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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
Waste Connections, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
941053100
(CUSIP Number)
Carolyn S. Reiser, Esq.
Shartsis Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, CA 94111
(415) 421-6500
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
August 1, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check
the following box /X/.
Note: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
SEC 1746 (10-97)<PAGE>
<PAGE>
CUSIP No. 941053100 Page 2 of 7 Pages
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Ronald J. Mittelstaedt
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- ------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 133,333
BENEFICIALLY -----------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 925,043
REPORTING -----------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 133,333
-----------------------------------------
10 SHARED DISPOSITIVE POWER
925,043
- ------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,058,376
- ------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.8%
- ------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
<PAGE>
<PAGE>
CUSIP No. 941053100 Page 3 of 7 Pages
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSON
IRS IDENTIFICATION NO. OF ABOVE PERSON
Mittelstaedt Family Trust
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- ------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) / /
- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY -----------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 925,043
REPORTING -----------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-----------------------------------------
10 SHARED DISPOSITIVE POWER
925,043
- ------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
925,043
- ------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- ------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.4%
- ------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO
- ------------------------------------------------------------------<PAGE>
<PAGE>
CUSIP No. 941053100 Page 4 of 7 Pages
ITEM 1. SECURITY AND ISSUER.
This statement relates to shares of Common Stock (the "Stock") of Waste
Connections, Inc. ("WCNX"). The principal executive office of WCNX is
located at 2260 Douglas Boulevard, Suite 280, Roseville, CA 95661.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this statement and the persons enumerated in Instruction
C of Schedule 13D and, where applicable, their respective places of
organization, general partners, directors, executive officers and controlling
persons, and the information regarding them, are as follows:
(a) Ronald J. Mittelstaedt ("Mittelstaedt"); Mittelstaedt Family Trust
("Trust"), a California trust of which Mittelstaedt is the sole trustee.
(b) The business address of Mittelstaedt and Trust is 2260 Douglas
Blvd., Ste. 280, Roseville, CA 95661.
(c) Mittelstaedt is President and Chief Executive Officer of WCNX. The
principal business address of WCNX is as set forth in 2(b) above.
(d) During the last five years, none of such persons has been convicted
in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of such persons was a party to a
civil proceeding of a judicial or administrative body of competent
jurisdiction, and as a result of such proceeding, was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Mittelstaedt is a citizen of the United States of America.
<PAGE>
<PAGE>
CUSIP No. 941053100 Page 5 of 7 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of funds used in purchasing the Stock were as follows:
Purchaser Source of Funds Amount
Mittelstaedt PF(1) $1,005,679.40
Trust AF $1,005,679.40
(1) Includes 925,043 shares held by Trust; also includes 100,000 shares
subject to a currently exercisable warrant and 33,333 shares subject to
an option exercisable beginning October 1, 1998, each of which was
granted to Mittelstaedt by WCNX in consideration of certain services
rendered by Mittelstaedt to WCNX.
ITEM 4. PURPOSE OF TRANSACTION.
The sole purpose of the acquisitions of the Stock reported herein is for
investment. Mittelstaedt is the President, Chief Executive Officer and
Chairman of the Board of WCNX and, as such, influences the management of
WCNX.<PAGE>
<PAGE>
CUSIP No. 941053100 Page 6 of 7 Pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The beneficial ownership of the Stock of the persons named in Item 2 of this
statement is as follows at the date hereof:
Aggregate
Beneficially Owned Voting Power Dispositive Power
Name Number Percent Sole Shared Sole Shared
Mittelstaedt 1,058,376(1) 11.8% 133,333 925,043 133,333 925,043
Trust 925,043 10.4% 0 925,043 0 925,043
(1) Includes 925,043 shares held by Trust; also includes 100,000 shares
receivable on exercise of a currently exercisable warrant and 33,333
shares receivable on exercise of an option first exercisable on
October 1, 1998.
The persons filing this statement have effected no transactions in the Stock
since June 7
, 1998.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Mittelstaedt and certain other stockholders are parties to a Second Amended
and Restated Investors' Rights Agreement with WCNX, the form of which is
attached as Exhibit A hereto. That Agreement gives Mittelstaedt and certain
other stockholders the right, subject to certain conditions, to include their
shares in future registration statements relating to WCNX Stock and to cause
WCNX to register certain shares of Stock owned by them.
Mittelstaedt holds a warrant to purchase 100,000 shares of Stock, which is
currently exercisable. The warrant is attached as Exhibit B hereto.
In connection with the initial public offering of the Stock, Mittelstaedt has
agreed not to sell or otherwise dispose of any shares of Stock before
November 17, 1998 without the consent of BT Alex. Brown Incorporated. The
form of lock-up letter is attached as Exhibit C hereto.
Mittelstaedt holds an option to purchase 33,333 shares of Stock, which
becomes exercisable on October 1, 1998. The option is attached as Exhibit D
hereto.<PAGE>
<PAGE>
CUSIP No. 941053100 Page 6 of 6 Pages
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Form of Second Amended and Restated Investors' Rights Agreement
B. Warrant to Purchase Common Stock of Waste Connections, Inc.
C. Form of Lock-up Letter
SIGNATURES
After reasonable inquiry and to the best of my knowledge, I certify that
the information set forth in this statement is true, complete and correct.
DATED: August 7, 1998
/s/ Ronald J. Mittelstaedt
____________________________________
Ronald J. Mittelstaedt
MITTELSTAEDT FAMILY TRUST
By: /s/ Ronald J. Mittelstaedt
____________________________________
Ronald J. Mittelstaedt, Trustee
<PAGE>
EXHIBIT A
WASTE CONNECTIONS, INC.
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
Dated as of
September 30, 1997
<PAGE>
TABLE OF CONTENTS
Page
1. Registration Rights 1
1.1 Definitions 1
1.2 Request for Registration. 2
1.3 Company Registration 4
1.4 Obligations of the Company 4
1.5 Furnish Information 6
1.6 Expenses of Company Registration 6
1.7 Underwriting Requirements 6
1.8 Delay of Registration 7
1.9 Indemnification 7
1.10 Reports Under Securities Exchange Act of 1934 9
1.11 Form S-3 Registration 10
1.12 Assignment of Registration Rights 11
1.13 "Market Stand-Off" Agreement 11
1.14 Termination of Registration Rights 12
1.15 Registration of Common Stock 12
2. Covenants of the Company 12
2.1 Delivery of Financial Statements 12
2.2 Inspection 13
2.3 Right of First Offer 13
2.4 Termination of Certain Covenants 14
3. Miscellaneous 14
3.1 Restrictive Legend 14
3.2 Notice of Proposed Transfer 15
3.3 Successors and Assigns 15
3.4 Governing Law 15
3.5 Counterparts 15
3.6 Titles and Subtitles 15
3.7 Notices 15
3.8 Expenses 16
3.9 Amendments and Waivers 16
3.10 Severability 16
3.11 Aggregation of Stock 17
3.12 Entire Agreement 17
3.13 Further Assurances 17
3.14 Interpretation 17
3.15 Additional Investors 17
Exhibit A Schedule of Investors
<PAGE>
SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (this
"Agreement") is made as of September 30, 1997, by and among Waste
Connections, Inc., a Delaware corporation (the "Company"), and the investors
listed on Exhibit A hereto, each of which is herein referred to as an
"Investor," with reference to the following facts:
The Company and the Investors are parties to the Stock Purchase
Agreement dated as of September 30, 1997 (the "Stock Purchase Agreement")
with respect to the purchase of shares of Series A Preferred Stock (the
"Series A Preferred Stock") and Common Stock (the "Common Stock") of the
Company. In order to induce the Company to enter into the Stock Purchase
Agreement and to induce the Investors to invest funds in the Company pursuant
to the Stock Purchase Agreement, the Investors and the Company hereby agree
that this Agreement shall govern the rights of certain of the Investors to
cause the Company to register shares of Common Stock issuable to such
Investors and certain other matters as set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth in this Agreement, the parties
agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Agreement:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the
SEC.
(c) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.12.
(d) The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
(e) The term "Preferred Stock" shall mean the Series A
Preferred Stock of the Company.
(f) The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration
or ordering of effectiveness of such registration statement or document.
(g) The term "Registrable Securities" means the Common Stock
sold pursuant to the Stock Purchase Agreement, the Common Stock issued
pursuant to the Stock
Purchase Agreement dated as of February 4, 1998, by and among Waste
Connections, Inc., Madera Disposal Systems, Inc., Alma Sciacqua, as trustee
of the Sciacqua Family Trust B, Eugene Dupreau, Melvin G. Dias, and Charles
B. Youngclaus, the Common Stock issuable upon exercise of the Warrants to
purchase Common Stock issued to Eugene Dupreau, Melvin G. Dias, Charles B.
Youngclaus, Imperial Bank, FSC Corp., Ronald J. Mittelstaedt, J. Bradford
Bishop, Frank W. Cutler, James N. Cutler, Jr., Michael Harlan, Phil Rivard,
Greg Popovich, Ed Quinnan and Steven Bouck, the Common Stock issuable or
issued upon conversion of the Preferred Stock, and any other securities
issued by the Company from time to time that the Company's Board of Directors
determines should be included in the definition of "Registrable Securities",
excluding in all cases, however, any Registrable Securities sold by a person
in a transaction in which his rights under this Section 1 are not assigned;
provided, however, that shares of Common Stock or other securities shall not
be treated as Registrable Securities for the purposes of any registration if
and so long as at the time of such registration all transfer restrictions and
restrictive legends with respect thereto have been or, in the opinion of the
Company's counsel, may be removed, and all the Registrable Securities held by
such Holder may be sold without restriction (including any volume
limitations) under Rule 144 under the Act.
(h) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(i) The term "SEC" shall mean the Securities and Exchange
Commission.
(j) The term "Underwritten Offering" means an offering of
Common Stock to the public pursuant to an effective Registration Statement
that is firmly underwritten by a United States nationally recognized
underwriter or underwriters that are selected or approved by the Company in
accordance with this Agreement.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the
earlier of (i) four years after the Closing of the Series A Preferred Stock
offering or (ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company
(other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request
from Holders holding at least fifty percent (50%) of the Registrable
Securities then outstanding (the "Initiating Holders") that the Company file
a registration statement under the Act covering the registration of at least
twenty percent (20%) of the Registrable Securities then outstanding (or a
lesser percent if the anticipated aggregate offering price would exceed
$100,000,000), then the Company shall, within twenty-one (21) days after the
receipt thereof, give written notice of such request to all Holders and
shall, subject to the limitations and pursuant to the provisions of this
Section 1.2, use reasonable efforts to file a registration statement under
the Act covering all Registrable Securities which the Holders request to be
registered.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 1.2:
(i) if the Initiating Holders propose to dispose of
shares of Registrable Securities which may be immediately registered on
Form S-3 pursuant to a request made under Section 1.11;
(ii) if the Holders shall have initiated two
registrations pursuant to this Section 1.2, which have been declared or
ordered effective and pursuant to which securities have been sold or have
been withdrawn by the Holders other than as a result of a material adverse
change to the Company; or
(iii) if the Company has effected a registration
pursuant to this Section 1.2 within one year prior to receipt of a requested
pursuant to Section 1.2(a).
(c)(i) Subject to the provisions of this Agreement,
including, but not limited to, the foregoing Section 1.2(b) and Section
1.4(a), the Company shall file a registration statement as soon as
practicable after receipt of the request or requests of the Initiating
Holders under this Section 1.2, but in any event within ninety (90) days
after receipt of such request or requests.
(ii) Notwithstanding anything to the contrary herein, the
Company shall not be obligated to effect a registration pursuant to this
Section 1.2 during the period starting with the date approximately 10 days
prior to the Company's good faith estimate of the date of filing of, and
ending on the date six months following the effective date of, a Company-
initiated registration statement pertaining to the initial registered
underwritten public offering of securities for the Company's account (the
"Initial Offering"); provided that the Company makes reasonable good faith
efforts to cause such registration statement to become effective.
(d) The right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned on such Holder's participation in an
Underwritten Offering and the inclusion of such Holder's Registrable
Securities to be registered in the Underwritten Offering. The Company shall
(together with all Holders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form
with the underwriter or underwriters selected by the Company, which
underwriter or underwriters shall be reasonably acceptable to a majority in
interest of the Initiating Holders. Notwithstanding any other provision of
this Section 1.2, if the underwriters advise the Initiating Holders and the
Company in writing that marketing factors require a limitation of the number
of shares to be underwritten and that the total amount of securities that all
Holders (initiating and noninitiating) request pursuant to this Section
1.2(d) to be included in such offering exceeds the amount of securities that
the underwriters reasonably believe compatible with the success of the
offering, the Company shall so advise all Holders and all of the Holders'
shares to be included in the registration shall be allocated among all
Holders requesting inclusion (initiating and noninitiating) pro rata
according to the total amount of securities entitled to be included in such
registration owned by each Holder requesting inclusion (initiating or
noninitiating) or in such other proportions as shall be mutually agreed by
such selling shareholders. Shares of Registrable Securities held by the
Holders shall not be subject to cutback following the allocation unless
shares of all other selling shareholders have been eliminated from the
offering.
If any Holder does not agree to the terms of any such underwriting,
that person shall be excluded therefrom by written notice from the Company or
the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration and the number of shares of
Registrable Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an
aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion pro rata
according to the total amount of securities entitled to be included in such
registration owned by each such person or in such other proportions as shall
be mutually agreed by such selling shareholders. For purposes of the
preceding sentence concerning apportionment, for any selling shareholder
which is a holder of Registrable Securities and which is a partnership,
limited liability company or corporation, the partners, retired partners,
members, retired members and shareholders of such holder, or the estates and
family members of any such partners, retired partners, members, retired
members and shareholders and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling shareholder," and
any pro-rata reduction with respect to such "selling shareholder" shall be
based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "selling shareholder," as
defined in this sentence.
1.3 Company Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a
registration effected by the Company for any shareholders) any of its stock
or other securities under the Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or a registration in which
the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities which are also being registered), the Company
shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty
(20) days after mailing of such notice by the Company in accordance with
Section 3.7, the Company shall, subject to the provisions of Section 1.7,
cause to be registered under the Act all of the Registrable Securities that
each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for a period of up to one hundred
twenty (120) days or until the distribution contemplated in the Registration
Statement has been completed; provided, however, that (i) such 120-day period
shall be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the
Company; and (ii) in the case of any registration of Registrable Securities
on Form S-3 which are intended to be offered on a continuous or delayed
basis, such 120-day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are
sold, provided that Rule 415, or any successor rule under the Act, permits an
offering on a continuous or delayed basis, and provided further that
applicable rules under the Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (i) includes any prospectus required by Section 10(a)(3) of the Act or
(ii) reflects facts or events representing a material or fundamental change
in the information set forth in the registration statement, the incorporation
by reference of information required to be included in (i) and (ii) above to
be contained in periodic reports filed pursuant to Section 13 or 15(d) of the
1934 Act in the registration statement. Notwithstanding anything to the
contrary in this Agreement, the Company may delay filing a Registration
Statement, and may withhold efforts to cause a Registration Statement to
become effective, for a period not to exceed 120 days, if the Company shall
furnish to Holders a certificate signed by the Chairman of the Board stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be effected at such time; provided that such right
to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period. If, after a Registration Statement becomes
effective, the Company advises the holders of registered shares that the
Company considers it appropriate for the Registration Statement to be amended
or supplemented, the holders of such shares shall suspend any further sales
of their registered shares, for a period not to exceed 90 days, until the
Company advises them that the registration statement has been amended or
updated.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities
owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a
result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the effective
date of such registration.
1.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
1.6 Expenses of Company Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to this Section 1 for each Holder (which right may be assigned as
provided in Section 1.12), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the fees and disbursements of counsel for the
Company and one separate counsel for the selling Holders hereunder (selected
by the Holders of a majority of the Registrable Securities that are included
in the corresponding registration), but excluding underwriting discounts and
commissions relating to Registrable Securities.
1.7 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under this Section 1 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it (or by other persons entitled to select the underwriters), and then
only in such quantity as the underwriters determine in their sole discretion
will not, jeopardize the success of the offering by the Company. If the
total amount of securities, including Registrable Securities, requested by
shareholders to be included in such offering exceeds the amount of securities
that the underwriters determine in good faith is compatible with the success
of the offering, the number of shares that may be included in the
underwriting shall be allocated, first, to the Company; second, to the
Holders on a pro rata basis based on the total number of Registrable
Securities held by the Holders; and third, to any shareholder of the Company
(other than a Holder) on a pro rata basis. No such reduction shall reduce
the amount of securities of the selling Holders included in the registration
below fifteen percent (15%) of the total amount of securities included in
such registration, unless such offering is the Initial Offering and such
registration does not include shares of any other selling shareholders, in
which event any or all of the Registrable Securities of the Holders may be
excluded in accordance with the immediately preceding sentence. In no event
will shares of any other selling shareholder be included in such registration
which would reduce the number of shares which may be included by Holders
without the written consent of Holders of not less than two-thirds (66 2/3%)
of the Registrable Securities proposed to be sold in the offering.
If any Holder does not agree to the terms of any such underwriting,
the holder shall be excluded therefrom by written notice from the Company or
the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration and or if the number of
shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration
in an aggregate amount equal to the number of shares so withdrawn, with such
shares to be allocated among the persons requesting additional inclusion pro
rata according to the total amount of securities entitled to be included in
such registration owned by each such person or in such other proportions as
shall be mutually agreed by such selling shareholders. For purposes of the
preceding sentence concerning apportionment, for any selling shareholder
which is a holder of Registrable Securities and which is a partnership,
limited liability company or corporation, the partners, retired partners,
members, retired members and shareholders of such holder, or the estates and
family members of any such partners, retired partners, members, retired
members and shareholders and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "selling shareholder," and
any pro-rata reduction with respect to such "selling shareholder" shall be
based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "selling shareholder," as
defined in this sentence.
1.8 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.
1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any
losses, claims, damages, or liabilities joint or several) to which they may
become subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any
untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Act, the 1934 Act, any state securities law or any rule or regulation
promulgated under the Act, the 1934 Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished expressly for use
in connection with such registration by any such Holder, underwriter or
controlling person of such Holder.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation,
in each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information furnished
by such Holder expressly for use in connection with such registration; and
each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.9(b), in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection 1.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld; provided, that, in no event
shall any indemnity under this subsection 1.9(b) exceed the net proceeds from
the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.9,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which may be
represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 1,9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this
Section 1.9.
(d) If the indemnification provided for in this Section 1.9
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss,
liability, claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering
are in conflict with the foregoing provisions, the provisions in the
underwriting agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees
to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety
(90) days after the effective date of the first registration statement filed
by the Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at
any time after it has become subject to such reporting requirements), or that
it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
1.11 Form S-3 Registration. In case the Company shall receive
written request or requests from at least ten percent (10%) of the Holders of
the Registrable Securities that the Company effect a registration on Form S-3
and any related qualification or compliance with respect to all or a part of
the Registrable Securities owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written
request given within 20 days after effectiveness of such written notice from
the Company pursuant to Section 3.7; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 1.11: (i) if Form S-3 is not available
for such offering by the Holders; (ii) if the Holders, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other
securities (if any) at any aggregate price to the public less than
$1,000,000; or (iii) as provided in Section 1.4(a) or Section 1.4(d).
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. Registrations effected pursuant
to this Section 1.11 shall not be counted as demands for registration
effected pursuant to Section 1.2.
1.12 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned to a transferee or assignee (other than a competitor of the Company)
who acquires at least twenty-five percent (25%) of the shares held by a
Holder provided: (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; (b) such transferee or assignee
agrees in writing to be bound by and subject to the terms and conditions of
this Agreement and the Stockholders Agreement, including without limitation
the provisions of Section 1.13 below; (c) such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act; and
(d) transfer of registration rights to a limited or general partner of any
Holder that is a partnership will be without restriction as to minimum
shareholding. For the purposes of determining the number of shares of
Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership or limited liability company who
are partners or retired partners of such partnership or members or retired
members of such limited liability company (including spouses and ancestors,
lineal descendants and siblings of such partners, members or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall
be aggregated together and with the partnership or limited liability company;
provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices
or taking any action under this Section 1.
1.13 "Market Stand-Off" Agreement. Each Investor hereby agrees
that, during the period of duration specified by the Company and an
underwriter of Common Stock or other securities of the Company, following the
effective date of a registration statement filed under the Act for the first
public offering of the Company's Common Stock, it shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock
included in such registration; provided, however, that:
(a) all officers and directors of the Company, all holders of
Common Stock and options to purchase Common Stock and all other persons with
registration rights (whether or not pursuant to this Agreement) enter into
similar agreements; and
(b) such market stand-off time period shall not exceed 180
days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.13 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to a Commission
Rule 145 transaction on Form S-14 or Form 915 or similar forms which may be
promulgated in the future.
1.14 Termination of Registration Rights.
(a) No Holder shall be entitled to exercise any right
provided for in this Section 1 after five (5) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the Initial Offering.
(b) In addition, the right of any Holder to request
registration or inclusion in any registration pursuant to Section 1 shall
terminate on the closing of the first Company-initiated registered public
offering of Common Stock of the Company if all shares of Registrable
Securities held or entitled to be held upon conversion by such Holder may
immediately be sold under Rule 144 during any 90 day period, or on such date
after the closing of the first Company-initiated registered public offering
of Common Stock of the Company as all shares of Registrable Securities held
or entitled to be held upon conversion by such Holder may immediately be sold
under Rule 144 during any 90 day period.
1.15 Registration of Common Stock. For purposes of Section 1 of
this Agreement, the only securities which the Company shall be required to
register pursuant hereto shall be shares of Common Stock, provided, however,
that, in any underwritten public offering contemplated by Section 1 hereof,
the holders of Preferred Stock shall be entitled to sell such Preferred Stock
to the underwriters for conversion and sale of the shares of Common Stock
issued upon conversion thereof.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall deliver
to each holder of Series A Preferred Stock (or Common Stock issued upon
conversion of Series A Preferred Stock):
(a) as soon as practicable, but in any event within one
hundred twenty (120) days after the end of each fiscal year of the Company,
an income statement for such fiscal year, a balance sheet of the Company and
statement of shareholder's equity as of the end of such year, and a statement
of cash flows for such year, such year-end financial reports to be in
reasonable detail, prepared in accordance with generally accepted accounting
principles ("GAAP"), and audited and certified by independent public
accountants of nationally recognized standing selected by the Company; and
(b) as soon as practicable, but in any event within sixty
(60) days after the end of each of the first three (3) quarters of each
fiscal year of the Company, an unaudited income statement for such fiscal
quarter, statement of cash flows for such fiscal quarter and an unaudited
balance sheet as of the end of such fiscal quarter.
2.2 Inspection. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may
be requested by the Investor; provided, however, that the Company shall not
be obligated pursuant to this Section 2.2 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.
2.3 Right of First Offer. Subject to the terms and conditions
specified in this Section 2.3, the Company hereby grants to each Investor a
right of first offer with respect to future sales by the Company of its
Shares (as hereinafter defined). For purposes of this Section 2.3, Investor
includes any general partners, managers and affiliates of an Investor. An
Investor shall be entitled to apportion the right of first offer hereby
granted it among itself and its partners, members and affiliates in such
proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of
its capital stock ("Shares"), the Company shall first make an offering of
such Shares to each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Investors stating (i) its bona fide intention to offer such
Shares, (ii) the number of such Shares to be offered, and (iii) the price and
terms, if any, upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within
20 calendar days after giving of the Notice, the Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up
to that portion of such Shares which equals the proportion that the number of
shares of common stock issued and held, or issuable upon conversion of the
Preferred Stock then held by such Investor bears to the total number of
shares of common stock of the Company then outstanding (assuming full
conversion and exercise of all convertible or exercisable securities). The
Company shall promptly, in writing, inform each Investor which purchases all
the shares available to it ("Fully-Exercising Investor") of any other
Investor's failure to do likewise. During the ten-day period commencing
after such information is given, each Fully-Exercising Investor shall be
entitled to obtain that portion of the Shares for which Investors were
entitled to subscribe but which were not subscribed for by the Investors
which is equal to the proportion that the number of shares of common stock
issued and held, or issuable upon conversion of Preferred Stock then held by
such Fully-Exercising Investor bears to the total number of shares of common
stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by all Fully-Exercising Investors who wish to purchase some of the
unsubscribed shares.
(c) If all Shares which Investors are entitled to obtain
pursuant to subsection 2.3(b) are not elected to be obtained as provided in
subsection 2.3(b) hereof, the Company may, during the 60-day period following
the expiration of the period provided in subsection 2.3(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an
agreement for the sale of the Shares within such period, or if such agreement
is not consummated within 30 days of the execution thereof, the right
provided hereunder shall be deemed to be revived and such Shares shall not be
offered unless first reoffered to the Investors in accordance herewith.
(d) The right of first offer in this Section 2.3 shall not be
applicable (i) to consummation of a bona fide, firmly underwritten public
offering of shares of common stock registered under the Act pursuant to a
registration statement on Form S-1, at an offering price of at least $5.00
per share (appropriately adjusted for any stock split, dividend, combination
or other recapitalization) with aggregate gross proceeds to the Company of at
least $5,000,000, (ii) the issuance of securities pursuant to the conversion
or exercise of convertible or exercisable securities, (iii) the issuance of
securities in connection with a bona fide business acquisition of or by the
Company, whether by merger, consolidation, sale of assets, sale or exchange
of stock or otherwise, or (iv) the issuance of options or warrants to
purchase shares of Common Stock to officers, directors and employees of, or
consultants to, the Company, with an exercise price greater than the then
current conversion price of the Company's Series A Preferred Stock.
(e) The right of first offer set forth in this Section 2.3
may be assigned or transferred to the same parties, subject to the same
restrictions pursuant to Section 1.12.
2.4 Termination of Certain Covenants. The covenants set forth in
this Section 2 shall terminate and be of no further force or effect upon the
consummation of a bona fide, firmly underwritten public offering of shares of
Common Stock registered under the Act pursuant to a registration statement on
Form S-1, at an offering price of at least $5.00 per share (appropriately
adjusted for any stock split, dividend, combination or other
recapitalization) with aggregate gross proceeds to the Company of at least
$5,000,000.
3. Miscellaneous.
3.1 Restrictive Legend. Each certificate representing Preferred
Stock or Common Stock issued upon conversion thereof shall, except as
otherwise provided in Section 3.2, be stamped or otherwise imprinted with a
legend substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND ALL SUCH OTHER APPLICABLE
LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company the securities being sold thereby may be publicly
sold without registration under the Act and any applicable state securities
laws.
3.2 Notice of Proposed Transfer. Prior to any proposed transfer
of any Preferred Stock or Common Stock issued upon conversion thereof (other
than under the circumstances described in Section 1), the holder thereof
shall give written notice to the Company of his or her intention to effect
such transfer. Each such notice shall describe the manner of the proposed
transfer and, if reasonably requested by the Company, shall be accompanied by
an opinion of counsel satisfactory to the Company to the effect that the
proposed transfer may be effected without registration under the Act and any
applicable state securities laws, whereupon the holder of such stock shall be
entitled to transfer such stock in accordance with the terms of the notice;
provided, however, that no such opinion of counsel shall be required for a
transfer to one or more partners or members of the transferor (in the case of
a transferor that is a partnership or limited liability company) or to an
affiliated corporation (in the case of a transferor that is a corporation).
Each certificate for Preferred Stock or Common Stock issued upon conversion
thereof transferred as above provided shall bear the legend set forth in
Section 3.1, except that such certificate shall not bear such legend if (i)
such transfer is in accordance with the provisions of Rule 144 (or any other
rule permitting public sale without registration under the Act) or (ii) the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale
without registration under the Act. The restrictions provided for in this
Section 3.2 shall not apply to securities which are not required to bear the
legend prescribed by Section 3.1 in accordance with the provisions of that
Section.
3.3 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
3.4 Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of
California, without regard to that state's conflict of laws principles.
3.5 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
3.6 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.7 Notices. Any notice, consent, authorization or other
communication to be given hereunder shall be in writing and shall be deemed
duly given and received when delivered personally or transmitted by facsimile
transmission with receipt acknowledged by the addressee or three days after
being mailed by first class mail, or the next business day after being
deposited for next-day delivery with a nationally recognized overnight
delivery service, charges and postage prepaid, properly addressed to the
party to receive such notice at the following address for such party (or at
such other address as shall be specified by like notice):
(a) if to the Company, to:
Waste Connections, Inc.
3510 Trenton Way
El Dorado Hills, CA 95762
Attention: Ronald J. Mittelstaedt
Telephone: (916) 939-7986
Facsimile: (916) 939-7987
with copies to:
Shartsis, Friese & Ginsburg LLP
One Maritime Plaza, 18th Floor
San Francisco, California 94111
Attention: Robert D. Evans, Esq.
Telephone: (415) 421-6500
Facsimile: (415) 421-2922
(b) if to the Investors, to the address indicated on
Exhibit A.
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or upon deposit with the
United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address indicated for such
part on the signature page hereof, or at such other address as such party may
designate by ten (10) days' advance written notice to the other parties.
3.8 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements
in addition to any other relief to which such party may be entitled.
3.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders
of a majority of the Registrable Securities then outstanding. Any amendment
or waiver effected in accordance with this Section shall be binding upon each
holder of any Registrable Securities then outstanding, each future holder of
all such Registrable Securities, and the Company.
3.10 Severability. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid or unenforceable, the remainder of this Agreement, or the application
of such provision to persons or circumstances other than those to which it is
held to be invalid or unenforceable, shall not be affected thereby.
3.11 Aggregation of Stock. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.
3.12 Entire Agreement. This Agreement, the Stockholders Agreement
and the Stock Purchase Agreement of even date contain the entire agreement of
the parties and supersede all prior negotiations, correspondence, agreements
and understandings, written and oral, between or among the parties, regarding
the subject matter hereof.
3.13 Further Assurances. Each party shall execute such other and
further certificates, instruments and other documents as may be necessary and
proper to implement, complete and perfect the transactions contemplated by
this Agreement.
3.14 Interpretation. All parties have been assisted by counsel in
the preparation and negotiation of this Agreement and the transactions
contemplated hereby, and this Agreement shall be construed according to its
fair language. The rule of construction to the effect that any ambiguities
are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
3.15 Additional Investors. If the Company shall at any future time
desire to issue or reissue any shares of Common Stock or Series A Preferred
Stock to any person or firm (including any Investors), all such issuees shall
become parties to this Agreement with respect to such shares of the Company's
stock by executing a counterpart of this Agreement or a writing agreeing to
be bound hereby. Such additional Investors shall be added to Exhibit A
hereto.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY: WASTE CONNECTIONS, INC.
By:
Ronald J. Mittelstaedt
President & CEO
INVESTOR: (Name of Investor)
By:
Name:
Title:
<PAGE>
Exhibit A
LIST OF COMMON AND SERIES A PREFERRED STOCKHOLDERS
<PAGE>
Exhibit B
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK PURCHASABLE ON EXERCISE
HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE ENCUMBERED, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
THEREFOR UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND
SUBSTANCE TO THE CORPORATION AND CONCURRED IN BY THE CORPORATION'S COUNSEL TO
THE EFFECT 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.
Warrant No. 1 Warrant to Purchase
100,000 shares of
Common Stock (Subject
to Adjustment)
WARRANT TO PURCHASE COMMON STOCK
of
WASTE CONNECTIONS, INC.
Void after December 14, 2008
This certifies that for value received, Ronald J. Mittelstaedt,
("Holder") is entitled, subject to the terms set forth below, at any time or
from time to time before 5:00 p.m., Pacific standard time, on December 14,
2008, to purchase from Waste Connections, Inc., a Delaware corporation (the
"Company"), up to 100,000 fully paid and nonassessable shares of the common
stock, par value $0.01 per share, of the Company (the "Common Stock") as
constituted on December 15, 1997 (the "Issue Date"), upon surrender hereof at
the principal office of the Company, with the subscription form attached
hereto properly completed and duly executed, and simultaneous payment
therefor in lawful money of the United States at the price of $2.80 per
share, subject to adjustment as provided in Section 4 hereof (the "Purchase
Price"). The number and character of such shares of Common Stock are also
subject to adjustment as provided below. Such number shall be reduced at
such time or times as this Warrant is exercised in part by the number of
shares as to which this Warrant is then exercised. The term "Warrant Stock"
shall mean, unless the context otherwise requires, the stock and other
securities and property at any time receivable upon the exercise of this
Warrant. The term "warrant" as used herein shall include this Warrant and
any warrants delivered in substitution or exchange therefor as provided
herein.
1. Method of Exercise; Payment. Subject to compliance with the
provisions of Section 7 hereof:
A. Cash Exercise. This Warrant may be exercised as a whole, or
in part from time to time, by the Holder by delivering this Warrant, for
cancellation if it is exercised as a whole or for endorsement if it is
exercised in part, together with a Subscription in the form appearing at the
end hereof properly completed and duly executed by or on behalf of the
Holder, to the Company at its office in Roseville, California (or at the
office of the agency maintained for such purpose), accompanied by payment in
cash or by certified or official bank check payable to the order of the
Company, in an aggregate amount equal to the Purchase Price as then adjusted
times the number of shares of Warrant Stock as to which this Warrant is then
being exercised. In the event of any such exercise that is partial, the
Company shall endorse this Warrant as having been exercised to that extent
and return this Warrant to the Holder. This Warrant shall be deemed to have
been exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive
the shares of Warrant Stock issuable upon such exercise shall be treated for
all purposes as the holder of such shares of record as of the close of
business on such date.
B. Net Issue Exercise. In lieu of exercising this Warrant
pursuant to Section 1.A, Holder may elect to receive shares equal to the
value of this Warrant (or the portion thereof being cancelled) by surrender
of this Warrant at such office together with notice of such election, in
which event the Company shall issue to Holder a number of shares of Warrant
Stock computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Warrant Stock to be issued to Holder.
Y = the number of shares of Warrant Stock purchasable under this
Warrant at the date of such calculation or, if only a portion of
this Warrant is being exercised, the portion of this Warrant being
cancelled at the date of such calculation..
A = the fair market value of one share of Warrant Stock purchasable
under this Warrant at the date of such calculation.
B = Purchase Price (as adjusted to the date of such calculations).
For purposes of this Warrant, fair market value of one share of Warrant Stock
shall mean:
(1) The average of the closing bid and asked prices of the Common
Stock quoted on the NASDAQ Stock Market or the closing price quoted on any
national securities exchange on which the Common Stock is listed, whichever
is applicable, as published in the Western Edition of The Wall Street Journal
for the ten trading days prior to the date of determination of fair market
value; or
(2) If the Common Stock is not traded on the NASDAQ stock market
or on such an exchange, an amount reasonably determined in good faith by the
Board of Directors to be the fair market value.
C. Delivery of Stock Certificates. The Company will, or will
direct its transfer agent to, issue, as soon as practicable after any
exercise of this Warrant under Section 1 and in any event within thirty days
thereafter, at its expense (including the payment by it of any applicable
issue taxes), in the name of and deliver to the Holder, or as the Holder may
direct (on payment by the Holder of any applicable transfer taxes) a
certificate or certificates for the number of fully paid and nonassessable
shares of Warrant Stock as to which this warrant is so exercised.
2. Payment of Taxes. All shares of Warrant Stock issued upon the
exercise of this Warrant shall be validly issued, fully paid and
nonassessable, and the Company shall pay all taxes and other governmental
charges that may be imposed in respect of the issuance or delivery thereof.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any
certificate for shares of Warrant Stock in any name other than that of the
Holder and, in such case, the Company shall not be required to issue or
deliver any stock certificate until such tax or other charge has been paid,
or it has been established to the Company's satisfaction that no tax or other
charge is due.
3. A. Transfer. Subject to Section 7, this Warrant and all rights
hereunder are transferable, as a whole or in part, on the books of the
Company maintained for such purpose at the office specified pursuant to
Section 1.A, by the Holder in person, or by duly authorized attorney, upon
surrender of this Warrant properly endorsed and upon payment of any necessary
transfer tax or other governmental charge imposed upon such transfer.
Upon any partial transfer, the Company will issue and deliver to
the Holder a new warrant or warrants of like tenor with respect to the shares
of Warrant Stock not so transferred. In lieu of any fraction of a share to
which the Holder would otherwise be entitled, the Company may deliver to the
Holder cash in an amount equal to such fraction of the current fair market
value of one full share determined in the manner provided in Section 1.B.
Each taker and holder of this Warrant, by taking or holding the
same, consents and agrees that this Warrant, when endorsed in blank, shall be
deemed negotiable and that when this Warrant shall have been so endorsed, the
person in possession of this Warrant may be treated by the Company, and all
other persons dealing with this Warrant, as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding, but until a transfer of this
Warrant on the books of the Company, the Company may treat the Holder as the
owner for all purposes.
B. Exchange. At the request of the Holder, the Company shall
exchange this Warrant for two or more Warrants of like tenor entitling the
Holder to purchase the same aggregate number of shares of Warrant Stock, each
new Warrant to represent the right to purchase such number of shares of
Warrant Stock as the Holder shall designate at the time of such exchange;
provided that the Holder shall not be entitled so to exchange this Warrant or
any warrant received in any such exchange on more than an aggregate of five
occasions.
4. A. Adjustment for Dividends in Other Stock or Property. In case
at any time, or from time to time, after the Issue Date the holders of the
Common Stock of the Company (or any shares of stock or other securities at
the time receivable upon the exercise of this Warrant), shall have received,
or, on or after the record date fixed for the determination of eligible
stockholders, shall have become entitled to receive, without payment
therefor:
(1) Other or additional stock or other securities or property
(other than cash) by way of a dividend;
(2) Any cash paid or payable out of capital, or capital surplus,
or surplus created as a result of a revaluation of property; or
(3) Other or additional stock or other securities or property
(including cash) by way of a stock-split, spin-off, reclassification,
combination of shares or similar corporate rearrangement;
then, and in each such case, the Holder, upon the exercise hereof (as
provided in Section 1), shall be entitled to receive the number of shares of
Warrant Stock and other securities and property (including cash in the cases
referred to in clauses (2) and (3) above) which the Holder would hold on the
date of such exercise if on the Issue Date the Holder had been the holder of
record of the number of shares of Common Stock called for on the face of this
Warrant and had thereafter, during the period from the Issue Date to and
including the date of such exercise, retained such shares and/or all other or
additional stock and other securities and property (including cash in the
cases referred to in clauses (2) and (3) above) receivable by the Holder as
aforesaid during such period, giving effect to all adjustments during such
period pursuant to this Section 4.
B. Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion thereof, is outstanding and unexpired there shall be
(i) a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which
the Company is the surviving entity but the shares of the Company's capital
stock outstanding immediately prior to the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the holder of this Warrant shall thereafter
be entitled to receive upon exercise of this Warrant, during the period
specified herein and upon payment of the Purchase Price then in effect, the
number of shares of stock or other securities or property of the successor
corporation resulting from such reorganization, merger, consolidation, sale
or transfer that a holder of the shares deliverable upon exercise of this
Warrant would have been entitled to receive in such reorganization,
consolidation, merger, sale or transfer if this Warrant had been exercised
immediately before such reorganization, merger, consolidation, sale or
transfer, all subject to further adjustment as provided in this Section 4.
The foregoing provisions of this Section 4.B shall similarly apply to
successive reorganizations, consolidations, mergers, sales and transfers and
to the stock or securities of any other corporation that are at the time
receivable upon the exercise of this Warrant. If the per-share consideration
payable to the holder hereof for shares in connection with any such
transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the
Company's Board of Directors. In all events, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made
in the application of the provisions of this Warrant with respect to the
rights and interests of the Holder after the transaction, to the end that the
provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable
after that event upon exercise of this Warrant.
C. Reclassification, etc. If the Company, at any time while
this Warrant, or any portion hereof, remains outstanding and unexpired by
reclassification of securities or otherwise, shall change the Warrant Stock
into the same or a different number of securities of any other class or
classes, this Warrant shall thereafter represent the right to acquire such
number and kind of securities as would have been issuable as the result of
such change with respect to the Warrant Stock immediately prior to such
reclassification or other change and the Purchase Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 4.
D. Split, Subdivision or Combination of Shares. If the Company
at any time while this Warrant, or any portion hereof, remains outstanding
and unexpired shall split, subdivide or combine the Warrant Stock, into a
different number of securities of the same class, the Purchase Price for such
securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.
E. Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding
and unexpired the holders of the securities as to which purchase rights under
this Warrant exist at the time shall have received, or, on or after the
record date fixed for the determination of eligible stockholders, shall have
become entitled to receive, without payment therefor, other or additional
stock or other securities or property (other than cash) of the Company by way
of dividend, then and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of Warrant Stock receivable upon
exercise of this Warrant, and without payment of any additional consideration
therefor, the amount of such other or additional stock or other securities or
property (other than cash) of the Company that such Holder would hold on the
date of such exercise had it been the holder of record of the Warrant Stock
on the date hereof and had thereafter, during the period from the date hereof
to and including the date of such exercise, retained such shares and/or all
other additional stock available by it as aforesaid during such period,
giving effect to all adjustments called for during such period by the
provisions of this Section 4.
F. Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 4, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each Holder of this Warrant a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Company shall, upon the written request, at any time, of any such Holder,
furnish or cause to be furnished to such Holder a like certificate setting
forth: (i) such adjustments and readjustments; (ii) the Purchase Price at
the time in effect; and (iii) the number of shares and the amount, if any, of
other property that at the time would be received upon the exercise of the
Warrant.
G. No Dilution or Impairment. The Company will not by amendment
of its Articles of Incorporation, or through reorganization, consolidation,
merger, dissolution, issuance or sale of securities, sale of assets, or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of
the Holder against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase the par value
of any shares of Warrant Stock receivable upon the exercise of this Warrant
above the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares upon the
exercise of this Warrant, and (c) will take no action to amend its Articles
of Incorporation which would change to the detriment of the holders of Common
Stock (whether or not any Common Stock be at the time outstanding) the
dividend or voting rights of the Company's Common Stock (as constituted on
the Issue Date).
H. Notices of Record Date. In case:
(1) The Company shall take a record of the holders of its Common
Stock (or other stock or securities at the time receivable upon the exercise
of this Warrant) for the purpose of entitling them to receive any dividend or
other distribution or any right to subscribe for or purchase any shares of
stock of any class or any other securities, or to receive any other right, or
(2) Of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any split or
combination of shares of any class of capital stock of the Company, any
consolidation or merger of the Company with or into another corporation, or
any conveyance of all or substantially all of the assets of the Company to
another corporation, or
(3) Of any voluntary dissolution, liquidation or winding-up of the
Company,
then, and in each such case, the Company will mail or cause to be mailed to
the Holder a notice specifying, as the case may be, (a) the date on which a
record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right, or (b) the date on which such reorganization, reclassification, split,
combination, consolidation, merger, conveyance, dissolution, liquidation or
winding-up is to take place, and the time, if any is to be fixed, as of which
the holders of record of Common Stock (or such stock or securities at the
time receivable upon the exercise of this Warrant) shall be entitled to
exchange their shares of Common Stock (or such other stock or securities) for
securities or other property deliverable upon such reorganization,
reclassification, split, combination, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
90 days prior to the date therein specified.
5. Loss or Mutilation. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of this Warrant, and of indemnity reasonably
satisfactory to it, and (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will execute and deliver in lieu
thereof a new warrant of like tenor.
6. Reservation of Common Stock. The Company shall at all times
reserve and keep available for issue upon the exercise of this Warrant such
number of its authorized but unissued shares of Warrant Stock as will be
sufficient to permit the exercise in full of this Warrant.
7. Investment Intent. The Holder, by accepting this Warrant,
represents and warrants to the Company as follows:
A. Acquisition for Own Account. The Holder is acquiring this
Warrant and will acquire the shares of Warrant Stock on exercise of this
Warrant with the Holder's own funds, for the Holder's own account, not as a
nominee or agent. The Holder is not obligated to transfer this Warrant or
any Warrant Stock to anyone else nor has any agreements or understandings to
do so. The Holder is purchasing or will purchase this Warrant and the
Warrant Stock for investment for an indefinite period and not with a view to
any sale or distribution thereof, by public or private sale or other
disposition, and has no intention of selling, granting any participation in
or otherwise distributing or disposing of any thereof. The Holder does not
intend to subdivide the Holder's purchase with anyone.
B. Restricted Securities. The Holder is able to bear the
economic risk of the Holder's investment in this Warrant and the Warrant
Stock and is aware that the Holder must be prepared to hold this Warrant and
the Warrant Stock for an indefinite period and that this Warrant and the
Warrant Stock have not been registered under the Securities Act of 1933, as
amended (the "Act"), on the ground that no distribution or public offering of
this Warrant or the Warrant Stock is to be effected and this Warrant or the
Warrant Stock are being or will be issued by the Company without any public
offering within the meaning of Section 4(2) of the Act.
C. Sophistication. The Holder is an "accredited investor" as
that term is defined in Regulation D under the Act. The Holder has such
knowledge and experience in financial and business matters that the Holder is
capable of evaluating the merits and risks of the Holder's investment in this
Warrant and the Warrant Stock.
D. Agreement to Refrain from Resales. Without in any way
limiting the Holder's representations herein, the Holder further agrees that
the Holder shall not encumber, pledge, hypothecate, sell, assign, transfer or
otherwise dispose of this Warrant or any Warrant Stock, unless and until,
prior to any proposed encumbrance, pledge, hypothecation, sale, assignment,
transfer or other disposition, either (i) a registration statement on Form
S-l (or any other form appropriate for the purpose or replacing such form)
under the Act with respect thereto shall be then effective (ii)(a) the Holder
shall have furnished the Company with a statement of the circumstances of the
proposed disposition and an opinion of counsel (obtained at the Holder's
expense) satisfactory to the Company to the effect that such disposition will
not require registration under the Act and (b) counsel for the Company shall
have concurred in such opinion of counsel and the Company shall have advised
the Holder of such concurrence; or (iii) the Warrant Stock can then be sold
pursuant to Rule 144 under the Act.
E. Certificates to be Legended. The Holder understands and
agrees that this Warrant, any warrant issued to replace this Warrant and any
certificate representing Warrant Stock will bear a legend on the face thereof
(or on the reverse thereof with a reference to such legend on the face
thereof) in substantially the form set forth on the first page of this
Warrant and any other legend that the Company considers necessary or
appropriate to comply with any applicable securities law.
8. Registration. The Company acknowledges that it has granted to
certain holders of its capital stock certain rights to registration of such
capital stock for resale under the Act, the terms and conditions of which
rights are set forth in an Investors' Rights Agreement dated as of
September 30, 1997. The Company covenants and agrees to seek an amendment to
the Investors' Rights Agreement to include the Warrant Stock in the
Registrable Securities to which the registration rights set forth in
Section 1 of the Investors' Rights Agreement so that the Holder shall be
entitled to identical registration rights pari passu with such holders of
capital stock as if the Holder had acquired the Warrant Stock concurrently
with such holders and pursuant to the Investors' Rights Agreement. If such
amendment is not consented to by the holders of a majority of the Registrable
Securities as required by the Investors' Rights Agreement, the Company shall
promptly prepare and thereafter enter into with the Holder a Registration
Rights Agreement providing for the same registration rights as the Investors'
Rights Agreement, which rights shall be subject and subordinate only to those
set forth in the Investors' Rights Agreement.
9. Notices. All notices and other communications from the Company to
the Holder shall be mailed by first-class registered or certified mail,
postage prepaid, to the address furnished to the Company in writing by the
last Holder who shall have furnished an address to the Company in writing.
10. Change; Waiver. Neither this Warrant nor any term hereof may be
changed, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. Attorneys' Fees. In the event any party is required to engage the
services of attorneys for the purpose of enforcing this Warrant, or any
provision hereof, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and any other costs or expenses.
12. Headings. The headings in this Warrant are for purposes of
convenience in reference only, and shall not be deemed to constitute a part
hereof.
13. Law Governing. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of California.
DATED: December 15, 1997
WASTE CONNECTIONS, INC.
By:
Ronald J. Mittelstaedt
President and
Chief Executive Officer
<PAGE>
ENDORSEMENTS
<PAGE>
SUBSCRIPTION FORM
(To be executed only upon exercise of warrant)
The undersigned Holder of this Warrant irrevocably exercises this
Warrant for the purchase of _________ shares of Common Stock of Waste
Connections, Inc., purchasable with this Warrant, and herewith makes payment
therefor, all at the price and on the terms and conditions specified in this
Warrant.
Dated: ___________________________
<PAGE>
(signature of Holder)
(Street Address)
(city) (state) (zip Code)
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned Holder of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights
of the undersigned under the within Warrant, with respect to the number of
shares of Common Stock set forth below:
and does hereby irrevocably constitute and appoint ____________ [Attorney] to
make such transfer on the books of Waste Connections, Inc., maintained for
the purpose, with full power of substitution in the premises.
Dated: ____________________
<PAGE>
[Holder]
By:
Name:
Title:
<PAGE>
Exhibit C
April __, 1998
BT Alex. Brown Incorporated
CIBC Oppenheimer Corp.
As Representatives of the Several Underwriters
c/o BT Alex. Brown Incorporated
One South Street
Baltimore, Maryland 21202
Re: Waste Connections, Inc. Initial Public Offering
I am an executive officer, director and/or shareholder of Waste
Connections, Inc. (the "Company"). I hereby agree and represent to you that,
without the prior written approval of BT Alex. Brown Incorporated, I will not
directly or indirectly make or cause any offering, sale or other disposition
of any shares of Common Stock of the Company which I own either of record or
beneficially, and of which I have the power to control the disposition, other
than gifts of shares of the Company's Common Stock if the donee agrees in
writing to be bound by the terms of this agreement, from this date to a date
180 days after the effective date of the Registration Statement, Form S-1,
File No. 333-_____ filed by the Company with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended. I
recognize that you and the Company are relying on my representations and
agreement contained hereby in entering into underwriting arrangements with
respect to the offering contemplated by such Registration Statement, as
amended.
Very truly yours,
<PAGE>
EXHIBIT D
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
Ronald Mittelstaedt, Optionee:
Waste Connections., Inc. (the "Company"), pursuant to its 1997 Stock
Option Plan (the "Plan"), has this December 15, 1997, 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
100,000 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)
33,333 10/1/98
33,333 10/1/99
33,334 10/1/2000
2. (a) The exercise price of this option is $2.80 per share, being
not less than 100 percent of 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 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 December
14, 2002 (which date shall be no more than five years 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.
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 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 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,
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 DECEMBER 15, 1997, 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.
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 _______________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1997 Stock Option Plan
Notice of Exercise
<PAGE>
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: ___________________________
(Initial)
OTHER: ___________________________
___________________________
___________________________
___________________________
Ronald Mittelstaedt
Address: _________________________
_________________________
_________________________
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