<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): June 24, 1997
3CI COMPLETE COMPLIANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 1-11097 76-0351992
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
910 PIERREMONT, #312
SHREVEPORT, LOUISIANA 71106
(Address of Principal Executive Offices)
318/869-0440
(Registrant's telephone number, including area code)
(NOT APPLICABLE)
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On June 24, 1997, 3CI Complete Compliance Corporation (the "Company")
entered into an Exchange Agreement (the "Agreement") pursuant to which the
Company has agreed to issue to Waste Systems, Inc., a Delaware corporation
("WSI"), 1,000,000 shares of its Series A Preferred Stock in exchange for
cancellation of and reduction in the principal amount of certain promissory
notes held by WSI. The Agreement provides for (i) the cancellation of a
promissory note dated December 20, 1996 in the original principal amount of
$2,700,000, payable to the order of WSI (the "1996 Note") and (ii) the
reduction in principal amount of a promissory note dated September 30, 1995 in
the original principal amount of $8,000,000, payable to the order of WSI (the
"1995 Note"). The principal amount of the 1995 Note will be reduced in an
amount equal to $7,000,000 less the principal amount of the 1996 Note as of
January 1, 1997. The cancellation of the 1996 Note and the reduction in the
principal amount of the 1995 Note will be effective as of January 1, 1997.
As a result of the foregoing transactions, the Company is now in
compliance with the Nasdaq Small-Cap Market's surplus requirement and is also
in compliance with alternative minimum bid price for continued listing on the
Nasdaq Small-Cap Market.
<PAGE> 3
Set forth below are: (i) the historical consolidated balance sheet of
the Company as of May 31, 1997 and (ii) the pro forma consolidated balance
sheet as of May 31, 1997, after giving effect to the foregoing transactions.
3CI COMPLETE COMPLIANCE CORPORATION
CONSOLIDATED BALANCE SHEETS AS OF MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL PROFORMA
MAY 31, PROFORMA MAY 31,
1997 ADJUSTMENTS 1997
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ -- $ -- $ --
Restricted cash 130,000 130,000
Accounts receivable, less allowances 4,660,805 4,660,805
Inventory 85,472 85,472
Other current assets 786,757 786,757
------------ ------------ ------------
Total current assets 5,663,034 0 5,663,034
------------ ------------ ------------
Property, plant and equipment, at cost 11,181,463 11,181,463
Accumulated depreciation (2,869,344) (2,869,344)
Net property, plant and equipment 8,312,119 0 8,312,119
------------ ------------ ------------
Excess of cost over net, assets acquired, net of
accumulated amortization 370,577 370,577
Other intangible assets, net of accumulated amortization 248,507 248,507
Other assets 51,107 51,107
------------ ------------ ------------
Total assets $ 14,645,344 $ 14,645,344
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Bank overdraft $ 466,250 $ 466,250
Notes payable 619,381 619,381
Current portion of long-term debt, unaffiliated
lenders 724,104 724,104
Accounts payable 1,978,634 1,978,634
Accounts payable, affiliated companies 367,156 367,156
Accrued liabilities 1,871,155 1,871,155
Note payable majority shareholder 11,175,840 (1) (7,245,278) 3,930,562
------------ ------------ ------------
Total current liabilities 17,202,520 (7,245,278) 9,957,242
------------ ------------ ------------
Long-term debt unaffiliated lenders, net of current portion 810,934 810,934
------------ ------------ ------------
Total liabilities 18,013,454 (7,245,278) 10,768,176
------------ ------------ ------------
Accrued stock put option 1,664,910 1,664,910
Shareholders' Equity:
Preferred Stock (1) 7,000,000 7,000,000
Common Stock 99,004 99,004
Additional Paid-in Capital 20,108,743 20,108,743
Accumulated deficit (25,240,767)(1) 245,278 (24,995,489)
------------ ------------ ------------
Total Shareholders' equity (5,033,020) 7,245,278 2,212,258
------------ ------------ ------------
Total liabilities and shareholders' equity $ 14,645,344 $ 0 $ 14,645,344
============ ============ ============
</TABLE>
(1) To reflect the conversion of $7,000,000 of WSI Promissory Note and to
remove the related interest expense of $245,278 to show that the
conversion occurred on January 1, 1997.
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
4.1 - Certificate of Designations of Series A Preferred Stock.
10.1 - Exchange Agreement between 3CI Complete Compliance
Corporation and Waste Systems, Inc. dated as of June 24,
1997.
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: June 24, 1997 3CI COMPLETE COMPLIANCE CORPORATION
By: /s/ CURTIS W. CRANE
-----------------------------------
Curtis W. Crane, Chief Financial
Officer
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
4.1 - Certificate of Designations of Series A Preferred Stock.
10.1 - Exchange Agreement between 3CI Complete Compliance
Corporation and Waste Systems, Inc. dated as of June 24,
1997.
</TABLE>
<PAGE> 1
EXHIBIT 4.1
3CI COMPLETE COMPLIANCE CORPORATION
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
We, Charles D. Crochet and Curtis W. Crane, the President and
Secretary, respectively, of 3CI Complete Compliance Corporation, a Delaware
corporation (the "Corporation") do hereby certify that the following resolution
of the Board of Directors of the Corporation has been duly adopted in
accordance with authority expressly accorded to the Board of Directors by
Article 4 of the Certificate of Incorporation, as amended, of the Corporation
(the "Certificate of Incorporation"), and in accordance with the provisions of
Section 151 of the Delaware General Corporation Law:
RESOLVED, that the Board of Directors of the Corporation, pursuant to
authority expressly vested in it by the provisions of the Certificate of
Incorporation of the Corporation, hereby establishes a series of preferred
stock of the Corporation, authorizes the issuance thereof, and hereby fixes the
designations, rights, preferences, privileges and voting powers, in addition to
those set forth in the Certificate of Incorporation, as follows:
1. Designation of Series. One million shares of the preferred
stock, without par value, of the Corporation shall constitute a series of
preferred stock designated as Series A Preferred Stock (the "Series A Preferred
Stock") with the designations, rights, preferences, privileges and voting
powers set forth below:
2. Dividends.
(a) The holders of Series A Preferred Stock shall not be
entitled to receive any fixed dividends and shall be entitled to
receive such cash dividends as may be declared from time to time by
the Board of Directors in its discretion, from any assets legally
available for the payment of dividends; however, for so long as any
shares of Series A Preferred Stock shall be outstanding, without the
written consent of the holders of a majority in interest of the Series
A Preferred Stock, the Corporation shall not (i) purchase or redeem
any shares of its common stock, par value $.01 per share ("Common
Stock"), or (ii) declare, pay or set apart for any payment any
dividend on its Common Stock. Notwithstanding the foregoing, the
holders of shares of Series A Preferred Stock shall be entitled to
receive, when, and if declared by the Corporation's Board of Directors
out of assets of the Corporation legally available for such payment,
cumulative dividends from the second anniversary of the original
issuance date of the Series A Preferred Stock, at the rate of $.5775
per share per annum, and no more, payable quarterly on the 15th day of
July, October, January and April of each year, commencing with a
payment on July 15, 1999, accrued from the second anniversary of the
original issuance date of the Series A Preferred Stock. Such dividends
shall be cumulative
<PAGE> 2
from the second anniversary of the original issuance date of the
Series A Preferred Stock. Accruals of dividends shall not bear
interest.
(b) Before any dividends (other than dividends payable in
capital stock ranking junior to the Series A Preferred Stock both as
to dividends and upon liquidation) on, or any distribution in respect
of, any class or classes of stock of the Corporation ranking junior to
the Series A Preferred Stock as to dividends or upon liquidation,
shall be declared or paid or set apart for payment, and before any
purchase or redemption of any such stock, the holders of Series A
Preferred Stock shall have received payment in full of all dividends,
if any, in arrears on the Series A Preferred Stock. No dividend shall
be declared on any series of preferred stock ranking on a parity with
the Series A Preferred Stock as to dividends unless there shall
likewise be or have been declared on the shares of Series A Preferred
Stock at the time outstanding a dividend of like kind for all
dividends periods coinciding with or ending before such dividend
period, ratably in proportion to the respective annual dividend rates
per annum fixed therefor as herein or in the Certificate of
Incorporation provided.
3. Redemption. The Series A Preferred Stock shall be subject to
redemption by the Corporation as follows:
(a) The shares of Series A Preferred Stock may be
redeemed at any time on or after the second anniversary of the
original issuance date of the Series A Preferred Stock at the option
of the Corporation in whole or, from time to time, in part, in any
such case at a per share redemption price equal to $7.00, plus accrued
dividends, if any.
(b) Notice of every redemption of Series A Preferred
Stock shall be given by mailing notice not less than 30 days before
the date fixed for such redemption to each holder of record of shares
of Series A Preferred Stock so to be redeemed, and shall be
sufficiently given if the Corporation shall cause a copy thereof to be
mailed to such holders of record at their respective addresses as the
same shall appear on the books of the Corporation, by first class
mail, postage prepaid; provided, however, that the failure to mail
such notice to one or more of such holders shall not affect the
validity of such redemption as to the other holders.
(c) In case of redemption of only a part of the Series A
Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected by lot.
(d) If any notice of redemption shall have been duly
given or if the Corporation shall have granted to a bank or trust
company irrevocable written authorization promptly to give or complete
such notice, and if, on or before the redemption date specified
therein, all funds necessary for such redemption shall have been
deposited by the Corporation with the bank or trust company designated
in such notice, in trust for the pro rata benefit of the holders of
the shares so called for redemption, then, notwithstanding that any
certificate for shares so called for redemption shall not have been
surrendered for cancellation, from and after the time of such deposit
(or from and after the redemption date if such notice shall fail to
state that the holders of the shares so called for redemption may
receive their redemption price at any time after such deposit) all
shares with respect to which such deposit shall have
2
<PAGE> 3
been made shall no longer be deemed to be outstanding, and all rights
with respect to such shares forthwith shall cease and terminate,
except only the right of the holders of the certificates therefor,
upon surrender thereof, to receive the redemption price thereof out of
the funds so deposited, without interest, and the right to exercise,
on or before the close of business on the date fixed for redemption,
any privileges of conversion applicable to the Series A Preferred
Stock. Any interest accrued on such funds shall be paid to the
Corporation from time to time.
(e) All funds so set aside or deposited, as the case may
be, and unclaimed at the end of one year from such redemption date
shall be released or repaid to the Corporation, after which the
holders of the shares so called for redemption shall look only to the
Corporation for the payment thereof; provided, however, that any funds
set aside or deposited which shall not be required for redemption
because of the exercise of any privilege of conversion after the date
of setting aside or deposit, as the case may be, shall be released or
repaid to the Corporation immediately after such exercise.
(f) Any shares of the Series A Preferred Stock redeemed,
purchased or otherwise acquired by the Corporation or into Common
Stock shall be deemed retired and shall be canceled and may not under
any circumstances thereafter be reissued or otherwise disposed of by
the Corporation, and the Corporation shall from time to time and at
least once each year cause all such shares to be retired in the manner
provided by law.
4. Conversion of Series A Preferred Stock.
(a) The Series A Preferred Stock shall be convertible at
the option of the record holder thereof, at any time after the second
anniversary of the original issuance thereof, in whole, or from time
to time in part, in the manner hereinafter provided, into Common
Stock. Except as otherwise specifically provided herein, no payment or
adjustment shall be made upon such conversion for dividends on any
shares of Series A Preferred Stock which shall be converted or for the
declaration or payment of any dividend on or other distribution in
respect of any shares of Common Stock issuable upon such conversion.
(b) The Series A Preferred Stock may be converted at any
time on or after the second anniversary of the original issuance
thereof into full shares of Common Stock of the Corporation based on a
Conversion Rate (defined below) of Series A Preferred Stock to Common
Stock equal to $7.00 divided by the Market Price (defined below) of
the Common Stock on the date of the related Conversion Notice (defined
below) (the conversion rate from time to time in effect being
hereinafter referred to as the "Conversion Rate"); provided, however,
that the Conversion Rate of Series A Preferred Stock to Common Stock
shall never be greater than 1 to 7 (i.e., all 1,000,000 shares of
Series A Preferred Stock shall be convertible into an aggregate of no
more than 7,000,000 shares of Common Stock); and provided further that
the Conversion Rate of Series A Preferred Stock to Common Stock shall
never be less than 7 to 1 (i.e., all 1,000,000 shares of Series A
Preferred Stock shall be convertible into no fewer than an aggregate
of 1,000,000 shares of Common Stock), subject to such adjustments, if
any, of the Conversion Rate and the securities or other property
3
<PAGE> 4
issuable upon such conversion pursuant to the provisions of
subparagraph (f) hereof. If at any time shares of Series A Preferred
Stock are presented for conversion, the Company does not have
sufficient shares of Common Stock authorized for issuance upon
conversion thereof, then the converting holder shall receive the
maximum number of shares of Common Stock available for issuance by the
Company upon such conversion, and with respect to the remaining shares
of Series A Preferred Stock that the Company is unable to convert to
Common Stock, the converting holder shall receive a note of the
Company (a "Conversion Note") in a principal amount equal to the
number of shares of Series A Preferred Stock that remains unconverted
times $7.00, such Conversion Note to bear interest at the rate of
8.25% per annum, with such interest to be cumulative from the date of
original issuance of the Series A Preferred Stock. If more than one
holder of Series A Preferred Stock presents shares of Series A
Preferred Stock for conversion, and the Company does not have
sufficient shares of Common Stock authorized for issuance upon such
conversion, then the number of shares of Common Stock issuable to each
such converting holder shall be allocated pro rata among all
converting holders based on the number of shares of Series A Preferred
Stock presented for conversion, and each such converting holder shall
receive a Conversion Note in the principal amount determined as
provided in this paragraph (b).
(c) To convert Series A Preferred Stock into Common
Stock, a holder of Series A Preferred Stock shall send to the
Secretary of the Company a dated notice (a "Conversion Notice")
setting for the number of shares of Series A Preferred Stock to be
converted, along with the certificate representing the Series A
Preferred Stock to be converted. Upon receipt of a Conversion Notice
and the surrendered certificate representing the Series A Preferred
Stock to be converted into Common Stock, the Corporation shall cause a
certificate representing the Common Stock issued pursuant to such
conversion (and, if applicable, a Conversion Note in the principal
amount determined as set forth in paragraph (b) above) to be delivered
to the converting holder, along with a certificate representing any
shares of Series A Preferred Stock that were not converted into Common
Stock.
(d) All shares of Series A Preferred Stock that have not
been redeemed or converted into Common Stock on or before the fifth
anniversary of the original issuance of the Series A Preferred Stock
shall automatically, without further action of the Company or any
holder of Series A Preferred Stock, be converted into Common Stock
based on the Conversion Rate then in effect. Upon such automatic
conversion, the Company shall send a notice to each record holder of
Series A Preferred Stock that such shares of Series A Preferred Stock
have been converted into Common Stock, along with appropriate
instructions for the surrender of certificates representing Series A
Preferred Stock in exchange for certificates representing the Common
Stock into which such Series A Preferred Stock has been converted.
Upon automatic conversion of Series A Preferred Stock pursuant to this
paragraph, the shares of Series A Preferred Stock shall no longer be
considered outstanding, and the certificates representing such Series
A Preferred Stock shall be void for all purposes except for the
purpose of surrender to the Company in exchange for the certificates
representing the Common Stock into which such Series A Preferred Stock
was converted.
4
<PAGE> 5
(e) Market Price means (i) the closing sale price on the
date of a Conversion Notice of a share of Common Stock as reported on
the principal securities exchange on which the shares of Common Stock
are then listed or admitted to trading or (ii) if not so listed, the
average of the closing bid and ask prices for a share of Common Stock
on that date as quoted on the Nasdaq National Market System or Nasdaq
Small-Cap Market or (iii) if not quoted on Nasdaq, the average of
closing bid and ask prices for a share of Common Stock as quoted by
the National Quotations Bureau's pink sheets or the National
Association of Securities Dealer's OTC Bulletin Board System. If the
price of a share of Common Stock shall not be so quoted, "Market
Price" shall mean the fair market value of a share of Common Stock as
the holders of the Series A Preferred Stock of the Corporation shall
mutually agree or, in the absence of such an agreement, as determined
by an investment banking firm, with expertise in the Corporation's
area of business, selected by the holders of the Series A Preferred
Stock and approved by the Corporation, such approval not to be
unreasonably withheld.
(f) The Conversion Rate shall be subject to the following
adjustments:
(i) While any shares of Series A Preferred Stock
are outstanding, in case the Corporation shall subdivide the
outstanding shares of Common Stock into a greater number of
shares of Common Stock or combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock,
the Conversion Rate in effect immediately before such
subdivision or combination, as the case may be, shall be
proportionately increased or decreased (adjusted to the
nearest, or if there shall be no nearest, then to the next
lower, thousandth of a share of Common Stock), as the case may
require, such increase or decrease, as the case may be, to
become effective at the opening of business on the day
following the day upon which such subdivision or combination
becomes effective.
(ii) No adjustment of the Conversion Rate shall be
made by reason of the issuance of shares of Common Stock in
exchange for cash, property, or services.
(iii) In case of any reclassification or change of
outstanding shares of Common Stock, or in case of any
consolidation or merger of the Corporation with or into
another corporation, or in case of any sale or conveyance to
another corporation of all or substantially all of the
property of the Corporation, each holder of shares of the
Series A Preferred Stock then outstanding shall have the right
thereafter, so long as his conversion right hereunder shall
exist, to convert such shares into the kind and number or
amount of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation,
merger, sale or conveyance, by a holder of the number of
shares of Common Stock of the Corporation into which such
shares of the Series A Preferred Stock might have been
converted immediately before such reclassification, change,
consolidation, merger, sale, or conveyance, and shall have no
other conversion rights under these provisions; provided, that
effective provision shall be made, in the articles or
certificate of incorporation of the resulting or surviving
corporation or otherwise, so that the
5
<PAGE> 6
provisions set forth herein for the protection of the
conversion rights of the Series A Preferred Stock shall
thereafter be applicable, as nearly as reasonably may be, to
any such other shares of stock and other securities and
property deliverable upon conversion of the Series A Preferred
Stock remaining outstanding or other convertible preferred
stock received by the holders in place thereof; and provided,
further, that any such resulting or surviving corporation
shall expressly assume the obligation to deliver, upon the
exercise of the conversion privilege, such shares, securities
or property as the holders of the Series A Preferred Stock
remaining outstanding, or other convertible preferred stock
received by the holders in place thereof, shall be entitled to
receive pursuant to the provisions hereof, and to make
provisions for the protection of the conversion right as above
provided. The subdivision or combination of shares of Common
Stock at any time outstanding into a greater or lesser number
of shares of Common Stock (whether with or without par value)
shall not be deemed to be a reclassification of the shares of
Common Stock of the Corporation for the purposes of this
subparagraph (iii).
(g) No fraction of a share of Common Stock shall be
issued upon any conversion, but, in lieu thereof, there shall be paid,
to the holder of shares of Series A Preferred Stock surrendered for
conversion as soon as practicable after the date such shares of Series
A Preferred Stock are surrendered for conversion, an amount in cash
equal to the same fraction of the market value of a full share of
Common Stock as shall be determined, in good faith by the board of
directors of the Corporation.
5. Dissolution. In the event of the dissolution, liquidation or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
or in the event of its insolvency, the assets of the Corporation shall be
distributed among the holders of its capital stock in accordance with the
following schedule of priorities and preferences:
(a) There shall be paid to the holders of the Series A
Preferred Stock an amount equal to that which would have been payable
pursuant to Section 3(a) if the Series A Preferred Stock had been
redeemed on the date of such payment before any distribution of assets
or payment shall be made to the holders of any other class of capital
stock of the Corporation. If the assets of the Corporation available
for distribution to the holders of Series A Preferred Stock shall be
insufficient to permit payment to the holders of the Series A
Preferred Stock of the full amount or amounts aforesaid, then the
entire assets of the Corporation shall be distributed ratably among
the holders of the Series A Preferred Stock then outstanding according
to the number of shares held by each.
(b) After the amounts provided by subparagraph (a) above
have been paid or distributed, any assets remaining shall be paid to
or distributed among the holders of Common Stock pro rata on a
per-share basis.
(c) Neither the consolidation, nor merger of the
Corporation into or with another corporation or corporations, nor the
merger or consolidation of another corporation or corporations with or
into the Corporation, nor a reorganization of the Corporation, nor the
6
<PAGE> 7
purchase or redemption of all or part of the outstanding shares of any
class or classes of the stock of the Corporation, nor a sale or
transfer of the property and business of the Corporation as, or
substantially as, an entity, shall be deemed a liquidation,
dissolution, or winding up of the affairs of the Corporation, within
the meaning of any of the provisions of this Section 5.
6. Voting Rights.
(a) Generally. Except as otherwise required by law or
expressly provided for herein, the holders of Series A Preferred Stock shall
have no voting rights.
(i) Defaults on Series A Preferred Stock. If and
when the Corporation shall be in default in the payment of dividends
on the Series A Preferred Stock, and such default continues for a
period of two fiscal quarters, then the holders of the outstanding
shares of Series A Preferred Stock, voting separately as a single
class, shall become entitled to elect two directors of the
Corporation, such additional directors to serve in addition to the
directors then in office. Such right to elect additional directors
may be exercised (A) by action taken by the written consent of the
holders of a majority of the shares of Series A Preferred Stock then
outstanding, (B) at any annual meeting of stockholders or (C) within
the limitations hereinafter provided, at a special meeting of
stockholders held for such purpose. If such default shall occur more
than two fiscal quarters preceding the date of the next annual meeting
of stockholders as fixed by the Bylaws of the Corporation, then a
special meeting of the holders of the Series A Preferred Stock may,
and upon the written request of the holders of not less than
one-fourth of the number of shares of Series A Preferred Stock then
outstanding, addressed to the Secretary of the Corporation, shall, be
called by the Secretary of the Corporation, such meeting to be held
within 60 days after such call and within 60 days after the delivery
to the Secretary of such request. Such additional directors, whether
elected by written consent or at an annual or a special meeting, shall
serve until the next annual meeting and until their successors shall
be duly elected and qualified, unless their term shall sooner
terminate pursuant to the provisions of this subparagraph. At any
meeting for the purpose of electing such additional directors, the
holders of a majority of the shares of Series A Preferred Stock then
outstanding shall constitute a quorum, and any such meeting shall be
valid notwithstanding that a quorum of the outstanding shares of any
other class or classes shall be present, the number of directors
constituting the whole board of directors shall be deemed to be
increased by a number sufficient to carry out the provisions of this
subparagraph. If a vacancy shall occur in the board of directors by
reason of the death, resignation, or inability to act of any such
additional director, such vacancy shall be filled only by vote of the
holders of the outstanding shares of Series A Preferred Stock, voting
separately as a single class, acting by written consent or at any
annual meeting or at a special meeting of the holders of shares of the
Series A Preferred Stock requested, called and held in the same manner
as the special meeting hereinabove referred to. Whenever a default in
the Corporation's obligations to pay dividends on the Series A
Preferred Stock has been cured by the Corporation, then the right of
the holders of the Series A Preferred Stock to elect directors shall
thereupon cease, and, if any such additional directors were elected by
the holders of shares of Series A Preferred Stock, voting separately
as a class, the term of
7
<PAGE> 8
such directors shall then terminate, and the number of directors
constituting the whole board of directors shall be reduced by the
number of such terminated directors. The above provisions for the
vesting of such voting rights in the holders of Series A Preferred
Stock shall apply, however, in case of any subsequent default under
this subparagraph.
7. Exclusion of Other Rights. Except as otherwise required by
law, the shares of Series A Preferred Stock shall not have any preferences or
relative participating, optional or other special rights except as specifically
set forth herein. No shares of any class of the corporation's capital stock
shall have more preemptive or subscription rights.
IN WITNESS WHEREOF, this Certificate of Designation has been signed by
Charles D. Crochet and Curtis W. Crane, the President and the Secretary,
respectively, of the Corporation, as of the 24 day of June, 1997.
3CI COMPLETE COMPLIANCE CORPORATION
By: /s/ Charles D. Crochet
-----------------------------------
Charles D. Crochet, President
ATTEST:
/s/ Curtis W. Crane
- ----------------------------------
Curtis W. Crane, Secretary
<PAGE> 1
EXHIBIT 10.1
EXCHANGE AGREEMENT
BETWEEN
3CI COMPLETE COMPLIANCE CORPORATION
AND
WASTE SYSTEMS, INC.
DATED AS OF JUNE 24, 1997
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE 1
THE EXCHANGE
1.1. Exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2
REPRESENTATIONS AND WARRANTIESOF THE COMPANY
2.1. Representations and Warranties of the Company. . . . . . . . . . . . 2
2.1.1. Organization and Standing. . . . . . . . . . . . . . . . . . . 2
2.1.2. Agreement Authorized and its Effect on Other Obligations. . . 2
2.1.3. Validity of Stock. . . . . . . . . . . . . . . . . . . . . . 2
2.1.4. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 3
2.1.5. Reports and Financial Statements. . . . . . . . . . . . . . . 3
ARTICLE 3
REPRESENTATIONS AND WARRANTIESOF WSI
3.1. Representations and Warranties of WSI. . . . . . . . . . . . . . . . 3
3.1.1. Organization and Standing. . . . . . . . . . . . . . . . . . 3
3.1.2. Agreement Authorized and its Effect on Other Obligations. . . 4
3.1.3. Ownership of Notes . . . . . . . . . . . . . . . . . . . . . 4
3.1.4. Investment Intent. . . . . . . . . . . . . . . . . . . . . . 4
3.1.5. Investor Sophistication. . . . . . . . . . . . . . . . . . . 4
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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PAGE
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<S> <C> <C><C>
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI. . . . . . . . . . . . . . 5
5.1.1. Representations and Warranties True at Closing Date. . . . . . 5
5.1.2. No Material Litigation. . . . . . . . . . . . . . . . . . . . 5
5.1.3. Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 5
5.2. Conditions Precedent to Obligations of the Company. . . . . . . . . . 6
5.2.1. Representations and Warranties of WSI True at Closing Date. . 6
5.2.2. No Material Litigation. . . . . . . . . . . . . . . . . . . . 6
5.2.3. Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 6
MISCELLANEOUS
6.1. Entirety. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.2. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
6.3. Notices and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 7
6.4. Termination of Representations, Warranties, etc. . . . . . . . . . . 7
6.5. Table of Contents and Captions. . . . . . . . . . . . . . . . . . . . 8
6.6. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . 8
6.7. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.8. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
-ii-
<PAGE> 4
EXCHANGE AGREEMENT
EXCHANGE AGREEMENT (this "Agreement"), dated as of June 24, 1997, among
3CI Complete Compliance Corporation, a Delaware corporation (the "Company") and
Waste Systems, Inc., a Delaware Corporation ("WSI").
W I T N E S S E T H:
WHEREAS, the Company and certain of its affiliates are the Makers of (i)
a promissory note dated September 30, 1995, in the original principal amount of
$8,000,000 (the "1995 Note"), and a promissory note dated December 20, 1996, in
the original principal amount of $2,700,000 (the "1996 Note"), in each case,
payable to the order of WSI (the 1995 Note and the 1996 Note are collectively
referred to herein as the "Notes"); and
WHEREAS, all interest due under the Notes has, in accordance with the
terms of the Notes, been converted to principal; and
WHEREAS, the Company is authorized to issue up to 1,000,000 shares of
its preferred stock, without par value;
WHEREAS, the Company and WSI have agreed that the Company will issue to
WSI 1,000,000 shares of its Series A Preferred Stock in the form of the
Certificate of Designation of Series A Preferred Stock attached hereto as
Exhibit A (the "Series A Preferred Stock"), in exchange for the cancellation of
the 1996 Note and a reduction in the principal amount of the 1995 Note.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, and to prescribe the terms and
conditions of the exchange contemplated hereby, the parties hereto hereby agree
as follows:
ARTICLE 1
THE EXCHANGE
1.1. Exchange. Upon the terms and subject to the conditions set forth
in this Agreement, the Company agrees to issue and deliver to WSI 1,000,000
shares of its Series A Preferred Stock, in exchange for the cancellation of the
1996 Note and a reduction of the principal amount of the 1995 Note in an amount
equal to $7,000,000 minus the principal amount of the 1996 Note as of January
1, 1997.
1.2. Closing. The closing of the transactions contemplated hereby
(the "Closing") will occur as soon as practicable after the date hereof (the
"Closing Date"). At the Closing, the Company will deliver to WSI a
certificate representing 1,000,000 shares of the Series A Preferred
<PAGE> 5
Stock. WSI will cancel 1996 Note and reduce the outstanding principal balance
on the 1995 Note in accordance with the provisions of this Agreement.
1.3. Effective Date. The effective date of the cancellation of the
1996 Note and the reduction in the principal amount of the 1995 Note described
in Section 1.1 shall be January 1, 1997 (the "Effective Date").
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
2.1. Representations and Warranties of the Company. The Company
hereby represents and warrants as follows:
2.1.1. Organization and Standing. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the state of Delaware, has full requisite corporate power and authority
to carry on its business as it is currently conducted, and to own and
operate the properties currently owned and operated by it, and is duly
qualified or licensed to do business and is in good standing as a
foreign corporation authorized to do business in all jurisdictions in
which the character of the properties owned or the nature of the
business conducted by it would make such qualification or licensing
necessary, except where the failure to be so qualified or licensed would
not have a material adverse effect on its financial condition,
properties or business.
2.1.2. Agreement Authorized and its Effect on Other Obligations.
The execution and delivery of this Agreement has been authorized by the
board of directors of the Company, the consummation of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company, and this
Agreement is a valid and binding obligation of the Company, enforceable
against the Company (subject to normal equitable principles) in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, debtor relief or similar laws
affecting the rights of creditors generally. The consummation of the
transactions contemplated by this Agreement will not conflict with or
result in a violation or breach of any term or provision of, nor
constitute a default under (i) the Certificate of Incorporation or
Bylaws of the Company or (ii) any obligation, indenture, mortgage, deed
of trust, lease, contract or other agreement to which the Company or any
of its subsidiaries is a party or by which any of them or their
properties are bound.
2.1.3. Validity of Stock. On the Closing Date, the Series A
Preferred Stock to be issued to WSI hereunder will be in due and proper
form, will be duly authorized by all necessary corporate action on the
part of the Company, and will be validly issued, fully paid and non-
assessable shares of Series A Preferred Stock, free of preemptive
rights. Upon delivery of the shares of Series A Preferred Stock, WSI
will acquire valid and marketable
2
<PAGE> 6
title to such shares of Series A Preferred Stock, free and clear of any
encumbrances. The Common Stock issuable upon conversion of the Series A
Preferred Stock has been duly authorized by all the necessary corporate
acts on the part of the Company and when issued will be validly issued,
fully paid and nonassessable shares of Common Stock of the Company free
of preemptive rights. Upon delivery of the shares of Common Stock upon
conversion of the Series A Preferred Stock, WSI will acquire valid
marketable title to such Common Stock free and clear of any
encumbrances.
2.1.4. Capitalization. As of the Effective Date and the Closing
Date, the authorized capitalization of the Company will consist of
15,000,000 shares of Common Stock and 1,000,000 shares of preferred
stock, without par value ("Preferred Stock").
2.1.5. Reports and Financial Statements. The Company has
furnished to WSI true and complete copies of its annual report filed
with the Commission pursuant to the Exchange Act for the fiscal year
ended September 30, 1996 (the "10-K"), and (ii) the Company's quarterly
report filed with the Commission for the fiscal quarter ended March 31,
1997 (the "10-Q"). The consolidated financial statements of the Company
and its consolidated subsidiaries included in the 10-K and the 10-Q were
prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved and fairly
present the consolidated financial position for the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and changes in financial position of the
periods then ended, and the 10-K and 10-Q did not contain any untrue
statement of a material fact or fail to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Since September 30, 1996, the Company has filed with the Commission all
material reports, registration statements and other material filings
required to be filed with the Commission under the rules and regulations
of the Commission.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF WSI
3.1. Representations and Warranties of WSI. WSI represents and
warrants as follows:
3.1.1. Organization and Standing. WSI is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, has full requisite corporate power and authority to
carry on its business as it is currently conducted, to own and operate
the properties currently owned and operated by it, and is duly qualified
or licensed to do business and is in good standing as a foreign
corporation authorized to do business in all jurisdictions in which the
character of the properties owned or the nature of the business
conducted by it would make such qualification or licensing necessary,
except
3
<PAGE> 7
where the failure to be so qualified or licensed would not have a
material adverse effect on its financial condition, properties or
business.
3.1.2. Agreement Authorized and its Effect on Other Obligations.
The consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate action on the part of
WSI, and this Agreement is a valid and binding obligation of WSI
enforceable (subject to normal equitable principles) in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, debtor relief or similar laws affecting the
rights of creditors generally. The consummation of the transactions
contemplated by this Agreement will not conflict with or result in a
violation or breach of any term or provision of, or constitute a default
under (i) the Certificate of Incorporation or Bylaws of WSI or (ii) any
obligation, indenture, mortgage, deed of trust, lease, contract or other
agreement to which WSI or any of its subsidiaries is a party or by which
any of them or their properties are bound.
3.1.3. Ownership of Notes. WSI owns the Notes free and clear of
any encumbrances or rights of any third parties and has the full right
and authority to cancel the indebtedness represented thereby as
contemplated by this Agreement. Upon consummation of the transactions
contemplated hereby, the portion of the debt evidenced by the Notes
repaid upon issuance of the Series A Preferred Stock shall no longer be
outstanding.
3.1.4. Investment Intent. WSI is acquiring the shares of Series
A Preferred Stock solely for its own account and not with a view to the
public distribution thereof. WSI acknowledges that the shares of Series
A Preferred Stock being issued hereunder will not be registered under
the Securities Act of 1933, as amended (the "Securities Act"), and
agrees that it will only re-offer or resell the shares of Series A
Preferred Stock in compliance with the requirements of Rule 144
promulgated under the Securities Act, in accordance with any other
available exemption from the registration requirements of the Securities
Act, or pursuant to a valid registration statement under the Securities
Act. WSI acknowledges that upon acquisition of the shares of Series A
Preferred Stock (other than in connection with a registered offering
thereof), and until such time, if any, as WSI has received an opinion of
counsel to WSI, in form and substance satisfactory to the Company, that
it is no longer necessary or advisable, the certificate(s) representing
such Series A Preferred Stock shall bear a legend in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAW AND,
ACCORDINGLY, THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY
NOT BE RESOLD, PLEDGED, OR OTHERWISE TRANSFERRED, EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER, OR IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY OTHER APPLICABLE SECURITIES LAWS."
4
<PAGE> 8
3.1.5. Investor Sophistication. WSI acknowledges and
understands that it must bear the economic risk of this investment for
an indefinite period of time. WSI has experience in analyzing and
investing in entities like the Company, can bear the economic risk of
its investment, including the full loss of its investment, and by reason
of its business or financial experience, has the capacity to evaluate
the merits and risks of its investment and to protect its own interests
in connection with the purchase of Series A Preferred Stock from the
Company.
ARTICLE 4
ADDITIONAL AGREEMENTS OF THE COMPANY
4.1. Further Assurances. The Company hereby covenants and agrees to
take all actions within its power after the date hereof to effect the
transactions contemplated by this Agreement, including but not limited to the
filing with the Delaware Secretary of State of a certificate of designations
relating to the Series A Preferred Stock.
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1. Conditions Precedent to Obligations of WSI. The obligation of
WSI to consummate and effect the transactions contemplated hereby shall be
subject to the satisfaction of the following conditions or to the waiver
thereof by WSI:
5.1.1. Representations and Warranties True at Closing Date. The
representations and warranties of the Company herein contained shall be,
in all material respects, true as of and at the Closing Date with the
same effect as though made at such date; and the Company shall have
performed and complied, in all material respects, with all covenants
required by this Agreement to be performed or complied with by the
Company before the Closing Date.
5.1.2. No Material Litigation. No suit, action or other
proceeding shall be pending or threatened before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
5.1.3. Opinion of Counsel. WSI shall have received a favorable
opinion, dated as of the Closing Date, from Porter & Hedges, L.L.P.,
counsel for the Company, in form and substance satisfactory to WSI, to
the effect that (i) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Delaware; (ii) all proceedings required to be taken by or on
the part of the Company to authorize the execution of this Agreement and
the implementation of the transactions contemplated hereby have been
taken; (iii) this Agreement has been duly executed and
5
<PAGE> 9
delivered by, and is the legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with its
terms, except as enforceability may be limited by (a) equitable
principles of general applicability or (b) bankruptcy, insolvency,
reorganization, fraudulent conveyance or similar laws affecting the
rights of creditors generally; and (iv) the Series A Preferred Stock,
when issued, will have been duly authorized by all necessary corporate
action on the part of the Company, and will be validly issued, fully
paid and nonassessable shares of Series A Preferred Stock, free of
preemptive rights. Such opinion also shall cover such other matters
incident to the transactions herein contemplated as WSI may reasonably
request.
5.2. Conditions Precedent to Obligations of the Company. The
obligations of the Company to consummate the transactions contemplated hereby
shall be subject to the satisfaction of the following conditions or to the
waiver thereof by the Company.
5.2.1. Representations and Warranties of WSI True at Closing
Date. The representations and warranties of WSI herein contained shall
be, in all material respects, true as of and at the Closing Date with
the same effect as though made at such date; and WSI shall have
performed and complied in all material respects with all covenants
required by this Agreement to be performed or complied with by it before
the Closing Date.
5.2.2. No Material Litigation. No suit, action or other
proceeding shall be pending or threatened before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
5.2.3. Opinion of Counsel. The Company shall have received a
favorable opinion, dated the Closing Date, from Blanchard, Walker,
O'Quinn & Roberts, counsel to WSI, in form and substance satisfactory to
the Company, to the effect that (i) WSI has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the State of Delaware; (ii) all corporate or other proceedings required
to be taken by or on the part of WSI to authorize the execution of this
Agreement and the implementation of the transactions contemplated hereby
have been taken; (iii) this Agreement has been duly executed and
delivered by, and is the legal, valid and binding obligation of WSI, and
is enforceable against WSI in accordance with its terms, except as
enforceability may be limited by (a) equitable principles of general
applicability or (b) bankruptcy, insolvency, reorganization, fraudulent
conveyance or similar laws affecting the rights of creditors generally.
Such opinion shall also cover such other matters incident to the
transactions herein contemplated as the Company and its counsel may
reasonably request.
6
<PAGE> 10
ARTICLE 6
MISCELLANEOUS
6.1. Entirety. This Agreement embodies the entire agreement among the
parties with respect to the subject matter hereof, and all prior agreements
between the parties with respect thereto are hereby superseded in their
entirety.
6.2. Counterparts. Any number of counterparts of this Agreement may
be executed and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
instrument.
6.3. Notices and Waivers. Any notice or waiver to be given to any
party hereto shall be in writing and shall be delivered by courier, sent by
facsimile transmission or first class registered or certified mail, postage
prepaid, return receipt requested as follows:
IF TO THE COMPANY
Addressed to: With a copy to:
3CI Complete Compliance Corporation Porter & Hedges, L.L.P.
910 Pierremont, Suite 312 700 Louisiana, 35th Floor
Shreveport, Louisiana 71106 Houston, Texas 77210-4744
Attn: Charles D. Crochet Attention: Samuel N. Allen
Facsimile: (713) 228-1331
IF TO WSI
Waste Systems, Inc. Blanchard, Walker, O'Quinn & Roberts
910 Pierremont, Suite 312 Bank One Tower
Shreveport, Louisiana 77106 P.O. Drawer 1126
Attn: Dr. Clemens Pues Shreveport, Louisiana 71163
Attn: Robert Johnson
Facsimile: (318) 227 2767
Any communication so addressed and mailed by first-class registered or
certified mail, postage prepaid, with return receipt requested, shall be deemed
to be received on the third business day after so mailed, and if delivered by
courier or facsimile to such address, upon delivery during normal business
hours on any business day.
6.4. Termination of Representations, Warranties, etc. The respective
representations and warranties of the Company and WSI contained herein shall
expire on the Closing Date.
7
<PAGE> 11
6.5. Table of Contents and Captions. The table of contents and
captions contained in this Agreement are solely for convenient reference and
shall not be deemed to affect the meaning or interpretation of any article,
section, or paragraph hereof.
6.6. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the successors and assigns
of the parties hereto.
6.7. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
6.8. Applicable Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Louisiana.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed in their respective corporate names by their respective duly authorized
representatives, all as of the day and year first above written.
3CI COMPLETE COMPLIANCE CORPORATION
By: /s/ Charles D. Crochet
----------------------------------
Charles D. Crochet, President
WASTE SYSTEMS, INC.
By: /s/ Dr. Clemens Pues
----------------------------------
Dr. Clemens Pues
8
