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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT (AMENDED)
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 20, 1996
STERICYCLE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-21229 36-3640402
(State or other juris- (Commission file (IRS employer
diction of incorporation) number) identification number)
1419 Lake Cook Road, Suite 410
Deerfield, Illinois 60015
(Address of principal executive offices)
Registrant's telephone number, including area code: (847) 945-6550
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ITEM 2. Acquisition or Disposition of Assets.
On December 20, 1996, Stericycle, Inc. (the "Company") entered into an
asset purchase agreement with Waste Management, Inc. ("Waste Management"), a
first-tier subsidiary of WMX Technologies, Inc., and various of Waste
Management's subsidiaries pursuant to which the Company acquired the major
portion of Waste Management's regulated medical waste business. The Company
purchased the customer accounts, customer contracts, trucks and other vehicles,
and other associated assets of Waste Management's regulated medical waste
business at 24 locations in Arizona, Carolina, Indiana, Kentucky, Maryland,
North Carolina, Ohio, Pennsylvania, Tennessee, Utah and Washington. The Company
will use the acquired assets in the operation of its own regulated medical waste
business.
The purchase price, which was the subject of arm's-length negotiation by
the parties and is subject to adjustment to reflect their final agreement by
January 31, 1997 on the value of the trucks and other vehicles acquired by the
Company, was approximately $10.9 million. The Company paid one-half of this
amount, or $5.45 million, in cash at closing and delivered a note to Waste
Management for the balance of the purchase price. This note provides for two
principal payments of $2.725 million each in December 1997 and December 1998,
respectively, and quarterly payments of accrued interest at the rate of 7.0% per
annum. The source of funds for the Company's cash payment at closing was cash on
hand. With the exception of service obligations arising after closing under the
customer contracts that the Company acquired, the Company did not assume any
liabilities of Waste Management or any of its subsidiaries.
There is (and was) no material relationship between the Company (or any
officer, director or affiliate of the Company or any associate of any such
officer or director) and Waste Management (or any officer, director, subsidiary
or other affiliate of Waste Management or any associate of any such officer or
director).
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired.
It is impracticable at the time of filing this Report to file all (or any)
of the financial statements for the acquired regulated medical waste business
for the periods specified in Rule 3-05 of Regulation S-X (17 C.F.R.
210.3-05(b)).
The Company intends to request the concurrence of the Securities and
Exchange Commission (the "Commission"), pursuant to Rule 3-13 of Regulation S-X,
to the Company's filing of certain other financial information in lieu of the
financial statements otherwise required to be filed. The Company would file this
other financial information by a second Current Report (Amended) on Form 8-K/A
filed on or before March 4, 1997 (i.e., 60 days from the date of filing the
original Current Report on Form 8-K).
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(b) Pro Forma Financial Information
It is impracticable at the time of filing this Report to file all (or any)
of the pro forma financial information that is required to filed pursuant to
Article 11 of Regulation S-X.
The Company intends to request the concurrence of the Commission, pursuant
to Rule 3-13 of Regulation S-X, to the Company's filing of certain other pro
forma financial information in lieu of the pro forma financial information
otherwise required to be filed. The Company would file this other pro forma
financial information by a second Current Report (Amended) on Form 8-K/A filed
on or before March 4, 1997 (i.e., 60 days from the date of filing the original
Current Report on Form 8-K).
(c) Exhibits
A copy of the Asset Purchase Agreement dated December 20, 1996 entered into
by the Company, Waste Management and various of Waste Management's subsidiaries
is filed as EXHIBIT 2.1 to this Report. As noted in the relevant places, the
copy filed omits certain information which has been filed separately with the
Commission.
The copy filed also omits the following schedules and exhibits:
Schedule 1 - Tangible Assets
Schedule 2 - Customer Accounts
Schedule 3 - Service Locations and Truck Domiciles
Schedule 4 - Rent Payable Under Lease and Subleases
Schedule 5 - Employees
Exhibit A - Form of Note
Exhibit B - Form of Security Agreement
Exhibit C - Form of Services Agreement
Exhibit D - Form of Lease/Sublease
In accordance with Item 601(b)(2) of Regulation S-K (17 C.F.R.
229.601(b)(2)), the Company agrees to furnish supplementally a copy of any
omitted schedule or exhibit to the Commission upon its request.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 23, 1997.
STERICYCLE, INC.
By /s/ James F. Polark
------------------------------------
James F. Polark
Vice President, Finance
and Chief Financial Officer
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EXHIBIT INDEX
Sequentially
Exhibit Description Numbered Page
2.1 Asset Purchase Agreement dated December 20, 6
1996, entered into by Stericycle, Inc., Waste Manage-
ment, Inc. and various subsidiaries of Waste Manage-
ment, Inc.
As noted in the relevant places, this exhibit omits certain information
which has been filed separately with the Commission.
This exhibit also omits the following schedules and exhibits:
Schedule 1 - Tangible Assets
Schedule 2 - Customer Accounts
Schedule 3 - Service Locations and Truck Domiciles
Schedule 4 - Rent Payable Under Lease and Subleases
Schedule 5 - Employees
Exhibit A - Form of Note
Exhibit B - Form of Security Agreement
Exhibit C - Form of Services Agreement
Exhibit D - Form of Lease/Sublease
In accordance with Item 601(b)(2) of Regulation S-K (17 C.F.R.
229.601(b)(2)), the Company agrees to furnish supplementally a copy of any
omitted schedule or exhibit to the Commission upon its request.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made this 20th day of
December, 1996 by and among STERICYCLE, INC., a Delaware corporation (the
"Purchaser"), WMI MEDICAL SERVICES OF THE MIDWEST, INC., a Delaware corporation,
WMI MEDICAL SERVICES OF ARIZONA, INC., an Arizona corporation, WMI MEDICAL
SERVICES OF NORTH CAROLINA, INC., a North Carolina corporation, WMI MEDICAL
SERVICES OF TEXAS, INC., a Delaware corporation, WMI MEDICAL SERVICES OF THE
SOUTH, INC., a Delaware corporation, WASTE MANAGEMENT OF ARIZONA, INC., a
California corporation, WASTE MANAGEMENT OF PENNSYLVANIA, INC., a Pennsylvania
corporation, WASTE MANAGEMENT OF MARYLAND, INC., a Maryland corporation, WASTE
MANAGEMENT OF OHIO, INC., a Delaware corporation, WASTE MANAGEMENT OF KENTUCKY,
L.L.C., a Kentucky limited liability company, WASTE MANAGEMENT OF INDIANA,
L.L.C., an Indiana limited liability company, WASTE MANAGEMENT OF UTAH, INC., a
Utah corporation, WASTE MANAGEMENT OF COLORADO, INC., a Colorado corporation,
WASTE MANAGEMENT, INC. OF TENNESSEE, a Tennessee corporation, WASTE MANAGEMENT
OF CAROLINAS, INC., a North Carolina corporation, WASTE MANAGEMENT OF TEXAS,
INC., a Texas corporation, WASHINGTON WASTE HAULING AND RECYCLING, INC., a
Delaware corporation, and WASTE MANAGEMENT, INC., an Illinois corporation
("WMI") (all parties other than the Purchaser collectively the "Seller" and
individually a "Seller").
AGREEMENTS
In consideration of the premises and the mutual representations, warranties
and covenants and subject to the conditions herein contained, the parties agree
as follows:
Certain capitalized terms which are used in this Agreement are defined in
the attached EXHIBIT I.
1. PURCHASE AND SALE OF ASSETS.
The Seller agrees to sell, transfer, assign and deliver to the Purchaser,
and Purchaser agrees to purchase (a) all of the assets listed on SCHEDULE 1 (the
"Tangible Assets") and (b) all of the customer accounts and customer account
contracts listed on SCHEDULE 2 (the "Customer Accounts"), subject to such
additions and subtractions as may occur in the ordinary course of business. (The
items listed on SCHEDULES 1 and 2 are hereinafter collectively referred to as
the "Purchased Assets"). The Seller represents to the Purchaser that the Seller
is the lawful owner of the Purchased Assets and that the Purchased Assets shall
be free and clear as of the Time of Closing (as defined in Section 3) of all
liens, liabilities, rights, claims, encumbrances and
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security interests of every kind and nature, except for the security interest
granted by the Purchaser pursuant to Section 4 hereof.
2. PURCHASE PRICE.
(a) As consideration for the Purchased Assets and the covenant-not-to-
compete in Section 12(a) (the "Covenant-Not-To-Compete"), the Purchaser agrees:
(1) to assume and discharge when lawfully due those liabilities,
contracts, commitments and other obligations of the Seller accruing from
and after the Time of Closing under the Customer Accounts (the "Assumed
Liabilities");
(2) to pay $5,449,720 (being one-half of the sum of (i) the purchase
price of the Customer Accounts [$8,849,440] plus (ii) the estimated fair
market value of the Tangible Assets [$2,050,000]) to the Seller in cash, by
wire transfer to Mellon Bank, ABA No. 043000261, Account No. 197-9409, at
the Closing;
(3) to deliver to WMI at the Closing a promissory note (the "Note")
substantially in the form of EXHIBIT A attached hereto in the principal
amount of $5,449,720:
(4) in the event that the actual revenues achieved by the Purchaser
from the Customer Accounts during the Measuring Period exceed [OMITTED;
filed separately with the Securities and Exchange Commission (the
"Commission")] (any such excess being hereinafter referred to as "Surplus
Revenues"), to pay to the Seller an amount equal to [OMITTED; filed
separately with the Commission] of any Surplus Revenues on or before the
date 60 days after the end of the Measuring Period.
(b) With the sole exception of the Assumed Liabilities, the Purchaser is
not assuming any Liabilities of any Seller of any kind. The excluded Liabilities
(the "Excluded Liabilities") include (but are not limited to):
(1) any Liability of any Seller for income, payroll, sales, use or
other Taxes;
(2) any Liability of any Seller for salary, wages, bonuses, vacation
pay, sick pay, severance pay or other compensation due to employees and
independent contractors;
(3) any Liability of any Seller under or in respect of any Employee
Benefit Plan which such Seller has ever maintained or contributed to or in
which its employees have ever participated;
(4) any Liability of any Seller for a failure to comply with the
continuation health care requirements of Sections 601-608 of ERISA and
Section 4980B of the Internal Revenue Code;
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(5) any Liability of any Seller for personal injury or property
damage;
(6) any Liability of any Seller under any Environmental Law; and
(7) any Liability of any Seller under any pending or threatened Suit.
Nothing in this Section 2(b) shall be construed to limit the Purchaser's
obligations under the services agreement to be entered into under Section 13.
3. CLOSING.
The consummation of the transactions contemplated hereby (the "Closing")
shall take place at the offices of the Seller on December 20, 1996, effective as
of the close of business on such date (the "Time of Closing"); provided that:
(a) To the extent that any of the transactions contemplated hereby
constitutes or would be deemed to be the sale, assignment, transfer, conveyance
or delivery or attempted sale, assignment, transfer, conveyance or delivery to
the Purchaser of any permit, contract or agreement and such transaction would be
prohibited by any applicable law or would require any governmental or third
party authorizations, approvals, consents or waivers and such authorizations,
approvals, consents or waivers shall not have been obtained prior to the
Closing, this Agreement shall not constitute a sale, assignment, transfer,
conveyance or delivery, or an attempted sale, assignment, transfer, conveyance
or delivery thereof. Following the Time of Closing, the parties shall use
reasonable efforts, and cooperate with each other, to obtain promptly such
authorizations, approvals, consents or waivers, to obtain novations or other
agreements if appropriate and, after obtaining such, to complete the
transactions contemplated hereby. Pending such authorization, approval,
novation, consent or waiver, the parties shall cooperate with each other in any
reasonable and lawful arrangement designed to provide the economic burden and
benefits of the use of such permits, contracts and agreements to the Purchaser.
Pending the actual transfer of an asset intended to be transferred hereunder,
the parties agree to make such economic payments and adjustments as may be
appropriate so that the parties would be put in the same economic position as if
such transfer had taken place at the Time of Closing. To the extent possible,
performance obligations of the Seller with respect to any such permits,
contracts or agreements shall be deemed to be subcontracted to the Purchaser. To
the extent that any contract, permit or agreement cannot be transferred
following the Closing pursuant to this Section 3(b), the Purchaser and the
Seller agree to negotiate in good faith a mutually acceptable resolution with
respect to such permit, contract or agreement.
(b) The obligations of the parties to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Time of Closing of each of the following conditions:
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(1) The representations and warranties of each of the parties hereto
shall have been true, complete and correct in all material respects as of
the date hereof and they shall be true and correct in all material respects
as of the Time of Closing;
(2) Each of the parties hereto shall have performed and complied in
all material respects with all of its obligations required by this
Agreement to be performed or complied with at or prior to the Time of
Closing;
(3) WMI, for itself and each of the other Sellers, and the Purchaser
shall each have delivered to the other a certificate, dated as of the date
of the Closing, certifying that their respective representations and
warranties are true, complete and correct in all material respects and that
all their respective obligations have in all material respects been
performed and complied with;
(4) WMI, for itself and each of the other Sellers, and the Purchaser
shall each have delivered to the other an opinion of counsel (which, in
WMI's case, may be an opinion of in-house counsel) that their respective
execution, delivery and performance of this Agreement has been duly
authorized by all necessary corporate action.
(5) There shall not be pending or threatened any Suit which shall
seek to restrain, prohibit or invalidate the sale of the Purchased Assets
to the Purchaser or any other transaction contemplated hereby; and
(6) Except as provided in Section 3(a), all necessary consents or
approvals of third parties to any of the transactions contemplated hereby
shall have been obtained and evidenced by written documentation reasonably
satisfactory to the parties.
4. SECURITY INTEREST.
The Purchaser hereby grants to Seller a security interest in the Purchased
Assets to secure payment of the Note and agrees (i) to execute and deliver to
the Seller at the Closing a Security Agreement substantially in the form of
EXHIBIT B attached hereto to secure the Purchaser's obligations under the Note
and (ii) to file on behalf of the Seller property executed UCC-1 financing
statements in form and substance satisfactory to the Seller. The Seller agrees
to subordinate its security interest to the Purchaser's lenders on terms
reasonably satisfactory to the Seller and the Purchaser's lenders.
5. VALUATION OF TRUCKS, TRAILERS AND OTHER VEHICLES.
The Seller and the Purchaser shall take an inventory of the trucks,
trailers and other vehicles included in the Tangible Assets at the locations
listed on SCHEDULE 3 as soon as practicable following Closing, but in any event
by January 31, 1997, and
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shall agree on the value of these vehicles.
If the value agreed on for these vehicles exceeds $2,000,000, the
principal balance of the Note shall be increased, retroactive to the Time of
Closing, by the excess of the agreed value over $2,000,000. If the value
agreed on for these vehicles is less than $2,000,000, the principal balance
of the Note shall be reduced, retroactive to the Time of Closing, by the
excess of $2,000,000 over the agreed value.
If by January 31, 1997, the Seller and the Purchaser cannot agree on the
value of any vehicle, or if any vehicle described on SCHEDULE 1 cannot be found
not at the location listed (or any other location listed on SCHEDULE 3), the
vehicle shall be considered excluded from the Tangible Assets (and remain the
sole property of the Seller), and the principal balance of the Note shall be
reduced, retroactive to the Time of Closing, by the net book value for the
vehicle shown on SCHEDULE 1.
6. REVENUE GUARANTEE.
(a) All of the Customer Accounts are presently receiving services from the
Seller. The Seller guarantees to the Purchaser that the Customer Accounts will
collectively generate for services rendered during January, February and March
1997 (the "Test Period") average monthly revenues of not less than [OMITTED;
filed separately with the Commission] (the "Required Revenues"). Actual average
monthly revenues for the Test Period shall include amounts pre-billed by Seller
for services to be rendered during the Test Period.
(b) In the event that the actual average monthly revenues for the Test
Period are less than the Required Revenues, an amount equal to [OMITTED; filed
separately with the Commission] times the deficiency shall be deemed to be the
Purchaser's loss (a "Test Period Loss") as a result of the breach of the
Seller's Test Period guarantee in Section 6(a); provided that lost revenue from
the loss of "Large Customer Accounts" shall be treated as follows. If any
"Large Customer Account" (a Customer Account with billings in excess of an
average of [OMITTED; filed separately with the Commission] per month) terminates
service prior to July 1, 1997, the Purchaser's loss (a "Large Customer Loss")
shall be deemed to be an amount equal to [OMITTED; filed separately with the
Commission] times the average monthly revenue from such account for September,
October and November 1996, less [OMITTED; filed separately with the Commission]
of the actual revenue which the Purchaser is entitled to bill such Large
Customer Account for services provided after the Time of Closing; provided that
the shortfall in revenue shall not be double counted for purposes hereof.
(c) For purposes of determining the amount of any Test Period Loss or
Large Customer Loss under Section 6(b), there shall not be included any loss
attributable to (i) any business lost due to an increase in the rates charged to
a Customer Account instituted by the Purchaser after the Time of Closing, (ii)
any breach by the Purchaser of any written customer account contracts, or (iii)
the failure by the Purchaser to
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provide adequate service to a Customer Account.
(d) In the event that the Purchaser incurs a Test Period Loss or,
following the Test Period (but prior to July 1, 1997), a Large Customer Loss,
the principal amount of the Note shall be reduced, retroactive to the Time of
Closing, by the amount of the loss. In this regard:
(1) The Purchaser shall provide the Seller with written notice of any
Test Period or Large Customer Loss (a "Loss Notice");
(2) All Loss Notices in respect of Test Period Losses must be
delivered to the Seller by May 15, 1997, and all Loss Notices in respect of
Large Customer Losses after the Test Period must be delivered to the Seller
by August 15, 1997, in order to be validly considered and given effect
pursuant to the terms of this Section 6;
(3) No payment by the Seller to the Purchaser pursuant to this
Section 6(c) shall be required or made unless mutually agreed to by the
Purchaser and the Seller or as resolved in accordance with Section 6(c)(4);
and
(4) If a Loss Notice is contested, the Seller shall notify the
Purchaser in writing within 10 days from the date of such Loss Notice (a
"Notice of Contest") of an intention to dispute the claim. If such dispute
is not resolved within 30 days after a Notice of Contest is given (the
"Resolution Period"), then such dispute shall be resolved by a committee of
three arbitrators (one jointly appointed by the Seller, one appointed by
the Purchaser and one appointed by the other two so appointed), which shall
be appointed within 60 days after the expiration of the Resolution Period.
The arbitrators shall abide by the rules of the American Arbitration
Association and their decision shall be made within 45 days from the date
of appointment and shall be final and binding on all parties.
(d) Upon any sale of Customer Accounts the representations, warranties and
covenants set forth in this Section 6 shall terminate and be of no further force
and effect.
7. CUSTOMER ACCOUNT PAYMENTS.
It is the intent of the parties hereto that the Purchaser shall take over
service with respect to the Customer Accounts at the Time of Closing. With
respect to the Customer Accounts:
(a) The Purchaser shall be entitled to all income generated from the
rendering of services with respect to said accounts on and after the Time of
Closing (including prepaid amounts and pre-billed amounts collected by the
Seller), and the Seller hereby agrees after the Time of Closing to reimburse to
the Purchaser on a monthly basis any funds which Seller has received for
services to be rendered by the
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Purchaser after the Time of Closing; and
(b) Seller shall be entitled to all income generated from the rendering of
services with respect to said accounts prior to the Time of Closing, and the
Purchaser agrees after the Time of Closing to reimburse to the Seller on a
monthly basis any funds which the Purchaser has received for services rendered
by the Seller.
8. INDEMNIFICATION.
(a) From and after the Time of Closing, the Sellers, jointly and
severally, agree to defend, indemnify and hold the Purchaser and its affiliates
harmless from and against all indemnifiable damages of the Purchaser. For this
purpose, "indemnifiable damages" of the Purchaser means the aggregate of all
expenses, losses, costs, deficiencies, liabilities and damages (including
attorney's fees and court costs) incurred or suffered by the Purchaser, or any
of its directors, agents, employees or affiliates or its affiliates' directors,
agents or employees, as a result of or in connection with:
(1) any inaccurate representation or warranty made by the Seller in or
pursuant to this Agreement;
(2) any default in the performance of any of the covenants or
agreements made by the Seller in this Agreement or in any of the additional
agreements entered into pursuant to Section 13 (the "Additional
Agreements");
(3) any third party claim which relates to, arises out of or is in
connection with the use of the Purchased Assets and which accrued or
relates to an event which occurred prior to the Time of Closing; or
(4) any Excluded Liabilities.
(b) From and after the Time of Closing, the Purchaser agrees to defend,
indemnify and hold the Seller and its affiliates harmless from and against all
indemnifiable damages of the Seller. For this purpose, "indemnifiable damages"
of the Seller means the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including attorney's fees and court costs) incurred or
suffered by the Seller or any of its directors, agents, employees or affiliates
or its affiliates' directors, agents or employees, as a result of or in
connection with:
(1) any inaccurate representation or warranty made by the Purchaser
in or pursuant to this Agreement;
(2) any default in the performance of any of the covenants or
agreements made by the Purchaser in this Agreement or in any of the
Additional Agreements;
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(3) any third party claim which relates to, arises out of or is in
connection with the use of the Purchased Assets and which accrues or
relates to an event which occurs at or after the Time of Closing; or
(4) any Assumed Liabilities.
9. EXECUTION OF FURTHER DOCUMENTS.
From and after the Time of Closing, upon the reasonable request of the
Purchaser and without additional consideration, the Seller shall execute,
acknowledge and deliver all such further documents as may be required to convey,
transfer and vest in the Purchaser, and to protect its right, title and interest
in, all of the Purchased Assets or which may be needed to transfer, maintain or
facilitate the assignment of all consents, approvals, authorizations and permits
issued to the Seller by any Governmental Authority and required by the Purchaser
for the operation of the Purchased Assets.
10. COOPERATION.
Each party shall cooperate with the other after the Time of Closing to
assist in the smooth transition of the operation of the Purchased Assets and the
servicing of the Customer Accounts, including assistance in notifying customers
and otherwise assisting in the transitions contemplated herein. Each party will
provide the other with reasonable access to such information and materials as
such party shall reasonably request. In addition, WMI shall provide the
Purchaser without charge with such readily available financial information
relating to the regulated medical waste businesses in which the Seller used the
Purchased Assets as the Purchaser reasonably requests in order to comply with
its financial reporting obligations under Regulation S-X of the Securities and
Exchange Commission, and the Seller shall cooperate with the Purchaser's
independent public accountants regarding additional financial information for
this purpose at the Purchaser's expense.
11. NOTICES.
Any notice, request, information or other document to be given hereunder to
any of the parties by any other party shall be in writing, shall be given by
hand delivery, telecopier, certified or registered U.S. mail or a private
courier service which provides evidence of receipt as part of its service
addressed to the Purchaser's or Seller's respective addresses and telecopier
number, if any, appearing on the signature page hereof and shall be deemed given
on the date of hand delivery, transmission by telecopier, deposit with the U.S.
Postal Service or delivery to a courier service, as appropriate. Notice duly
given by the Purchaser to WMI shall constitute due notice to all of the other
Sellers.
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12. COVENANT-NOT-TO-COMPETE.
(a) Subject to Section 12(b), the Seller agrees that for a period of five
(5) years from and after the Time of Closing, neither WMI nor any other Seller
shall directly or indirectly engage in:
(1) the collection and transportation of medical waste anywhere
within a radius of 75 miles of any of the service locations or truck
domiciles listed on SCHEDULE 3; or
(2) the ownership or operation of an incinerator or autoclave for the
treatment of medical waste anywhere within a radius of 350 miles of any of
the four facilities identified in Section 13.
(b) The Covenant-Not-to-Compete shall not (i) apply in the State of
Wisconsin, (ii) apply to any direct or indirect subsidiary of a Seller which is
not wholly-owned or (iii) prevent a Seller from:
(1) selling, renting, installing or providing on-site treatment
services with respect to Sani-pak units or other on-site treatment
technologies (with the exception that for a period of six months following
the Time of Closing, Seller shall not sell, rent, install or provide on-
site treatment services with respect to Sani-pak units or other on-site
treatment technologies to any Customer Account with which it had not
engaged in active discussions regarding the provision of such services
during the 12-week period ending with the day of Closing);
(2) providing solid waste collection, transportation, treatment,
recycling or disposal services, including, without limitation, such
services with respect to medical waste which has been converted into solid
waste by permitted treatment methods or permitted landfill disposal of
untreated medical waste;
(3) hauling and disposal of ash residue from medical waste
incinerators;
(4) participating in any Sharps mail-back programs pursuant to which
customers would mail Sharps packaged in special containers to treatment
facilities; or
(5) acquiring and holding not to exceed two percent (2%) of the
outstanding shares of any corporation engaged in such a competitive
business if such shares are available to the general public on a national
securities exchange.
In addition, the Covenant-Not-to-Compete in Section 12(a)(2) shall terminate in
respect of a facility identified in Section 13 upon the expiration or
termination of the Purchaser's lease or sublease of the facility (other than by
reason of the Purchaser's exercise of its option to purchase the facility or the
Seller's leasehold interest).
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(c) The covenant-not-to-compete in that certain Asset Purchase Agreement
dated January 31, 1996 between Purchaser and WMI Medical Waste Services of New
England, Inc. is hereby amended, effective as of the date hereof, by deleting
the phrase "to customers other than those listed in Schedule 3 thereto or to
those currently receiving medical waste services from the Purchaser as of the
Time of Closing" in Section 11, Clause (i) and the phrase "with customers other
than those listed in Schedule 3 hereto or those currently receiving medical
waste services from the Purchaser as of Time of Closing" in Section 11, Clause
(iv).
13. ADDITIONAL AGREEMENTS.
At the Closing, the Purchaser and WMI shall enter into a services agreement
substantially in the form of the attached EXHIBIT C.
When the Purchaser has obtained the necessary regulatory approvals and
permits and insurance to operate the particular facility and, in the case of a
sublease of the facility, the appropriate Seller has obtained any required
consent of the landlord and the ground lessor, if any, the Purchaser and the
appropriate Seller shall enter into the following agreements:
(a) a lease of the facility at 9885 Brighton Road, Henderson,
Colorado, substantially in the form of the attached EXHIBIT D;
(b) a sublease of the facility at 2510 Erick Street, Baltimore,
Maryland, substantially in the form of the attached EXHIBIT D;
(c) a sublease of the facility at 1251 South Nelson Drive, Chandler,
Arizona, substantially in the form of the attached EXHIBIT D; and
(d) a sublease of the facility at 300 Industrial Boulevard, Terrell,
Texas, substantially in the form of the attached EXHIBIT D.
In this regard, the Purchaser shall use reasonable efforts to obtain the
necessary regulatory approvals and permits and insurance, and the appropriate
Sellers shall use reasonable efforts to obtain any required consents from
landlords and ground lessors. The initial rent payable by the Purchaser under
each of these agreements is the "Monthly Total" for the facility shown on the
attached SCHEDULE 4.
14. POST CLOSING.
(a) Purchaser agrees to remove all marks, tradenames, logos and other
evidence of ownership by Seller or any division of Seller from the Purchased
Assets as promptly as practicable and in any event within 180 days after the
Time of Closing.
(b) For a period of three years following Closing, the appropriate Seller
(or
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other subsidiary of WMI) shall consider any request by the Purchaser to
discuss the terms of a lease or purchase of land by the Purchaser for use as
a treatment plant or transfer station at any of the 138 sites that accept
medical waste which are listed on the "Landfill Review" (December 1994) that
WMI provided to the Purchaser. No Seller (or other subsidiary of WMI) shall
be required to enter into any such discussions, however, or to negotiate with
the Purchaser or to lease or sell any land to the Purchaser.
(c) For a period of three years following Closing, each Seller shall
consider recommending to its customers use of the Purchaser's medical waste
collection, transport and treatment services when not competitive with the
Seller's permitted activities under Section 12(b) or in violation of the
Seller's contractual commitments to third parties. No Seller shall be required
to recommend the Purchaser's services, however.
15. PROCEEDS OF ASSETS AFTER THE TIME OF CLOSING.
The Purchaser hereby agrees that any and all proceeds derived from the
sale, loss, transfer or other disposition of any of the Tangible Assets (other
than insurance proceeds, the proceeds from isolated or occasional sales and the
benefit of vehicle trade-ins) will be paid over to the Seller within 5 days of
receipt thereof by the Purchaser and such proceeds received by the Seller will
be applied towards prepayment of the outstanding principal balance under the
Note.
16. DISCLOSURE.
No press release or other public announcement related to this Agreement or
the transaction contemplated hereby will be issued by any party hereto without
the prior approval of the other parties, except that any party may make such
public disclosure which it believes in good faith to be required by law (in
which case such party will consult with the other party prior to making such
disclosure, but the other party shall not have the right to approve such
disclosure).
17. EMPLOYEES.
The Purchaser agrees that at the Time of Closing it shall offer employment
to all of the employees of Seller listed on SCHEDULE 5 attached hereto. Seller
shall be responsible for the costs of all accrued benefits with respect to all
such employees, including accrued vacation and any accrued obligation to make a
contribution to a pension plan for such employees as of the Time of Closing.
18. REPRESENTATIONS.
Each of the Seller and the Purchaser represents to the other that it is
duly organized, validly existing and in good standing under the laws of its
state of incorporation, it has full corporate power and authority to enter into
the
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transactions contemplated hereby, its execution, delivery and performance of
this Agreement was duly authorized by all necessary corporate action, and
this Agreement and each of the agreements contemplated hereby constitutes, or
at the Time of Closing will constitute, a valid and binding agreement of such
party, enforceable in accordance with its terms. In addition, the Seller
represents to the Purchaser that all information relating to the Customer
Accounts and other Purchased Assets that the Seller provided to the Purchaser
prior to the execution of this Agreement was accurate in all material
respects.
19. ASSIGNMENT.
The Purchaser may assign its obligations under this Agreement to a wholly-
owned subsidiary provided that the Purchaser guarantees payment and performance
of all obligations of Purchaser hereunder.
20. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Illinois applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
STERICYCLE, INC. WMI MEDICAL SERVICES OF THE MIDWEST, INC.
By: /s/ Mark C. Miller By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Mark C. Miller Name:
---------------------------- ------------------------------------
Title: President/CEO Title: Authorized Signatory
--------------------------- -----------------------------------
Address: Address:
1419 Lake Cook Road c/o Waste Management, Inc.
Suite 410 3003 Butterfield Road
Deerfield, Illinois 60015 Oak Brook, Illinois 60521
Telecopier No.: (847) 945-6583 Attention: General Counsel
Telecopier No.: (630) 572-3095
WMI MEDICAL SERVICES WMI MEDICAL SERVICES
OF ARIZONA, INC. OF TEXAS, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
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WMI MEDICAL SERVICES WMI MEDICAL SERVICES
OF NORTH CAROLINA, INC. OF THE SOUTH, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
WASTE MANAGEMENT WASTE MANAGEMENT
OF ARIZONA, INC. OF PENNSYLVANIA, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
--------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
WASTE MANAGEMENT WASTE MANAGEMENT
OF MARYLAND, INC. OF OHIO, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
WASTE MANAGEMENT WASTE MANAGEMENT
OF KENTUCKY, L.L.C. OF INDIANA, L.L.C.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
WASTE MANAGEMENT WASTE MANAGEMENT
OF UTAH, INC. OF COLORADO, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
WASTE MANAGEMENT, INC. WASTE MANAGEMENT
OF TENNESSEE OF CAROLINAS, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
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WASTE MANAGEMENT WASHINGTON WASTE HAULING
OF TEXAS, INC. AND RECYCLING, INC.
By: /s/ William P. Hulligan By: /s/ William P. Hulligan
------------------------------ --------------------------------------
Name: Name:
---------------------------- ------------------------------------
Authorized Signatory Authorized Signatory
WASTE MANAGEMENT, INC.
By: /s/ William P. Hulligan
--------------------------------------
Name:
------------------------------------
Title: Authorized Signatory
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EXHIBIT I
DEFINITIONS
EMPLOYEE BENEFIT PLAN means (i) an "employee pension plan" as defined in
Section 3(2) of ERISA, (ii) an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA or (iii) any other employee benefit or fringe benefit plan
or program, whether established by a written agreement or other instrument or by
custom or informal understanding.
ENVIRONMENTAL LAW means any Law or Order relating to pollution or the
protection of the environment or imposing Liability or standards of conduct for
(i) the manufacture, processing, generation, distribution, use, storage,
handling, treatment, disposal, clean-up or transport of, or (ii) the emission,
discharge, release or threatened release into the environment of, pollutants,
contaminants or chemical, industrial, hazardous or toxic materials or wastes.
The term "Environmental Law" includes (but is not limited to) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
and the Resource Conservation and Recovery Act of 1976.
ERISA means the Employee Retirement Income Security Act of 1974.
GOVERNMENTAL AUTHORITY means any federal, state, local or foreign
governmental unit or entity or administrative or regulatory agency, board,
commission or panel.
LAW means any law, statute, ordinance, code, rule or regulation of any
Governmental Authority.
LIABILITY means any liability or obligation, whether know or unknown,
absolute or contingent, liquidated or unliquidated or due or to become due.
MEASURING PERIOD means the 12-month period starting with the first calendar
month beginning after the Time of Closing.
ORDER means any order, judgment, decree, ruling, consent decree, settlement
agreement, stipulation or injunction entered or issued by any court or
Governmental Authority.
SUIT means any action, suit, proceeding, hearing or investigation in, before
or by any court, Governmental Authority or arbitrator.
TAX means any federal, state, local or foreign income, gross receipts,
capital
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stock, franchise, profits, withholding, social security, unemployment, real
property, personal property, stamp, excise, occupation, sales, use, transfer,
value added or other tax (including any related interest, penalties and
additions), whether disputed or not.
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