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EXHIBIT 10.3
THE SECURITIES TO WHICH THIS AGREEMENT RELATES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. SUCH SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE OR SOLD IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT THEREFOR UNDER
SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
INCENTIVE STOCK OPTION AGREEMENT
__________________, Optionee:
Waste Connections., Inc. (the "Company"), pursuant to its 1997 Stock
Option Plan (the "Plan"), has this ______________, 19___, granted to you, the
optionee named above, an option to purchase shares of the common stock of the
Company ("Stock"). This option is intended to qualify as an "incentive stock
option" within the meaning of section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
The grant under this Incentive Stock Option Agreement (the "Agreement")
is in connection with and in furtherance of the Company's compensatory benefit
plan for participation of the Company's Employees (including Officers),
Directors or Consultants and is intended to comply with Rule 701 promulgated by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"). Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to them in the Plan. The option granted
hereunder shall be subject to and governed by the following terms and
conditions:
1. The total number of shares of Stock subject to this option is
______________ shares. Subject to the limitations herein and in the Plan, this
option shall become exercisable (vest) as follows:
Number of Shares Date of Earliest Exercise
(Installment) (Vesting)
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The installments provided for are cumulative. Each such installment that becomes
exercisable shall remain exercisable until expiration or earlier termination of
the option.
2. (a) The exercise price of this option is $_____________________
per share, being not less than 100 percent of [110 percent if Optionee is a Ten
Percent Shareholder] the fair market value of the Stock on the date of grant of
this option.
(b) Payment of the exercise price per share is due in full in
cash (including check) on exercise of all or any part of each installment that
has become exercisable by you; provided that, if at the time of exercise the
Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment of the exercise price, to the extent permitted by the Company and
applicable statutes and regulations, may be made by having the Company withhold
shares of Stock issuable on such exercise, by delivering shares of Stock already
owned by you, or by delivering a combination of cash and such shares. Such Stock
(i) shall be valued at its fair market value at the close of business on the
date of exercise, (ii) if originally acquired from the Company, must have been
held for the period required to avoid a charge to the Company's reported
earnings, and (iii) must be owned free and clear of any liens, claims,
encumbrances or security interests.
(c) Notwithstanding the foregoing, this option may be exercised
pursuant to a program developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by the Company
prior to the issuance of Stock.
3. (a) Subject to the provisions of this Agreement, you may elect
at any time during your Continuous Status as an Employee, Consultant or Director
to exercise this option as to any part or all of the shares subject to this
option at any time during the term hereof, including, without limitation, a time
prior to the date of earliest exercise (vesting) stated in paragraph 1 hereof;
provided that:
(i) a partial exercise of this option shall be deemed to
cover first vested shares and then unvested shares next vesting;
(ii) any shares so purchased that shall not have vested as
of the date of exercise shall be subject to the purchase option in favor of the
Company as described in the Early Exercise Stock Purchase Agreement available
from the Company;
(iii) you shall enter into an Early Exercise Stock
Purchase Agreement in the form available from the Company with a vesting
schedule that will result in the same vesting as if no early exercise had
occurred; and
(iv) you acknowledge that the aggregate fair market value
(determined as of the date options are granted) of any Stock subject to
Incentive Stock Options granted to you by the Company or any parent or
Subsidiary that become exercisable for the first time during any
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calendar year may not exceed $100,000, and agree that to the extent that the
aggregate fair market value of Stock with respect to which such Incentive Stock
Options are exercisable by you for the first time in a calendar year exceeds
$100,000, the options or portions thereof in excess of such limit shall be
treated (according to the order in which they were granted) as Nonqualified
Stock Options.
(b) The election provided in this paragraph 3 to purchase shares
on the exercise of this option prior to the vesting dates shall cease on
termination of your Continuous Status as an Employee, Consultant or Director and
may not be exercised from or after the date thereof.
4. This option may not be exercised for any number of shares that would
require the issuance of anything other than whole shares.
5. Notwithstanding anything to the contrary herein, this option may not
be exercised unless the shares issuable on exercise of this option are then
registered under the Act or, if such shares are not then so registered, the
Company shall have determined that such exercise and issuance would be exempt
from the registration requirements of the Act.
6. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on
___________________ (which date shall be no more than [ten years] [five years if
Optionee is a Ten Percent Shareholder] from the date this option is granted). In
no event may this option be exercised on or after the date on which it
terminates. This option shall terminate prior to the expiration of its term on
the day after the termination of your Continuous Status as an Employee,
Consultant or Director for any reason or for no reason, unless:
(a) such termination is due to your retirement or Disability and
you do not die within the three months after such termination, in which event
the option shall terminate on the earlier of the termination date set forth
above or six months after such termination of your Continuous Status as an
Employee, Consultant or Director; or
(b) such termination is due to your death, or such termination is
due to your retirement or Disability and you die within three months after such
termination, in which event the option shall terminate on the earlier of the
termination date set forth above or the first anniversary of your death.
Notwithstanding any of the foregoing provisions to the contrary
however, this option may be exercised following termination of your Continuous
Status as an Employee, Consultant or Director only as to that number of shares
as to which it shall have been exercisable under paragraph 1 of this Agreement
on the date of such termination.
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7. (a) This option may be exercised, to the extent specified above,
by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to subsection 5(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter into an arrangement
providing for the cash payment by you to the Company of any tax withholding
obligation of the Company arising by reason of (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired on
such exercise;
(ii) you will notify the Company in writing within fifteen
days after the date of any disposition of any of the shares of the Stock issued
on exercise of this option that occurs within two years after the date of this
option grant or within one year after such shares of Stock are issued on
exercise of this option; and
(iii) the Company (or a representative of the underwriters)
may, in connection with an underwritten registration of the offering of any
securities of the Company under the Act, require that you not sell or otherwise
transfer or dispose of any shares of Stock or other securities of the Company
during such period (not to exceed 180 days) following the effective date (the
"Effective Date") of the registration statement of the Company filed under the
Act as may be requested by the Company or the representative of the
underwriters. For purposes of this restriction, you will be deemed to own
securities which (i) are owned directly or indirectly by you, including
securities held for your benefit by nominees, custodians, brokers or pledgees;
(ii) may be acquired by you within sixty days of the Effective Date; (iii) are
owned directly or indirectly, by or for your brothers or sisters (whether by
whole or half blood) spouse, ancestors and lineal descendants; or (iv) are
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust of which you are a shareholder, partner or beneficiary, but only to the
extent of your proportionate interest therein as a shareholder, partner or
beneficiary thereof. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
8. You hereby represent and warrant to and agree with the Company as
follows:
(a) You have been granted access to, and have reviewed carefully,
the Plan and such records of the Company as may be necessary to permit you to
evaluate the option and, before any exercise of the option, you will review such
records of the Company as may be necessary to permit you to evaluate the merits
and risks of an investment in Stock. You are entering into this Agreement and
the transactions contemplated hereby solely in reliance on your own
investigation and such review. You have had an opportunity to meet with the
officers of the
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Company subsequent to review of such information to discuss with them your
questions concerning the Company and the terms and conditions of the
acquisitions hereunder.
(b) You are acquiring the option and will acquire the Stock, if
at all, pursuant to this Agreement with your own funds, and not with the funds
of anyone else. You are acquiring the option and will acquire the Stock, if at
all, for your own account, not as a nominee or agent and not for the account of
any other person or firm. No one else has or will have on any exercise of the
option any interest, beneficial or otherwise, in the option or, on the exercise
of the option, in any of the shares of Stock to be acquired on such exercise.
You are not, and prior to any exercise of the option will not be, obligated to
transfer the option or any Stock or any interest therein to anyone else, and you
do not and will not have any agreement or understanding to do so. You are
acquiring the option and will purchase Stock on the exercise hereof, if at all,
for investment for an indefinite period and not with a view to the sale or
distribution of the option or any Stock or any part or all thereof, by public or
private sale or other disposition, and you have no intention of selling,
granting any participation in or otherwise distributing or disposing of any or
all of the option or any Stock or any interest therein. You do not, and on any
exercise of the option will not, intend to subdivide the option or any shares
purchased on exercise thereof with anyone.
(c) At the time of any acquisition of Stock you will be able to
bear the economic risk of the investment in any Stock purchased. You are aware
that if you exercise the option, you must be prepared to hold any Stock received
for an indefinite period. You understand that neither the option nor the Stock
has been registered under the Act, on the ground, among others, that no
distribution or public offering of the Company's securities is to be effected
and any Stock acquired on exercise thereof will be acquired in connection with
transactions not involving any public offering within the meaning of section
4(2) of the Act. The Stock, if and when issued, will be "restricted securities",
as that term is defined in Rule 144 under the Act, and, accordingly, apart from
exercise of the option, the option and such Stock must be held indefinitely
unless they are subsequently registered under the Act or an exemption from such
registration is available. You understand and agree that the Company is not
under any obligation to register the option or any Stock under the Act or to
comply with any exemption under the Act.
You understand that the Company is relying in part on your
representations as set forth herein for purposes of claiming the exemption from
registration under the Act provided in section 3(b) or 4(2) thereof and that the
basis for such exemption may not be present if, notwithstanding your
representations herein, you have in mind merely acquiring the option or shares
for resale on the occurrence or nonoccurrence of some predetermined event. You
do not have in mind merely acquiring the option or any shares for resale on the
occurrence or nonoccurrence of any predetermined event.
(d) You have such knowledge and experience in financial and
business matters that the you are capable of evaluating the merits and risks of
the prospective investment contemplated by this Agreement, and you have
carefully reviewed and will carefully review all
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the information regarding the Company, access to which has been and will be
accorded to you hereunder, are thoroughly familiar with the business, operations
and properties of the Company by virtue of such review and of your relationship
with the Company and have discussed with the officers of the Company any
questions you have with respect to the Company.
(e) Without in any way limiting your representations as set forth
herein, you further agree that you shall in no event make any disposition of all
or any part of or interest in the Stock or the option and that the Stock and the
option shall not be encumbered, pledged, hypothecated, sold, assigned or
transferred by you nor shall you receive any consideration for the option or any
Stock or for any interest therein from any person, unless and until prior to any
proposed encumbrance, pledge, hypothecation, sale, assignment, transfer or other
disposition of the option or any Stock, either (i) a registration statement on
Form S-1 (or any other form replacing such form or appropriate for the purpose
under the Act) with respect to the option or the Stock, as the case may be,
proposed to be transferred or otherwise disposed of shall be then effective or
(ii)(1) you have notified the Company of the proposed disposition and have
furnished the Company with a detailed statement of the circumstances surrounding
the proposed disposition, (2) you have furnished the Company with an opinion of
counsel (obtained at your expense) in form and substance satisfactory to the
Company to the effect that such disposition will not require registration of the
option or any Stock, as the case may be, under the Act or qualification of the
option or any Stock, as the case may be, under any other securities law and (3)
counsel for the Company shall have concurred in such opinion and the Company
shall have advised you of such concurrence.
(f) If the Company proposes to sell Stock in a public offering
registered under the Act or exempt from registration under the Act, the
administrators of the securities laws of certain states may require as a
condition of registration or such exemption that some or all of the Shares be
deposited in an escrow or be subject to waivers of rights to dividends and
assets on liquidation, or both, for an extended period of time, subject to
release if specified financial or market requirements are met and partial
cancellation if such requirements are not met. You agree that you will enter
into any such escrow or waiver agreement that the Company may consider necessary
for the successful completion of such public offering.
(g) If, in the opinion of counsel for the Company, you at any
time act in any manner not consistent with your representations, warranties and
agreements in this Agreement, the Company may refuse to transfer the option or
any Stock until such time as counsel for the Company is of the opinion that such
transfer may be effected in compliance with all provisions of this Agreement and
such transfer will not require registration of the option or any Stock under the
Act or qualification of the option or any Stock under any other securities law.
(h) You hereby agree to indemnify and defend the Company and its
directors, officers, employees and agents and hold them harmless from and
against any and all claims, liabilities, damages or expenses incurred on account
of or arising out of (i) any inaccuracy in or breach of any of your
representations, warranties or agreements in this Agreement, including,
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without limitation, the defense of any claim based on any allegation of fact
inconsistent with any of such representations, warranties or agreements; (ii)
the disposition of the option or any Stock that you may receive, contrary to any
of such representations, warranties and agreements; or (iii) any action, suit or
proceeding based on a claim that any of such representations, warranties or
agreements were inaccurate or misleading or otherwise cause for obtaining
damages or redress from the Company under the Act or any other securities law.
(i) Certificates representing any Stock received on exercise of
the option will bear a legend on the face thereof (or on the reverse thereof
with a reference to such legend on the face thereof) substantially in the form
set forth below, which legend restricts the sale, transfer or disposition of the
Stock otherwise than in accordance with this Agreement:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
ENCUMBERED, PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR
AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION AND CONCURRED IN BY
THE CORPORATION'S COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID
ACT OR SUCH TRANSACTION COMPLIES WITH RULES PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION UNDER SAID ACT. IN ADDITION, SALE, TRANSFER,
ENCUMBRANCE, HYPOTHECATION, GIFT OR OTHER DISPOSITION OR ALIENATION OF SUCH
SHARES OR ANY INTEREST THEREIN IS RESTRICTED BY AND SUBJECT TO AN INCENTIVE
STOCK OPTION AGREEMENT DATED ________________, 19__, A COPY OF WHICH MAY BE
INSPECTED AT THE PRINCIPAL OFFICE OF THE CORPORATION AND ALL OF THE
PROVISIONS OF WHICH ARE INCORPORATED BY REFERENCE IN THIS CERTIFICATE.
(j) If Stock acquired on exercise of this option is transferred
other than by will or by the laws of descent and distribution within two years
after the date this option is granted or within one year after the issuance of
such Stock on exercise of this option, such transfer shall be a "disqualifying
disposition" under the Code, and you must bear the tax consequences thereof.
(k) The Company may require you to furnish to the Company, prior
and as a condition to the issuance of any Stock on any exercise of the option,
an agreement (in such form as the Company may specify) in which you confirm the
foregoing representations, warranties and agreements or make similar or
additional representations, warranties and agreements with respect to such
Stock.
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9. This option is generally not transferable, except by will or by the
laws of descent and distribution, unless the Company expressly permits a
transfer, such as to a trust or other entity for estate planning purposes.
Unless the Company approves such a transfer, this option is exercisable during
your life only by you.
10. This Agreement is not an employment contract and nothing in this
Agreement shall be deemed to create in any way whatsoever any obligation on your
part to continue in the employ of the Company, or of the Company to continue
your employment with the Company.
11. Any notice or other communication to be given under or in
connection with this Agreement or the Plan shall be given in writing and shall
be deemed effectively given on receipt or, in the case of notices from the
Company to you, five days after deposit in the United States mail, postage
prepaid, addressed to you at the address specified below or at such other
address as you may hereafter designate by notice to the Company.
12. This Agreement is subject to all provisions of the Plan, a copy
of which is attached hereto and made a part of this Agreement, including,
without limitation, the provisions of section 5 of the Plan relating to option
provisions, and is further subject to all interpretations, amendments, rules
and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of this
Agreement and those of the Plan, the provisions of the Plan shall control.
WASTE CONNECTIONS, INC.
By
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Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1997 Stock Option Plan
Notice of Exercise
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The undersigned:
(a) Acknowledges receipt of the foregoing Incentive Stock Option
Agreement and the attachments referenced therein and understands that all rights
and liabilities with respect to the option granted under the Agreement are set
forth in such Agreement and the Plan; and
(b) Acknowledges that as of the date of grant set forth in such
Agreement, the Agreement sets forth the entire understanding between the
undersigned optionee and the Company and its Subsidiaries regarding the
acquisition of Stock pursuant to the option and supersedes all prior oral and
written agreements on that subject with the exception of (i) the options, if
any, previously granted and delivered to the undersigned under stock option
plans of the Company, and (ii) the following agreements only:
NONE:
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(Initial)
OTHER:
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OPTIONEE
Address:
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