STERICYCLE INC, DEF 14A, 2000-05-01

STERICYCLE INC
DEF 14A, 2000-05-01
HAZARDOUS WASTE MANAGEMENT

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<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the registrant [X]

Filed by a party other than the registrant [ ]

Check the appropriate box:

[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive proxy statement

[ ] Definitive additional materials

[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Stericycle, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

- --------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction:

- --------------------------------------------------------------------------------

(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

- --------------------------------------------------------------------------------

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2
STERICYCLE, INC.

NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000

Dear Stockholders:

You are cordially invited to attend our Annual Meeting of Stockholders on
Thursday, May 11, 2000, at 11:00 a.m. (Chicago time), at the Rosemont Suites
Hotel, 5500 North River Road, Rosemont, Illinois 60018.

At the Annual Meeting, you will be asked to consider and vote upon:

o the election of a Board of Directors to hold office until the Annual
Meeting of Stockholders in 2001

o ratification of the appointment of Ernst & Young LLP as our
independent public accountants for the year ending December 31, 2000

o any other matters that properly come before the meeting

Only stockholders of record at the close of business on the record date
of April 1, 2000 are entitled to vote at the Annual Meeting.

For the convenience of our stockholders who do not plan to attend the
Annual Meeting in person and who desire to have their shares voted, we have
enclosed a proxy card. If you do not plan to attend the Annual Meeting, please
complete and return the proxy card in the envelope provided for that purpose. If
you return your proxy card and later decide to attend the Annual Meeting in
person, or for any other reason desire to revoke your proxy, you may do so at
any time before your proxy is voted.

For the Board of Directors

Jack W. Schuler Mark C. Miller
Chairman of the Board President and Chief Executive Officer

April 28, 2000
Lake Forest, Illinois

<PAGE> 3

STERICYCLE, INC.

28161 North Keith Drive
Lake Forest, Illinois 60045

-------------------

PROXY STATEMENT

2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2000

-------------------

We are furnishing this Proxy Statement in connection with the solicitation
of proxies by our Board of Directors for use at our Annual Meeting of
Stockholders on Thursday, May 11, 2000, at 11:00 a.m. (Chicago time), at the
Rosemont Suites Hotel, 5500 North River Road, Rosemont, Illinois. We are mailing
this Proxy Statement and the accompanying materials to our stockholders
beginning on or about April 28, 2000. In this Proxy Statement, "we," "us," "our"
or the "Company" refers to Stericycle, Inc.

GENERAL

Stock. Our authorized capital stock consists of common stock, par value
$0.01 per share ("common stock"), and Series A Convertible preferred stock, par
value $0.01 per share ("convertible preferred stock"). As of April 1, 2000, we
had outstanding 14,793,684 shares of common stock and 75,000 shares of preferred
stock.

Stockholders Entitled To Vote. Only holders of our common stock or
convertible preferred stock who were stockholders of record at the close of
business on the record date of April 1, 2000 are entitled to notice of and to
vote their shares of record at the Annual Meeting. Holders of common stock and
holders of convertible preferred stock will vote as a separate classes with
respect to the election of directors (seven of whom are to be elected by holders
of common stock and two of whom are to be elected by holders of convertible
preferred stock). Otherwise, holders of common stock and holders of convertible
preferred stock will vote together as a single class.

Each outstanding share of common stock is entitled to one vote. With
respect to the election of the two directors to be elected by holders of
convertible preferred stock, each outstanding share of convertible preferred
stock is entitled to one vote. Otherwise, each outstanding share of convertible
preferred stock is entitled to a number of votes equal to the number of votes
possessed by the shares of common stock into which the share of preferred stock
was convertible as of the record date for the Annual Meeting. As of the record
date, each share of preferred stock was convertible into 57.88 shares of common
stock.

Quorum. Holders of shares representing a majority of the voting power
entitled to vote at the Annual Meeting who are present in person or represented
by proxy will constitute a quorum to conduct business at the meeting. The
inspectors of election appointed at the meeting will determine the existence of
a quorum and tabulate the votes cast at the meeting.

Voting. Directors are elected by a plurality of the votes cast.
Accordingly, the seven directors to be
<PAGE> 4
elected by holders of common stock will be elected by a plurality of the votes
cast by holders of common stock, and the two directors to be elected by holders
of convertible preferred will be elected by a plurality of the votes cast by
holders of convertible preferred stock. With respect to each other matter coming
before the meeting, the affirmative vote of holders of a majority of the voting
power present in person or represented by proxy and entitled to vote will be
required for approval of the matter.

A stockholder may withhold authority to vote for one or more nominees for
director and may abstain from voting on one or more of the other matters coming
before the Annual Meeting. Shares for which authority is withheld or which a
stockholder abstains from voting will be counted for purposes of determining
whether a quorum is present. Shares for which authority is withheld will have no
effect on the vote for election of directors (which, as noted, requires a
plurality of the votes cast). Shares which a stockholder abstains from voting
will be included in the total of the votes cast and will have the effect of a
vote against the matter in question. If a broker or nominee indicates on a proxy
card that it does not have discretionary authority to vote on a particular
matter, the shares will be counted for purposes of determining whether a quorum
is present (if the shares are voted on any matter) but will not be included in
the total of the votes cast and thus will have no effect on the outcome of the
vote.

Proxies. If a stockholder properly completes and returns the accompanying
proxy card, the shares of stock represented by the proxy will be voted as the
stockholder directs. IF NO DIRECTIONS ARE GIVEN, THE PERSONS APPOINTED AS PROXY
HOLDERS WILL VOTE THE SHARES IN ACCORDANCE WITH THE RECOMMENDATIONS OF OUR BOARD
OF DIRECTORS.

A stockholder may revoke a proxy at any time before it is voted by filing a
signed notice of revocation with the Secretary of the Company or by returning a
properly completed proxy card bearing a later date. In addition, a stockholder
may revoke a proxy by attending the Annual Meeting in person and requesting to
vote. Attending the meeting in person will not, by itself, constitute revocation
of the proxy.

STOCK OWNERSHIP

STOCK OWNERSHIP OF CERTAIN STOCKHOLDERS

The following table provides certain information regarding the beneficial
ownership of our common stock by each person (other than a director or executive
officer) who was known to us to be the beneficial owner as of April 1, 2000 of
more than 5% of our outstanding common stock:

SHARES
BENEFICIALLY
NAME AND ADDRESS OWNED PERCENTAGE(1)
---------------- ------------ -------------

Bain Entities(2),(4)........................... 2,170,399 11.34%
c/o Bain Capital, Inc.
Two Copley Place
Boston, Massachusetts 02116

MDP Entities(3),(4)............................ 2,170,399 11.34%
c/o Madison Dearborn Partners, LLC
70 West Madison Street
Chicago, Illinois 60602

The TCW Group, Inc. (5)........................ 1,294,800 6.77%
865 South Figueroa Street
Los Angeles, California 90017

Larry N. Feinberg(6)........................... 1,000,000 5.23%

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<PAGE> 5

c/o Oracle Partners, L.P.
712 Fifth Avenue, 45th Floor
New York, New York 10019
- ----------------------

(1) The percentages in this column were calculated assuming the conversion as
of April 1, 2000 of all 75,000 outstanding shares of our convertible
preferred stock into 4,340,798 shares of common stock.

(2) The shares shown represent the aggregate number of shares of our
convertible preferred stock owned by the following investment funds
associated with Bain Capital, Inc. (the "Bain Entities"), assuming the
conversion as of April 1, 2000 of all of the shares into shares of common
stock:

<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK COMMON STOCK PERCENTAGE OF
FUND BENEFICIALLY OWNED BENEFICIALLY OWNED OUTSTANDING SHARES
---- --------------------------- ------------------ ------------------
<S> <C> <C> <C>
Bain Capital Fund VI, L.P. 25,403.76 1,470,301 7.68%
BCIP Associates II 4,491.38 259,949 1.36%
BCIP Associates II-B 615.62 35,630 0.19%
BCIP Associates II-C 1,319.76 76,384 0.40%
BCIP Trust Associates II 1,291.22 74,732 0.39%
BCIP Trust Associates II-B 206.08 11,927 0.06%
Pep Investments Pty. Limited 84.68 4,901 0.03%
Brookside Capital Partners Fund L.P. 1,856.25 107,435 0.56%
Sankaty High Yield Asset Partners, L.P. 1,856.25 107,435 0.56%
Randolph Street Partners II 375.00 21,705 0.11%
</TABLE>

A Schedule 13D, dated November 22, 1999, jointly filed by the Bain
Entities and by investment funds associated with Madison Dearborn
Partners, LLC, reported that each of the Bain Entities has sole voting
and sole dispositive power with respect to its shares.

The Schedule 13D also reported that (1) other entities related to Bain
Capital, Inc., in their roles as general partners of the Bain Entities,
may be deemed to control some of the Bain Entities and thus share voting
and dispositive power with respect to their shares, and that (2) W. Mitt
Romney, an individual, may be deemed to share voting and dispositive
power with respect to 2,116,588 shares of common stock in his capacity as
the sole shareholder of Bain Capital, Inc. and of other entities that
serve as general partners of the Bain Entities.

(3) The shares shown represent the aggregate number of shares of our
convertible preferred stock owned by the following investment funds
associated with Madison Dearborn Partners, LLC (the "MDP Entities"),
assuming the conversion as of April 1, 2000 of all of the shares into
shares of common stock:

<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK COMMON STOCK PERCENTAGE OF
FUND BENEFICIALLY OWNED BENEFICIALLY OWNED OUTSTANDING SHARES
---- --------------------------- ------------------ ------------------
<S> <C> <C> <C>
Madison Dearborn Capital Partners III, L.P. 36,538.68 2,114,760 11.05%
Madison Dearborn Special Equity III, L.P. 811.32 46,957 0.24%
Special Advisors Fund I, LLC, L.P. 150.00 8,682 0.05%
</TABLE>

The Schedule 13D jointly filed by the Bain Entities and the MDP Entities
(see Note 1) reported that Madison Dearborn Partners III, L.P., as the
sole general partner of each of the MDP Entities, and Madison Dearborn
Partners, LLC, as the sole general partner of Madison Dearborn Partners
III, L.P., may be deemed to share voting and dispositive power with
respect to 2,142,857 shares of common stock.

-3-
<PAGE> 6

(4) The Bain Entities and the MDP Entities have agreed to vote their shares
of convertible preferred stock in accordance with the terms of an
inter-investor agreement. By reason of this agreement, the Bain Entities
and the MDP Entities may be deemed to constitute a "group" for purposes
of the Securities Exchange Act of 1934. Accordingly, by virtue of their
beneficial ownership of 75,000 shares of convertible preferred stock, the
Bain Entities and the MDP Entities may be deemed to beneficially own
4,340,798 shares of common stock, representing approximately 22.68% of
the total number of outstanding shares of common stock.

(5) The shares shown as beneficially owned by The TCW Group, Inc., are
derived from a Schedule 13G/A, dated February 11, 2000, jointly filed by
The TCW Group, Inc., a parent holding company, and Robert Day, an
individual who may be deemed to control The TCW Group, Inc., reporting
that, for reporting purposes, each of them holds sole voting and
dispositive power over 1,294,800 shares of our common stock. The Schedule
13G indicated that: (a) no shares are held directly by The TCW Group,
Inc.; (b) The TCW Group, Inc. indirectly holds shares through its
subsidiaries, Trust Company of the West, TCW Asset Management Company and
TCW Funds Management, Inc.; and (c) aside from the indirect holdings of
The TCW Group, Inc., Robert Day does not directly or indirectly hold any
of these shares.

(6) The shares shown as beneficially owned by Larry N. Feinberg are derived
from a Schedule 13D, dated March 14, 2000, jointly filed by Oracle
Partners, L.P. , Oracle Institutional Partners, L.P., Oracle Investment
Management, Inc., which serves as investment manager to and has
investment discretion over the securities held by SAM Oracle Investments
Inc., Oracle Offshore Limited, and Oracle Management Company Employee
Retirement Account, and Larry N. Feinberg, an individual, who serves as
the general partner of Oracle Partners, L.P. and Oracle Institutional
Partners, L.P., is the sole shareholder and president of Oracle
Investment Management, Inc., and is the trustee of the Feinberg Family
Foundation. The Schedule 13D reported that: Mr. Feinberg holds sole
voting and dispositive power over 5,000 shares and shared voting and
dispositive power over 995,000 shares; Oracle Partners, L.P. holds shared
voting and dispositive power over 595,700 shares; Oracle Institutional
Partners, L.P. holds shared voting and dispositive power over 162,100
shares; and Oracle Investment Management, Inc. holds shared voting and
dispositive power over 237,200 shares. The Schedule 13D also reported
that Oracle Investment Management, Inc. does not directly own any shares
of our common stock.

STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

The following table provides certain information regarding the beneficial
ownership of our common stock as of April 1, 2000 by (1) each of our directors,
(2) each of our executive officers listed in the Summary Compensation Table on
page 11 and (3) all of our directors and executive officers as a group:

<TABLE>
<CAPTION>
OPTIONS AND
SHARES WARRANT SHARES
BENEFICIALLY BENEFICIALLY COMBINED
OWNED OWNED(1) PERCENTAGE(2)(3)
------------ -------------- ----------------
<S> <C> <C> <C>
Jack W. Schuler(4)................................ 957,115 80,641 5.40%
Mark W. Miller(5)................................. 568,296 165,954 3.80%
John P. Connaughton(6)............................ -- 4,032 *
Rod F. Dammeyer(7)................................ 11,000 47,280 *
Patrick F. Graham................................. 5,783 26,021 *
John Patience..................................... 261,057 82,094 1.79%
Thomas Reusche(8)................................. -- 4,032 *
Peter Vardy....................................... 163,362 76,113 1.25%
L. John Wilkerson, Ph.D.(9)....................... 1,469 -- *
Richard T. Kogler................................. -- 23,332 *
</TABLE>

-4-
<PAGE> 7

- ------------------------
* Less than 1%.

(1) This column shows shares of common stock issuable upon the exercise of
stock options or warrants exercisable as of or within 60 days after April
1, 2000.

(2) The percentages in this column were calculated assuming the conversion as
of April 1, 2000 of all outstanding shares of our convertible preferred
stock into 4,340,798 shares of common stock.

(3) Shares of common stock issuable under stock options or warrants
exercisable as of or within 60 days after April 1, 2000 are considered
outstanding for purposes of computing the percentage of the person
holding the option or warrant but are not considered outstanding for
purposes of computing the percentage of any other person.

(4) The shares shown as beneficially owned by Mr. Schuler include 35,218
shares owned by his wife and trusts for the benefit of his children, with
respect to which Mr. Schuler disclaims any beneficial ownership, and
30,000 shares owned by a family foundation of which Mr. Schuler is the
sole trustee, with respect to which Mr. Schuler disclaims beneficial
ownership.

(5) The shares shown as beneficially owned by Mr. Miller include 76,346
shares owned by trusts for the benefit of his sons, with respect to which
Mr. Miller disclaims beneficial ownership.

(6) Mr. Connaughton is a managing director of Bain Capital, Inc. See "Stock
Ownership--Stock Ownership of Certain Beneficial Owners." Mr. Connaughton
has assigned to Bain Capital, Inc. the economic interest in all stock
options that he receives. As a managing director of Bain Capital, Inc.,
Mr. Connaughton may be deemed to share voting and dispositive power with
respect to the shares of our stock owned by the Bain Entities. Mr.
Connaughton disclaims any beneficial interest in these stock options or
shares, except to the extent of any pecuniary interest arising from his
managing directorship of Bain Capital, Inc.

(7) The shares shown as beneficially owned by Mr. Dammeyer include 1,000
shares owned by his wife, with respect to which Mr. Dammeyer disclaims
beneficial ownership.

(8) Mr. Reusche is a managing director of Madison Dearborn Partners, LLC. See
"Stock Ownership--Stock Ownership of Certain Beneficial Owners." Mr.
Reusche has assigned to Madison Dearborn Partners, LLC the economic
interest in all stock options that he receives. As a managing director of
Madison Dearborn Partners, LLC, Mr. Reusche may be deemed to share voting
and dispositive power with respect to the shares of our stock owned by
the MDP Entities. Mr. Reusche disclaims any beneficial interest in these
stock options or shares, except to the extent of any pecuniary interest
arising from his managing directorship of Madison Dearborn Partners, LLC.

(9) Dr. Wilkerson is a limited partner of the general partner of Galen
Partners, L.P. and Galen Partners International, L.P. (the "Galen
Partnerships"), and has assigned to the Galen Partnerships stock options
for 28,966 shares which he has been granted under our Directors Stock
Option Plan (of which options for 23,839 shares are exercisable as of or
within 60 days after April 1, 2000). The Galen Partnerships together own
300,962 shares of our common stock. Dr. Wilkerson disclaims any
beneficial interest in the stock options or shares held by the Galen
Partnerships except to the extent

-5-

<PAGE> 8

of his individual ownership of limited partnership interests and his
pecuniary interest arising from his limited partnership interest in the
general partner of the Galen Partnerships.

(10) The shares shown as beneficially owned by Mr. Bernert include 1,000
shares owned by his wife, with respect to which Mr. Bernert disclaims
beneficial ownership. Mr. Bernert has been included in this table by
reason of his inclusion in the Summary Compensation Table on page 11. As
a result of a revision of our organizational structure following the
completion in November 1999 of our purchase of the medical waste business
of Browning-Ferris Industries, Inc., Mr. Bernert ceased to be an
executive officer as of January 1, 2000.

(11) The group includes Mr. Bernert. See Note 10.

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<PAGE> 9

ITEM 1

ELECTION OF DIRECTORS

Our Board of Directors is currently comprised of nine directors. All nine
directors will be elected at the Annual Meeting. Seven directors will be elected
by holders of our common stock, and two directors will be elected by holders of
our convertible preferred stock. Each director elected will hold office until
our Annual Meeting of Stockholders in 2001 or until his successor is elected and
qualified.

NOMINEES FOR DIRECTOR

The following table provides certain information regarding the nominees
for election as directors. All nine nominees are currently serving as our
directors.

Nominees for Election by Holders of Common Stock

NAME POSITION WITH COMPANY AGE
---- --------------------- ---
<S> <C> <C>
Jack W. Schuler......................... Chairman of the Board of Directors 59
Mark C. Miller.......................... President, Chief Executive Officer and a Director 44
Rod F. Dammeyer......................... Director 59
Patrick F. Graham....................... Director 60
John Patience........................... Director 52
Peter Vardy............................. Director 69
L. John Wilkerson, Ph.D. ............... Director 56
</TABLE>

Nominees for Election by Holders of Convertible Preferred Stock

<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY AGE
---- --------------------- ---
<S> <C> <C>
John P. Connaughton..................... Director 34
Thomas R. Reusche....................... Director 45
</TABLE>

Jack W. Schuler has served as our Chairman of the Board of Directors since
January 1990. From January 1987 to August 1989, Mr. Schuler served as President
and Chief Operating Officer of Abbott Laboratories, a diversified health care
company, where he served as a director from April 1985 to August 1989. Mr.
Schuler serves as a director of Chiron Corporation, Medtronic, Inc. and Ventana
Medical Systems, Inc. He is a co-founder of Crabtree Partners LLC, a private
investment firm in Lake Forest, Illinois, which was formed in June 1995. Mr.
Schuler received a B.S. degree in mechanical engineering from Tufts University
and a M.B.A. degree from the Stanford University Graduate School of Business
Administration.

Mark C. Miller has served as our President and Chief Executive Officer
and a director since joining us in May 1992. From May 1989 until he joined us,
Mr. Miller served as Vice President for the Pacific, Asia and Africa in the
International Division of Abbott Laboratories, which he joined in 1976 and where
he held a number of management and marketing positions. He is a director of
AmericasDoctor.com (formerly Affiliated Research Centers, Inc.), an Internet
health care company that provides product development and promotion services to
pharmaceutical companies, and is a director of Lake Forest Hospital. Mr. Miller
received a B.S. degree in computer science from Purdue University, where he
graduated Phi Beta Kappa.

Rod F. Dammeyer has served as a director since January 1998. He is the
Managing Partner of Equity Group Corporate Investments and Vice Chairman and a
director of Anixter International Inc., where he

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<PAGE> 10

has been employed since 1985. Mr. Dammeyer serves as a director of Antec
Corporation, CNA Surety Corporation, Grupo Azucarero Mexico, GATX Corporation,
IMC Global, Inc., Matria Healthcare, Inc., TeleTech Holdings, Inc. and
Transmedia Network, Inc., and as a trustee of Van Kampen Investments, Inc.
closed-end funds. He received a B.S. degree from Kent State University.

Patrick F. Graham has served as a director since May 1991. Mr. Graham is a
Vice President of A. T. Kearney and is the head of Global Strategy Practice and
a director of Intelidata Technologies, Inc. He was a co-founder of Bain &
Company, Inc., a management consulting firm in Boston, Massachusetts, where he
served in a number of positions from 1973 to 1997. He received a B.A. degree in
economics from Knox College and a M.B.A. degree from the Stanford University
Graduate School of Business Administration.

John Patience has served as a director since our incorporation in March
1989. He is a co-founder and partner of Crabtree Partners LLC, a private
investment firm in Lake Forest, Illinois, which was formed in June 1995. From
January 1988 to March 1995, Mr. Patience was a general partner of Marquette
Venture Partners, L.P., a venture capital fund which he co-founded and which led
our initial capitalization. Mr. Patience serves as a director of TRO Learning,
Inc. and Ventana Medical Systems, Inc. He received B.A. and B.L. degrees from
the University of Sydney in Sydney, Australia, and a M.B.A. degree from the
Wharton School of Business of the University of Pennsylvania.

Peter Vardy has served as a director since July 1990. He is the Managing
Director of Peter Vardy & Associates, an international environmental consulting
firm in Chicago, Illinois, which he founded in June 1990. From April 1973 to May
1990, Mr. Vardy served at Waste Management, Inc., a waste management services
company, where he was Vice President, Environmental Management. Mr. Vardy
received a B.S. degree in geological engineering from the University of Nevada.

L. John Wilkerson, Ph.D., has served as a director since July 1992. Dr.
Wilkerson is a general partner of Galen Partners, L.P. and Galen Partners
International, L.P., affiliated health care venture capital funds, and serves as
a director of British Biotech Plc., Ventro Corp. and several privately held
health care companies. Dr. Wilkerson received a B.S. degree in biological
sciences from Utah State University and a Ph.D. degree in managerial economics
and marketing research from Cornell University.

John P. Connaughton has served as a director since November 1999. He has
been a Managing Director of Bain Capital, Inc. since 1997 and a member of the
firm since 1989. Prior to joining Bain Capital, Inc., Mr. Connaughton was a
consultant at Bain & Company, where he worked in consumer products and health
care strategy consulting. Mr. Connaughton serves as a director of Dade Behring,
Inc., DealTime.com Ltd., Epoch Senior Living and Vivra, Inc. Mr. Connaughton
received a B.S. degree in commerce from the University of Virginia and a M.B.A.
degree from the Harvard University Graduate School of Business, where he was a
Baker Scholar.

Thomas R. Reusche has served as a director since November 1999. He is a
Managing Director and co-founder of Madison Dearborn Partners, LLC. Prior to
founding Madison Dearborn Partners, LLC, Mr. Reusche was a senior investment
manager of First Chicago Venture Capital, which comprised the private equity
investment activities of First Chicago Corporation, the holding company parent
of First National Bank of Chicago. Mr. Reusche serves as a director of Hines
Horticulture, Inc., Woods Equipment Company and a number of private companies.
He has received an A.B. degree from Brown University and a M.B.A. degree from
the Harvard University Graduate School of Business.

COMMITTEES OF THE BOARD

Our Board of Directors has standing Compensation and Audit Committees. It
does not have a standing nominating committee.

The Compensation Committee, consisting of Messrs. Schuler (Chairman) and
Vardy and Dr.

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<PAGE> 11

Wilkerson, makes recommendations to the full Board of Directors concerning the
base salaries and cash bonuses of our executive officers and reviews our
employee compensation policies generally. The Compensation Committee also
administers our stock option plans as they apply to executive officers. The
Audit Committee, consisting of Messrs. Dammeyer (Chairman), Patience and Vardy,
makes recommendations to the full Board of Directors regarding the selection of
independent public accountants, reviews the results and scope of the audit and
other services provided by our independent public accountants, and reviews and
evaluates the Company's financial reporting process and internal accounting
controls.

MEETINGS

Our Board of Directors held five meetings during 1999 and acted without a
meeting by unanimous written consent on a number of occasions. The Compensation
Committee held three meetings and the Audit Committees held one meeting during
1999.

Each of our directors attended or participated by teleconference in all of
the meetings of the Board of Directors during 1999. No meeting of the Board was
held following the election of Messrs. Connaughton and Reusche as directors in
November 1999. All of the members of the Compensation and Audit Committees
attended the respective meetings of those committees.

COMPENSATION OF DIRECTORS

Our directors do not receive fees or other cash compensation for their
services as directors.

The Directors Stock Option Plan authorizes nonstatutory stock options for a
total of 285,000 shares of common stock to be granted to our outside directors
(i.e., directors who are neither officers nor employees).

Prior to amendment in February 2000, the Directors Stock Option Plan
provided for formula-determined option grants. As of each annual meeting, each
incumbent outside director who was reelected as a director was automatically
granted an option for a number of shares determined by multiplying 7,000 shares
by a fraction, the numerator of which is $12.00 and the denominator of which is
the closing price of a share of common stock on the date of the annual meeting;
and each outside director who was elected as a director for the first time was
automatically granted an option for a number of shares determined by multiplying
21,000 shares by a fraction, the numerator of which is $12.00 and the
denominator of which is closing price on the date of the annual meeting. These
option grants are subject to a maximum grant of 9,500 shares and a minimum grant
of 4,500 shares (or a maximum grant of 28,500 shares and a minimum grant of
13,500 shares in the case an outside director who is elected as a director for
the first time). In accordance with these terms, each of the six incumbent
outside directors who were reelected as directors at the 1999 Annual Meeting in
October 1999 was granted an option for 5,376 shares of common stock at an
exercise price of $15.63 per share.

As amended by our Board of Directors in February 2000, the plan now
provides for option grants to outside directors at the times and in the amounts
that the Board determines, taking the prior formulas into account as guidelines.

The exercise price of each option granted under the plan is the closing
price on the date of the option grant. The term of each option granted prior to
January 1, 2000 is six years from the grant date, and the term of each option
granted after December 31, 1999 is 10 years from the grant date. Each option
vests in 12 equal monthly installments and may be exercised only when it is
vested. Each vested option granted prior to the amendment of the plan in
February 2000 may be exercised only while the holder of the option remains a
director or during the 90-day period following the date that he or she ceases to
serve as a director. Each vested option granted after the amendment of the plan
in February 2000 remains

-9-
<PAGE> 12

exercisable for the term of the option, notwithstanding that the holder has
ceased to serve as a director, unless (1) the Board of Directors considers an
earlier expiration date appropriate, taking into account the circumstances in
which the holder ceased to serve as a director, or (2) the director was removed
from office, in which case the option remains exercisable for only 30 days after
his or her removal. The Directors Stock Option Plan has a six-year term, and no
option may be granted under the plan after its expiration in June 2002.

Each option granted under the Directors Stock Option Plan is transferable
to (1) a member of the outside director's immediate family, (2) a trust for the
primary benefit of the outside director or any one or more members of his or her
immediate family, or (3) a corporation, partnership or other entity which,
together with its affiliates, owns at the time of transfer at least 2.0% of our
outstanding common stock and to which the outside director has a contractual
obligation to assign his "outside" remuneration.

NOMINEES OF HOLDERS OF CONVERTIBLE PREFERRED STOCK

Messrs. Connaughton and Reusche serve as two of our directors as the
respective designees of the Bain Entities and the MDP Entities. Under the
certificate of designation to our certificate of incorporation pursuant to which
we sold 75,000 shares of convertible preferred stock to the Bain Entities and
the MDP Entities, as long as they and their respective affiliates own 50% or
more of the "underlying common stock" (i.e., the shares of common stock
issuable, or previously issued, upon conversion of the convertible preferred
stock), they have the right, voting as a separate class, to elect two directors
to our Board of Directors. If they and their respective affiliates cease to hold
50% but still hold 25% or more of the underlying common stock, they have the
right , voting as a separate class, to elect one director; and if they cease to
hold 25% of the underlying common stock, their right to elect directors as a
separate class terminates.

At the closing in November 1999 of our sale of convertible preferred stock
to the Bain Entities and the MDP Entities, we also entered into a corporate
governance agreement. This agreements contains, among other provisions,
provisions intended to implement the right of the Bain Entities and the MDP
Entities to elect directors to our Board. The agreement requires us to nominate
their two designees for election to our Board of Directors, and if our
stockholders fail to elect a nominated designee, to appoint the nominated
designee as a director (increasing the number of our directors to permit the
appointment, if necessary).

Under the certificate of designation to our certificate of incorporation
pursuant to which we sold convertible preferred stock to the Bain Entities and
the MDP Entities, as long as there are 18,750 shares of convertible preferred
stock outstanding, holders of convertible preferred stock have the right to
elect a majority of our directors upon the occurrence of certain bankruptcy
events (e.g., we make an assignment for the benefit of creditors or admit in
writing our inability to pay our debts generally as they become due).

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<PAGE> 13
EXECUTIVE COMPENSATION

The following table provides certain information regarding the
compensation paid to or earned by our President and Chief Executive Officer and
our four other most highly compensated executive officers (the "named executive
officers") for services rendered in 1999, 1998 and 1997:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION -------------------
FISCAL ------------------------ NUMBER OF SECURITIES ALL OTHER
YEAR SALARY BONUS(1) UNDERLYING OPTIONS(2) COMPENSATION(3)
------ ----------- ----------- --------------------- ---------------
<S> <C> <C> <C> <C> <C>
Mark C. Miller........................ 1999 $ 235,000 $ 141,000 83,148 $ 3,323
President and Chief Executive 1998 235,000 30,500 51,429 300
Officer 1997 235,000 -- 60,000 300

Richard T. Kogler(4).................. 1999 168,269 125,000 132,500 300
Chief Operating Officer 1998 -- -- -- --
1997 -- -- -- --

Anthony J. Tomasello.................. 1999 168,269 -- 39,130 300
Executive Vice President and 1998 150,000 1,750 22,000 300
Chief Technical Officer 1997 150,000 -- 20,972 300

Frank J.M. ten Brink(5)............... 1999 168,269 93,000 69,781 300
Chief Financial Officer 1998 150,000 16,867 20,429 300
1997 70,619 -- 55,000 --

Michael J. Bernert(6)................. 1999 130,000 45,000 13,127 300
Vice President, Sales and 1998 127,462 21,569 11,000 300
Marketing 1997 123,833 -- 21,174 300
</TABLE>

- ---------------------
(1) In 1999, Messrs. Tomasello, ten Brink and Bernert participated in our
cash bonus program for executive officers, pursuant to which executive
officers can elect, in advance of any award, to forego some portion or
all of any bonus otherwise payable under the bonus program and receive
instead an immediately vested nonstatutory stock option at an exercise
price per share equal to the closing price of a share of our common stock
on the bonus award date. The number of shares for which an option is
granted is determined by dividing the product of four times the amount of
the cash bonus that a participating executive officer elects to forego by
the closing price. Messrs. Tomasello and Bernert elected to forego all of
their respective cash bonuses of $10,000 and $3,000 for their performance
in 1998, receiving instead options for 3,699 shares and 1,110 shares,
respectively. Mr. ten Brink elected to forego $5,000 of his $10,000 cash
bonus for his performance in 1998, receiving instead an option for 1,850
shares.

In 1998, Messrs. Miller, Tomasello, ten Brink and Bernert participated in
our cash bonus program for executive officers. Messrs. Miller, Tomasello
and ten Brink elected to forego $40,000, $35,000 and $5,000,
respectively, of their respective cash bonuses of $70,500, $36,750 and
$21,867 for their performance in 1997, receiving instead options for
11,429, 10,000 and 1,429 shares, respectively. Mr. Bernert did not elect
to forego any portion of his cash bonus.

(2) The stock options granted during 1999 to Messrs. Tomasello, ten Brink and
Bernert include options for 3,699, 1,850 and 1,110 shares, respectively,
and the stock options granted during 1998 to Messrs.

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<PAGE> 14
Miller, Tomasello and ten Brink include options for 11,429, 10,000 and
1,429 shares, respectively, granted in lieu of all or portions of the
cash bonuses otherwise payable under our cash bonus program for executive
officers. See Note 1.

(3) These amounts represent our matching contributions under our 401(k) plan.
For 1999, 1998 and 1997, the matching contribution was 30% of the first
$1,000 contributed by each participant. The amount in 1999 for Mr. Miller
also includes $3,023 in life insurance premiums that we reimbursed to
him.

(4) Mr. Kogler joined us in December 1998.

(5) Mr. ten Brink joined us in June 1997.

(6) As a result of a revision of our organizational structure following the
completion in November 1999 of our purchase of the medical waste business
of Browning-Ferris Industries, Inc., Mr. Bernert ceased to be an
executive officer as of January 1, 2000.

1999 STOCK OPTION GRANTS

The following table provides certain information regarding stock options
granted to the named executive officers in 1999. In accordance with the rules of
the Securities and Exchange Commission, the following table also provides the
potential realizable value over the term of the options (i.e., the period from
the date of grant to the date of expiration) based upon assumed rates of stock
appreciation of 5% and 10%, compounded annually. These amounts do not represent
our estimate of future appreciation of the price of our common stock. We did not
grant stock appreciation rights to any named executive officer in 1999.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM(4)
UNDERLYING EMPLOYEES IN PRICE PER EXPIRATION ----------------------
OPTIONS(1) FISCAL YEAR(2) SHARE(3) DATE 5% 10%
----------- -------------- ---------- ---------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Mark C. Miller........................ 6,890 0.84% $ 12.75 2/22/09 $ 55,247 $ 140,006
31,358 3.82% 12.75 2/22/09 251,441 637,201
44,900 5.47% 12.75 8/13/09 360,026 912,378

Richard T. Kogler..................... 36,381 4.44% 12.75 2/22/09 291,718 739,270
63,619 7.76% 12.75 2/22/09 510,123 1,292,752
32,500 3.96% 12.75 8/13/09 260,598 660,407

Anthony J. Tomasello.................. 14,397 1.76% 12.75 2/22/09 115,441 292,550
6,034 0.74% 12.75 2/22/09 48,383 122,612
3,699 0.45% 10.81 4/21/09 25,153 63,742
15,000 1.63% 12.75 8/13/09 120,276 304,803

Frank J.M. ten Brink.................. 26,868 3.28% 12.75 2/22/09 215,439 545,964
8,563 1.04% 12.75 2/22/09 68,661 174,002
1,850 0.23% 10.81 4/21/09 12,580 31,880
32,500 3.96% 12.75 8/13/09 260,598 660,407

Michael J. Bernert.................... 10,343 1.26% 12.75 2/22/09 82,934 210,172
1,674 0.20% 12.75 2/22/09 13,423 34,016
1,110 0.14% 10.81 4/21/09 7,548 19,128
</TABLE>

-12-
<PAGE> 15
- -------------------
(1) All of the stock options granted to the named executive officers were
granted under our 1997 Stock Option Plan. Each option granted vests over
a four-year period: one-quarter of the option vests at the end of the
first year, and the balance of the option vests in equal monthly
increments over the next 36 months. The stock options granted during 1999
to Messrs. Tomasello, ten Brink and Bernert include options for 3,699,
1,850 and 1,110 shares, respectively, and the stock options granted
during 1998 to Messrs. Miller, Tomasello and ten Brink include options
for 11,429, 10,000 and 1,429 shares, respectively, granted in lieu of all
or portions of the cash bonuses otherwise payable under our cash bonus
program for executive officers. See "--Summary Compensation Table--Note
1."

(2) The percentages shown in the table reflect options for a total of 820,203
shares granted to employees during 1999. All of these options were
granted under our 1997 Stock Option Plan.

(3) The exercise price per share shown in the table is equal to the closing
price of a share of our common stock on the date of grant.

(4) The potential realizable value was calculated on the basis of the 10-year
term of each option on its grant date, assuming that the fair market
value of the underlying stock on the grant date appreciates at the
indicated annual rate compounded annually for the entire term of the term
of the option and that the option is exercised and sold on the last day
of its term for the appreciated stock price. The potential realizable
value of each option was calculated using the exercise price of the
option as the fair market value of the underlying stock on the grant
date.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR END AT FISCAL YEAR END(2)
ACQUIRED VALUE --------------------- ----------------------
ON EXERCISE REALIZED(1) VESTED UNVESTED VESTED UNVESTED
----------- ----------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Mark C. Miller........................ 68,980 $ 758,120 59,975 141,038 $ 524,306 $ 999,401

Richard T. Kogler..................... -- -- -- 132,500 -- --

Anthony J. Tomasello.................. 15,196 106,579 19,123 53,857 116,139 372,833

Frank J.M. ten Brink.................. -- -- 37,095 108,115 351,736 775,095

Michael J. Bernert.................... 10,000 146,575 66,163 31,254 1,040,919 251,630
</TABLE>

(1) The value realized was determined by multiplying the number of option
shares acquired by the closing price of a share of our common stock on
the date of exercise, and then subtracting the aggregate exercise price

(2) The value of in-the-money stock options was determined by multiplying the
number of vested (exercisable) or unvested (unexercisable) options by
$18.81 per share, which was the closing price of a share of common stock
on December 31, 1999, and then subtracting the aggregate exercise price

-13-

<PAGE> 16
STOCK OPTION PLANS

We have adopted three stock option plans in addition to the Directors Stock
Option Plan: (1) the 2000 Nonstatutory Stock Option Plan (the "2000 Plan"),
which our Board of Directors adopted in February 2000; (2) the 1997 Stock Option
Plan (the "1997 Plan"); and (3) the Incentive Compensation Plan (the "1995
Plan"). The 2000 Plan authorizes options to be granted for a total of 500,000
shares of common stock. The 1997 and 1995 Plans each authorize options to be
granted or, in the case of the 1995 Plan, restricted stock awarded, for a total
of 1,500,000 shares of common stock. If an option under any plan expires
unexercised or is surrendered, the shares subject to the option once again
become available for option grants.

As of December 31, 1999, 1,267,816 shares were available for future option
grants under the 1997 Plan, and 119,942 shares were available for future option
grants (or restricted stock awards) under the 1995 Plan. We did not make any
option grants or restricted stock awards under the 1995 Plan during 1999. Each
plan has a 10-year term, and no option may be granted under any plan after its
expiration.

The 2000 Plan provides for the grant of nonstatutory stock options. The
1997 and 1995 Plans provide for the grant of both nonstatutory stock options and
incentive stock options intended to satisfy the requirements of section 422 of
the Internal Revenue Code of 1986. The 1995 Plan also provides for restricted
stock awards. Options may be granted to our employees and consultants under all
three plans, but only our employees may be granted incentive stock options under
the 1997 Plan or 1995 Plan. Officers may not be granted options under the 2000
Plan. Directors may be granted nonstatutory stock options under the 1997 Plan
but may not be granted options under the 2000 Plan or 1995 Plan.

All three plans are administered by our Board of Directors with respect to
all eligible persons other than executive officers and by the Compensation
Committee of the Board of Directors with respect to executive officers. The
Board of Directors or the Compensation Committee, as the case may be, selects
the eligible persons to whom options are granted or, in the case of the 1995
Plan, restricted stock is awarded and, subject to the provisions of the
particular plan, determines the terms of each option or award, including, in the
case of an option, the number of shares, type of option, exercise price and
vesting schedule.

The exercise price per share of options granted under all three plans may
not be less than the closing price of a share of our common stock on the date of
grant. The maximum term of an option granted under any plan may not exceed 10
years. An option may be exercised only when it is vested and, in the case of an
option granted to an employee, only while the holder of the option remains our
employee or during the 90-day period following the termination of his or her
employment or, in the case of the 2000 Plan, for the period specified in the
option agreement. In the discretion of the Board of Directors or the
Compensation Committee, as the case may be, this 90-day or specified period may
be extended to any date ending on or before the option's expiration date.
Options granted under all three plans become exercisable upon a "change in
control," and, in addition, the Board of Directors or the Compensation
Committee, as the case may be, otherwise may accelerate the exercisability of an
option at any time.

OTHER PLANS

We maintain a 401(k) plan in which employees who have completed one year's
employment and attained age 21 are eligible to participate. The plan permits us
to make matching contributions of a percentage of participants' deferrals as
determined each year by the Board of Directors. For 1999, the we made matching
contributions of 30% of the first $1,000 contributed by participants.

-14-
<PAGE> 17
EMPLOYMENT AGREEMENTS

We have not entered into written employment agreements with any of our
executive officers. All of our executive officers and employees have signed
confidentiality agreements with us.

REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION

The compensation of the Company's executive officers is determined
generally by the Compensation Committee of the Board of Directors. The three
members of the Compensation Committee, Messrs. Schuler and Vardy and Dr.
Wilkerson, are outside directors of the Company.

Decisions of the Compensation Committee relating to executive officers'
base salaries and cash bonuses are subject to the review and approval of the
full Board of Directors; decisions of the Compensation Committee relating to
executive officers' stock options are reviewed by the full Board but are not
subject to the Board's approval.

EXECUTIVE COMPENSATION POLICIES

The Company's executive compensation policies seek to coordinate executive
officers' compensation with the Company's performance objectives and business
strategy. These policies are intended to attract, motivate and retain executive
officers whose contributions are critical to the Company's long-term success and
to reward executive officers for attaining individual and Company objectives
that enhance stockholder value.

The Company's compensation program for executive officers consists of cash
compensation and long-term compensation. Cash compensation is paid in the form
of a base salary and a discretionary cash bonus, and long-term compensation is
paid in the form of stock options. Bonuses are intended to provide executive
officers with an opportunity to earn additional cash compensation through
individual and collective performance. Stock options are intended to focus
executive officers on managing our business from the perspective of owners with
an equity interest and to align their long-term compensation with the benefits
realized by the Company's stockholders.

Salaries. The Compensation Committee determines the salaries of executive
officers on the basis of (1) the individual officer's salary grade, scope of
responsibilities and level of experience, (2) the rate of inflation, (3) the
range of salary increases for the Company's employees generally and (4) the
salaries paid to comparable officers in comparable companies. The Compensation
Committee has not commissioned any formal surveys of executive officer
compensation at comparable companies, but has relied on published salary surveys
for indications of salary trends generally and at small growth companies in
particular.

During 1999, the Compensation Committee recommended (and the Board of
Directors approved) increasing the bases salaries of Messrs. Tomasello and ten
Brink from $150,000 to $175,000 per year. The base salaries of our other
executive officers remained unchanged.

Cash Bonuses. Under the Company's cash bonus program for executive
officers, each executive officer is eligible for a cash bonus of up to 20%, 25%
or 30% of his or her base salary (depending upon salary grade), with the actual
amount awarded being determined by the Compensation Committee on the basis of
specific individual and Company performance goals and criteria. Pursuant to this
program and on the Committee's recommendation, in April 1999 the Company awarded
cash bonuses to Messrs. Tomasello, ten Brink and Bernert of $10,000, $10,000 and
$3,000, respectively, for their performance in 1998. Under our cash bonus
program, executive officers can elect, in advance of any award, to forego

-15-
<PAGE> 18

some portion or all of any bonus otherwise pay able under the bonus program and
receive instead an immediately vested nonstatutory stock option at an exercise
price per share equal to the closing price of a share of our common stock on the
bonus award date. The number of shares for which an option is granted is
determined by dividing the product of four times the amount of the cash bonus
that a participating executive officer elects to forego by the closing price.
Messrs. Tomasello and Bernert elected to forego all of their respective cash
bonuses for their performance in 1998, receiving instead options for 3,699
shares and 1,110 shares, respectively. Mr. ten Brink elected to forego $5,000 of
his $10,000 cash bonus for his performance in 1998, receiving instead an option
for 1,850 shares.

On the Committee's recommendation, in November 1999 the Company awarded
cash bonuses to Messrs. Miller, Kogler, and ten Brink of $141,000, $125,000 and
$88,000, respectively, in recognition of their respective roles and
responsibilities in (1) negotiating and completing the Company's successful
acquisition of the medical waste business of Browning-Ferris Industries, Inc.
("BFI") from Allied Waste Industries, Inc. for $412.5 million in cash, and (2)
negotiating and obtaining the related financing, consisting of (a) $225.0
million in borrowings under the term loan facilities of a new senior credit
facility that the Company established, (b) $125.0 million in proceeds from the
sale of 12-3/8% senior subordinated notes due 2009 and (c) $75.0 million in
proceeds from the sale of convertible preferred stock to the Bain Entities and
the MDP Entities. In addition, the Company paid Mr. Bernert a cash bonus of
$45,000 at the same time in recognition of his performance during 1999.

Stock Options. The Compensation Committee believes that the grant of stock
options is a desirable method of acknowledging the efforts of the Company's
executive officers and encouraging their continued high levels of performance.
In deciding on the stock option grants to individual executive officers in
respect of their performance, the Compensation Committee generally employs a
formula taking into account each officer's salary grade and the Company's
financial performance as measured by a trailing average of the market price of
the Company's common stock. The Compensation Committee then adjusts the
formula-determined option grant by a factor reflecting the Committee's
assessment of the individual officer's performance, initiative and contribution
to the Company's success in meeting its performance objectives. In accordance
with this adjusted formula, in February 1999 the Committee granted Messrs.
Miller, Tomasello, ten Brink and Bernert options for 38,248, 20,431, 35,431 and
12,017 shares of common stock, respectively, for their performance in 1998. At
the same time, the Company granted Mr. Kogler, who joined the Company as its
Chief Operating Officer in December 1998, an option for 100,000 shares of common
stock.

In August 1999, the Compensation Committee granted options to Messrs.
Miller, Kogler, Tomasello and ten Brink for 44,900, 32,500, 15,000 and 32,500
shares, respectively. The options granted to Messrs. Miller, Kogler and ten
Brink were in recognition of their performance in connection with the Company's
(then) pending acquisition of BFI's medical waste business and were contingent
upon the successful completion of this acquisition. The option granted to Mr.
Tomasello was in recognition of his efforts in developing joint venture and
other opportunities to exploit the Company's proprietary electro-thermal
deactivation technology in overseas markets.

COMPENSATION OF CHIEF EXECUTIVE OFFICER

The Compensation Committee determines the compensation of the Company's
President and Chief Executive Officer, Mark C. Miller, on the basis of the same
criteria applicable to the Company's executive officers generally.

As noted earlier, the Compensation Committee recommended (and the Board of
Directors approved) continuing Mr. Miller's base salary of $235,000 through
1999. The Compensation Committee granted Mr. Miller an option for 38,428 shares
in March 1999 for his performance in 1998. The factors most influencing the
Committee in making Mr. Miller's stock option grant were (1) his significant
leadership in identifying and negotiating the Company's 12 acquisitions during
1998 (including, in

-16-
<PAGE> 19

particular, the Company's acquisition of Waste Systems, Inc. , the majority
shareholder of 3CI Complete Compliance Corporation, in October 1998 and its
acquisition of Med-Tech Environmental Limited in December 1998), (2) his
management of the Company's growth strategy generally and (3) his oversight of
the integration of acquired businesses into the Company's operations. As also
noted earlier, in August 1999 the Compensation Committee granted Mr. Miller an
option for 44,900 shares, and in November 1999, on the Committee's
recommendation, the Company paid Mr. Miller a cash bonus of $141,000, in
recognition of his vision and leadership in negotiating and successfully
concluding the BFI acquisition, the largest and most important acquisition in
the Company's history.

Compensation Committee

Jack W. Schuler, Chairman
Peter Vardy
L. John Wilkerson, Ph.D.

-17-

<PAGE> 20
PERFORMANCE GRAPH

The following graph compares the cumulative total return (i.e., stock price
appreciation plus dividends) on our common stock for the period from August 23,
1996, when our common stock was first traded, through December 31, 1999, with
the cumulative total return for the same period on the Nasdaq NMS Composite
Index, the Russell 3000 Index and an index of a peer group of companies that we
selected. The graph assumes that $100 was invested on August 23, 1996 in our
common stock and in the stock represented by each of the three indexes, and that
all dividends were reinvested. The common stock of the following companies has
been included in the peer group index: Allied Waste Industries, Inc.;
Browning-Ferris Industries, Inc. (for 1996 through 1998); Isolyser Company,
Inc.; Isomedix, Inc. (for 1996); Safety-Kleen Corporation (for 1996 and 1997);
Sterigenics International, Inc. (for 1997 and 1998); Sterile Recoveries, Inc.;
Steris Corporation; United Waste Systems, Inc. (for 1996 and 1997); U.S.A. Waste
Services, Inc. (for 1996 and 1997); and Waste Management, Inc. The stock price
performance of our common stock reflected in the following graph is not
necessarily indicative of future performance.

8/23/96 12/31/96 12/31/97 12/31/98 12/31/99
Stericycle, Inc $100.00 $124.32 $151.49 $161.00 $192.00
Nasdaq NMS Composite Index $100.00 $113.04 $136.18 $175.00 $361.53
Russell 3000 Index $100.00 $111.65 $144.29 $167.00 $213.20
Peer Group $100.00 $106.53 $138.03 $130.00 $ 63.95

-18-
<PAGE> 21
ITEM 2

RATIFICATION OF APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS

We have appointed Ernst & Young LLP as our independent public accountants
for the fiscal year ending December 31, 2000. Ernst & Young LLP has served as
our independent public accountants since our incorporation in March 1989.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting to respond to appropriate questions and will have the opportunity to
make a statement if they desire to do so.

Ratification of the appointment of Ernst & Young LLP as our independent
public accountants will require the affirmative vote of holders of a majority of
the voting power present in person or represented by proxy and entitled to vote
at the Annual Meeting. In the event that our stockholders do not ratify the
appointment of Ernst & Young LLP, the Board of Directors may reconsider the
appointment.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT PUBLIC ACCOUNTS FOR
THE FISCAL YEAR ENDING DECEMBER 31, 2000.

OTHER MATTERS

As of the date of this Proxy Statement, our Board of Directors knows of no
other business to come before the Annual Meeting for consideration by our
stockholders. If any other business properly comes before the meeting, the
persons named as proxies in the accompanying proxy card will vote the shares of
stock represented by the proxy in accordance with their judgment.

STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING

Any stockholder who wishes to present a proposal for consideration at our
Annual Meeting of Stockholders in 2001, and to have the proposal included in our
proxy statement for the meeting, must submit the proposal to us by January 1,
2001. Any stockholder who wishes to present a proposal from the floor for
consideration at our Annual Meeting of Stockholders in 2001 must submit the
proposal to us by March 1, 2001.

Stockholder proposals for inclusion in our proxy statement must satisfy the
requirements of the rules of the Securities and Exchange Commission in order to
be included. Stockholder proposals should be sent to our Corporate Secretary at
28161 North Keith Drive, Lake Forest, Illinois 60045.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act requires our directors,
executive officers and persons beneficially owning more than 10% of our
outstanding common stock to file periodic reports of stock ownership and stock
transactions with the Securities and Exchange Commission. On the basis of a
review of copies of these reports, we believe that all filing requirements for
1999 were satisfied in a timely manner, with the exception that Messrs. Miller,
Graham and Bernert each filed one report late. The late reports by Messrs.
Miller and Graham were filed late (by one day) because the courier service
failed to collect the reports as scheduled, and the late report by Mr. Bernert
was filed late because he was unaware that his wife's purchase of 1,000 shares
of our common stock was required to be reported.

ADDITIONAL INFORMATION

We will bear the cost of soliciting proxies on the accompanying proxy card.
Some of our officers

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<PAGE> 22
and regular employees may solicit proxies by personal conversations, mail,
telephone or telecopier, but will not receive any additional compensation for
their services. We may reimburse brokers and others for their reasonable
expenses in forwarding proxy solicitation material to the beneficial owners of
shares of our common stock.

We have provided a copy of our Annual Report on Form 10-K for the year
ended December 31, 1999, as filed with the Securities and Exchange Commission,
with our 2000 Annual Report furnished to all stockholders of record on the
record date. WE WILL PROVIDE WITHOUT CHARGE TO EACH STOCKHOLDER OF RECORD ON THE
RECORD DATE, UPON WRITTEN REQUEST, AN ADDITIONAL COPY OF OUR ANNUAL REPORT ON
FORM 10-K FOR 1999. REQUESTS SHOULD BE DIRECTED TO OUR CORPORATE SECRETARY AT
28161 NORTH KEITH DRIVE, LAKE FOREST, ILLINOIS 60045.

-20-
<PAGE> 23
PROXY PROXY

STERICYCLE, INC.
28161 NORTH KEITH DRIVE
LAKE FOREST, ILLINOIS 60045

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STERICYCLE, INC.

I or we hereby appoint each of Jack W. Schuler, Mark C. Miller and Frank
J.M. ten Brink (the "proxies") as my or our proxy, each with the power to
appoint his substitute, and authorize each of them acting alone to vote all of
the shares of Common Stock, par value $.01 per share, of Stericycle, Inc. (the
"Company") held of record by me or us on April 1, 2000 at the Annual Meeting of
Stockholders to be held on May 11, 2000 (the "Annual Meeting"), and at any
adjournment of the Annual Meeting.

If properly completed and returned, this Proxy will be voted as directed.
If no direction is given, this Proxy will be voted in accordance with the
recommendations of the Company's Board of Directors, i.e., FOR each of the seven
nominees for election as a director by holders of Common Stock (Item 1) and FOR
ratification of the appointment of Ernst & Young LLP as the Company's
independent public accountants (Item 2). It will be voted in the best judgment
of the proxies in respect of any other business that properly comes before the
Annual Meeting.

PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED REPLY ENVELOPE

(Continued and to be signed on the reverse side.)

<PAGE> 24
STERICYCLE, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. (o)

1. ELECTION OF DIRECTORS--
Nominees: 01-Jack W. Schuler, 02-Mark C. Miller, 03-Rod F. Dammeyer,
04-Patrick F. Graham, 05-John Patience, 06-Peter Vardy,
07-L. John Wilkerson, Ph.D.

For All Withhold All For All Except
( ) ( ) ( )

------------------------------------------------
(Except Nominee(s) written above

2. Ratification of appointment of Ernst & Young LLP as the Company's
independent public accountants for the year ending December 31, 2000.

For Against Abstain
( ) ( ) ( )

Date: ,2000
----------------------------

Signature:
----------------------------

Title or Capacity:
--------------------

Instruction: Please sign exactly as your
name appears immediately to the left. If
signing as a fiduciary (for example, as
a trustee), please indicate your fiduciary
capacity. If signing on behalf of a
corporation, partnership or other entity,
please indicate your title or other
authorized capacity. If the shares for
which this Proxy is given are held jointly,
both joint tenants must sign.

- --------------------------------------------------------------------------------
FOLD AND DETACH HERE

YOUR VOTE IS IMPORTANT.

PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
<PAGE> 25

PROXY PROXY

STERICYCLE, INC.
28161 NORTH KEITH DRIVE
LAKE FOREST, ILLINOIS 60045

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STERICYCLE,
INC.

We hereby appoint each of Jack W. Schuler, Mark C. Miller and Frank J.M.
ten Brink (the "proxies") as our proxy, each with the power to appoint his
substitute, and authorize each of them acting alone to vote all of the shares of
Series A Convertible Preferred Stock, par value $.01 per share, of Stericycle,
Inc. (the "Company") held of record by us on April 1, 2000 at the Annual Meeting
of Stockholders to be held on May 11, 2000 (the "Annual Meeting"), and at any
adjournment of the Annual Meeting.

If properly completed and returned, this Proxy will be voted as directed.
If no direction is given, this Proxy will be voted in accordance with the
recommendations of the Company's Board of Directors, i.e., FOR each of the two
nominees for election as a director by holders of Series A Convertible Preferred
Stock (Item 1) and FOR ratification of the appointment of Ernst & Young LLP as
the Company's independent public accountants (Item 2). It will be voted in the
best judgment of the proxies in respect of any other business that properly
comes before the Annual Meeting.

PLEASE MARK VOTE IN BOX [ ]

1. ELECTION OF DIRECTORS--
Nominees: 08-John P. Connaughton, 09-Thomas R. Reusche

For Both Withhold Both For One (Name written below)
[ ] [ ] [ ]

------------------------------------
(Name of nominee voted for)

2. Ratification of appointment of Ernst &Young LLP as the Company's independent
public accountants for the year ending December 31, 2000.

For Against Abstain
[ ] [ ] [ ]

Date: , 2000.
------------------------------

BAIN CAPITAL INVESTORS

BAIN CAPITAL FUND VI, L.P.

By: Bain Capital Partners VI, L.P.
Its: General Partner

By: Bain Capital Investors VI, Inc.
Its: General Partner

By:
----------------------------------------
A Managing Director
<PAGE> 26

BCIP ASSOCIATES II

By: Bain Capital, Inc.
Its: Managing Partner

By:
----------------------------------------
A Managing Director

BCIP ASSOCIATES II-B

By: Bain Capital, Inc.
Its: Managing Partner

By:
----------------------------------------
A Managing Director

BCIP ASSOCIATES II-C

By: Bain Capital, Inc.
Its: Managing Partner

By:
----------------------------------------
A Managing Director

BCIP TRUST ASSOCIATES II

By: Bain Capital, Inc.
Its: Managing Partner

By:
----------------------------------------
A Managing Director

BCIP TRUST ASSOCIATES II-B

By: Bain Capital, Inc.
Its: Managing Partner

By:
----------------------------------------
A Managing Director

SANKATY HIGH YIELD ASSET PARTNERS, L.P.

By:
----------------------------------------
A Managing Director

PEP INVESTMENTS PTY. LIMITED

By: Bain Capital, Inc.
Its: Attorney-in-Fact

By:
----------------------------------------
A Managing Director

BROOKSIDE CAPITAL PARTNERS, L.P.

By:
----------------------------------------
A Managing Director

RANDOLPH STREET PARTNERS II

By:
----------------------------------------
A General Partner

-2-
<PAGE> 27
MADISON DEARBORN PARTNERS INVESTORS

MADISON DEARBORN CAPITAL PARTNERS III, L.P.

By: Madison Dearborn Partners III, L.P.
Its: General Partner

By: Madison Dearborn Partners, LLC
Its: General Partner

By:
----------------------------------------
A Managing Director

MADISON DEARBORN SPECIAL EQUITY III, L.P.

By: Madison Dearborn Partners III, L.P.
Its: General Partner

By: Madison Dearborn Partners, LLC
Its: General Partner

By:
----------------------------------------
A Managing Director

SPECIAL ADVISORS FUND I, LLC

By: Madison Dearborn Partners III, L.P.
Its: Manager

By: Madison Dearborn Partners, LLC
Its: General Partner

By:
----------------------------------------
A Managing Director

-3-