | | |
| Other 5% Stockholders: | | | | | | | | | | | | | |
Juan Yunis(4) | | | | | 460,000 | | | | | | 12.2% | | |
Michael Bigger(5) | | | | | 361,000 | | | | | | 9.6% | | |
The following table sets forth
| Name of Beneficial Owner | | | Number of Shares Beneficially Owned(1) | | | Percentage of Outstanding Series A Preferred(2) | | ||||||
Greg Sullivan(3) | | | | | 15,976 | | | | | | 7.62% | | |
Juan Yunis(4) | | | | | 193,730 | | | | | | 92.38% | | |
| Name of Beneficial Owner | | | Amount and Nature of Beneficial Ownership(1) | | | Outstanding Series S Preferred(2) | | ||||||
Amol Soin, MD(3) | | | | | 100,000 | | | | | | 100% | | |
| Beneficial Owner | Number of Shares Beneficially Owned (1) | Percent of Outstanding Series A Preferred (2) | ||||||
| Gregg Sullivan (3) | 57,718 | 20.0% | ||||||
| Juan Yunis (4) | 216,729 | 75.1% | ||||||
| Isaac Capital Group, LLC (5) | 14,141 | 4.9% | ||||||
_______________________
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such officers, directors and 10% shareholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms received by it, or written representations from certain reporting persons, the Company believes that, during the fiscal year ended December 31, 2016, its officers, directors and 10% shareholders timely complied with all Section 16(a) filing requirements, except as follows: Mr. Gao and Mr. Butler filed late Form 4s on April 13, 2017, reporting grants of stock options on December 29, 2016 upon their reelection to the Board of Directors.
affirmative vote of the holders of a plurality of the votes cast at the Annual Meeting is required for the election of the director nominees, i.e., the four director nominees who receive the most votes will be elected.
Director nominees as directors, each of
whom shall hold office for a term of one year, expiring at the Annual Meeting in 2024, and until his successor
is elected and qualified, or until his earlier death, resignation, or removal.
for Election to our Board
| Name | Position with Company | Director Since | Age | |||||||
| Tony Isaac | Director and Chief Executive Officer | 2015 | 63 | |||||||
| Richard D. Butler | Director | 2015 | 69 | |||||||
| Dennis (De) Gao | Director | 2015 | 37 | |||||||
| Timothy M. Matula | Director | 2016 | 57 | |||||||
| Name | | | Position with Company | | | Director Since | | | Age as of August 11, 2023 | |
| Tony Isaac | | | Director, President, Chief Executive Officer, and Secretary | | | 2015 | | | 69 | |
| Richard D. Butler | | | Director | | | 2015 | | | 72 | |
| Nael Hajjar | | | Director | | | 2018 | | | 38 | |
| John Bitar | | | Director | | | 2020 | | | 60 | |
Richard D. Butler, Jr.
has beenDennis (De) Gao
Timothy M. Matulaoperational expertise.
Mr.
It is management’s responsibility to manage risk and bring to the attention of theour Board of Directors the most material risks affecting the Company. TheOur Board, of Directors, including through committees of our Board Committees comprised solely of independent directors, regularly reviews various areas of significant risk to the Company, and advises and directs management on the scope and implementation of policies, strategic initiatives, and other actions designed to mitigate various types of risks. Specific examples of risks primarily overseen by theour full Board of Directors include competition risks, industry risks, economic risks, liquidity risks, and business operations risks. TheOur Audit Committee reviews with management and the independent auditors significant financial risk exposures and the processes management has implemented to monitor, control, and report such exposures. TheOur Audit Committee also reviews and approves transactions with related persons. TheOur Compensation and Benefits Committee (the “Compensation Committee”) reviews and evaluates potential risks related to the attraction
| Board Diversity (As of August 11, 2023) | | ||||||||||||||||||||||||
| Total Number of Directors | | | 4 | | |||||||||||||||||||||
| | | | Female | | | Male | | | Non-Binary | | | Did Not Disclose Gender | | ||||||||||||
| Part I: Gender Identity | | | | | | | | | | | | | | | | | | | | | | | | | |
| Directors | | | | | 0 | | | | | | 3 | | | | | | 0 | | | | | | 1 | | |
| Part II: Demographic Background | | | | | | | | | | | | | | | | | | | | | | | | | |
| African American or Black | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Alaskan Native or Native American | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Asian | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Hispanic or Latinx | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| Native Hawaiian or Pacific Islander | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| White | | | | | 0 | | | | | | 3 | | | | | | 0 | | | | | | 0 | | |
| Two or More Races or Ethnicities | | | | | 0 | | | | | | 0 | | | | | | 0 | | | | | | 0 | | |
| LGBTQ+ | | | 0 | | |||||||||||||||||||||
| Did Not Disclose Demographic Background | | | 4 | | |||||||||||||||||||||
Compensation and Benefits Committee
The Compensation Committee of theour Board of Directors is comprised entirely of non-employee directors. In fiscal 2016,2022, the members of the Compensationour Audit Committee were Mr. Isaac (until February 29, 2016), Mr. Gao,Bitar, Mr. Butler (Chairman)(Chair), and Mr. Matula (commencing August 19, 2016), eachHajjar. Each of whomMessrs. Bitar, Butler, and Hajjar was also an “independent” director as defined under NASDAQNasdaq rules. Mr. Isaac resigned from the Compensation Committee upon his appointment as Interim CEO on February 29, 2016. Mr. Matula was appointed to the board and the Compensation Committee on August 19, 2016. The Compensation Committee is responsible for review and approval of officer salaries and other compensation and benefits programs and determination of officer bonuses. Annual compensation for the Company’s executive officers, other than the CEO, is recommended by the CEO and approved by the Compensation Committee. The annual compensation for the CEO is recommended by the Compensation Committee and formally approved by the full Board of Directors. The Compensation Committee may approve grants of equity awards under the Company’s stock compensation plans.
In the performance of its duties, the Compensation Committee may select independent compensation consultants to advise the committee when appropriate. No compensation consultant played a role in the executive and director compensation for fiscal 2016. In addition, the Compensation Committee may delegate authority to subcommittees where appropriate. The Compensation Committee may separately meet with management if deemed necessary and appropriate. The Compensation Committee operates under a written charter adopted by the Board of Directors in March 2011, which is posted on the Company’s website atwww.ARCAInc.com under the caption “Investors - Corporate Governance.”
The Audit Committee of the Board of Directors is comprised entirely of non-employee directors. In fiscal 2016, the members of the Audit Committee were Mr. Isaac (until February 29, 2016), Mr. Gao, Mr. Butler and Mr. Matula (commencing August 19, 2016), each of whom was also an “independent” director as defined under NASDAQ rules. Mr. Isaac resigned from the Audit Committee upon his appointment as Interim CEO on February 29, 2016, and Mr. Butler was named Chairman of the committee. Mr. Matula was appointed to the board and the Audit Committee on August 19, 2016. TheOur Audit Committee is responsible for selecting and approving the Company’sour independent auditors, for relations with the independent auditors, for review of internal auditing functions (whether formal or informal) and internal controls, and for review of financial reporting policies to assure full disclosure of financial condition. TheOur Audit Committee operates under a written charter adopted by theour Board, of Directors, which is posted on the Company’sour website atwww.ARCAInc.com www.janone.com under the caption “Investors - Corporate Governance.— Governance — Governance Documents.” The Board has determined that Mr. Butler is an “audit committee financial expert” as defined in SEC rules.
The Our Audit Committee discussed withoperates under a written charter adopted by our Board, which is posted on our website at www.janone.com under the Company’s independent auditors the overall scope and plans for their audit. caption “Investors — Governance — Governance Documents.”
Review, Approval or Ratification of Transactions with Related Persons
The Audit Committee, comprised of Mr. Gao, Mr. Isaac (Chairman until February 29, 2016), Mr. Matula (Member since August 19, 2016) and Mr. Butler (Chairman effective February 29, 2016), is responsible for the review and approval of all transactions in which the Company was or is to be a participant and in which any executive officer, director or director nominee of the Company, or any immediate family member of any such person (“related persons”) has or will have a material interest. In addition, all, if any, transactions with related persons that come within the disclosures required by Item 404 of the SEC’s Regulation S-K must also be approved by the Audit Committee. The policies and procedures regarding the approval of all such transactions with related persons have been approved at a meeting of the Audit Committee and are evidenced in the corporate records of the Company. Each member of the Audit Committee is an “independent” director as defined under NASDAQ rules. Mr. Isaac was independent until February 29, 2016 when he was appointed Interim CEO for the Company, at which point in time he resigned from the Audit Committee and Mr. Butler was appointed as Chairman of the Audit Committee.
Board Practice Related to Nominations of Directors
The Nominating and Corporate GovernanceCompensation Committee (the “Governance Committee”“
The
Theour Secretary.
We intend to satisfy the disclosure requirement under Item 105.05 of Form 8-K regarding the amendment to, or waiver from, a provision of the code of ethics by posting such information on our website at the address and location specified above and, to the extent required by the listing standards of the NASDAQNasdaq Capital Market, by filing a Current Report on Form 8-K with the SEC disclosing such information.
The Company uses a combination of cash and share-based incentive compensationAugust 11, 2023, other than Tony Isaac, whose biographical information is presented under “Nominees for Election to attract and retain qualified candidates to serve on the Board of Directors. In setting director”
| | Virland A. Johnson, 62 | | | Mr. Johnson was appointed our Chief Financial Officer on August 21, 2017. Mr. Johnson had previously served us as a consultant beginning in February 2017. Mr. Johnson served as Chief Financial Officer for Live Ventures between January 3, 2017 and September 21, 2021. Prior to joining Live Ventures, Mr. Johnson was Sr. Director of Revenue for JDA Software from February 2010 to April 2016, where he was responsible for revenue recognition determination, sales and contract support while acting as a subject matter expert. Prior to joining JDA, Mr. Johnson provided leadership and strategic direction while serving in C-Level executive roles in public and privately held companies such as Cultural Experiences Abroad, Inc., Fender Musical Instruments Corp., Triumph Group, Inc., Unitech Industries, Inc. and Younger Brothers Group, Inc. Mr. Johnson’s more than 30 years of experience is primarily in the areas of process improvement, complex debt financings, SEC and financial reporting, turn-arounds, corporate restructuring, global finance, merger and acquisitions and returning companies to profitability and enhancing stockholder value. Mr. Johnson holds a Bachelor’s degree in Accountancy from Arizona State University which he earned in 1982, and holds an active CPA license in the State of Arizona. | |
| | | | Series S Preferred Stock Issued and Outstanding | | | Common Stock (as converted) | | ||||||
| Total, which is solely shares issued pursuant to the Merger Agreement: | | | | | 100,000 | | | | | | 18,072,289 | | |
Non-employee directorsshares of our Series S Preferred Stock, those holders would own an aggregate of 18,072,289 shares of our Common Stock, representing approximately [ ]% of our outstanding capital stock as of August 11, 2023.
Non-employee directors also receive stock options under the 2011 Stock Compensation Plan. Each year, on the date of the Company’s annual meeting, non-employee directors receive an option to purchase 10,000 shares of common stock. In addition, upon their initial appointmentstock to be issued is or electionwill be equal to or in excess of 20% of the Board, non-employee directors receive a one-time grantnumber of options to purchase 10,000 shares of common stock. Generally,stock outstanding before the issuance of the stock or securities. Collectively, we may issue 20% or more of our outstanding Common Stock or 20% or more of the voting power, in each case outstanding before the issuance, pursuant to the issuance of Common Stock in connection with the conversion of the shares of our Series S Preferred Stock.
The table below presents cash and non-cash compensation paid to non-employee directors during the prior fiscal year.
Non-Management Director Compensation for Fiscal Year Ended December 31, 2016
| Name (1) (2) | Fees Earned or Paid in Cash ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | ||||
| Tony Isaac (3) | 8,426 | -- | -- | 8,426 | ||||
| Dennis (De) Gao | 26,917 | 8,900 (4) | -- | 35,817 | ||||
| Richard D. Butler | 32,708 | 8,900 (4) | -- | 41,608 | ||||
| Timothy Matula | 9,000 | 8,700 (4) | -- | 17,700 |
_______________________
The
The Company’s
Baker Tilly Virchow Krause, LLP previously servedus.
The reports of Baker Tilly Virchow Krause, LLP on the Company’s consolidated financial statements2022 and for the fiscal years ended January 2, 2016 and January 3, 2015 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the Company’s two most recent fiscal years and subsequent interim period through April 4, 2016, there were no disagreements with Baker Tilly Virchow Krause, LLP on any matters of accounting principles or practices, financial statement disclosure or auditing scope and procedure which, if not resolved to the satisfaction of Baker Tilly Virchow Krause, LLP, would have caused Baker Tilly Virchow Krause, LLP to make reference to the matter in its reports on the consolidated financial statements for such years. A representative of Baker Tilly Virchow Krause, LLP is not expected to be present at the annual meeting.
During the fiscal years ended January 2, 2016 and January 3, 2015, and the subsequent interim period prior to the engagement of Anton & Chia, LLP,June 26, 2023, neither the Companywe, nor anyone acting on itsour behalf, has consulted with Anton & Chia, LLP with respect toHudgens regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed,proposed; or the type of audit opinion that might be rendered on the Company’sour financial statements and neither a written report nor oral advice was provided to the Company that Anton & Chia, LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue or (ii) any matter that was either the subject of a “disagreement”disagreement as that term is defineddescribed in Item 304(a)(1)(iv) of Regulation S-K or “reportable event” as that term is defined ina reportable event within the meaning of Item 304(a)(1)(v) of Regulation S-K.
Anton
| | | | December 31, 2022 | | | January 1, 2022 | | ||||||
| Audit Fees | | | | $ | 353,500 | | | | | $ | 212,725 | | |
| Audit-Related Fees | | | | | — | | | | | | 11,466 | | |
| Tax Fees | | | | | 40,800 | | | | | | 48,459 | | |
| All Other Fees | | | | | 4,000 | | | | | | — | | |
| Total | | | | $ | 398,300 | | | | | $ | 272,650 | | |
| December 31, 2016 | January 2, 2016 | |||||||
| Description | ||||||||
| Audit fees (1) | $ | 132,300 | $ | 217,287 | ||||
| Audit-Related Fees | – | – | ||||||
| Tax Fees | – | – | ||||||
| All Other Fees | – | – | ||||||
Our Audit Committee |
The Audit Committee of the Board of Directors has considered whether the provision of the services described above was and is compatible with maintaining the independence of AntonFrazier & Chia, LLPDeeter and Baker Tilly Virchow Krause, LLP.
TheWSRP, respectively.
TheCommittee’s appointment of Hudgens as disclosed in this Proxy Statement.
PLLC as our independent registered public accounting
Proposal 3:APPROVAL OF THE REINCORPORATION OF THE COMPANY FROMTHE STATE OF MINNESOTA TO THE STATE OF NEVADA
The Board has unanimously approved the reincorporation of the Company from the State of Minnesota to the State of Nevada (the “Reincorporation”), including the adoption of Articles of Incorporation and Bylawsfirm for the reincorporated Company, subject to approval by our shareholders. In addition, the Board has determined that the terms of the Plan of Conversion, in substantially the form attached hereto asAppendix A to this Proxy Statement, by which the Reincorporation will be effectuated are fair to, and in the best interests of, both the Company and our shareholders.
The Reincorporation would be effected through the conversion of the Company into a Nevada corporation, which we refer to as “ARCA-Nevada,” pursuant to the Plan of Conversion. Upon completion of the conversion, ARCA-Nevada will be the converted corporation and will continue to operate our business under the name “Appliance Recycling Centers of America, Inc.” unless we subsequently change the name of the Company. In this section we refer to the Company before the Reincorporation as the “Company” and after the conversion as “ARCA-Nevada.” For the reasons set forth herein, we recommend that the shareholders approve the Reincorporation, which will also constitute approval of the Plan of Conversion, as well as the Articles of Incorporation of ARCA-Nevada and the Bylaws of ARCA-Nevada, in substantially the forms attached to this Proxy Statement asAppendices B and C, respectively.
The principal effects of the Reincorporation, if approved by our shareholders and consummated, will be that:
Principal Reasons for Reincorporation
The BoardIf no vote indication is continually evaluating how best to position the Company to be attractive to all of its potential constituents, including shareholders, employees, officers, directors, customers, and other business partners. The Board approved the Reincorporation because it believes that the resulting change to governance under the corporate laws of the State of Nevada will directly benefit our shareholders by providing a greater measure of flexibility and simplicity in corporate governance than is available in the State of Minnesota, and may increase the marketability of our securities. Nevada has adopted, construed, and implemented comprehensive, advanced, flexible corporate laws responsive to the legal and business needs of corporations organized under its laws.
The Board is not proposing the Reincorporation to prevent a change in control of our Company and is not aware of any present attempt by any person to acquire control of our Company or to obtain representationmade on the Board.
Possible Disadvantages of the Reincorporation
Notwithstanding the belief of the Board as to the benefits to our shareholders of the Reincorporation, it should be noted that Nevada law has been criticized on the grounds that it does not afford minority shareholders the same substantive rights and protections as are available in a number of other states, including Minnesota. Generally, the Articles of Incorporation and Bylaws of ARCA-Nevada, in comparison to the Company’s current Minnesota Articles of Incorporation and Bylaws, also containaccompanying proxy card or eliminate certain provisions that may have the effect of reducing the rights of minority shareholders. The Reincorporation of the Company in Nevada may make it more difficult for minority shareholders to elect directors and influence our policies. Below are highlighted the main areas for which the Reincorporation could constitute a negative impact for shareholders due to differences in Minnesota and Nevada corporate law:
It should also be noted that the interests of the Board, management, and affiliated shareholders in voting on the Reincorporation proposal may not be the same as those of unaffiliated shareholders. For a summary comparison of shareholders’ rights and the power of management under Nevada law and Minnesota law, see “Significant Differences Related to State Law.”
The Board has considered the potential disadvantages of the Reincorporation and has concluded that the potential benefits outweigh the possible disadvantages.
Principal Features of the Reincorporation – The Plan of Conversion
The Reincorporation would be effected through the conversion of the Company into ARCA-Nevada. The conversion will be accomplished pursuant to a Plan of Conversion, which is attached to this proxy statement asAppendix A. Upon completion of the conversion, ARCA-Nevada will continue to maintain all of the assets and liabilities of the Company and will continue to operate our business under the name “Appliance Recycling Centers of America, Inc.” unless we subsequently change that name, which we reserve the right to do at any time.
Upon completion of the conversion, each outstanding share of common stock of the Company will be automatically converted into one share of common stock of ARCA-Nevada. Each outstanding share of Series A Preferred Stock will be converted into one share of Series A Preferred Stock of ARCA-Nevada. In addition, all outstanding warrants and options exercisable for shares of the Company’s common stock will be automatically converted into comparable warrants and options of ARCA-Nevada.
Assuming we obtain requisite shareholder approval for the Reincorporation, we currently intend to cause the Reincorporation to become effective as soon as reasonably practicable following the Annual Meeting. The Reincorporation will become effective upon the filing of Articles of Conversion with the Secretary of State of the State of Nevada and the Secretary of State of the State of Minnesota. Upon the effectiveness of the conversion, the Articles of Incorporation and the Bylaws of ARCA-Nevada, in substantially the forms attached asAppendices B and C to this Proxy Statement, respectively, will govern corporate operations and activities of the converted corporation.
You will not have to take any action to exchange your stock certificates as a result of the conversion. The current certificates representing shares of the Company’s common stock will automatically represent an equal number of shares of ARCA-Nevada’s common stock following the Reincorporation. Similarly, option and warrant agreements representing rights to acquire shares of Company common stock will automatically represent the right to purchase an equal number of shares of ARCA-Nevada common stock following the reincorporation, and holders of options and warrants will not be required to take any action to have such agreements reissued by ARCA-Nevada.
Effect of Vote for Reincorporation
A vote in favor of the Reincorporation is a vote in favor of the Plan of Conversion and the Articles of Incorporation and the Bylaws for ARCA-Nevada, each in the forms attached to this Proxy Statement. Shareholders also should note that approval of the Reincorporation also will constitute approval of our equity and other employee benefit and incentive plans continuing as plans of the Company after the Reincorporation. We have no current arrangements or understandings providing for the issuance of any of the additional authorized and unreserved shares of our common stock or preferred stock that would be available as a result of the proposed Reincorporation.
Effect of Not Obtaining Required Vote for Reincorporation
If we fail to obtain the requisite vote of our shareholders for approval of the Reincorporation, the Reincorporation will not be consummated and we will continue to be incorporated under the laws of the State of Minnesota and governed by the MBCA and our existing Articles of Incorporation and Bylaws.
Discretion Not to Consummate Reincorporation
The Reincorporation may be delayed by the Board or the Plan of Conversion may be terminated or abandoned by action of the Board at any timeinstruction form prior to the effective timestart of the Reincorporation, whether before or after approval by our shareholders, if2023 Annual Meeting, each such proxy will be deemed to grant authority to vote “
The Reincorporation will not be consummated until after shareholder approval is obtained. We will obtain all required consents of governmental authorities, including the filing of the Articles of Conversion with the Secretary of State of the State of Nevada and the Secretary of State of the State of Minnesota.
Certain United States Federal Income Tax Consequences
The below only summarizes the material U.S. federal income tax consequences of the Reincorporation to shareholders. ACCORDINGLY, WE URGE YOU TO CONSULT YOUR OWN TAX ADVISOR REGARDING YOUR PARTICULAR CIRCUMSTANCES AND YOUR TAX CONSEQUENCES RELATING TO THE REINCORPORATION, AS WELL AS ANY TAX CHANGES IN CONSEQUENCES ARISING UNDER THE LAWS OF THE FEDERAL OR ANY STATE, LOCAL, FOREIGN OR OTHER TAX JURISDICTION.
The Reincorporation provided for in the Plan of Conversion is intended to be a tax-free reorganization under Section 368(a) of the U.S. Internal Revenue Code. Assuming the Reincorporation qualifiesauditors as a tax-free reorganization within the meaning of Section 368(a) of the U.S. Internal Revenue Code, and subject to the qualifications and assumptions describeddisclosed in this Proxy Statement our shareholders should not recognize any gain or lossand as a resultdescribed in this “Proposal No. 4 — Ratification of the consummationAppointment of the Reincorporation and our shareholders’ basis and duration of holding our shares will be unchanged.
Accounting Consequences Associated with the Reincorporation
Because there is no change in the entity, we do not expect the Reincorporation to have a material effect on the Company from anindependent registered public accounting perspective. Historical financial statements of the Company, which have previously been reported to the SEC on our periodic reports, as of and for all periods through the date of this Proxy Statement, will remain the financial statements of the Company following the Reincorporation.
Significant Differences Related to State Law
We are incorporated under the laws of the State of Minnesota and ARCA-Nevada will be incorporated under the laws of the State of Nevada. The Company’s corporate affairs are currently governed by the MBCA and our Articles of Incorporation and Bylaws, which were created pursuant to Minnesota law. On the effective date of the Reincorporation, issues of corporate governance and control will be controlled by the NRS and ARCA-Nevada’s Articles of Incorporation and Bylaws, which will be created under Nevada law.
The following comparison of the NRS, Nevada Articles of Incorporation, and Nevada Bylaws with the MBCA, Minnesota Articles of Incorporation, and Minnesota Bylaws summarizes important distinctions between the respective bodies of law and organizational documents, but does not purport to be a complete statement of the respective rights of our shareholders prior and subsequent to the Reincorporation. Further, the following summary is not intended to constitute a comprehensive summary of such laws or documents. As such, the following summary is qualified in its entirety by reference to the MBCA and NRS, respectively, as well as the Nevada Articles of Incorporation, Nevada Bylaws, Minnesota Articles of Incorporation, and Minnesota Bylaws.
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As discussed further below, holders of common stock and Series A Preferred Stock have the right to dissent from the proposed Reincorporation from the State of Minnesota to the State of Nevada and demand payment in cash for their shares equal to the fair value of the shares as determined under Minnesota law.
Action Creating Right
Section 302A.471(e) of the MBCA grants any shareholder of record of the Company, and any beneficial owner of shares of the Company, as of the record date of October 6, 2017, the right to object to the Reincorporation and obtain payment from the Company for the fair value of their shares at the effective time of the Reincorporation. The Board reserves the right to abandon the Reincorporation in the event that shareholders holding 5% or more of the Company’s outstanding shares properly exercise their right to dissent with respect to such shares.
Requirements for Exercising
TO BE ENTITLED TO PAYMENT, THE DISSENTING SHAREHOLDER MUST FILE WITH THE COMPANY, BEFORE THE VOTE FOR THE REINCORPORATION AND THE PLAN OF CONVERSION, A WRITTEN NOTICE OF INTENT TO DEMAND PAYMENT OF THE FAIR VALUE OF THE SHARES AND MUST NOT VOTE IN FAVOR OF THE REINCORPORATION AND THE PLAN OF CONVERSION. THIS DEMAND WILL BE OF NO FORCE AND EFFECT IF THE REINCORPORATION IS NOT EFFECTED. The notice must be submitted to the Company at Appliance Recycling Centers of America, Inc., 175 Jackson Avenue North, Suite 102, Minneapolis, Minnesota 55343, attention: Secretary, and must be received before the vote for the Reincorporation. A vote against the Reincorporation is not necessary for the shareholder to exercise dissenters’ rights and require the Company to purchase their shares. A vote against the Reincorporation will not be deemed to satisfy the notice requirements of state law. The liability to the dissenting shareholder for the fair value of the shares also shall be the liability of the Company, as a Nevada corporation, when and if the Reincorporation is effective. Any shareholder contemplating the exercise of these dissenters’ rights should review carefully the provisions of Sections 302A.471 and 302A.473 of the MBCA, particularly the procedural steps required to perfect such rights. SUCH DISSENTERS’ RIGHTS WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SECTIONS 302A.471 AND 302A.473 ARE NOT FULLY AND PRECISELY SATISFIED. A COPY OF SECTIONS 302A.471 AND 302A.473 IS ATTACHED ASAPPENDIX D TO THIS PROXY STATEMENT.
Notice of Procedure
If and when the Reincorporation is approved by shareholders of the Company and if the Reincorporation is not abandoned by the Board of Directors, the Company will deliver to all shareholders who have properly dissented from the Reincorporation a notice that: (1) lists the address to which demand for payment and certificates for shares must be sent to obtain payment for such shares and the date by which such certificates must be received; (2) describes any restriction on transfer of uncertificated shares that will apply after the demand for payment is received; (3) encloses a form to demand payment and to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them; and (4) encloses a copy of Sections 302A.471 and 302A.473 of the MBCA and a brief description of the procedures to be followed to dissent and obtain payment of fair values for shares.
Submission of Share Certificates
To receive the fair value of his, her, or its shares, a dissenting shareholder must demand payment and deposit his, her or its share certificates within 30 days after the notice is delivered by the Company, but the dissenting shareholder retains all other rights of a shareholder until the proposed action takes effect. Under Minnesota law, notice by mail is made by the Company when deposited in the United States mail. A shareholder who fails to make demand for payment and fails to deposit certificates will lose the right to receive the fair value of the shares notwithstanding the timely filing of such shareholder’s notice of intent to demand payment.
Purchase of Dissenting Shares
After the effective time of the Reincorporation, the Company shall remit to the dissenting shareholders who have complied with the above-described procedures the amount the Company estimates to be the fair value of the shares held by such shareholders, plus interest accompanied by certain financial information about the Company, an estimate of the fair value of the shares and the method used and a copy of Sections 302A.471 and 302A.473 of the MBCA, and a brief description of the procedure to be followed to demand supplemental payment.
Acceptance or Settlement of Demand
If a dissenting shareholder believes that the amount remitted by the Company is less than the fair value of the shares, with interest, then the dissenting shareholder may give written notice to the Company of his or her estimate of fair value, with interest, within 30 days after the Company mails such remittance and must demand payment of the difference. UNLESS A SHAREHOLDER MAKES SUCH A DEMAND WITHIN SUCH THIRTY-DAY PERIOD, THE SHAREHOLDER WILL BE ENTITLED ONLY TO THE AMOUNT REMITTED BY THE COMPANY. Within 60 days after the Company receives such a demand from a shareholder, it will be required either to pay the shareholder the amount demanded (or agreed to after discussion between the shareholder and the Company) or to file in court a petition requesting that the court determine the fair value of the shares, with interest.
Court Determination
All shareholders who have demanded payment for their shares, but have not reached agreement with the Company, will be made parties to such court proceeding. The court will then determine whether the dissenting shareholders have fully complied with the provisions of Section 302A.473 of the MBCA and will determine the fair value of the shares, taking into account any and all factors the court finds relevant (including the recommendation of any appraisers appointed by the court), computed by any method that the court, in its discretion, sees fit to use, whether or not such method was used by the Company or a shareholder. The expenses of the court proceeding will be assessed against the Company, except that the court may assess part or all of those costs and expenses against a shareholder whose action in demanding payment is found to be arbitrary, vexatious, or not in good faith. The fair value of the Company’s shares means the fair value of the shares immediately before the effective time of the Reincorporation. Under Section 302A.471 of the MBCA, a shareholder of the Company has no right at law or equity to set aside the effect of the Reincorporation pursuant to the Plan of Conversion, except if such consummation is fraudulent with respect to such shareholder or the Company. Any shareholder making a demand for payment of fair value for his or her shares may withdraw the demand at any time before the determination of the fair value of the shares by filing with the Company written notice of such withdrawal.
The Board recommends a vote FOR the approval of the Reincorporation of the Company from the State of Minnesota to the State of Nevada.
Proposal 4:AUTHORITY TO ADJOURN The ANNUAL MEETING
If, at the annual meeting, our Board determines it is necessary or appropriate to adjourn the annual meeting, we intend to move to adjourn the annual meeting. For example, our Board may make such a determination in order to adjourn the meeting to solicit additional votes if the number of shares of our voting stock represented and voting in favor of Proposal 3 regarding reincorporation in Nevada is insufficient to adopt that proposal. If our Board determines that it is necessary or appropriate, we will ask our shareholders and proxies to vote only upon the proposal to adjourn the annual meeting, and not the other proposals.
In this proposal, we are asking you to authorize our Board to adjourn the annual meetingAnnual Meeting to another place, date, or time if our Board believes adjournment is necessary or appropriate. If the shareholdersstockholders approve the proposal to adjourn the annual meeting,Annual Meeting, we would expect to adjourn the annual meetingAnnual Meeting and use the additional time to solicit additional votes, including the solicitation of votes from shareholdersstockholders that have previously voted, if necessary to approve Proposal 3.
If a quorumquorum does not exist, the holders of a majority of the voting power of the shares of our common stock and Series A Preferred Stock present at the annual meeting,Annual Meeting in person or by proxy may adjourn theannual meeting Annual Meeting to another place, date, or time.
The
Virland A. Johnsonwas appointed Chief Financial OfficerFOR vote from at least a majority of the Company on August 21, 2017. Mr. Johnson had previously servedvotes cast. Abstentions and broker non-votes will have the Company aseffect of a consultant beginning in February 2017. Mr. Johnson also continues to serve as Chief Financial Officer for Live Ventures Incorporatedvote against this proposal.
Bradley S. Bremer is President of ApplianceSmart, Inc., a subsidiaryapproval of the Company, a position he has held since February 2012. He served as Vice President of Retail Operations from 2007 until his appointment as President of ApplianceSmart. Mr. BremerAdjournment Proposal.
Rachel L. Holmes is the Executive Vice President of ARCA Recycling, Inc. a position she was appointed to in January 2016. She previously held the position of Vice President of Client Services since July 2015, Vice President of Business Development since April 2008, and Chief of Staff since April 2012. Ms. Holmes focuses on business development, including strategic planning to obtain new clients for the Company’s appliance recycling and replacement services, and management of client accounts. She directs the Company’s environmental and regulatory research; participation in industry and government initiatives; and marketing and communications. She was employed by the Company from 1991 to 1999 in various corporate planning, marketing and advertising capacities. From 1999 until rejoining the Company in 2003, she was an independent marketing consultant for the Company. Ms. Holmes earned a B.A. from the University of Minnesota.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Award ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | |||||||
Tony Isaac (1) Chief Executive Officer | 2016 | 338,462 | -- | 62,000 (4) | -- | -- | 400,462 | |||||||
Edward R. Cameron (2) Former President of ARCA Recycling, Inc.; former Chairman of the Board; former President and CEO | 2016 2015 | 300,000 300,000 | -- -- | -- 114,000 (5) | -- 96,000 (6) | -- -- | 300,000 417,528 | |||||||
Jeffery Ostapeic (3) Former Chief Financial Officer | 2016 2015 | 93,323 180,000 | 100,000 -- | -- -- | -- -- | 3,600 7,200 | 196,923 187,200 | |||||||
Bradley S. Bremer President of ApplianceSmart, Inc. | 2016 2015 | 169,950 169,950 | -- -- | -- -- | -- -- | -- -- | 169,950 169,950 |
______________________
Name and principal Position(1) | | | Year | | | Salary | | | Bonus | | | Stock Awards | | | Option Awards | | | All Other Compensation | | | Total | | |||||||||||||||||||||
Tony Isaac President, Chief Executive Officer, and Secretary | | | | | 2022 | | | | | $ | 550,324 | | | | | $ | 75,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 625,324 | | |
| | | | 2021 | | | | | $ | 550,324 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 550,324 | | | ||
Virland A. Johnson Chief Financial Officer | | | | | 2022 | | | | | $ | 250,324 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 250,324 | | |
| | | | 2021 | | | | | $ | 149,363 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 149,363 | | | ||
Year PEO
Compensation
Table Total
for PEO
Actually
Paid to PEO
Summary
Compensation
Table
Total for
Non-PEO
NEO’s
Compensation
Actually
Paid to
Non-PEO
NEO’s
Initial $100
Investment
Based on
Total
Stockholder
Return Net Income (1) (2) (3) (4) (5) (6) (7) (8) 2022 Tony Isaac $ 625,324 $ 625,324 $ 250,324 $ 250,324 $ 33.50(a) $ 10,992,000 2021 Tony Isaac $ 550,324 $ 550,324 $ 149,363 $ 149,363 $ 83.64(b) $ (16,887,000)
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2022
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | |||||
| Tony Isaac | 10,000 | (1) | -- | 1.98 | 05/18/2025 | ||||
| Edward R. Cameron | 35,000 | (2) | -- | 2.30 | 08/16/2017 | ||||
| Edward R. Cameron | 5,000 | (3) | -- | 4.25 | 02/24/2018 | ||||
| Edward R. Cameron | 100,000 | (4) | -- | 1.89 | 05/09/2020 | ||||
| Edward R. Cameron | 23,334 | (5) | 11,666 (5) | 3.00 | 02/26/2021 | ||||
| Edward R. Cameron | 100,000 | (6) | -- | 1.14 | 09/01/2025 | ||||
| Bradley S. Bremer | 15,000 | (7) | -- | 3.55 | 05/13/2017 | ||||
| Bradley S. Bremer | 5,000 | (3) | -- | 4.25 | 02/24/2018 | ||||
| Bradley S. Bremer | 7,500 | (4) | -- | 1.89 | 05/09/2020 | ||||
| Bradley S. Bremer | 10,000 | (5) | 5,000 (5) | 3.00 | 02/26/2021 | ||||
_______________________
| Name | | | Number of Securities Underlying Unexercised Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | |||||||||
| Tony Isaac | | | | | 2,000 | | | | | | 9.90 | | | | | | 5/18/2025 | | |
| President, Chief Executive Officer, and Secretary | | | | | | | | | | | | | | | | | | | |
| Virland A. Johnson | | | | | — | | | | | | — | | | | | | — | | |
| Chief Financial Officer | | | | | | | | | | | | | | | | | | | |
The Company uses
As of October 6, 2017,December 31, 2022, options to purchase an aggregate of 710,250up to 117,500 shares of our Common Stock were outstanding, including options for 20,000to purchase an aggregate of up to 90,000 shares of our Common Stock under the 2016 Plan and options for 484,500to purchase an aggregate of up to 27,500 shares of our Common Stock under the 2011 Plan and options for 205,750 shares under the 2006 Plan. In addition, the Company had issued 220,000 shares pursuant to stock grants under the 2016 Plan. The Plans are administered by theour Compensation Committee or theour full Board, of Directors acting as the Committee.
The 2016 Plan permits the grant of the following types of awards, in the amounts and upon the terms determined by the Administrator:
• Options. Options may either be incentive stock options (“ISOs”) which are specifically designated as such for purposes of compliance with Section 422 of the Internal Revenue Code or non-qualified stock options (“NSOs”). Options shall vest as determined by the Administrator, subject to certain statutory limitations regarding the maximum term of ISOs and the maximum value of ISOs that may vest in one year. |
The followingexercise price of each share subject to an ISO will be equal to or greater than the fair market value of a share on the date of the grant of the ISO, except in the case of an ISO grant to a stockholder who owns more than 10% of our outstanding shares, in which case the exercise price will be equal to or greater than 110% of the fair market value of a share on the grant date. The exercise price of each share subject to an NSO shall be determined by our Board at the time of grant but will be equal to or greater than the fair market value of a share on the date of grant. Recipients of options have no rights as a stockholder with respect to any shares covered by the award until the award is exercised and a stock certificate or book entry evidencing such shares is issued or made, respectively.
| (a) | (b) | (c) | ||||||||||
Number of Securities to be Issued Upon Exercise of Outstanding Options and Warrants | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Available for Future Issuance Under Equity Compensation Plans, Excluding Securities Reflected in Column (a) | ||||||||||
| Equity compensation plans approved by shareholders | 710,250 | $ | 2.62 | 1,980,000 | ||||||||
| Equity compensation plans not approved by shareholders | 23,500 | $ | 3.55 | – | ||||||||
| Total | 733,750 | $ | 2.65 | 1,980,000 | ||||||||
| Name | | | Fees Earned or Paid in Cash ($) | | | Option Awards ($) | | | All Other Compensation ($) | | | Total ($) | | ||||||||||||
| Jon Bitar | | | | | 18,000 | | | | | | — | | | | | | — | | | | | | 18,000 | | |
| Richard D. Butler, Jr. | | | | | 30,000 | | | | | | — | | | | | | — | | | | | | 30,000 | | |
| Nael Hajjar | | | | | 14,400 | | | | | | — | | | | | | — | | | | | | 14,400 | | |
Transactions with related persons
On August 18, 2017, the Company acquired GeoTraq, Inc. (“GeoTraq”), a development stage companyWe consider it improper and inappropriate for our directors, officers, and other employees to engage in any transactions that is engagedhedge or offset, or are designed to hedge or offset, any decrease in the development, manufacture, and, ultimately, sale of cellular transceiver modules. In connection with this transaction, we tendered to the owners of GeoTraq $200,000 in cash, issued to them an aggregate of 288,588 sharesvalue of our Series A Convertible Preferred Stock,securities. As such, our no hedging policy prohibits all employees, including directors and entered into one-year unsecured promissory notes for an aggregateexecutive officers, from engaging in any speculative or hedging transactions or any other transactions that are designed to offset any decrease in the value of $800,000.our securities.
the ARCA Entities’ aggregate gross revenues between $2,000,000 and $3,000,000 for the relevant month, plus (iii) 3% of the ARCA Entities’ aggregate gross revenues over $3,000,000 for the relevant month. The Buyer received credit toward the payment of the first monthly payment (March of 2023) for any payments, distributions, or cash dividends paid by any of the ARCA Entities to us on or after March 19, 2023.
Theoperates pursuant to a charter that it reviews annually. Additionally, a brief description of the primary responsibilities of our Audit Committee reviewed withis included in this Proxy Statement under the discussion of “The Board of Directors and Certain Governance Matters — Committee Membership — Audit Committee.” Under our Audit Committee’s charter, management is responsible for the audited consolidatedpreparation, presentation, and integrity of our financial statements, includedthe application of accounting and financial reporting principles, and our internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the Company’s Annual Report on Form 10-K, including a discussionUnited States of America.
The audit committeeits oversight function, our Audit Committee reviewed and discussed the audited financial statements and internal control over our financial reporting with management. The audit committeemanagement and with the independent registered public accounting firm. Our Audit Committee also discussed with the independent auditorsregistered public accounting firm the matters required to be discussed by Statement onPublic Company Accounting Oversight Board Auditing StandardsStandard No. 61, as amended, as adopted1301 “Communications with Audit Committee.” In addition, our Audit Committee received the written disclosures and the letters from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board (PCAOB) in Rule 3200T. The audit committee has received the written disclosures and the letter from the independent accountants required by applicable requirements of the PCAOB regarding the independent accountant’sregistered public accounting firm’s communications with the audit committeeour Audit Committee concerning independence and has discussed with the independent accountantregistered public accounting firm their independence.
In reliance on the reviewsreview and discussions referred to above,described in the preceding paragraph, our Audit Committee recommended to theour Board of Directors (and the Board approved) that theour audited consolidated financial statements be included in theour Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for filing2022, filed with the Securities and Exchange Commission.
| August , | | | The Audit Committee | |
| | | | | Richard D. Butler,
| |
| | | | | John Bitar | |
| | | | | Nael Hajjar | |
The information set forth above in the Audit Committee Report is not to be considered “filed” with the SEC for any purpose or “incorporated by reference” into any Securities Act or Exchange Act document of the Company for any purpose.
| | By Order of the Board of Directors | | | | |
| | /s/ Tony Isaac Tony Isaac, Secretary | | | | |
| | [Proxy Date] | | | | |
JANONE INC. 2023 EQUITY INCENTIVE PLAN
By Orderprovisions of the BoardPlan.
Michael J. Stein, Secretary
October [●], 2017
PLAN OF CONVERSION
of
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
a Minnesota corporation
to
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
a Nevada corporation
This Plan of Conversion (“Plan of Conversion”)an individual Award. Each Award Agreement is entered into by Appliance Recycling Centers of America, Inc., a Minnesota corporation, which desiressubject to convert to Appliance Recycling Centers of America, Inc., a Nevada corporation.
1. Converting Corporation. The namethe terms and conditions of the Converting Corporation before the conversion is Appliance Recycling Centers of America, Inc., a Minnesota corporation.
2. Converted Corporation. After conversion, the name of the Converting CorporationPlan. The Award Agreement shall be Appliance Recycling Centersdelivered to the Participant receiving such Award upon, or as promptly, as is reasonably practicable following, the grant of America, Inc., a Nevada corporation.
3. Organizational Documents.such Award. The Articleseffectiveness of Incorporation attached hereto asAttachment Aan Award shall not be subject to the Articles of Incorporation of the Converted Corporation. The Bylaws of the Converting Corporation shall terminate on the Effective Date and shall be superseded and replacedAward Agreement’s being signed by the Bylaws ofCompany and/or the Converted Corporation.
4. Effective Date. The Conversion shall become effective upon filingParticipant receiving the Articles of Conversion andAward unless specifically so provided in the Articles of Incorporation with the Nevada Secretary of State.
5. Conversion of Ownership Shares.As of the Effective Date, each share of the Converting Corporation that is outstanding immediately prior thereto, shall be unchanged and shall continue to represent the shares of stock of the Converted Corporation and shall remain in effect immediately after consummation of the conversion.
6. Officers and Directors. The Board of Directors of the Converting Corporation holding office immediately before the Effective Date shall constituteAward Agreement.
7. Continuation. Astransfer of assets;
8. Instruments of Further Assurance. If at any time after the Effective Date, the Converted Corporation shall determine or be advised that any instrument of further assurance is needed in order to evidence the continued vesting in it of the title of the Converting Corporation to any of the property rights of the Converting Corporation, the appropriate officers or managers of the Converted Corporation and the Converting Corporation are hereby authorized to execute, acknowledge, and deliver all such instruments of further assurance and to do all acts or things, in the name of the Converted Corporation and the Converting Corporation, as may be required or desirable to carry out the provisions of this Plan of Conversion.
Proposed Nevada Articles of Incorporation
This form must be accompanied by appropriate fees. ABOVE SPACE IS FOR OFFICE USE ONLY USE BLACK INK ONLY - DO NOT HIGHLIGHT Articles of Incorporation (PURSUANT TO NRS CHAPTER 78) Nevada Secretary of State NRS 78 Articles Revised: 1 - 5 - 15 BARBARA K. CEGAVSKE Secretary of State 202 North Carson Street Carson City, Nevada 89701 - 4201 (775) 684 - 5708 Website: www.nvsos.gov *040105* *040105* 1. Name of Corporation: Appliance Recycling Centers of America, Inc. 2. Registered 俺 Commercial Registered Agent: National Registered Agents, Inc. of NV Name Noncommercial Registered Agent OR Office or Position with Entity (name and address below) (name and address below) Name of Noncommercial Registered Agent OR Name of Title of Office or Other Position with Entity Nevada Street Address City Zip Code Nevada Mailing Address (if different from street address) City Zip Code Agent for Service of Process: (check only one box) 3. Authorized Number of Number of shares shares with Par value without par value: 52,000,000 per share: $ 0.001 par value: 0 Stock: (number of shares corporation is authorized to issue) 4. Names and 1) Tony Isaac Name 175 Jackson Ave. N., Ste. 102 Minneapolis MN 55343 Street Address City State Zip Code 2) Richard Butler Name 175 Jackson Ave. N., Ste. 102 Minneapolis MN 55343 Street Address City State Zip Code Addresses of the Board of Directors/Trustees: (each Director/Trustee must be a natural person at least 18 years of age; attach additional page if more than two directors/trustees) 5. Purpose: (optional; The purpose of the corporation shall be: 6. Benefit Corporation: (see instructions) Yes required only if Benefit Corporation status selected) 7. Name, Address I declare, to the best of my knowledge under penalty of perjury, that the information contained herein is correct and acknowledge that pursuant to NRS 239.330, it is a category C felony to knowingly offer any false or forged instrument for filing in the Office of the Secretary of State. X Name Incorporator Signature 175 Jackson Ave. N., Ste. 102 Minneapolis MN 55343 Address City State Zip Code and Signature of Incorporator: (attach additional page if more than one incorporator) 8. Certificate of Acceptance of I hereby accept appointment as Registered Agent for the above named Entity. Appointment of X Reset
CONTINUATION OF ARTICLES OF INCORPORATION OF APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
Article 3: Authorized Stock
Section 3.1. Designation of Classes and Series.
The total number of shares of capital stock that the Corporation shall have authority to issue is 52,000,000 shares, of which (i) 40,000,000 shares shall be Common Stock, $0.001 par value per share, (the of the Company, or any security of the Company issued in substitution, exchange, or lieu thereof.
The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is expressly authorized to establish from the undesignated shares of Preferred Stock one or more series of Preferred Stock and to prescribe the series and the number of each such series of Preferred Stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of each such series of Preferred Stock, including without limitation: the rate of dividends upon which and the times at which dividends on shares of such series shall be payable and the preference, if any, which such dividends shall have relative to dividends on shares of any other class or classes or any other series of stock4(b)(xii) of the corporation; whether such dividends shall be cumulativePlan.
Section 3.2. Series A Convertible Preferred Stock Section
3.2.1 Definitions.
For purposes of this Section 3.2, the following definitions shall apply:
(a) “Business Day” means a dayCommittee determines otherwise in which a majority of the banks in the State of Nevada in the United States of America are open for business.
(b) “Conversion Date”an applicable Award Agreement. “Disability” shall mean the date on whichParticipant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a share or sharescontinuous period of not less than twelve (12) months, as determined by the Committee. Notwithstanding the above, with respect to an Incentive Stock Option, Disability shall mean permanent and total disability as defined in Section 22(e)(3) of the Series A Convertible Preferred Stock is convertedCode and, with respect to any Award that constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code, the foregoing definition shall apply for purposes of vesting of such Award, provided that such Award shall not be settled until the earliest of: (x) the Participant’s “disability” within the meaning of Section 409A of the Code, (y) the Participant’s “separation from service” within the meaning of Section 409A of the Code, and (z) the date such Award would otherwise be settled pursuant to the terms of this Section 3.2.
(c) the Award Agreement.
(d) “Holder” shall mean the person or entity in which the Series A Convertible Preferred Stock is registered on the books of the Corporation, which shall initially be the person or entity that subscribes for the Series A Convertible Preferred Stock, and shall thereafter be the permitted and legal assigns of which the Corporation is notified by the Holder and in respect of which the Holder has provided a valid legal opinion in connection therewith to the Corporation.
(e) “Holders” shall mean all Holders of the Series A Convertible Preferred Stock.
(f) “Junior Stock” shall meanCode. If the Common Stock and each other classis not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion, taking into account, to the extent appropriate, the requirements of capital stock or series of preferred stockSection 409A of the Corporation established priorCode.
(g) “Original Issue Date” shall meaneach Award, the date upon which the shares of Series A Convertible Preferred Stock are first issued.
(h) “Recapitalization” shall mean any stock dividend, stock split, and combination of shares, reorganization, recapitalization, reclassification, or other similar event.
Section 3.2.2 Dividends.
(a) The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation unless (in additionAward is granted to the obtaining of any consents required elsewhere in these Articles of Incorporation or under applicable law) the holders of the Series A Convertible Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Convertible Preferred Stockan Awardee pursuant to this Plan, which may be a designated future date as of which such Award will be effective, as determined by the Committee.
(b) To the fullest extent permitted by the General Corporation Law of the State of Nevada, the Corporation shall be expressly permitted, but not required, to redeem, repurchase or make distributions on the shares of its capital stock in all circumstances other than where doing so would cause the Corporation to be unable to pay its debts as they become due in the usual course of business.
Section 3.2.3 No Liquidation Preference. ImmediatelyCompany prior to the occurrence of any liquidation, dissolution or winding uptime that such Affiliate became an Affiliate of the Corporation, whether voluntaryCompany.
Section 3.2.4 Conversion. The Series A Convertible Preferred Stock shall not be convertible into Common Stockregulations promulgated thereunder and have no other conversion rights except as specifically set forth below:
(a) Conversion. The “Conversion Ratio” per share of the Series A Convertible Preferred Stock in connection with any Conversion shall be atsuccessor thereto.
(b) Taxes. The Corporation shall not be required to pay any tax thatsuch agreement except as may be payableotherwise provided in respectsuch agreement. For purposes of any transfer involved in the issue and deliverythis Plan, a Participant’s Termination of shares of Common Stock upon conversion in a name other than that in which the shares of the Series A Convertible Preferred Stock so converted were registered, and no such issue or deliveryEmployment shall be made unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. The Corporation shall withhold from any payment due whatsoever in connection with the Series A Convertible Preferred Stock any and all required withholdings and/or taxes the Corporation, in its sole discretion deems reasonable or necessary, absent an opinion from Holder’s accountant or legal counsel, acceptable to the Corporation in its sole determination, that such withholdings and/or taxes are not requireddeemed to be withheld bya Termination for Cause if, after the Corporation.
(c) Stock Dividends, Splits,Participant’s employment has terminated, facts and Reclassifications. If the Corporation shall (i) declare a dividend or other distribution payable in securities or (ii) split its outstanding shares of Common Stock into a larger number, including any such reclassification in connection with a merger, consolidation or other business combination in which the Corporation is the continuing entity(any such corporate event, an “Event”), then in each instance the Conversion Ratio shall be adjusted such that the number of shares issued upon conversion of one share of Series A Convertible Preferred Stock will equal the number of shares of Common Stockcircumstances are discovered that would otherwise be issued but for such Event.
(d) Fractional Shares. If any Conversion of Series A Convertible Preferred Stock would result in the issuance of a fractional share of Common Stock (aggregating all shares of Series A Convertible Preferred Stock being converted pursuant to each Conversion), such fractional share shall be rounded up to the nearest whole share and the Holder shall be entitled to receive, in lieu of the final fraction of a share, one additional whole share of Common Stock.
(e) Reservation of Stock Issuable Upon Conversion. The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the Series A Convertible Preferred Stock, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then•outstanding shares of the Series A Convertible Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then•outstanding shares of the Series A Convertible Preferred Stock, the Corporation will within a reasonable time period make a good faith effort to take such corporate action as may,have justified, in the opinion of the Committee, a Termination for Cause.
(f) Effect of Conversion. On any Conversion Date, all rights of any Holder with respect to the shares of the Series A Convertible Preferred Stock so converted, including the rights, if any, to receive distributions of the Corporation’s assets or notices from the Corporation, will terminate, except only for the rights of any such Holder to receive certificates (if applicable) for the number of shares of Common Stock into which such shares of the Series A Convertible Preferred Stock have been converted.
Section 3.2.5 Voting. The Holder of each share of Series A Convertible Preferred Stock shall have such number of votes as is determined by multiplying (a) the number of shares of Series A Convertible Preferred Stock held by such holder, and (b) 100. Such voting calculation is hereby authorized by the Corporation and the Corporation acknowledges such calculation may result in the total number of possible votes cast by the Series A Holders and all other classes of the Corporation’s common stock in any given voting matter exceedingnot exceed the total aggregate number of sharesShares that this Corporation shall have authority to issue. With respect to any shareholder vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any shareholders’ meeting in accordance with the Bylaws of this Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. The holders of Series A Convertible Preferred Stock shall vote together with all other classes and series of common and preferred stock of the Corporation as a single class on all actions to be taken by the Common Stock shareholders of the Corporation, except to the extent that voting as a separate class or series is required by law. Notwithstanding anything to the contrary herein, the Holders of shares of Series A Convertible Preferred Stock may not engage in any vote where the voting power would trigger any NASDAQ requirement to obtain shareholder approval; provided, however, the Holders shall have the right to vote that portion of their voting power that would not trigger such a requirement. This restriction shall lapse upon the requisite approval of the shareholders in compliance with NASDAQ’s shareholder voting requirements in effect at the time of such approval.
Section 3.2.6 Redemption. The Series A Convertible Preferred Stock shall have no redemption rights.
Section 3.2.7 Protective Provisions. In addition to any other rights provided by law, at any time any shares of Series A Convertible Preferred Stock are outstanding, as a legal party in interest, the Corporation, through action directly initiated by the Corporation’s Board of Directors or indirectly initiated by the Corporation’s Board of Directors through judicial action or process, including any action by the shareholders of the Corporation’s Common Stock, shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, take any of the following actions without first obtaining the affirmative approval of a majority of the Holders.
(a) Increase or decrease (other than by redemption or conversion) the total number of authorized shares of Series A Convertible Preferred Stock;
(b) Effect an exchange, reclassification, or cancellation of all or a part of the Series A Convertible Preferred Stock, but excluding a stock split or reverse stock split or combination of the Common Stock or Preferred Stock;
(c) Effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series A Convertible Preferred Stock; or
(d) Alter or change the rights, preferences or privileges of the shares of Series A Convertible Preferred Stock so as to affect adversely the shares of such series, including the rights set forth in this Section 3.2;provided, however, that the Corporation may, by any means authorized by law and without any vote of the Holders of shares of the Series A Convertible Preferred Stock, make technical, corrective, administrative or similar changes in this Section 3.2 that do not, individually or in the aggregate, materially adversely affect the rights or preferences of the Holders of shares of the Series A Convertible Preferred Stock.
Section 3.2.8 Preemptive Rights. Holders of Series A Convertible Preferred Stock and holders of Common Stock shall not be entitled to any preemptive, subscription or similar rights in respect to any securities of the Corporation, except as specifically set forth herein or in any other document agreed to by the Corporation.
Section 3.2.9 Reports. The Corporation shall mail to all holders of Series A Convertible Preferred Stock those reports, proxy statements and other materials that it mails to all of its holders of Common Stock.
Section 3.2.10 Notices. In addition to any other means of notice provided by law or in the Corporation’s Bylaws, any notice required by the provisions of this Section 3.2 to be given to the Holders shall be deemed given if deposited in the United States mail, postage prepaid, return
receipt requested and addressed to each Holder of record at such Holder’s address appearing on the books of the Corporation.
Section 3.2.11 Miscellaneous.
(a) The headings of the various sections and subsections of this Section 3.2 are for convenience of reference only and shall not affect the interpretation of any of the provisions of this Section 3.2.
(b) Whenever possible, each provision of this Section 3.2 shall be interpreted in a manner as to be effective and valid under applicable law and public policy. If any provision set forth herein is held to be invalid, unlawful, or incapable of being enforced by reason of any rule of law or public policy, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions of this Section 3.2. No provision herein set forth shall be deemed dependent upon any other provision unless so expressed herein. If a court of competent jurisdiction should determine that a provision of this Section 3.2 would be valid or enforceable if a period of time were extended or shortened, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law.
(c) The Corporation will provide to the Holders of the Series A Convertible Preferred Stock all communications sent by the Corporation to the holders of the Common Stock.
(d) Except as may otherwise be required by law, the shares of the Series A Convertible Preferred Stock shall not have any powers, designations, preferences or other special rights, other than those specifically set forth in this Section 3.2.
(e) Shares of the Series A Convertible Preferred Stock converted into Common Stock shall be retired and canceled and shall have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to any specific series and may with any and all other authorized but unissued shares of preferred stock of the Corporation be designated or re•designated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation.
(f) Notwithstanding the above terms and conditions of this Section 3.2 and the dollar amounts and share numbers set forth herein shall be subject to adjustment, as appropriate, whenever there shall occur a stock split, stock dividend, combination, reclassification or other similar event involving shares ofdelivered under Awards under the Series A Convertible Preferred Stock. Such adjustments shall be made in such manner and at such time as the Board of Directors in good faith determines to be equitable in the circumstances, any such determination to be evidenced in a resolution duly adopted by the Board of Directors. Upon any such equitable adjustment, the Corporation shall promptly deliver to each Holder a notice describing in reasonable detail the event requiring the adjustment and the method of calculation thereof.
(g) With respect to any notice to a Holder required to be provided hereunder, such notice shall be mailed to the registered address of such Holder, and neither failure to mail such notice, nor any defect therein or in the mailing thereof, to any particular Holder shall affect the sufficiency of the notice or the validity of the proceedings referred to in such notice with respect to the other Holders or affect the legality or validity of any redemption, conversion, distribution, rights, warrant, reclassification, consolidation, merger, conveyance, transfer, dissolution, liquidation, winding•up or other action, or the vote upon any action with respect to which the Holders are entitled to vote. All notice periods referred to herein shall commence on the date of the mailing of the applicable notice. Any notice that was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Holder receives the notice.
Article 4: Names and Addresses of the Board of Directors/Trustees
175 Jackson Ave. N., Ste. 102
Minneapolis, MN 55343
175 Jackson Ave. N., Ste. 102
Minneapolis, MN 55343
Article 9: Limitation of Liability
The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by the General Corporation Law of the State of Nevada,Plan, as the same may be amended and supplemented.
Article 10: Indemnification
The Corporation shall,from time to time. Notwithstanding any other provision of the Plan to the maximumcontrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-employee Director during any single calendar year shall not exceed [ ] ([ ]) Shares.
7. Term of Award. Subject to the provisions of the Plan, the term of each Award shall be determined by the Administrator and stated in the Award Agreement, and may extend beyond the termination of the Plan. In the mattercase of Nevada Secretary of State Form RA Acceptance Revised: 1 - 5 - 15 Registered Agent Acceptance (PURSUANT TO NRS 77.310) Name of Represented Business Entityan Option or a Stock Appreciation Right, the term shall be ten (10) years from the Grant Date the above named business entity. USE BLACK INK ONLY - DO NOT HIGHLIGHT ABOVE SPACE IS FOR OFFICE USE ONLY Certificate of Acceptance of Appointment by Registered Agent Nevada Nevada Street Address City Zip Code Zip Code City Mailing Address (if different from street address) noncommercial registered agent with the following address for service of process: am a: and hereby state that on X Authorized Signature of R.A. or On Behalf of R.A. Company Date b) I, BARBARA K. CEGAVSKE Secretary of State 202 North Carson Street Carson City, Nevada 89701 - 4201 (775) 684 - 5708 Website: www.nvsos.gov Nevada Nevada Street Address City Zip Code City Zip Code I accepted the appointmentsuch shorter term as registered agent for Mailing Address (if different from street address) represented entity accepting own service of process at the following address: c) Title of Office or Position of Person in Represented Entity *If changing Registered Agent when reinstating, officer's signature required. X Signature of Officer Date This form may be submittedprovided in the Award Agreement. Notwithstanding the foregoing, the term of Awards other than Awards that are structured to qualify as Incentive Stock Options under Section 9 shall be extended automatically if the Award would expire at a time when trading in Shares of Common Stock is prohibited by : a Commercial Registered Agent, Noncommercial Registered Agentlaw or Represented Entity . For more information please visit http : //www . nvsos . gov/index . aspx?page= 141 *180304* *180304* Appliance Recycling Centersthe Company’s insider trading policy to the thirtieth (30th) day after the expiration of America, Inc. National Registered Agents, Inc. of NV Name of Appointed Registered Agent OR Represented Entity Serving as Own Agent* (complete only one) a) 俺 commercial registered agent listed with the Nevada Secretary of State, Reset
Proposed Nevada Bylaws
BYLAWS
OF
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
A Nevada corporation
As adopted ____, 2017
3.13) Executive Committee. A two-thirds (2/3) majority voteissuance of the Board of Directors present at a meeting may pass a resolution establishing committees having the authority of the BoardShares to the extent providedpermitted by Applicable Law; or
3.14) Vacancies. A director may resign at any time by giving written notice of same to the Board of Directors,vote or to the President. Such resignation shall be effective upon receipt unless a later date is specified in the notice. If at any time and for any reason, including the creation of a new directorship, a vacancy occurs in the Board of Directors, the remaining directors of the Board, though less than a quorum, may elect a successor to fill such vacancy, or the Board may leave the vacancy unfilled until the next regular meeting of the shareholders, or until an intervening special meeting of the shareholders is called and held for the purpose of electing a successor. A director elected to fill the vacancy shall hold his office for the unexpired term of his predecessor, or until his successor is duly elected and qualified.
3.15) Order of Business. The following order of business shall be observed at all meetings of the Board of Directors so far as is practicable:
3.16) Informal Action by Directors. Any action required to be taken at a meeting of the directors,receive dividends or any other action which may be taken atrights as a meeting of the directors, may be taken without a meeting and notice thereof if a consent in writing, setting forth the action so taken,stockholder shall be signed by all of the directors entitled to voteexist with respect to the Shares subject matter set forth.
ARTICLE 4. OFFICERS
4.1) Number. The officersto an Option, notwithstanding the exercise of the corporationOption.
4.2) Election, Term of Office and Qualifications. AtAwardee during any regular meetingcalendar year (under all plans of the BoardCompany and any of Directors, the board may elect a Chief Executive Officer, a Chief Financial Officer, andits Subsidiaries) exceeds U.S. $100,000, such other officers and assistant officersOptions shall be treated as may be deemed advisable. Such officers shall hold office until their successors are elected and qualify; provided, however, that any officer may be removed with or without cause by the affirmative voteNonqualified Stock Options. For purposes of a majoritythis Section 9(b) of the whole Board of Directors.
4.3) The Chief Executive Officer. The Chief Executive Officer, who may alsoPlan, Incentive Stock Options shall be referred to as the President shall: (a) have general active management of the business of the corporation; (b) when present, preside at all meetings of the Board and of the shareholders; (c) see that all orders and resolutions of the Board are carriedtaken into effect; (d) sign and deliver in the name of the corporation any deeds, mortgages, bonds, contracts or other instruments pertaining to the business of the corporation, except in cases in which the authority to sign and deliver is required by law to be exercised by another person or is expressly delegated by the articles or bylaws or by the Board to some other officer or agent of the corporation; (e) maintain records of and, whenever necessary, certify all proceedings of the Board and the shareholders; and (f) perform other duties prescribed by the Board. The Chief Executive Officer may also be referred to as the President.
4.4) Assistant Executive Officers. Each assistant executive officer shall have such powers and shall perform such duties as may be prescribed by the Board of Directors. In the event of absence or disability of the Chief Executive Officer, an assistant executive officer shall succeed to his powers and dutiesaccount in the order in which they are elected orwere granted. The Fair Market Value of the Shares shall be determined as otherwise prescribedof the Grant Date.
4.5) Secretary. The Secretaryof the Grant Date or any later date, do not so comply, the Option will be treated thereafter for tax purposes as a Nonqualified Stock Option.
4.6) Chief Financial Officer. The Chief Financial Officer, who may also be referred to asAdministrator, (V) restrictions on the Treasurer, shall: (a) keep accurate financial records for the corporation; (b) deposit all money, drafts, and checks in the name of and to the credittransferability of the corporationStock Award, and (VI) such further terms and conditions, in the banks and depositories designated by the Board; (c) endorse for deposit all notes, checks, and drafts received by the corporation as ordered by the Board, making proper vouchers therefor; (d) disburse corporate funds and issue checks and drafts in the name of the corporation, as ordered by the Board; (e) render to the Chief Executive Officer and the Board, whenever requested, an account of all transactions by the Chief Financial Officer and of the financial condition of the corporation; and (f) perform other duties prescribed by the Board or by the Chief Executive Officer. The Chief Financial Officer may also be referred to as the Treasurer.
4.7) Assistant Officers. In the event of absence or disability of any officer, assistants to such officers shall succeed to the powers and duties of the absent officer in the order in which they are elected or as otherwise prescribed by the Board of Directors until such principal officer shall resume his duties or a replacement is elected by the Board of Directors. Such assistant officers shall exercise such other powers and dutieseach case not inconsistent with this Plan, as may be delegated to themdetermined from time to time by the BoardAdministrator. Unless otherwise provided in the Award Agreement, no Stock Award shall vest sooner than one (1) year after its Grant Date. More specifically, unless otherwise provided in the Award Agreement, the Stock Award shall vest in twenty-five percent (25%) increments on each of Directors, but theythe first four (4) anniversaries of its Grant Date. The Committee may, in its sole discretion, waive the vesting restrictions and any other conditions set forth in any Award Agreement under such terms and conditions as the Committee shall deem appropriate.
4.8) Officers Shall not Lend Corporate Credit. Except for the proper useParticipant. Any certificate issued in respect of the corporation, no officer of this corporationa Restricted Stock Award shall sign or endorsebe registered in the name or on behalf of this corporation, orthe applicable Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award. The Committee may require that the certificates evidencing such Shares be held in his official capacity, any obligations forcustody by the accommodationCompany until the restrictions thereon shall have lapsed and that, as a condition of any other partyAward of Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award. The Participant shall not be permitted to sell, assign, transfer, pledge, or parties, norotherwise encumber a Stock Award.
ARTICLE 5. INDEMNIFICATION
5.1) Authorityforfeiture of the Board of Directors. The corporation acting through its Board of Directors or as otherwise provided in this bylaw, shall exercise as fullyShares as may be permitteddetermined from time to time by the statutesAdministrator, (IV) restrictions on the transferability of the Stock Unit Award, and decisional(V) such further terms and conditions, in each case not inconsistent with this Plan, as may be determined from time to time by the Administrator. Unless otherwise provided in the Award Agreement, no Stock Unit Award shall vest sooner than one (1) year after its Grant Date. More specifically, unless otherwise provided in the Award Agreement, the Stock Unit Award shall vest in twenty-five percent (25%) increments on each of the first four (4) anniversaries of its Grant Date. The Committee may, in its sole discretion, waive the vesting restrictions and any other conditions set forth in any Award Agreement under such terms and conditions as the Committee shall deem appropriate.
5.2) Standard for Indemnification. Any person described in Section 5.1 may be indemnified by the corporation if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful.
5.3) No Presumptions Resulting From Termination of Actions. The determination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, have reasonable cause to believe that his conduct was unlawful.
5.4) Mandatory Indemnification. To the extent that any such person has been successful on the meritsillegal, invalid, or otherwise in defense of any action, suit, or proceeding referred to in this bylaw, or in defense of any claim, issue, or matter within this bylaw, he shall be indemnified against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection therewith.
5.5) Determination. Any indemnification under Section 5.1, unless orderedunenforceable by a court of competent jurisdiction, such provision shall be made byreformed, if possible, to the corporation only as authorized inextent necessary to render it legal, valid, and enforceable, or otherwise deleted, and the specific case upon a determination that indemnificationremainder of the director, officer, employee, or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 5.2. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to such action, suit, or proceeding or (2) if such a quorum is not obtainable, or, even if obtainable if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by a majority vote of disinterested shareholders.
5.6) Advance Payment. The expenses incurred in defending a civil or criminal action, suit, or proceeding may be paid by the corporation in advanceterms of the final dispositionPlan and/or Award shall not be affected except to the extent necessary to reform or delete such illegal, invalid, or unenforceable provision.
5.7) Continuance of Indemnification. The indemnification provided by this bylaw shall continue as to a person who has ceased to be a director, officer, employee, or agentPlan and any Award shall inure to the benefit of and be binding upon the parties hereto and their respective permitted heirs, executors,beneficiaries, successors, and administratorsassigns.
5.8) Not Exclusive Remedy. The indemnification providedChange of Control, shall be set forth in the applicable Award Agreement, deferral election forms and procedures, and rules established by this bylaw shall not exclude any other right to which an officer may be entitled under any agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office,the Administrator, and shall not implycomply in all respects with Section 409A of the Code. The following rules will apply to Awards intended to be subject to Section 409A of the Code (“
5.9) Insurance. The corporation may purchase and maintain insurance on behalfexpiration of the six (6)-month period following such Termination of Employment.
5.10) Notice of Indemnification. If, under this bylaw, any expenses or other amounts are paid by way of indemnification, otherwise than by Court order or action by the shareholders, the corporation shall, not later than the next annual meeting of shareholders unless such meeting is held within three (3) months from the date of such payment, and in any event, within fifteen (15) months from the date of such payment, mail to its shareholders of record at the time entitled to vote for the election of directors a statement specifying the persons paid, the amounts paid, and the nature and statusend of the litigationcalendar year during which the settlement of the 409A Award is specified to occur.
ARTICLE 6. SHARES AND THEIR TRANSFER
6.1) Establishment and Issuance of Shares. Subject to the provisions of the Articles of Incorporation and as provided by law, the Board of Directorsdistribution or settlement is authorized to designate and cause to be issued, classes and series of shares of the corporation, with designated voting rights, preferences, and other characteristics, at such times and for such consideration as the Board of Directors may determine.
6.2) Uncertificated Shares of Stock; Stock Certificates. The corporation may provide, to the extent andnot otherwise specified in the manner permitted by applicable law, that somePlan or all of anyan Award Agreement or all classes and series of shares of capital stock inother governing document, the corporation shall be issued in uncertificated form. Except as otherwise expressly provided by statute, the rights and obligations of the holders of certificated and uncertificated shares of the same class and series are identical. Any action providing for uncertificated shares shall not apply to shares then represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the foregoing, upon written request delivered to the Secretary of the Corporation, an owner of stock of the corporation shall be entitled to a certificate, to be in such form as the Board of Directors prescribes, certifying the number of shares of stock of the corporation owned by him. In the case of shares represented by certificates, the certificates for such stock shall be numbered in the order in which they shall be issued and shall be signed in the name of the corporation by the Chief Executive Officer, and by the Secretarydistribution, or any other proper officer of the corporation authorized by the Board of Directors. Within a reasonable time after the issuance or transfer of uncertificated shares, the corporation shall send to the registered owner of the shares a written notice containing the information required to be set forth or stated on certificates pursuant to applicable law, unless such notice is not required by law.
6.3) Transfer of Shares. Transfer of certificated and uncertificated shares of the corporationsettlement shall be made only on the booksnot later than March 15 of the corporation. The shareholderyear following the year in whose name shareswhich the Award vested or the risk of stock stand on the books of the corporation shall be deemed the owner thereof for all purposes as regards the corporation; provided, that when any transfer of shares shall be made as collateral security, and not absolutely, such facts, if knownforfeiture lapsed.
6.4) Stock Records; Transfer Agent and Registrar. The corporation shall keep, at its principal executive office or at another place or places within the United States determined by the Board, a share register not more than one year old containing the names and addresses of the shareholders and the number and classes of shares held by each shareholder. The corporation shall also keep at its principal executive office or at another place or places within the United States determined by the Board, a record of the dates on which certificates representing shares were issued, or on which uncertificated shares were issued,409A, and in no event shall the case of cancellation,Company or the respective dates of cancellation. The Board of Directors may appoint one or more transfer agents or transfer clerks, and may require all certificates for shares to bear the signature or signatures of any of them.
6.5) Facsimile Signature. Where any certificate is manually signed by a transfer agent, a transfer clerk or by a registrar appointed by the Board of Directors to perform such duties, a facsimile or engraved signature of the Chief Executive Officer and Secretary or other proper officer of the corporation authorized by the Board of Directors mayAdministrator be inscribed on the certificate in lieu of the actual signature of such officer. The fact that a certificate bears the facsimile signature of an officer who has ceased to hold office shall not affect the validity of such certificate if otherwise validly issued.
6.6) Lost Certificates. Any shareholder claiming a certificate of stock to be lost or destroyed shall make an affidavit or affirmation of that fact in such form as the Board of Directors may require, and shall, if the directors so require, give the corporation a bond of indemnity in form and with one or more sureties satisfactory to the Board, in an amount determined by the Board of Directors not exceeding double the value of the stock represented by such certificate to indemnify the corporation, against any claim that may be made of such certificate; whereupon a new certificate may be issued in the same tenor and for the same number of shares as the one alleged to have been destroyed or lost.
6.7) Treasury Stock. Treasury stock shall be held by the corporation subject to disposal by the Board of Directors, in accordance with the Articles of Incorporation and these Bylaws, and shall not have voting rights nor participate in dividends.
6.8) Inspection of Books by Shareholders. Upon written demand shareholders shall for any purpose, as provided by statute, be permitted to examine and copy the share register; records of shareholder and Board proceedings; the articles of incorporation and amendments; the bylaws and amendments; reports made to shareholders within the last three (3) years; voting trust agreements; a statement of names and addresses of its Directors and principal officers; and financial statements prepared for distribution to the shareholders or to a government agency as a matter of public record. Shareholders shall for any proper purpose and upon written demand be permitted to examine and copy other corporate records.
ARTICLE 7. DIVIDENDS, DISTRIBUTIONS, ETC.
7.1) Dividends. Subject to the provisions of the Articles of Incorporation, these bylaws, and, the applicable laws, the Board of Directors may declare a distribution in the form of a dividend whenever, and in such amounts as, in its opinion, the condition and the affairs of the corporation shall render it advisable.
7.2) Other Distributions, Reserves. Subject to the provisions of the Articles of Incorporation and of these bylaws, the Board of Directors in its discretion may purchase or acquire any of the shares of the capital stock of this corporation in accordance with law, or any of its bonds, debentures, notes, scrip or other securities or evidences of indebtedness, or from time to time may set aside from its net assets or net profits such sum or sums as it, in its absolute discretion, may think proper as a reserve fund to meet contingencies, or for the purpose of maintaining or increasing the property or business of the corporation or for any other purpose it may think conducive to the best interests of the corporation.
ARTICLE 8. FINANCIAL AND PROPERTY MANAGEMENT
8.1) Fiscal Year. The fiscal year of the corporation shall be set by the Board of Directors.
8.2) Audit of Books and Accounts. The books and accounts of the corporation shall be audited at such times as may be ordered by the Board of Directors.
8.3) Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.
8.4) Checks. All checks, drafts, or other ordersliable for the payment of, money, notes,or any gross up payment in connection with, any taxes or penalties owed by the Participant pursuant to Code Section 409A.
8.5) Deposits. All funds ofCompany nor the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies, or other depositories as the Board of Directors may select.
8.6) Voting Securities Held by Corporation. The Chief Executive Officer or other agent designated by the Board of Directors, shall have full power and authority on behalf of the corporation to attend, act and vote at any meeting of security holders of other corporations in which this corporation may hold securities. At such meeting the Chief Executive Officer, or such other agent, shall possess and exercise any and all rights and powers incident to the ownership of such securities which the corporation might possess and exercise.
ARTICLE 9. WAIVER OF NOTICE
9.1) Requirement of Waiver in Writing. Whenever any notice whatever is required to be given by these bylaws or the Articles of Incorporation of the corporation or any of the corporate laws of the State of Nevada, a waiver thereof in writing, signed by the person or persons entitled to said notice, either before, at, or after the time stated therein,Administrator shall be deemed equivalent thereto. Attendance byto be a director at a meetingtrustee of Shares or cash to be awarded under the Plan. Any liability of the Board of Directors or attendanceCompany to any Participant with respect to an Award shall be based solely upon any contractual obligations that may be created by a shareholder at a meetingthe Plan; no such obligation of the shareholdersCompany shall constitute a waiverbe deemed to be secured by any pledge or other encumbrance on any property of the noticeCompany. Neither the Company nor the Administrator shall be required to give any security or bond for the performance of said meeting.
ARTICLE 10. AMENDMENTS
10.1) Actionany obligation that may be created by Boardthis Plan.
CERTIFICATION OF BYLAWS
The above Bylaws of the Corporation are certified to have been adopted by the Board of Directors of the Corporation as of ______________, 2017.
_____________________________
Secretary
APPENDIX D:Description of Dissenters’ Rights
302A.471 Rights Of Dissenting Shareholders.
Subdivision 1.Actions creating rights.
Ashareholder of acorporationmay dissent from, and obtain payment for the fair value of the shareholder’s shares in the event of, any of the following corporate actions:
(a)unless otherwise provided in the articles, an amendment of the articles that materially and adversely affects the rights or preferences of the shares of the dissenting shareholder in that it:
(1)alters or abolishes a preferential right of the shares;
(2)creates, alters, or abolishes a right in respect of the redemption of the shares, including a provision respecting a sinking fund for the redemption or repurchase of the shares;
(3) alters or abolishes a preemptive right of the holder of the shares to acquire shares, securities other than shares, or rights to purchase shares or securities other than shares;
(4) excludes or limits the right of a shareholder to vote on a matter, or to cumulate votes, except as the right may be excluded or limited through the authorization or issuance of securities of an existing or new class or series with similar or different voting rights; except that an amendment to the articles of an issuing public corporation that provides that section 302A.671 does not apply to a control share acquisition does not give rise to the right to obtain payment under this section; or
(5) eliminates the right to obtain payment under this subdivision;
(b)a sale, lease, transfer, or other disposition of property and assets of thecorporationthat requires shareholder approval under section 302A.661, subdivision 2, but not including a disposition in dissolution described in section 302A.725, subdivision 2, or a disposition pursuant to an order of a court, or a disposition for cash on terms requiring that all or substantially all of the net proceeds of disposition be distributed to the shareholders in accordance with their respective interests within one year after the date of disposition;
(c)a plan of merger, whether under this chapter or under chapter 322B or 322C, to which thecorporationis a constituent organization, except as provided in subdivision 3, and except for a plan of merger adopted under section 302A.626;
(d)a plan of exchange, whether under this chapter or under chapter 322B or 322C, to which thecorporationis a party as thecorporationwhose shares will be acquired by the acquiring organization, except as provided in subdivision 3;
(e)a plan of conversion is adopted by thecorporationand becomes effective;
(f)an amendment of the articles in connection with a combination of a class or series under section 302A.402 that reduces the number of shares of the class or series owned by the shareholder to a fraction of a share if thecorporationexercises its right to repurchase the fractional share so created under section 302A.423; or
(g)any other corporate action taken pursuant to a shareholder votetax purposes with respect to which the articles, the bylaws, orCompany has a resolution approvedtax withholding obligation. Unless otherwise determined by the board directsCompany, withholding obligations may be settled with Shares, including Shares that dissenting shareholders may obtain payment for their shares.
Subd. 2.Beneficial owners.
(a)A shareholder shall not assert dissenters’ rights as to less than allare part of the shares registered inAward that gives rise to the namewithholding requirement; provided, however, that not more than the maximum statutory withholding requirement may be settled with Shares that are part of the shareholder, unless the shareholder dissents with respect to all the shares that are beneficially owned by another person but registered in the nameAward. The obligations of the shareholder and disclosesCompany under the name and address of each beneficial owner on whose behalf the shareholder dissents. In that event, the rights of the dissenterPlan shall be determined as if the shares as to which the shareholder has dissentedconditional on such payment or arrangements, and the other shares were registered inCompany and its Affiliates shall, to the names of different shareholders.
(b)A beneficial owner of shares who is not the shareholder may assert dissenters’ rights with respect to shares held on behalf of the beneficial owner, and shall be treated as a dissenting shareholder under the terms of this section and section 302A.473, if the beneficial owner submits to thecorporationat the time of or before the assertion of the rights a written consent of the shareholder.
Subd. 3. Rights not to apply.
(a)Unless the articles, the bylaws, or a resolution approvedextent permitted by the board otherwise provide,the right to obtain payment under this sectiondoes not apply to a shareholder of(1)the survivingcorporationin a merger with respect to shares of the shareholder that are not entitled to be voted on the merger and are not canceled or exchanged in the merger or(2)thecorporationwhose shares will be acquired by the acquiring organization in a plan of exchange with respect to shares of the shareholder that are not entitled to be voted on the plan of exchange and are not exchanged in the plan of exchange.
(b)If a date is fixed according to section 302A.445, subdivision1, for the determination of shareholders entitled to receive notice of and to vote onan action described in subdivision 1, only shareholders as of the date fixed, and beneficial owners as of the date fixed who hold through shareholders, as provided in subdivision 2, may exercise dissenters’ rights.
(c)Notwithstanding subdivision1,the right to obtain payment under this section, other than in connection with a plan of merger adopted under section 302A.621, is limited in accordance with the following provisions:
(1) The right to obtain payment under this sectionis not available for the holders of shares of any class or series of shares that is listed on the New York Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, or the NASDAQ Global Select Market.
(2) The applicability of clause(1)is determined as of:
(i) the record date fixed to determine the shareholders entitled to receive notice of, and to vote at, the meeting of shareholders to act upon thecorporate action described in subdivision 1; or
(ii) the day before the effective date ofcorporate action described in subdivision 1if there is no meeting of shareholders.
(3)Clause(1)is not applicable, andthe right to obtain payment under this sectionis available pursuant to subdivision1, for the holders of any class or series of shares who are required by the terms of thecorporate action described in subdivision 1to accept for such shares anything other than shares, or cash in lieu of fractional shares, of any class or any series of shares of a domestic or foreigncorporation, or any other ownershipinterestof any other organization, that satisfies the standards set forth in clause(1)at the time the corporate action becomes effective.
Subd. 4.Other rights.
The shareholders of acorporationwho have a right under this section to obtain payment for their shares, or who wouldlaw, have the right to obtaindeduct any such taxes from any vested Shares or any other payment for their shares absent the exception set forth in paragraph (c) of subdivision 3, do not have a right at law or in equity to have acorporate action described in subdivision 1set aside or rescinded, except when the corporate action is fraudulent with regarddue to the complaining shareholderParticipant at that time or at any future time. The Administrator may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Shares.corporation.
302A.473 Procedures For Asserting Dissenters’ Rights.
Subdivision 1. Definitions.
(a)For purposes29. Cancellation of this section,Award; Forfeiture of Gain. Notwithstanding anything to the terms defined in this subdivision havecontrary contained herein, an Award Agreement may provide that the meanings given them.
(b)“Corporation” meansAward will be cancelled and the issuerParticipant will forfeit the Shares or cash received or payable on the vesting or exercise of the shares held by a dissenter before the corporate action referred to in section 302A.471, subdivision1 or the successor by merger of that issuer.
(c)“Fair value of the shares” means the value of the shares of acorporationimmediately before the effective date of the corporate action referred to in section 302A.471, subdivision1.
(d)“Interest” meansinterestcommencing five days after the effective date of the corporate action referred to in section 302A.471, subdivision1, up toAward, and including the date of payment, calculated at the rate provided in section 549.09, subdivision1, paragraph(c), clause(1).
Subd. 2.Notice of action.
If acorporationcalls a shareholder meeting at which any action described in section 302A.471, subdivision1 is to be voted upon, the notice of the meeting shall inform each shareholder of the right to dissent and shall include a copy of section 302A.471 and this section and a brief description of the procedure to be followed under these sections.
Subd. 3.Notice of dissent.
If the proposed action must be approved by the shareholders and thecorporationholds a shareholder meeting, a shareholder who is entitled to dissent under section 302A.471 and who wishes to exercise dissenters’ rights must file with thecorporationbefore the vote on the proposed action a written notice of intent to demand thefair value of the sharesowned by the shareholder and must not vote the shares in favor of the proposed action.
Subd. 4.Notice of procedure; deposit of shares.
(a) After the proposed action has been approved by the board and, if necessary, the shareholders, thecorporationshall send to (i) all shareholders who have complied with subdivision3, (ii) all shareholders who did not sign or consent to a written action that gave effect to the action creatingthe right to obtain payment under section 302A.471, and (iii) all shareholders entitled to dissent if no shareholder vote was required, a notice that contains:
(1) the address to which a demand for payment and certificates of certificated shares must be sent in order to obtain payment and the date by which they must be received;
(2) any restrictions on transfer of uncertificated shares that will apply after the demand for payment is received;
(3) a form to be used to certify the date on which the shareholder, or the beneficial owner on whose behalf the shareholder dissents, acquired the shares or an interest in them and to demand payment; and
(4) a copy of section 302A.471 and this section and a brief description of the procedures to be followed under these sections.
(b) In order to receive thefair value of the shares, a dissenting shareholder must demand payment and deposit certificated shares or comply with any restrictions on transfer of uncertificated shares within 30 days after the notice required by paragraph(a)was given, but the dissenter retains all other rights of a shareholder until the proposed action takes effect.
Subd. 5.Payment; return of shares.
(a) After the corporate action takes effect, or after thecorporationreceives a valid demand for payment, whichever is later, thecorporationshall remit to each dissenting shareholder who has complied with subdivisions3and 4 the amount thecorporationestimates to be thefair value of the shares, plusinterest, accompanied by:
(1) thecorporation’s closing balance sheet and statement of income for a fiscal year ending not more than 16 months before the effective date of the corporate action, together with the latest available interim financial statements;
(2) an estimate by thecorporationof thefair value of the sharesand a brief description of the method used to reach the estimate; and
(3)a copy of section 302A.471 and this section, and a brief description of the procedure to be followed in demanding supplemental payment.
(b) Thecorporationmay withhold the remittance described in paragraph(a)from a person who was not a shareholder on the date the action dissented from was first announced to the public or who is dissenting on behalf of a person who was not a beneficial owner on that date. If the dissenter has complied with subdivisions 3 and 4, thecorporationshall forward to the dissenter the materials described in paragraph(a), a statement of the reason for withholding the remittance, and an offer to pay to the dissenter the amount listed in the materials if the dissenter agrees to accept that amount in full satisfaction. The dissenter may decline the offer and demand payment under subdivision 6. Failure to do so entitles the dissenter only to the amount offered. If the dissenter makes demand, subdivisions 7 and 8 apply.
(c) If thecorporationfails to remit payment within 60 days of the deposit of certificates or the imposition of transfer restrictions on uncertificated shares, it shall return all deposited certificates and cancel all transfer restrictions. However, thecorporationmay again give notice under subdivision 4 and require deposit or restrict transfer at a later time.
Subd. 6.Supplemental payment; demand.
If a dissenter believes that the amount remitted under subdivision 5 is less than thefair valueof any proceeds of the sharesplusinterest,sale or gain realized on the dissenter may give written notice to thecorporationvesting or exercise of the dissenter’s own estimate of thefair value of the shares, plusinterest, within 30 days after thecorporationmails the remittance under subdivision 5, and demand payment of the difference. Otherwise, a dissenter is entitled onlyAward must be repaid to the amount remittedCompany, under such conditions as may be required by thecorporation.
Subd. 7.Petition; determination.
If thecorporationreceives a demand under subdivision 6, it shall, within 60 days after receiving the demand, either pay to the dissenter the amount demandedApplicable Law or agreed toestablished by the dissenter after discussion with thecorporationor file in court a petition requesting that the court determine thefair value of the shares, plusinterest. The petition shall befiledin the county in which the registered office of thecorporationis located, except that a surviving foreigncorporationthat receives a demand relating to the shares of a constituent domesticcorporationshall file the petition in the county in this state in which the last registered office of the constituentcorporationwas located. The petition shall name as parties all dissenters who have demanded payment under subdivision 6 and who have not reached agreement with thecorporation. Thecorporationshall, after filing the petition, serve all parties with a summons and copy of the petition under theRules of Civil Procedure. Nonresidents of this state may be served by registered or certified mail or by publication as provided by law. Except as otherwise provided, the Rules of Civil Procedure apply to this proceeding. The jurisdiction of the court is plenary and exclusive. The court may appoint appraisers, with powers and authorities the court deems proper, to receive evidence on and recommend the amount of thefair value of the shares. The court shall determine whether the shareholder or shareholders in question have fully complied with the requirements of this section, and shall determine thefair value of the shares, taking into account any and all factors the court finds relevant, computed by any method or combination of methods that the court,Committee in its discretion, sees fit to use, whether or not used by thesole discretion.corporationor by a dissenter. Thefair value of the sharesas determined by the court is binding on all shareholders, wherever located. A dissenter is entitled to judgment in cash for the amount by which thefair value of the sharesas determined by the court, plusinterest, exceeds the amount, if any, remitted under subdivision 5, but shall not be liable to thecorporationfor the amount, if any, by which the amount, if any, remitted to the dissenter under subdivision 5 exceeds thefair value of the sharesas determined by the court, plusinterest.
Subd. 8.Costs; fees; expenses.
(a) The court shall determine the costs and expenses of a proceeding under subdivision 7, including the reasonable expenses and compensation of any appraisers appointed by the court, and shall assess those costs and expenses against thecorporation, except that the court may assess part or all of those costs and expenses against a dissenter whose action in demanding payment under subdivision 6 is found to be arbitrary, vexatious, or not in good faith.
(b) If the court finds that thecorporationhas failed to comply substantially with this section, the court may assess all fees and expenses of any experts or attorneys as the court deems equitable. These fees and expenses may also be assessed against a person who has acted arbitrarily, vexatiously, or not in good faith in bringing the proceeding, and may be awarded to a party injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an attorney for the dissenters out of the amount awarded to the dissenters, if any.
