<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 15, 1996
REGISTRATION NO. 333-05665
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
STERICYCLE, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 4953 36-3640402
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) Number)
</TABLE>
1419 LAKE COOK ROAD, SUITE 410
DEERFIELD, ILLINOIS 60015
(847) 945-6550
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
MARK C. MILLER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
STERICYCLE, INC.
1419 LAKE COOK ROAD, SUITE 410
DEERFIELD, ILLINOIS 60015
(847) 945-6550
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------------
COPIES TO:
<TABLE>
<S> <C>
Craig P. Colmar, Esq. Geoffrey E. Liebmann, Esq.
Michael Bonn, Esq. Cahill Gordon & Reindel
Johnson and Colmar 80 Pine Street
300 South Wacker Drive New York, New York 10005
Chicago, Illinois 60606
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
--------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 426(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration Statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Registrant, as currently in effect.
3.5* By-Laws of the Registrant, as currently in effect.
4.1 Specimen certificate for shares of the Registrant's Common Stock, par value $.01 per share.
4.2* Form of Common Stock Purchase Warrant in connection with July 1995 line of credit.
4.3* Form of Common Stock Purchase Warrant in connection with May 1996 short-term loan.
4.4* Amended and Restated Registration Agreement dated October 19, 1994 between the Registrant and certain
of its stockholders, and related First Amendment dated September 30, 1995 and Second Amendment dated
July 1, 1996.
5.1 Form of opinion of Johnson and Colmar.
10.1* Amended and Restated Incentive Compensation Plan.
10.2* Directors Stock Option Plan.
10.3* Loan and Security Agreement dated October 31, 1995 between the Registrant and Silicon Valley Bank,
and related Amendments dated March 12, 1996 and June 4, 1996.
10.4* Guaranty Agreement dated June 1, 1992 among the Registrant, Fleet National Bank, as Trustee, and
Rhode Island Industrial-Recreational Building Authority, and related Regulatory Agreement dated June
1, 1992 between the Registrant and the Rhode Island Industrial-Recreational Building Authority.
10.5 Radio-Frequency Heating Technology License Agreement dated November 10, 1995 between the Registrant
and IIT Research Institute (revised; confidential treatment request withdrawn).
10.6+ Alliance Agreement dated October 12, 1993 between the Registrant and Baxter Healthcare Corporation
(previously filed) and related First Amendment dated August 1, 1996.
10.7+ Agreement dated May 6, 1994 between the Registrant and SAGE Products, Inc., and related letter
agreement dated November 7, 1995 (revised).
10.8* Office Lease dated December 26, 1991 between the Registrant and American National Bank and Trust
Company of Chicago, as Trustee under Trust No. 57661, relating to the Registrant's Deerfield,
Illinois office space.
10.9* Standard Form Industrial Lease dated October 1, 1991 between the Registrant and General American Life
Insurance Registrant, relating to the Registrant's Loma Linda, California treatment facility.
10.10* Lease dated June 1, 1992 between the Registrant and Rhode Island Industrial Facilities Corporation,
relating to the Registrant's Woonsocket, Rhode Island treatment facility.
10.11* Lease dated February 25, 1992 between the Registrant and EML Associates, relating to the Registrant's
San Leandro, California transfer station.
10.12* Master Lease Agreement dated February 11, 1994 between the Registrant and Ziegler Leasing
Corporation, relating to the machinery and equipment at the Registrant's Yorkville, Wisconsin
treatment facility
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
10.13* Master Lease Agreement dated March 14, 1991 between the Registrant and LINC Venture Lease Partners
II, L.P., and related Equipment Schedule dated January 1, 1996, relating to the machinery and
equipment at the Registrant's West Memphis, Arkansas recycling and research development facility,
its San Leandro, California transfer station, and its Morton, Washington treatment facility.
<C> <S>
10.14* State of Rhode Island and Providence Plantations Consent Agreement dated August 22, 1995 between the
Registrant and the Rhode Island Department of Environmental Management.
10.15+ Interim Agreement dated June 28, 1996 between the Registrant and a Brazilian company (revised).
11* Statement Re Computation of Per Share Earnings (revised).
21.1* Subsidiaries.
23.1 Consent of Ernst & Young LLP.
23.2** Consent of Johnson and Colmar (to be filed as part of Exhibit 5.1).
24.1* Power of Attorney.
</TABLE>
- ------------------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment requested.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 4 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Village of
Deerfield, State of Illinois, on August 15, 1996.
STERICYCLE, INC.
By: /s/ MARK C. MILLER
-------------------------------------
Mark C. Miller
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<C> <S> <C>
NAME TITLE DATE
- ------------------------------------------------------ -------------------------------------- -----------------
*
------------------------------------------- Chairman of the Board of Directors August 15, 1996
Jack W. Schuler
/s/ MARK C. MILLER President, Chief Executive Officer and
------------------------------------------- a Director (Principal Executive August 15, 1996
Mark C. Miller Officer)
* Vice President, Finance and Chief
------------------------------------------- Financial Officer (Principal August 15, 1996
James F. Polark Financial and Accounting Officer)
*
------------------------------------------- Director August 15, 1996
Patrick F. Graham
*
------------------------------------------- Director August 15, 1996
John Patience
*
------------------------------------------- Director August 15, 1996
Lloyd D. Ruth
*
------------------------------------------- Director August 15, 1996
L. John Wilkerson, Ph.D.
*
------------------------------------------- Director August 15, 1996
Peter Vardy
*By /s/ MARK C. MILLER
---------------------------------------
Mark C. Miller
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Registrant, as currently in effect.
3.5* By-Laws of the Registrant, as currently in effect.
4.1 Specimen certificate for shares of the Registrant's Common Stock, par value $.01 per share.
4.2* Form of Common Stock Purchase Warrant in connection with July 1995 line of credit.
4.3* Form of Common Stock Purchase Warrant in connection with May 1996 short-term loan.
4.4* Amended and Restated Registration Agreement dated October 19, 1994 between the Registrant and certain
of its stockholders, and related First Amendment dated September 30, 1995 and Second Amendment dated
July 1, 1996.
5.1 Form of opinion of Johnson and Colmar.
10.1* Amended and Restated Incentive Compensation Plan.
10.2* Directors Stock Option Plan.
10.3* Loan and Security Agreement dated October 31, 1995 between the Registrant and Silicon Valley Bank,
and related Amendments dated March 12, 1996 and June 4, 1996.
10.4* Guaranty Agreement dated June 1, 1992 among the Registrant, Fleet National Bank, as Trustee, and
Rhode Island Industrial-Recreational Building Authority, and related Regulatory Agreement dated June
1, 1992 between the Registrant and the Rhode Island Industrial-Recreational Building Authority.
10.5 Radio-Frequency Heating Technology License Agreement dated November 10, 1995 between the Registrant
and IIT Research Institute (revised; confidential treatment request withdrawn).
10.6+ Alliance Agreement dated October 12, 1993 between the Registrant and Baxter Healthcare Corporation
(previously filed) and related First Amendment dated August 1, 1996.
10.7+ Agreement dated May 6, 1994 between the Registrant and SAGE Products, Inc., and related letter
agreement dated November 7, 1995 (revised).
10.8* Office Lease dated December 26, 1991 between the Registrant and American National Bank and Trust
Company of Chicago, as Trustee under Trust No. 57661, relating to the Registrant's Deerfield,
Illinois office space.
10.9* Standard Form Industrial Lease dated October 1, 1991 between the Registrant and General American Life
Insurance Registrant, relating to the Registrant's Loma Linda, California treatment facility.
10.10* Lease dated June 1, 1992 between the Registrant and Rhode Island Industrial Facilities Corporation,
relating to the Registrant's Woonsocket, Rhode Island treatment facility.
10.11* Lease dated February 25, 1992 between the Registrant and EML Associates, relating to the Registrant's
San Leandro, California transfer station.
10.12* Master Lease Agreement dated February 11, 1994 between the Registrant and Ziegler Leasing
Corporation, relating to the machinery and equipment at the Registrant's Yorkville, Wisconsin
treatment facility
10.13* Master Lease Agreement dated March 14, 1991 between the Registrant and LINC Venture Lease Partners
II, L.P., and related Equipment Schedule dated January 1, 1996, relating to the machinery and
equipment at the Registrant's West Memphis, Arkansas recycling and research development facility,
its San Leandro, California transfer station, and its Morton, Washington treatment facility.
10.14* State of Rhode Island and Providence Plantations Consent Agreement dated August 22, 1995 between the
Registrant and the Rhode Island Department of Environmental Management.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- --------- -----------------------------------------------------------------------------------------------------
10.15+ Interim Agreement dated June 28, 1996 between the Registrant and a Brazilian company (revised).
<C> <S>
11* Statement Re Computation of Per Share Earnings (revised).
21.1* Subsidiaries.
23.1 Consent of Ernst & Young LLP.
23.2** Consent of Johnson and Colmar (to be filed as part of Exhibit 5.1).
24.1* Power of Attorney.
</TABLE>
- ------------------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment requested.
<PAGE>
[LOGO]
SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS
-----------------
SHARES
- -----------
-----------------
S[NUMBER]
STERICYCLE, INC CUSIP S58912 10 8
- -----------
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
- --------------------------------------------------------------------------------
This Certifies That
is the owner of
- --------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $.01 PER
SHARE OF
STERICYCLE, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid unless countersigned by the Transfer
Agent and registered by the Registrar.
WITNESS the facsimile seal of the corporation and the facsimile
signatures of the Corporation's duly authorized officers.
DATED:
COUNTERSIGNED AND REGISTERED:
HARRIS TRUST AND SAVINGS BANK
TRANSFER AGENT
AND REGISTRAR
/s/ Mark C. Miller
PRESIDENT AND CHIEF EXECUTIVE OFFICER
[CORPORATE SEAL]
BY
/s/ James F. Polark
SECRETARY
AUTHORIZED SIGNATURE
<PAGE>
STERICYCLE, INC.
The corporation will furnish without charge to each stockholder who so
requests, a statement of the powers, designations, preferences and relative,
participating, optional, or other special rights of each class of stock or
series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - _______Custodian_______
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform gifts to Minors
JT TEN - as joint tenants with right Act .........................
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________________
/______________________________________/________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE, OF
ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
__________________________________________________________________________Shares
of the Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint _________________________________________________________
________________________________________________________________________________
Attorney to transfer the said stock on the Books of the within-named Corporation
with full power of substitution in the premises.
Dated ________________________ ______________________________________
Signature
_______________________________________
THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED
________________________________________________________________________________
The signature(s) must be guaranteed by an eligible guarantor institution (Banks,
Stockbrokers, Savings and Loan Associations and Credit Unions with membership in
an approved signature guarantee Medallion Program),) pursuant to S.E.C. Rule
17Ad-15.
<PAGE>
[Letterhead]
August , 1996
Board of Directors
Stericycle, Inc.
1419 Lake Cook Road
Suite 410
Deerfield, Illinois 60015
Re: REGISTRATION STATEMENT ON FORM S-1
Gentlemen:
We have acted as counsel to Stericycle, Inc. (the "Company") in connection
with the preparation and filing with the Securities and Exchange Commission of a
Registration Statement on Form S-1 (the "Registration Statement") for the
registration (Registration No. 333-05665) under the Securities Act of 1933, as
amended, of 3,450,000 shares of the Company's Common Stock, par value $.01 per
share (the "Shares"), of which 3,000,000 Shares are to be offered for sale in a
public offering underwritten by Dillon, Read & Co. Inc., Salomon Brothers Inc
and William Blair & Company, L.L.C. and other underwriters (the "Underwriters")
and 450,000 Shares are intended to cover the Underwriters' over-allotments, if
any.
As such counsel, we have examined the Registration Statement (including the
prospectus which is part of the Registration Statement), as the Registration
Statement (and prospectus) have been amended to date, the Company's certificate
of incorporation and by-laws, each as amended to date, minutes of meetings and
records of proceedings of the Company's Board of Directors and stockholders
(including, but not limited to, (i) the minutes of a meeting by teleconference
of the Board of Directors on June 11, 1996, (ii) the Consent of Directors dated
as of July 31, 1996, signed by all of the Company's directors, pursuant to
which, in accordance with section 141(f) of the General Corporation Law of the
State of Delaware (the "Delaware General Corporation Law"), the Company's Board
of Directors adopted certain resolutions without the necessity of a formal
meeting of the Board of Directors and (iii) the Consent of Stockholders dated as
of July 31, 1996, signed by holders of a majority of the Corporation's then
outstanding shares of Class A Common Stock and holders of a majority of the
Corporation's then outstand-
<PAGE>
Board of Directors
Stericycle, Inc.
August , 1996
Page Two
ing shares of Class B Common Stock pursuant to which, in accordance with section
228 of the Delaware General Corporation Law, the Company's stockholders adopted
certain resolutions without the necessity of a formal meeting of the
stockholders), and such other matters of fact and questions of law as we have
considered necessary to form the basis of our opinion. In the course of this
examination, we have assumed the genuineness of all signatures, the authenticity
of all documents and certificates submitted to us as originals by
representatives of the Company, public officials and third parties, and the
conformity to and authenticity of the originals of all documents and
certificates submitted to us as copies.
On the basis of our examination, we are of the opinion that the Company has
duly authorized the issuance of the Shares and that, when issued and delivered
to the Underwriters against payment in accordance with the underwriting
agreement to be entered into by the Company and Dillon, Read & Co. Inc., Salomon
Brothers Inc and William Blair & Company, L.L.C., as managing underwriters and
representatives of the several underwriters to be named in Schedule A to the
underwriting agreement, the Shares will be validly issued, fully paid and non-
assessable.
We consent to the use of our opinion as an exhibit to the Registration
Statement.
Very truly yours,
JOHNSON AND COLMAR
<PAGE>
RADIO-FREQUENCY HEATING
TECHNOLOGY
LICENSE AGREEMENT
This Agreement entered into this 10th day of November 1995 by and between
IIT Research Institute (hereinafter "IITRI"), a not-for-profit corporation
organized under the laws of the State of Illinois with principal offices located
at 10 West 35th Street, Chicago, Illinois 60616-3799, U.S.A. and Stericycle
Inc., a corporation organized under the laws of the State of Delaware with
principal offices located at 1419 Lake Cook Road, Suite 410, Deerfield, Illinois
60015 (hereinafter "STERICYCLE"), revoking and replacing the July 13, 1989
Research Agreement and any amendments or understandings thereto between IITRI
and STERICYCLE.
WITNESSETH
WHEREAS, IITRI and STERICYCLE are parties to an agreement entitled
"RESEARCH AGREEMENT" entered into July 13, 1989 as amended, (hereinafter
collectively "RESEARCH AGREEMENT");
WHEREAS, IITRI and STERICYCLE desire to terminate the RESEARCH AGREEMENT in
its entirety and substitute and replace the RESEARCH AGREEMENT with the present
Agreement;
WHEREAS, IITRI and STERICYCLE agree that proper notice has been provided
pursuant to the RESEARCH AGREEMENT in order to terminate the RESEARCH AGREEMENT;
WHEREAS, IITRI's obligation to maintain STERICYCLE information in
confidence has expired pursuant to the terms and conditions of the RESEARCH
AGREEMENT;
WHEREAS, IITRI represents that it is the owner and licensor of certain
IITRI PATENT RIGHTS and related IITRI KNOW-HOW pertaining to radio-frequency
technology;
WHEREAS, STERICYCLE desires to obtain a fully paid-up, royalty-free,
exclusive license with the right to sublicense the IITRI PATENT RIGHTS and IITRI
KNOW-HOW for use in the FIELD OF USE, in the herein described STERICYCLE
EXCLUSIVE TERRITORY;
WHEREAS, STERICYCLE's obligation to maintain IITRI information in
confidence has expired pursuant to the terms and conditions of the RESEARCH
AGREEMENT;
WHEREAS, STERICYCLE represents that it is the owner and licensor of certain
STERICYCLE PATENT RIGHTS pertaining to radio-frequency technology;
<PAGE>
WHEREAS, IITRI desires to obtain a fully paid up, royalty free, exclusive
license with the right to sublicense the STERICYCLE PATENT RIGHTS for use in the
FIELD OF USE in the herein described IITRI EXCLUSIVE TERRITORY;
NOW, THEREFORE, for and in consideration of the promises and mutual
covenants herein contained, IITRI and STERICYCLE agree as follows:
1. DEFINITIONS
As used throughout this Agreement, the following terms shall have the meanings
as hereinafter defined:
1.01 "EFFECTIVE DATE" shall mean the date first written above.
1.02 "IITRI PATENT RIGHTS" shall mean any patents and/or applications for
patents owned or filed by IITRI prior to or subsequent to the
EFFECTIVE DATE that pertain to both radio-frequency technology and the
FIELD OF USE as defined below. The IITRI PATENT RIGHTS as of the
EFFECTIVE DATE of this Agreement are listed in Attachment A of this
Agreement.
1.03 "STERICYCLE PATENT RIGHTS" shall mean any patents and/or patent
applications owned or filed by STERICYCLE prior to or subsequent to
the EFFECTIVE DATE that pertain to both radio-frequency technology and
the FIELD OF USE as defined below. The STERICYCLE PATENT RIGHTS as
of the EFFECTIVE DATE of this Agreement are listed in Attachment B of
this Agreement.
1.04 "IITRI KNOW-HOW" shall mean IITRI information relating to radio-
frequency technology, including electrical conduction heating and
dielectric heating.
2
<PAGE>
1.05 "FIELD OF USE" shall mean the treatment of medical waste to inactivate
some or all of the microorganisms found in or on such waste.
1.06 "STERICYCLE EXCLUSIVE TERRITORY" shall be defined to mean the
following countries:
Argentina Germany Portugal
Australia Greece Saudi Arabia
Austria Hungary South Africa
Belgium Iceland South Korea
Brazil Indonesia Spain
Canada Ireland Sweden
Colombia Italy Switzerland
Czech Republic Japan Taiwan
Denmark Luxembourg Thailand
Finland Mexico United Kingdom
France The Netherlands United States of America
Norway
1.07 "IITRI EXCLUSIVE TERRITORY" shall mean all remaining countries not
defined as within the STERICYCLE EXCLUSIVE TERRITORY.
2. LICENSE GRANT
2.01 IITRI hereby grants to STERICYCLE and STERICYCLE hereby accepts the
fully paid, royalty free, exclusive right and license, including the
right to grant sublicenses, to practice IITRI PATENT RIGHTS and IITRI
KNOW-HOW, to enable STERICYCLE to make, have made, use, sell, offer to
sell, distribute, rent, lease and/or reproduce any portion or
embodiment of the IITRI PATENT RIGHTS, to the extent they exist, and
the IITRI KNOW-HOW, within the FIELD OF USE in the STERICYCLE
EXCLUSIVE TERRITORY.
2.02 STERICYCLE hereby grants to IITRI and IITRI accepts the fully paid,
royalty free, exclusive right and license, including the right to
grant sublicenses, to practice STERICYCLE PATENT RIGHTS to enable
IITRI to use, sell, offer to sell, distribute, rent, and/or lease any
portion or embodiment of STERICYCLE PATENT RIGHTS within the FIELD OF
USE in the IITRI EXCLUSIVE TERRITORY.
2.03 Where IITRI has the right to do so, IITRI will offer STERICYCLE a
license within the STERICYCLE EXCLUSIVE TERRITORY for inventions
developed by others that pertain to both the FIELD OF USE and radio-
frequency technology.
3
<PAGE>
2.04 Where STERICYCLE has the right to do so, STERICYCLE will offer IITRI a
license within the IITRI EXCLUSIVE TERRITORY for inventions developed
by others that pertain to both the FIELD OF USE and radio-frequency
technology.
3. MARKETING
3.01 IITRI hereby agrees that STERICYCLE shall have exclusive marketing
rights within the FIELD OF USE in the STERICYCLE EXCLUSIVE TERRITORY.
3.02 STERICYCLE hereby agrees that IITRI shall have exclusive marketing
rights within the FIELD OF USE in the IITRI EXCLUSIVE TERRITORY.
3.03 IITRI and STERICYCLE agree to cooperate to the fullest extent possible
in the event one party identifies a potential customer within the
FIELD OF USE in the other party's EXCLUSIVE TERRITORY.
4. SUPPLY AND SERVICE
4.01 IITRI hereby grants to STERICYCLE the right to competitively bid to
supply and service IITRI systems within the FIELD OF USE in the IITRI
EXCLUSIVE TERRITORY. IITRI hereby grants to STERICYCLE the right to
match the most competitive bid to supply and service IITRI systems
within the FIELD OF USE in the IITRI EXCLUSIVE TERRITORY.
5. PATENT RIGHTS
5.01 IITRI agrees that it will provide STERICYCLE adequate and timely
written notice that IITRI intends to let any IITRI PATENT RIGHTS
lapse.
5.02 IITRI agrees that STERICYCLE shall have the initial right to assume
responsibility of any IITRI PATENT RIGHTS that IITRI intends to let
lapse.
5.03 In the event that STERICYCLE assumes any IITRI PATENT RIGHTS pursuant
to Paragraph 5.02, those IITRI PATENT RIGHTS shall become jointly
owned by IITRI and STERICYCLE.
5.04 STERICYCLE agrees that it will provide IITRI adequate and timely
written notice that STERICYCLE intends to let any STERICYCLE PATENT
RIGHTS lapse.
4
<PAGE>
5.05 STERICYCLE agrees that IITRI shall have the initial right to assume
responsibility of any STERICYCLE PATENT RIGHTS that STERICYCLE intends
to let lapse.
5.06 In the event that IITRI assumes any STERICYCLE PATENT RIGHTS pursuant
to Paragraph 5.05, those STERICYCLE PATENT RIGHTS shall become jointly
owned by STERICYCLE and IITRI.
6. CONSIDERATION
6.01 In consideration of the rights and licenses granted STERICYCLE herein
and for the period over which this Agreement is in effect, STERICYCLE
has transferred Twenty-two Thousand (22,000) shares of its common
stock to IITRI.
6.02 In consideration of the rights and licenses granted IITRI herein and
for the period over which this Agreement is in effect, IITRI hereby
agrees to waive and forego any royalties or other payments that may be
due IITRI as provided for under the terms of the RESEARCH AGREEMENT
and IITRI shall whenever and wherever possible recommend STERICYCLE
as the premier supplier and installer in and of equipment and systems
for application and practice of the IITRI PATENT RIGHTS and IITRI
KNOW-HOW.
7. GENERAL PROVISIONS
7.01 This Agreement shall be interpreted in accordance with the laws of the
State of Illinois, U.S.A. and shall be deemed to have been executed
and delivered in the State of Illinois, U.S.A.
7.02 If any paragraph, section, term, condition or provision of this
Agreement shall be finally adjudged to be unlawful or unenforceable
for any reason, such article, paragraph, section, term, condition or
provision hereby shall be deemed severable herefrom and shall be
deemed thereby to be stricken herefrom and shall not thereupon and
thereafter otherwise remain in full force and effect undisturbed by
such adjudication.
7.03 This Agreement shall not be assignable by either party in whole or in
part, without the prior written consent of the other party, except
that either party may assign all of its rights hereunder together with
all of its obligations hereunder to any third party with which it may
merge or consolidate, or to which it may transfer substantially all of
its property and assets relating to the subject matter of this
Agreement.
5
<PAGE>
7.04 It is understood and agreed that there shall be no warranty by IITRI,
express or implied, as to the results to be obtained utilizing IITRI
PATENT RIGHTS and IITRI KNOW-HOW or as to freedom from infringement of
any patents of any third party.
7.05 It is understood and agreed that there shall be no warranty by
STERICYCLE, express or implied, as to the results to be obtained
utilizing STERICYCLE PATENT RIGHTS or as to freedom from infringement
of any patents of any third party.
7.06 IITRI and STERICYCLE agree to fully cooperate and resolve any issue of
licensing terms or conditions including exclusivity whenever and
wherever possible when IITRI is attempting to sublicense others under
Section 2.02.
7.07 IITRI and STERICYCLE agree to fully cooperate and resolve any issue of
licensing terms or conditions including exclusivity whenever and
wherever possible when STERICYCLE is attempting to sublicense others
under Section 2.01.
7.08 This Agreement, when executed by the parties hereto, shall constitute
the entire Agreement between the parties.
7.09 This Agreement expressly terminates all sections or provisions in the
RESEARCH AGREEMENT.
8. TERM AND TERMINATION
8.01 This Agreement shall continue in force from the EFFECTIVE DATE until
the last to expire patent owned by either IITRI or STERICYCLE relating
to IITRI PATENT RIGHTS as defined and STERICYCLE PATENT RIGHTS as
defined, unless this Agreement is terminated earlier by mutual
agreement of the parties.
9. NOTICE
9.01 All correspondence under this Agreement should be sent to the
following addresses:
Attn: Office of the General Counsel
IIT Research Institute
10 West 35th Street
Chicago, IL 60616-3799
6
<PAGE>
Attn: President
Stericycle, Inc.
1419 Lake Cook Road - Suite 410
Deerfield, IL 60015
or such other address to which either party shall give due written notice from
time to time.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, duly authorized as of the date first
above written.
IIT Research Institute Stericycle, Inc.
By: /s/A. L. Valentine By: /s/Mark C. Miller
-------------------------------- --------------------------------
Title: Group Vice President Title: President/CEO
----------------------------- -----------------------------
Date: November 10, 1995 Date: November 15, 1995
7
<PAGE>
ATTACHMENT A
<TABLE>
<CAPTION>
TITLE COUNTRY APP. NO. FILING DATE PATENT NO. ISSUE DATE
- ----- ------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Method and Apparatus For
Rendering Medical Materials USA 08/290,002 8/12/94 Pending
Safe
USA 08/409,897 03/23/95 Pending
USA 08/426,631 04/21/95 Pending
USA 08/466,088 06/06/95 Pending
USA 08/480,879 06/07/95 Pending
CA 2,079,331 03/28/91 Pending
EP 91908103.4 03/28/91 Pending
CA 2,086,124 07/03/91 Pending
EP 91913191.2 07/03/91 Pending
CA 2,086,125 07/02/91 Pending
EP 91913461.9 07/02/91 Pending
</TABLE>
<PAGE>
ATTACHMENT B
<TABLE>
<CAPTION>
TITLE COUNTRY APP. NO. FILING DATE PATENT NO. ISSUE DATE
- ----- ------- -------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Method For Disinfecting USA 07/530,438 06/01/90 5,035,858 07/30/91
Medical Materials
Device For USA 07/698,594 05/10/91 5,226,065 07/06/93
Disinfecting Materials
Method For Disinfecting Canada 2027392 10/11/90 Pending
Medical Materials
EPO 90916602.7 10/15/90 Pending
Japan 2-515575 10/15/90 Pending
Apparatus and Method For USA 07/586,442 09/21/90 5,106,594 04/21/92
Processing Medical Waste
USA 07/903,906 06/25/92 Pending
USA 08/177,803 01/06/94 Pending
USA 08/485,480 06/07/95 Pending
USA 08/486,394 06/07/95 Pending
Australia 85449/91 09/18/91 642533 03/07/94
Canada 2069430 09/18/91 Pending
EPO 91917216.3 09/18/91 Pending
Hungary P9201696 09/18/91 Pending
Ireland 920862 03/18/92 Pending
Japan 3-515692 09/18/91 Pending
Mexico 921455 03/31/92 177232 03/15/95
Mexico 947607 03/31/92 Pending
Russian Fed. 5052770.13 09/18/91 Pending
South Korea 701203/92 09/18/91 Pending
</TABLE>
<PAGE>
FIRST AMENDMENT TO
ALLIANCE AGREEMENT
This Amendment is entered into as of August 1, 1996 by Baxter Healthcare
Corporation, a Delaware corporation ("Baxter"), and Stericycle, Inc., a Delaware
corporation ("Stericycle").
PREAMBLE
Baxter and Stericycle are parties to an Alliance Agreement which, while
undated, was signed on or about, and became effective as of, October 12, 1993
(the "Alliance Agreement"). Baxter and Stericycle desire to clarify and amend
the Alliance Agreement as follows.
Now, therefore, in consideration of their mutual promises, Baxter and
Stericycle agree as follows:
1. DEFINITIONS. Capitalized terms used in this Amendment without being
defined have the same meanings that they have in the Alliance Agreement. The
following terms have these meanings:
ALLEGIANCE means Allegiance Corporation, a Delaware corporation.
Allegiance is currently a wholly-owned direct subsidiary of Baxter
International Inc.
ALLEGIANCE SPIN-OFF means the distribution by Baxter International
Inc. to its stockholders of all of its stock in Allegiance.
BAXTER LOCK-UP AGREEMENT means the Lock-Up Agreement dated July 1,
1996 from Baxter to the Managing Underwriters, which Baxter signed and
delivered in connection with the Stericycle IPO. A copy of the Baxter
Lock-Up Agreement is attached to this Amendment as EXHIBIT A.
MANAGING UNDERWRITERS means Dillon, Read & Co. Inc., Salomon Brothers
Inc and William Blair & Company L.L.C., as the representatives of the
underwriters in connection with the Stericycle IPO.
REGISTRATION STATEMENT means the Registration Statement on Form S-1
that Stericycle filed with the Securities and Exchange Commission on June
11, 1996 in connection with the Stericycle IPO (Registration No. 333-
05665), as it has been and may be further amended before becoming
effective.
STERICYCLE CLASS A COMMON STOCK means the Class A Common Stock, par
value $0.01 per share, which Stericycle is currently authorized to issue.
STERICYCLE COMMON STOCK means the Common Stock, par value $0.01 per
share,
<PAGE>
which Stericycle will become authorized to issue prior to completion of the
Stericycle IPO.
STERICYCLE IPO means Stericycle's initial public offering of up to
3,450,000 shares of Stericycle Common Stock pursuant to the Registration
Statement.
2. AMENDMENT OF SECTIONS 7.6 AND 7.7. Upon the expiration of the Baxter
Lock-Up Agreement 180 days after the date of Stericycle's execution and delivery
of the underwriting agreement to be entered into by Stericycle and the Managing
Underwriters in connection with the Stericycle IPO, or upon the earlier
termination of the Baxter Lock-Up Agreement by the Managing Underwriters (or by
Dillon, Read & Co. Inc. on their behalf), Sections 7.6 and 7.7 of the Alliance
Agreement shall be amended to read as follows, without the necessity of any
further action by either Baxter or Stericycle:
7.6 CONSEQUENCES OF EARLY TERMINATION. (a) Any notice of termination
of the Alliance given by Baxter pursuant to Section 7.3(a) (as a result of
a willful breach or default by Stericycle) or 7.4(a) of this Agreement
shall describe the basis upon which Baxter believes that it is entitled to
terminate the Alliance pursuant to such Section. If the Alliance is
terminated by Baxter pursuant to Section 7.3(a) (as a result of a willful
breach or default by Stericycle) or 7.4(a) of this Agreement, promptly upon
such termination, Stericycle shall transfer the Alliance Technology and all
of Stericycle's rights therein (including all rights to receive royalty
payments) to Baxter.
(b) Any notice of termination of the Alliance given by Stericycle
pursuant to Section 7.3(a) (as a result of a willful breach or default by
Baxter) or 7.5(c) of this Agreement shall describe the basis upon which
Stericycle believes that it is entitled to terminate the Alliance pursuant
to such Section. If the Alliance is terminated by Stericycle pursuant to
Section 7.3(a) (as a result of a willful breach or default by Baxter) or
7.5(c) of this Agreement, promptly upon such termination, Baxter shall
transfer all of its rights in the Alliance Technology to Stericycle (and
Baxter's rights to receive payments under Sections 4.6(c) and 9.1(d) of
this Agreement shall immediately terminate).
(c) If the Alliance is terminated by Baxter pursuant to Section
7.3(a) (other than as a result of a willful breach or default by
Stericycle), 7.3(b), 7.3(c), 7.4(b), 7.4(c), 7.4(d), or 7.4(e) of this
Agreement, or by Stericycle pursuant to Section 7.3(a) other than as a
result of a willful breach or default by Baxter), 7.3(b), 7.3(c), 7.5(a),
or 7.5(b) of this Agreement promptly upon such termination, Stericycle
shall grant Baxter a License on a non-exclusive basis.
7.7 POST TERMINATION FORFEITURE OF RIGHTS TO ALLIANCE TECHNOLOGY.
(a) Provided (except in the case of a termination of the Alliance by Baxter
pursuant to Section 7.4(e) of this Agreement) that a Baxter Competitive
Event shall not have first occurred, if at any time within 18 months after
the termination of the alliance by Baxter pursuant to Section 7.3(a) (other
than as a result of a willful breach or default by Stericycle), 7.3(c),
7.4(b), 7.4(c), or 7.4(e) of this Agreement or the non-renewal of the
Alliance by Baxter, a Stericycle Competitive Event occurs, Baxter's rights
with respect to the Alliance Technology shall
-2-
<PAGE>
automatically be transferred to Stericycle (and Baxter's rights to receive
payments under Sections 4.6(c) and 9.1(d) of this Agreement shall
immediately terminate).
(b) Provided that a Stericycle Competitive Event shall not have first
occurred, if at any time within 18 months after the termination of the
Alliance by Stericycle pursuant to Section 7.3(a) (other than as a result
of a willful breach or default by Baxter), 7.3(c) or 7.5(b) of this
Agreement or the non-renewal of the alliance by Stericycle, a Baxter
Competitive Event occurs, all of Stericycle's rights with respect to the
Alliance Technology (including all rights to receive royalty payments)
shall automatically be transferred to Baxter.
3. ALLEGIANCE SPIN-OFF. Stericycle consents to Baxter's assignment to
Allegiance, or to any direct or indirect wholly-owned subsidiary of Allegiance,
of all of Baxter's rights and obligations under the Alliance Agreement, as
amended by this Amendment, as part of the Allegiance Spin-off. Any such
assignment shall not be effective until Baxter has given written notice of the
assignment to Stericycle (but no further consent or other action by Stericycle
shall be necessary). Stericycle shall promptly request the Managing
Underwriters (or Dillon, Read & Co. Inc. on their behalf) to consent to Baxter's
transfer of the Stericycle Shares to Allegiance (or to the direct or indirect
wholly-owned subsidiary to which Baxter has assigned its rights and obligations
under the Alliance Agreement, as amended by this Amendment) on the condition
that Allegiance (or the other transferee) signs and delivers to the Managing
Underwriters a lock-up agreement in substantially the same form as the Baxter
Lock-Up Agreement.
4. MISCELLANEOUS. As amended by this Amendment, the Alliance Agreement
shall continue in full force and effect. This Amendment shall be governed by
the laws of the State of Delaware, without regard to choice-of-law rules. This
Amendment may be signed in counterparts, any one of which need not contain the
signature of both parties, but all of which taken together shall constitute one
and the same instrument.
In witness, the parties have signed this Amendment.
STERICYCLE, INC.
By: /s/ Mark C. Miller
---------------------------------------
Mark C. Miller
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BAXTER HEALTHCARE CORPORATION
By: /s/ John F. Gaither, Jr.
---------------------------------------
John F. Gaither, Jr.
VICE PRESIDENT
-3-
<PAGE>
AGREEMENT
THIS AGREEMENT is made and entered into on this 6th day of May, 1994, by
and between SAGE PRODUCTS, INC., an Illinois corporation ("Sage") and
STERICYCLE, INC., an Illinois corporation ("Stericycle").
WITNESSETH:
WHEREAS, Sage and Stericycle desire to develop a process which will
generate a constant source of polyolefin, a plastic product consisting
substantially of polypropylene with traces of polyethylene and polystyrene and
other olefins, from post consumer medical waste (the "Product") for use by Sage
in the manufacture of its line of health care products;
WHEREAS, pursuant to the terms of that certain Letter Agreement dated
November 11, 1992 (the "Letter Agreement"), Sage and Stericycle have previously
agreed to jointly develop a process which will facilitate the reclamation of the
Product from post consumer medical waste for use by Sage in the manufacture of
its line of health care products (the "Process");
WHEREAS, Sage and Stericycle have previously expended monies
pursuant to the development of the Process;
WHEREAS, Sage has agreed to make a payment of up to[ * ] to
Stericycle, which payment will be applied towards [ * ] the
* Omitted; filed separately with the Commission
<PAGE>
total installed cost of that certain equipment which is necessary for the
further development of the Process, as that certain Equipment is described in
Exhibit A (the "Equipment");
WHEREAS, from and after the time that development of the Process is
complete, Sage has agreed to purchase from Stericycle, and Stericycle has agreed
to sell to Sage, the Product that is reclaimed from post-consumer medical waste
by application of the Process; and
WHEREAS, Sage and Stericycle have agreed that Sage's payment of additional
monies to Stericycle for the development of the Process and the purchase and
sale of the resulting product will best be effectuated pursuant to the terms and
provisions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, and for other good and valuable consideration, the adequacy
and sufficiency of which is hereby acknowledged, Sage and Stericycle agree as
follows:
1. DEVELOPMENT PERIOD.
A. EQUIPMENT. As the Equipment is installed and invoiced, Sage
agrees to make a payment of up to [ * ] (the "Cash Payment") to
Stericycle. Stericycle agrees to apply the Cash Payment towards [ * ] the
cost of purchasing the Equipment (the "Project Cost"). Stericycle further agrees
that it will apply up to [ * ] of cash, or assets having a net book value
equivalent to [ * ] toward the
* Omitted; filed separately with the Commission
2
<PAGE>
Project Cost. The Equipment is described on Schedule "A" attached hereto, which
schedule may be amended from time to time.
(1) TITLE TO THE EQUIPMENT. Stericycle shall retain title to
the Equipment; provided, however, that if this Agreement is terminated for any
reason, Stericycle agrees to pay Sage an amount equal to [ * ]
the "fair market value" of the Equipment. For purposes of this Agreement, "fair
market value" will be determined by an independent appraiser jointly selected by
Sage and Stericycle. The appraiser shall take into consideration the value of
the Equipment as operated "in place". In the event that Sage does not agree
with the appraised value, Sage shall, within thirty (30) days of delivery of the
appraisal, have the option to meet the appraisal price and purchase the
Equipment (the "Option Period"). The ultimate purchaser of the Equipment shall
make payment to the other party within fifteen (15) days after the expiration of
the Option Period.
(2) RELATED COSTS. Stericycle shall pay all maintenance and
insurance costs, and all taxes, that pertain to the Equipment. For purposes of
paragraph 2.E.(1) of this Agreement, the maintenance and insurance costs and the
taxes pertaining to the Equipment shall be included as part of the direct
operating cost of producing the Product by application of the Process.
B. PROJECT MANAGEMENT. Stericycle shall be responsible for
purchasing the Equipment. Stericycle shall also be responsible for managing and
supervising the operations which are undertaken pursuant to completion of
development of the Process.
* Omitted; filed separately with the Commission
3
<PAGE>
(1) MANAGEMENT FEE. In consideration of its management and
supervision of the operations which are necessary to completion of development
of the Process, Sage agrees to pay Stericycle a fee of [ * ]
(2) ADDITIONAL COSTS. If Sage and Stericycle agree that
additional developmental expenses are required with respect to the Process, they
will share such expenses equally.
2. PURCHASE AND SALE. From and after the time that development of the
Process is complete, Sage agrees to purchase from Stericycle the Product that is
reclaimed by application of the Process, and Stericycle agrees to sell to Sage
the Product that is reclaimed by application of the Process, upon the following
terms and conditions.
A. DESCRIPTION OF GOODS. The Product is a plastic product
consisting substantially of polypropylene with traces of polyethylene and
polystyrene and other olefins. Stericycle expressly agrees and acknowledges
that Sage may use and incorporate the Product into any of its products, unless
Sage has agreed to the sale of Product pursuant to paragraph 2.C.(3) herein, and
Stericycle has entered into an exclusive agreement with a purchaser for the
sale of that Product.
B. EXCLUSIVE PURCHASER. Except as otherwise provided herein,
Stericycle represents that it will not sell, give away, or deliver to any other
person, firm or corporation any commercial amount of the Product reclaimed by it
during the term of this Agreement pursuant to the application of the Process
without Sage's prior written consent, which consent shall not unreasonably be
withheld.
* Omitted; filed separately with the Commission
4
<PAGE>
If at anytime after December 31, 1994, Sage's annual purchases fall below [
* ] per year, Sage agrees to change its rights to a non-exclusive basis.
C. INITIAL GUARANTEED PURCHASE. Stericycle shall sell and deliver
to Sage, and Sage shall purchase and accept from Stericycle, a minimum of [
* ] of Product per month ("Minimum"), commencing [ * ], and
for each month thereafter through [ * ].
(1) SUBSEQUENT PURCHASES. After [ * ],
Sage shall update and amend, on a quarterly basis, its estimate of its
requirements of the Product for the following twelve (12) month period. The
amount required shall be based solely on Sage's determination of its needs. The
actual quantity of Product purchased by Sage shall be reflected in a purchase
order (the "Purchase Order") . A Purchase Order shall be placed on the first day
of the month for delivery by the fifteenth (15th) day of the succeeding month.
(2) FAILURE TO MEET REQUIREMENTS. If, for any reason,
Stericycle does not completely fill a Purchase Order, and if the Purchase order
is for an amount of Product which is less than the maximum amount of Product
which can be reclaimed by the Process [ * ], Stericycle
shall have sixty (60) days within which to make up the amount by which the
Purchase Order is deficient; provided, however, that if the amount of Product
enumerated in a Purchase Order exceeds the amount of Product enumerated in the
immediately preceding Purchase Order by fifty percent (50%) or more, Stericycle
shall have one hundred twenty (120) days within which to
* Omitted; filed separately with the Commission
5
<PAGE>
make up the amount by which the Purchase Order is deficient. If, within that
sixty (60) day period or one hundred twenty (120) day period, as the case may
be, Stericycle is unable to make up the amount of the deficiency, Sage shall
have the right to develop a source of Product which is adequate to meet its
requirements; in the alternative, Sage may purchase the Product, or such other
product as it deems suitable, from a third party.
(3) SALES TO THIRD PARTIES. If the amount of Product reclaimed
by Stericycle is in excess of the amount required by Sage, Stericycle shall have
the right to sell the excess to a third party; provided, however, that (a)
Stericycle shall not sell such excess to any other person, firm or corporation
which makes products which are made by Sage and in which Sage incorporates the
Product and (b) Stericycle shall not sell such excess to any other person, firm
or corporation which is engaged, directly or indirectly, in the development,
manufacture or marketing of products which compete with the products which are
developed, manufactured and marketed by Sage without Sage's prior written
consent, which consent shall not unreasonably be withheld; provided further,
that no sales shall be made at a price less than Sage's total unit cost without
Sage's prior approval, which approval shall not unreasonably be withheld.
D. QUALITY OF GOODS. The units of Product which are produced by
Stericycle and which comprise a Purchase Order shall meet the quality standards
which are specified in Exhibit "B" attached hereto and incorporated herein.
Stericycle warrants that the Product will conform to the attached specifications
and that it will convey
6
<PAGE>
good title thereto. The Product shall not include (and Sage shall not accept)
"Excluded Material" (a) anatomical waste; (b) hazardous waste or hazardous
substances, as defined under the Resource Conservation and Recovery Act of 1976,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980; or (c) radioactive materials, as defined by the United States Nuclear
Regulatory Commission. Sage will not accept Excluded Material, and if
Stericycle delivers Excluded Material to Sage, Sage may reject such Excluded
Material and any Product which contains such material. At Sage's option, it may
forward such Excluded Material for disposal at Stericycle's sole risk and
expense. In order that Stericycle may produce Product which satisfies Sage's
quality assurance standards, Sage agrees to assist Stericycle in understanding
and satisfying those quality assurance standards of Sage which may be unique to
its needs. Any units of the Product which do not reasonably satisfy the
foregoing quality assurance standards may be rejected by Sage pursuant to the
terms of paragraph 4 below.
E. PURCHASE PRICE. The total purchase price for a Purchase Order
shall be equal to [
*
], as those costs are hereinafter defined (the "Purchase Price").
The direct and incremental costs of the Product shall be determined as follows.
* Omitted; filed separately with the Commission
7
<PAGE>
(1) DIRECT COSTS. For purposes of this Agreement, direct cost
shall include direct production and transportation expenditures which are
associated with the production and delivery of the Product to Sage.
(2) RELATED PARTY ALLOCATIONS. Additional charges will be
allocated for facility usage and nonproduction equipment. All such allocations
shall be agreed to by Sage prior to billing for such costs.
(3) INCREMENTAL COSTS. Sage and Stericycle agree that the
incremental costs for reclaiming the polyolefin plastics shall be equal to [
* ]. The incremental costs associated with the
Product include the cost of additional energy usage for processing, additional
material handling requirements before and after treatment and adjustments to
normal processing standards for sharps-only materials.
(4) QUARTERLY AND YEAR-END ADJUSTMENT. Monthly charges shall be
computed on a pro forma cost-per-pound basis as agreed to by the parties. An
accounting which reflects the cost set forth herein on a per pound basis shall
be provided on a quarterly basis, and Sage shall pay or be credited with the
difference between the per pound cost as determined by the accounting and the
per pound cost as determined by the pro forma. At the end of each calendar
year, a comprehensive accounting which reflects the annualized cost per pound
for the entire year shall be provided, and Sage shall pay or be credited with
the difference between the actual costs, as computed in accordance with the
terms of this Agreement, for the
* Omitted; filed separately with the Commission
8
<PAGE>
calendar year and the sum total of payments and credits for that year. Any
disputes with respect to the accounting shall be resolved within ninety (90)
days after the presentation of the accounting, and if the parties cannot resolve
the dispute within that time period, they shall submit the matter to a certified
public accounting firm which is acceptable to both of them. Within sixty (60)
days thereafter, the accounting firm to which the matter is submitted shall
render a decision, and the decision so rendered shall be binding upon the
parties.
(5) PAYMENT OF PURCHASE PRICE. Sage shall pay the Purchase
Price for each shipment of Product and adjustments within fifteen (15) business
days after delivery.
3. DELIVERY OF GOODS.
A. PLACE FOR DELIVERY. Stericycle shall deliver all units of Product
comprising a Purchase Order FOB at Sage's facility located in Crystal Lake,
Illinois.
B. TIME FOR DELIVERY. Stericycle shall commence delivery by [ *
], and shall deliver all other Purchase Orders to Sage by the fifteenth
(15th) day of each succeeding month (hereinafter referred to, singly, as the
"Purchase Order Period" and, collectively, as the "Purchase Order Periods")
until this Agreement terminates or is otherwise canceled.
* Omitted; filed separately with the Commission
9
<PAGE>
4. RIGHT TO INSPECT GOODS. Before delivery of any shipment of Product is
considered complete under this Agreement, Sage shall have the right to inspect
the Product tendered for delivery. Such inspection shall take place at Sage's
facility in Crystal Lake, Illinois. If any portion of a particular Purchase
Order does not satisfy Buyer's quality assurance standards, Buyer may, within
five (5) business days after taking delivery, reject that portion and
immediately return it to Stericycle freight collect. Stericycle shall also pay
the shipping costs associated with the furnishing of replacement goods. Sage
shall not be charged for those portions which are properly rejected as being
nonconforming. After five (5) business days from delivery of a shipment, all
Product is deemed inspected and accepted by Sage.
5. ROYALTY. Sage shall pay a royalty to Stericycle based on Sage's "Net
Sales" of those products which it has manufactured and which incorporate the
Product. For purposes of this Agreement, "Net Sales" shall be defined as the
total monthly invoice price of those products sold by Sage which incorporate the
Product, less sales or excise taxes and shipping costs actually paid, directly
or indirectly, by Sage, and less actual trade discounts, rebates and returns and
allowances thereon. The amount of the royalty shall be equal to Sage's Net
Sales of such products multiplied by a royalty percentage determined in
accordance with the following schedule:
10
<PAGE>
Monthly Net Sales Royalty Percentage
1. [ * ] [ * ]
2. [ * ] [ * ]
3. [ * ] [ * ]
4. [ * ] [ * ]
The royalty so computed shall be paid to Stericycle on a quarterly basis, within
thirty (30) days after the end of the calendar quarter.
6. TERM. Subject to the terms of paragraph 7 herein, the term
of this Agreement shall commence as of January 1, 1994, and terminate on
December 31, 1998 (the "Initial Term"). Thereafter, this Agreement shall be
automatically extended for successive one (1) year terms unless sooner
terminated pursuant to the terms of paragraph 7 herein.
7. TERMINATION.
A. TERMINATION DURING THE INITIAL TERM. During the Initial Term,
this Agreement may be terminated for any of the following reasons:
(1) At Sage's option, if Stericycle is unable to deliver the
full amount of a Purchase Order to Sage within its attendant Purchase Order
Period, and, within sixty (60) days after written notice, Stericycle fails to
cure the amount of the deficiency;
11
<PAGE>
(2) At Sage's option, if four (4) shipments of Product in a
twelve (12) month period fail to satisfy Sage's quality assurance standards, as
those standards are delineated on Exhibit "B" attached hereto and incorporated
herein;
(3) At Stericycle's option, if Sage fails to pay the Purchase
Price to Stericycle, provided that Stericycle has given written notice to Sage
and Sage has failed to cure within sixty (60) days thereafter; and
(4) At Stericycle's option, if Sage fails to pay the royalty
provided for in paragraph 5 herein to Stericycle, provided that Stericycle has
given written notice to Sage and Sage has failed to cure within sixty (60) days
thereafter.
(5) By either party, if the other party files a petition in
bankruptcy, has a receiver appointed for it, becomes insolvent or is unable to
meet its debts as they come due. In the event that Sage terminates this
Agreement pursuant to the terms of this paragraph, it shall have an option to
purchase the Equipment from Stericycle for its net book value at the time of
termination pursuant to the terms set forth in paragraph 1.A.(1) of this
Agreement.
(6) At Sage's option, if Sage demonstrates the commercial
availability of product which is substantially similar to the Product and which
has a price which is [ * ] than the average weighted cost
of the Product for the prior six (6) months.
* Omitted; filed separately with the Commission
12
<PAGE>
B. TERMINATION AFTER THE INITIAL TERM. After expiration of the
Initial Term, this Agreement may be terminated for any of the following reasons:
(1) Sage or Stericycle may terminate this Agreement at the end
of any given year upon not less than 365 days written notice delivered to the
other party; and
(2) For any of the reasons enumerated in paragraphs 7.A.(1)-
7.A.(6) of this Agreement.
8. AUDIT.
A. AUDIT BY STERICYCLE. Stericycle shall have the right, upon
written request, to inspect Sage's books and records in order to verify Sage's
accounting for the royalty which is payable pursuant to paragraph 5 herein;
provided, however, that Stericycle shall conduct no more than two (2) such
inspections in any twelve (12) month period. Any inspection shall take place
during normal business hours, upon reasonable notice, at Sage's address set
forth below.
B. AUDIT BY SAGE. Sage shall have the right, upon written request,
to inspect Stericycle's books and records in order to verify Stericycle's
accounting for the all costs of the Product, as those costs are described in
paragraph 2.E herein; provided, however, that Sage shall conduct no more than
two (2) such inspections in any twelve (12) month period. Any inspection shall
take place during normal business hours, upon reasonable notice, at Stericycle's
address set forth below.
13
<PAGE>
C. Any disputes with respect to the accounting shall be resolved
within ninety (90) days after the presentation of the accounting, and if the
parties cannot resolve the dispute within that time period, they shall submit
the matter to a certified public accounting firm which is acceptable to both of
them. Within sixty (60) days thereafter, the accounting firm to which the
matter is submitted shall render a decision, and the decision so rendered shall
be binding upon the parties.
9. JOINT OWNERSHIP OF TECHNOLOGY.
A. JOINTLY DEVELOPED TECHNOLOGY. Any and all patents, processes,
technologies, drawings, technical information and data, and other information
and intangible property rights which are developed under and pursuant to the
terms of this Agreement shall be the joint property of Sage and Stericycle (the
"Technology") . The Technology shall be described on Schedule "C" attached
hereto, which schedule may be amended from time to time. Both Sage and
Stericycle agree that each party shall have the perpetual right to use the
Technology directly or to sublicense the Technology; provided, however, that
neither party shall have the right to use the Technology to create products
which would compete with the products which have been created by the other
party. Sage and Stericycle recognize that Baxter and Stericycle have entered
into an agreement to explore development of separate Baxter-Stericycle
Technology in which Sage will have no rights; provided, however, that the
Baxter-Stericycle agreement shall not limit any rights that Sage has under this
Agreement.
14
<PAGE>
B. PRE-EXISTING TECHNOLOGY. Any pre-existing patents, processes,
technologies, technical information and data, and any other information and
intangible property rights, (collectively, the "Preexisting Technology") shall
remain the exclusive property of Sage or Stericycle, as the case may be, and
neither party shall have the right to restrict the other party's use of its
Preexisting Technology.
10. NATURE OF RELATIONSHIP. While this Agreement contemplates that Sage
and Stericycle will work together to pursue certain enumerated goals, Sage and
Stericycle expressly agree that this Agreement shall not create a joint venture
for tax purposes and that each party shall determine the tax consequences of its
actions under and pursuant to the terms of this Agreement on an independent
basis. Sage and Stericycle also expressly agree that nothing contained in this
Agreement shall be construed to authorize either party to act as general agent
for the other party or to obligate the other party to pay any liability or take
any action other than those set forth herein or those expressly agreed to by the
parties in the future.
11. INDEMNITY.
A. INDEMNITY BY STERICYCLE. Stericycle agrees to indemnify and hold Sage
harmless from and against any and all liabilities, obligations, suits, actions,
proceedings or claims asserted against Sage which arise out of or result from
the negligent
15
<PAGE>
acts or omissions of Stericycle with respect to the design or manufacture of the
Product or the handling of the Product prior to its delivery to Sage.
B. INDEMNITY BY SAGE. Sage agrees to indemnify and hold Stericycle
harmless from and against any and all liabilities, obligations, suits, actions,
proceedings or claims asserted against Stericycle arising out of or resulting
from the negligent acts or omissions of Sage with respect to the design or
manufacture of any of its products which incorporate the Product, or the
handling of the Product subsequent to its delivery to Sage.
12. CONFIDENTIALITY. Sage and Stericycle acknowledge and agree that,
during the term of this Agreement, either of them may receive or otherwise
acquire information which is confidential or proprietary in nature and which is
the exclusive property of the other party. Accordingly, Sage and Stericycle
agree that, during the term of this Agreement, and from and after the date of
its termination, they will not disclose or use, directly or indirectly, any such
confidential or proprietary information unless they receive written
authorization from the other party. Such confidential or proprietary
information shall include, but shall not be limited to technical and
non-technical data, formulae, patterns, compilations, programs, devices,
methods, techniques, drawings, plans, processes, financial data and lists of
actual or potential customers or suppliers.
16
<PAGE>
13. AUTHORITY. Sage and Stericycle each have full authority to enter into
this Agreement. Neither Sage nor Stericycle has entered into nor will either of
them enter into any agreement which would prohibit that party from meeting its
full obligations under this Agreement.
14. GOVERNING LAW. This Agreement shall be subject to, and governed by,
the laws of the State of Illinois, including the Illinois Trade Secrets Act,
765 ILCS 1065/5 ET. SEQ. (1992 State Bar Edition) .
15. ENTIRE AGREEMENT. This Agreement supersedes all previous agreements
between Sage and Stericycle relating to the subject matter contained herein,
including the Letter Agreement, and shall not be amended other than by the
written agreement of Sage and Stericycle.
16. NOTICES. Any notice or other communication in this Agreement to be
given by either party to the other must be in writing and may be given by any
means which provides evidence of receipt, or by delivering the same in person.
Notices may also be served by the use of a facsimile machine with proof of
transmission and a copy of the notice, with proof of transmission being sent by
regular mail on the date of transmission. Notice shall be deemed received upon
making an in-person delivery or upon the date shown on a receipted delivery.
For purposes of notice, the addresses of the parties shall be as follows:
17
<PAGE>
Notices to Sage: Mr. Vincent W. Foglia
815 Tek Drive
Crystal Lake, Illinois 60014
Sage Products, Inc.
815 Tek Drive
Crystal Lake, Illinois 60014
Notices to Stericycle: Mr. Mark C. Miller
1419 Lake Cook Road
Suite 410
Deerfield, Illinois 60015
Stericycle, Inc.
1419 Lake Cook Road
Suite 410
Deerfield, Illinois 60015
or to such other addresses as any party may designate for itself by notice given
from time to time to the other parties in the manner provided herein.
17. BINDING EFFECT. This Agreement shall be binding on the parties hereto,
and their respective successors, assigns, heirs and legal representatives, and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
IN WITNESS WHEREOF, Sage and Stericycle have executed this Agreement on the
day and year first above written.
SAGE PRODUCTS, INC.: STERICYCLE, INC.:
By: /s/ Vincent W. Foglia By: /s/ Mark C. Miller
-------------------------------- -----------------------------------
Its: President 5/6/94 Its: President/CEO
------------------------------- ----------------------------------
May 6, 1994
18
<PAGE>
FINAL SASPRO EQUIPMENT ESTIMATE
12/28/93
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
October November December January February March
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
[ * ]
[ * ]
[ * ]
[ * ]
</TABLE>
* Omitted; filed separately with the Commission
<PAGE>
Exhibit B
PRODUCT SPECIFICATION
Steri-Plastic is a recycled product recovered from post consumer medical
waste plastics after treatment by Stericycle's patented ETD process:
Steri-Plastic shall conform to the following proximate specification:
Product Type: Identified as primarily polypropylene by infrared
spectrophotometry
Product Size: [ * ]
Shipping Configuration: Nominal [ * ] per palleted gaylord
Melt Flow [ * ]
It is understood that product specifications can change with a recycled
product. The above specifications are to be considered as averages and
material can from time to time vary; provided that they are still capable
of being processed by Sage in an efficient manner and consistent with their
quality standards.
* Omitted; filed separately with the Commission
<PAGE>
Exhibit C
STERICYCLE-SAGE JOINTLY DEVELOPED PROCESS TECHNOLOGY
The SASPRO Technology consists of two (2) sub-technologies.
The first is a dry classifier which provides both size and graduation and
Ballistic Classification. The key pieces of equipment are shown at [
* ]. The equipment is supported with conventional material
handling conveyors, a size reduction mill and a dust collection system.
The second is a wet classification and cleaning system which provides for
Gravimitric separation, cleaning and drying of the plastic flakes. The
equipment is supported with conventional material handling equipment and a steam
boiler.
* Omitted; filed separately with the Commission
<PAGE>
[LETTERHEAD]
November 27, 1995
This side letter is intended to expand upon our original agreement dated May 6,
1994.
1. Sage agrees to purchase all SASPRO production through [ * ], in
satisfaction of its annual purchase commitment through [ * ].
2. Stericycle agrees to waive the royalty provision of the contract until such
time as the above production has been consumed in the fabrication of
finished product by Sage.
3. Sage agrees to participate with Stericycle in funding the direct costs
(exclusive of intercompany allocation) of continued operations of the West
Memphis facility. Stericycle will bill Sage at [ * ] not to exceed a
maximum of [ * ]. This provision extends to [ * ].
4. Sage agrees to pay [ * ] related directly to the storage of the
SASPRO inventory located at the West Memphis facility.
5. Stericycle agrees to extend Sage's exclusivity under this agreement to [
* ] coincident with provisions of Items 3 and 4. Exclusivity
beyond [ * ] shall be subject to mutually agreeable financial support by
Sage of the SASPRO operation.
/s/ Vincent W. Foglia /s/ Mark C. Miller 11/27/95
------------------------------ ---------------------------------
Sage Products Stericycle, Inc.
Authorized Signature Authorized Signature
* Omitted; filed separately with the Commission
<PAGE>
[LETTERHEAD]
June 28, 1996
[ * ]
Attention: [ * ]
Director Presidente
INTERIM AGREEMENT
Dear Mr. Fernandes:
In connection with recent discussions between Stericycle, Inc.
("Stericycle") and [ * ] regarding a proposed comprehensive Agreement for
Technical and Industrial Cooperation (the "Definitive Agreement") for the use of
Stericycle's proprietary systems and technology for medical waste management in
Brazil, we hereby set forth our agreement with respect to short-term cooperation
(the "Interim Agreement"), subject to formal approval of the parties' Boards of
Directors.
1. INTRODUCTION. Stericycle owns (a) certain proprietary medical waste
treatment and recycling technology; (b) certain proprietary know-how respecting
operations, sales, marketing and regulatory compliance, (c) certain patents,
trademarks, and other proprietary intellectual property, and (d) certain
proprietary programs, systems, literature and training methods ((a) - (d)
collectively referred to as the "Stericycle Proprietary Rights"). [ * ] are
experienced and knowledgeable engineers, developers and operators in the waste
management industry in South America. Stericycle and [ * ] have reached an
Interim Agreement whereby [ * ] may utilize the Stericycle Proprietary Rights in
Sao Paulo and Rio de Janeiro Brazil in order to participate in contract
procurement activities.
2. LICENSE. Stericycle shall grant [ * ] an exclusive license to use
Stericycle Proprietary Rights in Sao Paulo and Rio de Janeiro Brazil, including
the use of the trademark "Stericycle" during the term of the Interim Agreement.
The license shall not include sublicensing rights.
3. TERRITORY. The Interim Agreement grants rights only in Sao Paulo and
Rio de Janeiro Brazil. The parties contemplate that the Definitive Agreement, if
and when effective, will grant exclusive rights to [ * ] in Brazil. The parties
will discuss in good faith the expansion of the territory to include the
countries of Argentina and Chile.
4. TERM. The term of the Interim Agreement shall be for 180 days.
5. DEFINITIVE AGREEMENT. The parties agree to negotiate in good faith the
terms and conditions of the Definitive Agreement within 180 days from the date
hereof. If no definitive Agreement has been entered into within the aforesaid
180-day period, except for the provisions of paragraph 8 hereof relating to
confidentiality which shall continue in effect, (a) this Interim Agreement
shall expire and be
* omitted; filed separately with the Commission.
<PAGE>
Mr. [ * ]
June 28, 1996
Page 2
of no further effect, and (b) [ * ] shall no longer have any license or other
rights to the Stericycle Proprietary Rights, and shall return any documents
or other embodiment of the information comprising such Stericycle Proprietary
Rights to Stericycle. Upon the effectiveness of the Definitive Agreement,
Stericycle will commit to provide equipment capable of processing [ * ] of
medical waste per 24 hour day, in a processing facility built in an
appropriate [ * ] supplied building and site for a price not to exceed [ * ]
U.S. net of freight, duties and taxes. [ * ] shall also pay royalties to
Stericycle not to exceed [ * ] per pound of medical waste. These sums are
subject to revision based upon final plant configuration and range of
services offered.
6. INTERIM AGREEMENT.
(a) During the terms of this Interim Agreement Stericycle will:
(i) provide [ * ] with access to Stericycle Proprietary Rights;
(ii) provide [ * ] with executive support, on request, in support
of the establishment of the Stericycle concept in Brazil and
will reimburse Stericycle for expenses incurred in this
regard;
(iii) provide [ * ] with facility design, operational cost, data and
strategies for Stericycle treatment and recycling
technologies;
(iv) provide [ * ] and its potential clients access to Stericycle's
facilities in the US;
(v) negotiate exclusively with [ * ] for medical waste management
opportunities in Brazil.
(b) During the term of this Interim Agreement [ * ] will:
(i) aggressively pursue medical waste treatment opportunities in
the Sao Paulo and Rio de Janeiro market of Brazil;
(ii) develop a plan for product offerings in these markets
utilizing Stericycle's systems and proprietary information;
and
(iii) negotiate exclusively with Stericycle for medical waste
management opportunities in Brazil.
7. PAYMENTS. For the activities listed in paragraph 6(a)(i) - (iv) above,
[ * ] will pay Stericycle [ * ] U.S. In addition, [ * ] will pay Stericycle
[ * ] U.S. in consideration of Stericycle's commitment in paragraph 6(a)(v)
above, to deal exclusively with [ * ] during the term of this Interim Agreement
for medical waste management opportunities in Brazil. Such payments shall be
made in four monthly payments of [ * ] on July 1, 1996; [ * ] on August 1, 1996;
[ * ] on September 1, 1996; and [ * ] on October 1, 1996.
* omitted; filed separately with the Commission
<PAGE>
Mr. [ * ]
June 28, 1996
Page 3
8. CONFIDENTIALITY. Stericycle and [ * ] recognize the highly
confidential nature of their respective proprietary information (and in this
regard, all information contained in the definition of Stericycle Proprietary
Rights shall be proprietary information of Stericycle). Accordingly, Stericycle
and [ * ] for themselves, their affiliates, officers, directors and agents
hereby agree that they will hold in confidence, not disclose to others and not
use except for purposes of this Interim Agreement and the Definitive Agreement
described herein (if and when effective), any and all proprietary information
disclosed to it by the other party. The provisions of this paragraph shall not
apply to any proprietary information which (a) is or later becomes publicly
known under circumstances involving no breach of disagreement by the receiving
party; (b) was already known to the receiving party (other than by previous
disclosure to the receiving party by the disclosing party) as evidenced by the
receiving party's records at the time of receipt of such proprietary information
from the disclosing party; or (c) is lawfully made available to the receiving
party by a third party. Both parties recognize that money damages alone would
not be an adequate remedy for the breach of this confidentiality provision, and
therefore agree that, in the event of the breach of this provision by one party,
the other party shall be entitled to injunctive relief or its functional
equivalent under Brazilian law, prohibiting the breaching party from engaging in
any business activities which employ the proprietary information of the other.
9. FORM. The parties may reconsider the form of business relationship and
characterization of fees to maximize the benefit of local business and tax laws.
10. DISPUTE RESOLUTION. The parties agree that all disputes arising under
this Interim Agreement will be resolved by binding arbitration before the
American Arbitration Association using its commercial arbitration rules and
applying the substantive laws of the State of Illinois.
Please indicate your agreement to the terms of this Interim Agreement by
signing and returning a copy to the undersigned.
Stericycle, Inc.
By: /s/ Anthony J. Tomasello
---------------------------
Anthony J. Tomasello
Vice President, Operations
[ * ]
By: [ * ]
-----------------------------------
Director Presidente
* omitted; filed separately with the Commission
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated March 20, 1996, except for the first paragraph of
Note 7, as to which the date is in the Registration Statement on
Form S-1 (No. 333-05665) for the registration of 3,450,000 shares of common
stock.
Chicago, Illinois
August 15, 1996
The foregoing consent is in the form that will be signed when the reverse stock
split, decrease in authorized common stock and redesignation of the Class A and
Class B common stock as a like number of shares of common stock all become
effective prior to completion of an initial public offering as described in the
first paragraph of Note 7 to the financial statements.
ERNST & YOUNG LLP
