Exhibit 28.1
APPLIANCE RECYCLING CENTERS OF AMERICA, INC.
AMENDED AND RESTATED 1997 STOCK OPTION PLAN
Effective April 29, 1999
1. PURPOSE. The purpose of this Plan is to provide a means whereby
APPLIANCE RECYCLING CENTERS OF AMERICA, INC., a Minnesota corporation, (the
"Company") may, through the grant of incentive stock options and nonqualified
stock options to Eligible Persons, as defined below, attract and retain persons
of ability as employees, officers and directors and motivate such persons to
exert their best efforts on behalf of the Company and any Subsidiary. As used
herein the term "Subsidiary" shall mean any corporation which at the time an
option is granted under this Plan qualifies as a subsidiary of the Company under
the definition of "subsidiary corporation" contained in Section 424(f) of the
Internal Revenue Code of 1986, as amended from time to time (the "Code"), or any
similar provision hereafter enacted, except that such term shall not include any
corporation which is classified as a foreign corporation pursuant to Section
7701 of the Code. The term "incentive stock options" means options to purchase
Common Stock, without par value, of the Company ("Stock") which at the time such
options are granted under this Plan qualify as incentive stock options within
the meaning of Section 422 of the Code. The term "nonqualified stock options"
means options to purchase Stock which at the time such options are granted under
this Plan do not qualify as incentive stock options. With respect to incentive
stock options, the term "Eligible Persons" includes "Employees," i.e., any
full-time employees (including officers and directors who are also employees) of
the Company or of any Subsidiary. With respect to nonqualified stock options,
"Eligible Persons" also includes "Independent" Directors of the Company (i.e.,
directors who are not full-time employees of the Company or of any Subsidiary)
as provided in Sections 6 and 7. The term "Board" means the Board of Directors
of the Company. The term "Optionee" means an individual granted an option
pursuant to the terms of the Plan. The term "Plan" means the 1997 Stock Option
Plan as set forth herein, which may be amended from time to time.
2. SHARES SUBJECT TO THE PLAN. Options may be granted by the Company
from time to time to Eligible Persons to purchase an aggregate of 200,000 shares
of Stock, and such amount of shares shall be reserved for options granted under
the Plan (subject to adjustment as provided in Section 8(c)). The shares issued
upon exercise of options granted under the Plan may be authorized and unissued
shares or shares held by the Company in its treasury. If any option granted
under the Plan shall terminate, expire or, with the consent of the Optionee, be
canceled as to any shares, new options may hereafter be granted covering such
shares.
3. ADMINISTRATION OF THE PLAN. The Plan may be administered by the
Company's Board of Directors or a Compensation and Benefits Committee (the
"Committee") consisting of two or more persons appointed by the Board and
serving at the Board's pleasure. Members of the Committee shall be "Non-Employee
Directors" within the meaning of Rule
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16b-3 under the Securities Exchange Act of 1934 ("Exchange Act") or any
successor rule or regulation. Any vacancy occurring in the membership of the
Committee shall be filled by appointment by the Board.
Sections 6 and 7 of the Plan shall be administered by the Board of
Directors, whose construction and interpretation of the terms and provisions of
Sections 6 and 7 shall be final and conclusive. The amount of Stock subject to
options granted to Independent Directors under Sections 6 and 7, the timing of
the grants of such options, the eligibility for such options, and the terms and
conditions of such options shall be automatic and non-discretionary in
accordance with the terms of Sections 6 and 7. With respect to the remainder of
the Plan, the Board or the Committee may interpret the Plan, prescribe, amend,
and rescind any rules and regulations necessary or appropriate for the
administration of the Plan, or for the continued qualification of any incentive
stock options granted thereunder and make such other determinations and take
such other action as it deems necessary or advisable, except as otherwise
expressly reserved to the Board in the Plan. Any interpretation, determination,
or other action made or taken by the Board or the Committee shall be final,
binding and conclusive. If no Committee is appointed, the Board shall administer
the Plan.
4. GRANT OF EMPLOYEE OPTIONS. Subject to the provisions of the Plan,
the Board or the Committee shall (a) determine and designate from time to time
those Employees to whom options are to be granted and the number of shares of
Stock to be optioned to each Employee; (b) authorize the granting of incentive
stock options or nonqualified stock options or combination thereof; (c)
determine the number of shares subject to each option; and (d) determine the
time or times when and the manner in which each option shall be exercisable and
the duration of the exercise period; provided, however, that (i) no option shall
be granted after the expiration of ten years from the effective date of the Plan
specified in Section 14, below and (ii) the aggregate fair market value
(determined as of the date the option is granted) of the Stock for which
incentive stock options will first become exercisable by an Employee in any
calendar year under all incentive stock option plans of the Company and its
Subsidiaries shall not exceed $100,000.
5. TERMS AND CONDITIONS OF EMPLOYEE OPTIONS. Each option granted under
Section 4 of the Plan shall be evidenced by an agreement, in a form approved by
the Board or the Committee. Such agreement shall be subject to the following
express terms and conditions and to such other terms and conditions as the Board
or the Committee may deem appropriate:
(a) OPTION PERIOD. Each option agreement shall specify the
period for which the option thereunder is granted and shall provide
that the option shall expire at the end of such period. The Board or
the Committee may extend such period provided that, in the case of an
incentive stock option, such extension shall not in any way disqualify
the option as an incentive stock option. In no case shall such period,
including any such extensions, exceed ten years from the date of grant,
provided, however, that, in the case of an incentive stock option
granted to an individual who, at the time of grant, owns stock
possessing more than 10 percent of the total combined voting power of
all classes of
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stock of the Company (a "Ten Percent Stockholder"), such period,
including extensions, shall not exceed five years from the date of
grant.
(b) OPTION PRICE. The option price per share shall be
determined by the Board or the Committee at the time any option is
granted, and (i) in the case of an incentive stock option shall not be
less than the fair market value, or (ii) in the case of an incentive
stock option granted to a Ten Percent Stockholder, shall not be less
than 110 percent of the fair market value, of one share of Stock on the
date the option is granted, as determined by the Board or the
Committee.
(c) EXERCISE OF OPTION. Each option agreement shall specify
the time or times when the option shall become exercisable and the
duration of the exercise period, and may provide for vesting provisions
and/or exercisability in installments. In the case of an option granted
to a full-time Employee of the Company or of any Subsidiary, no part of
the option may be exercised until the Optionee shall have remained in
the employ of the Company or of a Subsidiary for such period, which
shall be no less than one year, after the date on which the option is
granted as the Board or the Committee may specify in the option
agreement.
(d) PAYMENT OF PURCHASE PRICE UPON EXERCISE. The purchase
price for each stock option shall be paid to the Company in full upon
exercise and shall be payable in cash in United States dollars
(including check, bank draft or money order); by delivering to the
Company shares of the Common Stock having a fair market value on the
date of exercise of the stock option equal to the purchase price for
the shares being purchased (except that the portion of the purchase
price representing a fraction of a share, if any, shall in any event be
paid in cash); or by delivering instructions to the Company to withhold
from the shares that would otherwise be issued upon exercise of the
stock option that number of shares having a fair market value equal to
the purchase price; or by any combination of the above, as the Board or
the Committee, in its sole discretion, shall determine. Delivery of
shares may also be accomplished through the effective transfer to the
Company of shares held by a broker or other agent. The Company will
also cooperate with any person exercising a stock option who
participates in a cashless exercise program of a broker or other agent
under which all or part of the shares received upon exercise of the
stock option are sold through the broker or other agent or under which
the broker or other agent makes a loan to such person. As of the date
of exercise the person exercising the stock option shall be considered
for all purposes to be the owner of the shares with respect to which
the stock option has been exercised. Payment of the purchase price with
shares shall not increase the number of shares of the Common Stock
which may be issued under the Plan.
(e) EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF
EMPLOYMENT. In the case of an option granted to a full-time Employee of
the Company or of any Subsidiary:
(1) If the Optionee shall die while an employee of
the Company or a Subsidiary, the Optionee's options may be
exercised, to the extent that the Optionee
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shall have been entitled to do so on the date of death, by the
person or persons to whom the Optionee's right under the
option pass by will or applicable law, or if no such person
has such right, by the executors or administrators of the
Optionee, at any time, or from time to time, but not later
than the expiration date specified in paragraph (a) of this
Section 5 or one year after the Optionee's death, whichever
date is earlier; and
(2) If the Optionee's employment by the Company or a
Subsidiary shall terminate because of disability, or voluntary
or involuntary separation, the Optionee may exercise the
options, to the extent that he or she shall have been entitled
to do so at the date of the termination of employment, at any
time, or from time to time, but not later than the expiration
date specified in paragraph (a) of this Section 5 or three
months after termination of employment, whichever date is
earlier;
provided, however, the Board or the Committee may, in its sole
discretion, further limit the time periods set forth herein during
which an option may be exercised, and any such limitations shall be
specified in the option agreement.
6. GRANT OF INDEPENDENT DIRECTOR OPTIONS. Each Independent Director,
upon his or her initial election to a first term on the Board of Directors,
shall, on the date of such initial election, automatically be granted an option
to purchase 5,000 shares of Common Stock. In addition, on the date of each
annual meeting of shareholders of the Company, beginning with the annual meeting
to be held in 1999, each Independent Director shall automatically be granted
options to purchase 5,000 shares of Common Stock upon the re-election of such
Independent Director to the Board by the shareholders of the Company.
7. TERMS AND CONDITIONS OF INDEPENDENT DIRECTOR OPTIONS. Each option
granted under Section 6 of this Plan to an Independent Director shall be
evidenced by an agreement, in a form approved by the Board. Such agreement shall
be subject to the following express terms and conditions:
(a) TERM. Each option granted under Section 6 to an
Independent Director shall have a term of ten years.
(b) EXERCISE PRICE. The exercise price of options granted
under Section 6 shall be 100% of the fair market value of one share of
Common Stock on the date of grant.
(c) VESTING AND TERMINATION OF OPTIONS. Subject to Section
8(g), options granted under Section 6 shall become exercisable six
months after the date of grant. If an Independent Director ceases to be
a member of the Board by reason of death or total disability and has
served as a director continuously since the date of the grant, the
option will become immediately exercisable in full, and shall remain
exercisable, by the Optionee or the person or persons to whom the
Independent Director's right under the option shall pass by will or
applicable law, or if no such person has such right, by the executors
or administrators of the Independent Director, for the remaining term
of the
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option. If the Independent Director ceases to be a member of the Board
for any other reason, the option will remain exercisable, to the extent
that it was exercisable on the date such Independent Director ceased to
be a member of the Board, for the remaining term of the option, but no
further vesting of the option shall occur.
(d) MISCELLANEOUS. Except as provided in this Plan, no
Independent Director shall have any claim or right to be granted an
option under this Plan. Neither the Plan nor any action hereunder shall
be construed as giving any director any right to be retained in the
service of the Company.
8. TERMS AND CONDITIONS OF OPTIONS IN GENERAL.
(a) NONTRANSFERABILITY. No option granted under the Plan shall
be transferable other than by will or by the law of descent and
distribution. During the lifetime of the Optionee, an option shall be
exercisable only by the Optionee.
(b) INVESTMENT REPRESENTATION. Each option agreement may
provide that, upon demand by the Board or the Committee for such a
representation, the Optionee (or any other person acting under Section
5(e) or Section 7(c)) shall deliver to the Board or the Committee at
the time of any exercise of an option or portion thereof a written
representation that the shares to be acquired upon such exercise are to
be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation
prior to the delivery of any shares issued upon exercise of an option
and prior to the expiration of the option period shall be a condition
precedent to the right of the Optionee or such other person to purchase
any shares.
(c) ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK. In the
event of any change in the Common Stock of the Company by reason of any
stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of shares, or rights
offering to purchase Common Stock at a price substantially below fair
market value, or of any similar change affecting the Common Stock, the
number and kind of shares which thereafter may be optioned and sold
under the Plan and the number and kind of shares subject to option in
outstanding option agreements and the purchase price per share thereof
shall be appropriately adjusted consistent with such change in such
manner as the Board or the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or
available for, participants in the Plan.
(d) INCENTIVE STOCK OPTIONS. Each option agreement which
provides for the grant of an incentive stock option to a participant
shall contain such terms and provisions as the Board or the Committee
may determine to be necessary or desirable in order to qualify such
option as an incentive stock option within the meaning of Section 422
of the Code.
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(e) NO RIGHTS AS SHAREHOLDER. No Optionee shall have any
rights as a shareholder with respect to any shares subject to his
option prior to the date of issuance to him of a certificate or
certificates for such shares.
(f) NO RIGHTS TO CONTINUED EMPLOYMENT. The Plan and any option
granted under the Plan shall not confer upon any Optionee any right
with respect to continuance of employment by the Company or any
Subsidiary, nor shall they interfere in any way with the right of the
Company or any Subsidiary by which an Optionee is employed to terminate
his employment at any time.
(g) COMPLIANCE WITH SECTION 16(b). In the case of Optionees
who are subject to Section 16 of the Exchange Act, the Company intends
that the Plan and any award granted under the Plan satisfy the
applicable requirements of Section 16 and any regulations promulgated
thereunder, including Rule 16b-3. If a provision of the Plan or any
award would otherwise conflict with such intent, that provision, to the
extent possible, shall be interpreted so as to avoid the conflict. To
the extent of any remaining irreconcilable conflict with such intent,
the provision shall be deemed void as applied to Optionees who are
subject to Section 16 of the Exchange Act.
9. WITHHOLDING TAXES. The Company and its Subsidiaries shall have the
right to require the payment (through withholding or otherwise) of any federal,
state or local taxes required by law to be withheld with respect to the issuance
of shares upon the exercise of an option.
10. CONTINGENT AWARDS. Any option granted under the Plan prior to the
date on which the Plan is approved by the Company's stockholders shall be
contingent upon such approval. If stockholder approval is not received within 12
months after the date on which this Plan is adopted by the Board, such award
shall be void and of no force or effect.
11. STOCKHOLDER APPROVAL. The approval of the Plan or any amendment by
the Company's stockholders must comply with all applicable provisions of the
Company's charter, bylaws, and applicable state law prescribing the method and
degree of stockholder approval required for granting awards of the type provided
under the Plan. Absent any such prescribed method and degree of stockholder
approval, the Plan or such amendment must be approved by a simple majority vote
of stockholders voting, either in person or by proxy, at a duly held
stockholders' meeting.
12. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the grant and
exercise of options thereunder, and the obligation of the Company to sell and
deliver shares under such options, shall be subject to all applicable federal
and state laws, rules, and regulations and to such approvals by any government
or regulatory agency as may be required. The Company shall not be required to
issue or deliver any certificates for shares of Common Stock prior to the
completion of any registration or qualification of such shares under any federal
or state law, or any ruling or regulation of any government body which the
Company shall, in its sole discretion, determine to be necessary or advisable.
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13. AMENDMENT AND DISCONTINUANCE. The Plan shall expire on March 6,
2007, unless earlier terminated as provided herein, and no options shall be
granted under the Plan after it expires or is terminated. Options outstanding at
the expiration or termination of the Plan shall continue to be exercisable in
accordance with their respective terms and conditions. The Board of Directors of
the Company may from time to time amend, suspend or discontinue the Plan;
provided, however, that subject to the provisions of Section 8(c), no action of
the Board of Directors or of the Committee may, without shareholder approval,
(i) increase the number of shares reserved for options pursuant to Section 2 or
(ii) permit a change in the classification of Employees eligible to participate
in the Plan; and further provided, that no amendment to the Plan shall be
effective without approval of the shareholders, if shareholder approval is
required pursuant to Rule 16b-3 under the Exchange Act (or any successor rule or
regulations) or the applicable rules of any securities exchange or the NASD.
Without the written consent of an Optionee, no amendment or suspension of the
Plan shall alter or impair any option previously granted to him under the Plan.
14. EFFECTIVE DATE OF THE PLAN. The original effective date of the Plan
was March 7, 1997, subject to shareholder approval on or before March 7, 1998.
The Plan was approved by the shareholders of the Company on April 24, 1997. The
Plan was amended by the Board on May 20, 1997. The Plan was further amended by
the Board on November 2, 1998 and on March 5, 1999, subject to approval by the
shareholders (which amendments were approved by the shareholders of the Company
on April 29, 1999). This amendment and restatement of the Plan was effective as
of April 29, 1999.
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