EXHIBIT 99.1
PURCHASE AGREEMENT
This Agreement is entered into as of April 30, 2002 by Stericycle,
Inc., a Delaware corporation ("Stericycle"), and Xxxxx X. Xxxxxxxx ("Xxx"),
Xxxxx Xxxxxxx Xxxxxxxx ("Xxxx") and Xxxxxxx X. XxXxxxxxxx ("Xxxxxxx"), residents
of the State of Arkansas (Xxx, Xxxx and Xxxxxxx each individually a "Seller" and
together the "Sellers").
Background:
A. Each Seller own certain shares of common stock of 3CI Complete
Compliance Corporation, a Delaware corporation ("3CI").
B. In addition, two of the Seller possess certain profit-sharing
rights, and all three of the Sellers possess certain other rights, under a
settlement agreement entered into in January 1996 with 3CI and other parties
(the "Settlement Agreement"), and all three of the Seller possess certain rights
under related agreements securing 3CI's obligations under the Settlement
Agreement.
C. Stericycle desires to buy the Sellers' shares of stock in 3CI and to
receive an assignment of the Sellers' respective rights under the Settlement
Agreement with 3CI and the related agreements securing 3CI's obligations, and
the Sellers desire to sell their respective shares of stock in 3CI to Stericycle
and to assign to Stericycle their respective rights under the Settlement
Agreement and under the related agreements securing 3CI's obligations under the
Settlement Agreement, upon the terms and subject to the conditions of this
Agreement.
Now, therefore, in consideration of their mutual promises, the parties
agree as follows:
1. DEFINITIONS
Capitalized terms used in this Agreement without otherwise being
defined are defined as follows:
3CI SHARES means, in respect of each Seller, the shares that he
owns of the following shares of 3CI Stock, and means, in respect of the
three Sellers, all of the following 932,770 shares of 3CI Stock:
(a) the 525,000 shares of 3CI Stock constituting the
"Original Shares" as that term is defined in Section 3(a) of the
Settlement Agreement;
(b) the 250,000 shares of 3CI Stock constituting the
"Additional Shares" as that term is defined in Section 3(a) of
the Settlement Agreement;
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(c) the 145,470 shares of 3CI Stock constituting the
"Earnout Shares" as that term is defined in Section 3(a) of the
Settlement Agreement; and
(d) 12,300 shares of 3CI stock other than the shares
constituting "Original Shares," "Additional Shares" or "Earnout
Shares" as those terms are defined in Section 3(a) of the
Settlement Agreement.
The 3CI Shares are respectively owned by Xxx, Xxxx and Xxxxxxx as shown
on the attached EXHIBIT A, which also identifies the certificates
representing the 3CI Shares by certificate number and number of shares
represented.
3CI STOCK means 3CI's common stock, par value $.01 per share.
ASSIGNED INTERESTS means, in respect of each Seller, his rights,
title, interest and estate in, to and under (i) the Settlement
Agreement, (ii) each of the Security Documents and (iii) each other
contract, agreement or instrument creating any right against,
obligation on or liability of either 3CI or WSI, and means in respect
of the three Sellers, all of their respective rights, title, interest
and estate in, to and under (i) the Settlement Agreement, (ii) each of
the Security Documents and (iii) each other contract, agreement or
instrument creating any right against, obligation on or liability of
either 3CI or WSI. The term "Assigned Interests" includes (but is not
limited to):
(a) the Profit Sharing Rights; and
(b) the Put Rights.
LAWSUIT means the lawsuit that Xxx, Xxxx and Xxxxxxx filed in
June 1995 against 3CI and other defendants in the Circuit Court of Hot
Springs County, Arkansas (No. C.V. 95-1441-1), which was subsequently
removed to the United States District Court for the Western District of
Arkansas, Hot Springs Division (Civil Action No. HS-C-95-6056) and
later transferred (in November 1996) to the United States District
Court for the Western District of Louisiana.
LIEN means any lien, security interest, claim, community
property interest, equitable interest, option, pledge, right of first
refusal or other encumbrance or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of
any other attribute of ownership.
PROFIT SHARING RIGHTS means the respective rights of Xxx and
Xxxx under Section 3(b) of the Settlement Agreement to a specified
percentage of the "Net Income Before Income Taxes" of the "MedWaste
Division" as those terms are respectively defined in Sections 2(a) and
2(b) of the Settlement Agreement.
PUT RIGHTS means the put options granted to Xxx, Xxxx and
Xxxxxxx, separately and jointly, under Section 3(c) of the Settlement
Agreement.
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SECURITY DOCUMENTS means all security agreements, mortgages,
deeds of trust, financing statements and other agreements, documents
and instruments entered into or made or given by any one or more of
0XX, XXX, 0XX Acquisition Corp./A/Med, a Delaware corporation, and 3CI
Acquisition Corp./AMTC, a Delaware corporation, to secure the
performance of the respective obligations of 3CI and WSI under the
Settlement Agreement or to modify or perfect the security given. The
term "Security Documents" includes (but is not limited to):
(a) the Security Agreement/Collateral Chattel Mortgage
dated January 30, 1996 entered into by 3CI, 3CI Acquisition
Corp./A/Med and 3CI Acquisition Corp./AMTC, as the debtors, and
Xxx, Xxxx and Xxxxxxx, as the secured parties;
(b) the Deed of Trust and Security Agreement dated January
30, 1996 entered into by 3CI Acquisition Corp./A/Med, as the
debtor, and Xxx, Xxxx and Xxxxxxx, as the secured parties;
(c) the Leasehold Mortgage and Security Agreement dated
January 30, 1996 by 3CI Acquisition Corp./A/Med, as the debtor,
and Xxx, Xxxx and Xxxxxxx, as the secured parties;
(d) the Deed of Trust and Security Agreement dated January
30, 1996 entered into by 3CI, as the debtor, and Xxx, Xxxx and
Xxxxxxx, as the secured parties; and
(e) the Intercreditor and Subordination Agreement entered
into in February 1996 by WSI and Xxx, Xxxx and Xxxxxxx, as
amended by a First Amendment effective as of December 20, 1996.
SETTLEMENT AGREEMENT means the Settlement Agreement and Release
of All Claims dated January 10, 1996 entered into by Xxx, Xxxx and
Xxxxxxx, as releasors, and 3CI, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxx
Xxxxxx, Xxxxxxx Crochet and WSI, as releasees, in settlement of the
claims of the releasors against the releasees in the Lawsuit. A copy of
the Settlement Agreement is attached to this Agreement as EXHIBIT B.
WSI means Waste Systems, Inc., a Delaware corporation. WSI is a
wholly-owned direct subsidiary of Stericycle and the majority
stockholder in 3CI.
2. PURCHASE PRICE
The purchase price for the 3CI Shares and the Assigned Interest is
$1,860,920 (the "Purchase Price"), allocated among Xxx, Xxxx and Xxxxxxx as
follows:
SELLER PURCHASE PRICE
Xxxxx X. Xxxxxxxx......................... $ [omitted]
Xxxxx Xxxxxxx Xxxxxxxx.................... [omitted]
Xxxxxxx X. XxXxxxxxxx..................... [omitted]
$ 1,860,920
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3. PURCHASE AND SALE
Concurrently with the execution and delivery of this Agreement:
(a) Stericycle has paid the Purchase Price to the Sellers by a
wire transfer of $1,860,920 in immediately available funds to the
following accounts designated by the Sellers:
[Omitted]
(b) the Sellers have delivered to Stericycle the stock
certificates representing their respective 3CI Shares, each certificate
duly endorsed for transfer to Stericycle by the Seller in whose name
the certificate is registered or accompanied by a duly executed
assignment separate from certificate.
(c) the Sellers have delivered to Stericycle an assignment, in
form and substance acceptable to the parties and their counsel,
effective to assign, transfer and convey to Stericycle all of the
Sellers' respective Assigned Interests, including (but not limited to)
all of their respective rights, title, interest and estate in, to and
under the Profit Sharing Rights and the Put Rights (the assignment of
the Sellers' Profit Sharing Rights being effective for all payments by
3CI in respect of any period beginning after March 2002);
(d) Xxx has delivered to Stericycle his written resignation as
an employee of 3CI;
(e) the Sellers have delivered to 3CI all confidential and other
information relating to 3CI's business and operations in their
respective possession or control (including, but not limited to, the
business and operations of the "MedWaste Division" as that term is
defined in Section 2(b) of the Settlement Agreement);
(f) the Sellers have delivered to Stericycle, on its own behalf
and on behalf of 3CI and WSI, a release, in form and substance
acceptable to the parties and their counsel, effective to release and
waive all the Sellers' respective claims of any kind xxxxxxx 0XX, XXX
or Stericycle arising or accruing or relating to any matter or event
occurring prior to the date of this Agreement; and
(g) 3CI and WSI have each delivered its written confirmation (by
consent to the assignment referred to in Paragraph 3(c)), signed on its
behalf by its president or a vice president, to the effect that,
insofar as it is concerned, each Seller's Assigned Interests are
assignable to Stericycle in accordance with the terms of this
Agreement.
4. SELLERS' REPRESENTATIONS AND WARRANTIES.
To induce Stericycle to enter into this Agreement, each Seller
severally (but not jointly) represents and warrants to Stericycle as follows:
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(a) He is the owner of record, beneficial owner and holder of
his 3CI Shares (as listed opposite his name on EXHIBIT A), free and
clear of any Liens (other than restrictions on transfer under the
federal Securities Act of 1933, as amended, and state securities laws),
and to his knowledge, the other Sellers' 3CI Shares (as listed opposite
their respective names on EXHIBIT A) constitute all of their respective
"Original Shares," "Additional Shares" and "Earnout Shares" as those
terms are defined in Section 3(a) of the Settlement Agreement.
(b) He is the owner and holder of his Assigned Interests, free
and clear of any Liens, and to his knowledge, the other Sellers'
Assigned Interests constitute all of their rights, title, interest and
estate in, to and under the Settlement Agreement and each of the
Security Documents.
(c) Assuming the consent of 3CI and WSI, as described in
Paragraph 3(g), his Assigned Interests are assignable to Stericycle in
accordance with the terms of this Agreement, and he has never assigned,
transferred, waived, released or modified any of his rights, title,
interest or estate in, to or under the Settlement Agreement or any of
the Security Documents (other than pursuant to this Agreement).
(d) He is not a party to or bound by (i) any shareholders
agreement, buy-sell agreement, option agreement or other contract or
agreement (other than the Settlement Agreement or this Agreement)
relating to the sale, transfer or other disposition of any of his 3CI
Shares or all or part of his Assigned Interests or (ii) any voting
trust, proxy or other contract or agreement relating to the voting of
any of his 3CI Shares.
(e) He has the legal capacity and the requisite power and
authority to execute, deliver and perform this Agreement.
(f) This Agreement constitutes a legal, valid and binding
obligation of his , enforceable against him in accordance with its
terms, except as enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), including, for
purposes of this exception, judicial reformation of the type
contemplated by Paragraph 6(e).
(g) His execution, delivery and performance of this Agreement
will not, either directly or indirectly (and with or without notice or
the passage of time or both), result in a breach of or default under
any contract or agreement to which he is a party or by which he is
bound or result in the imposition or creation of a Lien upon any of his
3CI Shares.
(h) To his knowledge, each of the representations and warranties
made by the other Sellers in this Paragraph 4 is true and correct.
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5. STERICYCLE'S REPRESENTATIONS AND WARRANTIES
To induce the Sellers to enter into this Agreement, Stericycle
represents and warrants to the Sellers as follows:
(a) Stericycle is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full
corporate power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it
purports to own or use, and to perform its obligations under all
contracts and agreements.
(b) Stericycle has the power and authority to execute, deliver
and perform this Agreement, and its execution, delivery and performance
of this Agreement has been duly authorized by all necessary corporate
action.
(c) This Agreement constitutes a legal, valid and binding
obligation of Stericycle, enforceable against it in accordance with its
terms, except as enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(d) Stericycle's execution, delivery and performance of this
Agreement will not, either directly or indirectly (and with or without
notice or the passage of time or both), violate or conflict with
Stericycle's certificate of incorporation or bylaws or result in a
breach of or default under any contract or agreement to which
Stericycle is a party or by which it is bound.
(e) Stericycle is purchasing the 3CI Shares for its own account,
for investment purposes, and not with a present view to the further
sale or distribution of the 3CI Shares.
(f) Stericycle acknowledges that its purchase of the 3CI Shares
will not have been registered under the federal Securities Act of 1933,
as amended, or registered or qualified under any state securities laws
in reliance by the Sellers on specific exemptions from registration or
qualification that may depend upon, among other things, the bona fide
nature of Stericycle's investment intent.
6. NONCOMPETITION
(a) As used in this Paragraph 6, the following terms have these
meanings:
BUSINESS means a person, proprietorship, partnership,
joint venture, limited liability company, corporation,
enterprise or other entity, whether proprietary or
not-for-profit.
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CAPACITY means as an employee, sole proprietor, partner,
joint venturer, limited liability company member, shareholder,
consultant, adviser, principal, agent, lender, seller, buyer,
supplier, vendor, consultant or in any other capacity or role.
COMPETING BUSINESS means a Business that (i) engages in
the collection, transport, treatment or disposal of regulated
medical waste or in one or more other Protected Activities (ii)
from or at a location anywhere in any state in the United States
in which Stericycle or any direct or indirect subsidiary of
Stericycle (including, but not limited to, 3CI) currently
operates a treatment facility, transfer station or collection
site.
PROTECTED ACTIVITIES means (i) the collection,
transportation, treatment and disposal of regulated medical
waste, (ii) the provision of related training and education
programs and consulting services or (iii) the manufacture, sale
and distribution of containers for the collection of regulated
medical waste, including "sharps." In Mike's case, however (and
only in Mike's case), Protected Activities shall not include
consulting services that Xxxx renders to a generator of medical
waste for its in-house waste management program as long as (and
only as long as) all of the following conditions are satisfied:
(i) Xxxx is not affiliated in any Capacity with a Competing
Business, (ii) Xxxx does not recommend to the medical waste
generator the services of a Competing Business and (iii) unless
Xxxx has received 3CI's prior written authorization to provide
consulting services to the generator in question, the medical
waste generator was not a customer of 3CI or Stericycle, or of
any direct or indirect subsidiary of 3CI or Stericycle, on the
date that for any reason Xxxx ceases to be an employee of 3CI.
RESTRICTED PERIOD means, in Jim's case and Richard's case,
the period beginning on the date of this Agreement and ending on
the fifth anniversary of the date of this Agreement, and means,
in Mike's case, the period beginning on the date that for any
reason he ceases to be an employee of 3CI and ending on the
fifth anniversary of that date.
(b) To induce Stericycle to enter into this Agreement, each
Seller agrees that he will not directly or indirectly do any of the
following, regardless of the Capacity in which he is acting:
(1) accept employment with, engage in, acquire any form of
financial interest in, or render compensated or uncompensated
advisory or other services to any Competing Business (but this
restriction shall not apply to the Seller's direct or indirect
beneficial ownership of not more than 1% of the issued and
outstanding stock of any corporation whose stock is available to
the general public on a national securities exchange or the
NASDAQ national market system);
(2) solicit or attempt to solicit for a Competing Business
any customer or
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account of Stericycle or 3CI with which Stericycle or 3CI did
business at any time during the three years ending on the date
of this Agreement; and
(3) solicit for employment or hire away any employee of
Stericycle or 3CI, regardless of whether the employee is
full-time, part-time or temporary, or is employed on an "at
will" basis or pursuant to a written agreement.
(c) The consideration for the restrictions in Paragraph 6(b)
consists of the Purchase Price and, in Mike's case only, an additional
$[omitted] payable in 12 equal monthly installments beginning on the
first day of the first month following the month in which for any
reason he ceases to be an employee of 3CI and continuing on the first
day of each of the next 11 months. The additional $[omitted] payable to
Xxxx shall be subject to the following condition and right of
acceleration:
(1) Stericycle's obligation to make payments to Xxxx shall
be suspended for the duration of any period of violation by Xxxx
of any restriction in Paragraph 6(b) and for any period of
litigation that Stericycle institutes to enforce the
restriction.
(2) If Stericycle defaults in any payment to Xxxx and the
default continues for seven days after Xxxx gives written notice
of the default to Stericycle (sent by certified mail to
Stericycle at its principal executive offices, which are
currently located at 00000 Xxxxx Xxxxx Xxxxx, Xxxx Xxxxxx,
Xxxxxxxx 60045), Xxxx xxx accelerate the remaining monthly
installments and declare the entire amount due, with interest
payable on the amount due from the date of acceleration until
paid at a fluctuating rate equal at all times to 3.0% above the
rate of interest that Bank of America, N.A. announces as it
prime or equivalent rate of interest. Acceleration shall require
a second written notice to be given to Stericycle, in the same
manner as the first notice, at any time after the seven-day cure
period and before Stericycle cures its default.
(d) The restrictions in Paragraph 6(b) shall be in effect for
the Restricted Period. The duration of the Restricted Period shall be
extended, in respect of the Seller in question, for a period equal to
the duration of any period of violation by the Seller of any
restriction and for any period of litigation that Stericycle institutes
to enforce the restriction.
(e) The Sellers stipulate that a Seller's violation of any of
the restrictions in Paragraph 6(b) would result in immediate and
irreparable injury and harm to Stericycle unless injunctive relief were
granted, and that money damages for the violation would be both
difficult to determine and inadequate to compensate Stericycle for its
injury. The Sellers accordingly agree that in the event that a Seller
violates any of the restrictions in Paragraph 6(b), Stericycle shall be
entitled to obtain a temporary restraining order and a preliminary and
permanent injunction to prevent the Seller's continued violation,
without the necessity of proving actual damages or posting any bond or
security. This right to injunctive relief shall be in addition to any
other remedies to which Stericycle may be
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entitled. If Stericycle prevails in its lawsuit against the Seller, the
Seller shall pay Stericycle's attorneys' fees and court costs in
prosecuting its lawsuit.
(f) The Sellers stipulate that if the court in which Stericycle
seeks injunctive relief determines that any of the restrictions in
Paragraph 6(b) are too broad in scope or territorial application to be
legally valid and enforceable, or that the duration of any restriction
is too long to be legally valid and enforceable, the scope, area or
duration may be reduced to limits that the court considers reasonable
and, as so reduced, the restriction may be enforced against the Seller.
7. INDEMNIFICATION
Stericycle agrees that it will indemnify and hold each Seller harmless
from any liability, cost, expense or claim which he may suffer or incur as a
result of his assignment of his Assigned Rights (other than by reason of a
matter constituting the breach of any representation or warranty in Paragraph 4)
or as a result of any act or omission of Stericycle with respect to the Assigned
Rights arising or accruing on or after the date of this Agreement.
8. SURVIVAL
The representations and warranties in Paragraphs 4 and 5 shall survive
Stericycle's payment of the Purchase Price and the Sellers' delivery of their
3CI Shares and assignment of their Assigned Interests, and continue in force
indefinitely.
9. PAYMENTS BY THIRD PARTIES
In the event that after the date of this Agreement, any Seller receives
any payments, distributions or other amounts from 3CI or any other third party
in respect of the Seller's 3CI Shares or his Assigned Interests, the Seller
shall promptly turn over to Stericycle the payment, distribution or other amount
received. To facilitate Stericycle's exercise and enjoyment of its rights under
the Assigned Interests, Stericycle may act in any Seller's name but for its own
interest and account.
10. ADDITIONAL ACTIONS
The Sellers agree that, without additional consideration and promptly
upon Stericycle's request, they shall furnish such further information, execute
and deliver such other documents and do such other acts and things, as
Stericycle reasonably requests for the purpose of carrying out the intent of
this Agreement.
11. GOVERNING LAW
(a) This Agreement shall be governed by the laws of the State of
Arkansas except for the interpretation and enforcement of Paragraph 6,
which shall be governed by the laws of the State of Illinois, where
Stericycle's principal executive offices are located,
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without regard to Illinois conflicts of laws principles. The Sellers
acknowledges that Stericycle believes that the restrictions in
Paragraph 6(b) may be more readily enforced under Illinois law than
under Arkansas law; and in order to provide additional assurance to
Stericycle, the Sellers have agreed, despite their residence in the
State of Arkansas, to the application of Illinois law to the
interpretation and enforcement of Paragraph 6(b).
(b) The Sellers and Stericycle consent to the enforcement of
this Agreement in the United States District Court for the Northern
District of Illinois, the United States District Court for the Western
District of Arkansas, the Circuit Court of Xxxx County, Illinois, and
the Circuit Court of Hot Spring County, Arkansas, and consent to the
personal jurisdiction of those courts.
12. BINDING EFFECT
This Agreement shall apply to, be binding in all respects upon and
inure to the benefit of parties and their respective heirs, legal
representatives, successors and assigns.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, but all
counterparts shall constitute one and the same instrument.
14. COMPLETE AGREEMENT
This Agreement together with any Exhibits (which are hereby
incorporated by reference word for word) constitutes the entire agreement
between the parties with regard to the subject matter, and no other agreement,
statement, promise, or practice between the parties relating to the subject
matter shall be binding upon the parties. All prior and contemporaneous
agreements, whether written or oral, are merged in this Agreement. This
Agreement may be changed only by a written amendment signed by the parties.
STERICYCLE, INC.
By /s/ Xxxxx X.X. ten Xxxxx
--------------------------------
Xxxxx X.X. ten Brink
Executive Vice President and
Chief Financial Officer
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
XXXXX X. XXXXXXXX
/s/ Xxxxx Xxxxxxx Xxxxxxxx
--------------------------------
XXXXX XXXXXXX XXXXXXXX
/s/ Xxxxxxx X. XxXxxxxxxx
--------------------------------
XXXXXXX X. XXXXXXXXXX
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EXHIBIT A
[Omitted]
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