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JOINT VENTURE AGREEMENT Exhibit 10.2
Agreement entered into as of May 16, 1997 between Stericycle, Inc.,
("STERICYCLE") a corporation organized and existing under the laws of Delaware
represented by Xx. Xxxxxxx X. Xxxxxxxxx, Xxxxxxx Associates, Inc. ("PENNONI"),
a corporation organized and existing under the laws of Pennsylvania represented
by Xx. X.X. Xxxxxxx, Conopam, S.A. de C.V. ("CONOPAM"), a corporation
organized and existing under the laws of Mexico represented by Mr. Xxxxxxxx
Xxxxx Xxxx, and Controladora Ambiental, S.A. de C.V., for the purposes of
guarantying CONOPAM's obligations hereunder, also represented by Mr.Xxxxxxxx
Xxxxx Xxxx, pursuant to the following recitals and articles:
RECITALS
First. The Parties hereto recite that they desire to incorporate a
Mexican corporation under the name of Medam, S.A. de C.V. or
such other name as they may mutually agree upon (herein called
the "Company") for the initial purpose of undertaking in
Mexico the business of sales, marketing, on-site service,
collection transportation, treatment disposal and
recycling/reuse of medical waste materials (biological and
infectious residue and dangerous waste).
Second. The Parties hereto recite that except as otherwise expressly
stated in this Agreement, they have agreed to cooperate in the
incorporation, financing, development and operations of the
Company by supplying equity and debt capital.
Third. The Parties hereto recite that in view of the foregoing
recitals they have agreed to enter into this Agreement in
accordance with the following articles.
ARTICLES
I. Acquisition of Stock in Company
A. Each of the Parties hereto agrees and undertakes to subscribe and pay in
cash or in kind for the shares of capital stock of the Company set forth
opposite its respective name below (herein called the "Stock") at a price
of Ps. $ 1.00 (one peso, Mexican Currency), per share, which Stock shall be
common and fully voting.
Name of Party Percentage Number of Shares Series Initial Investment
------------- ---------- ---------------- ------ ------------------
Conopam 51.0% 765,000 "A" $ 765,000.00 pesos
Pennoni 24.5% 367,500 "B" $ 367,500.00 pesos
Stericycle 24.5% 367,500 "C" $ 367,500.00 pesos
B. Each of the Parties hereto agrees and undertakes on the Closing Date to
subscribe, and to pay at least the percentage and amount set forth opposite
its respective name above of the price of the shares to be subscribed by
them in accordance with the provisions of paragraph A of this Article I,
and further agrees and undertakes to make any other funding required to pay
the shares in full and therefore complete the project pursuant to the
funding schedule described in Exhibit "A" attached hereto [omitted].
For these purposes, upon incorporation of the Company, the parties shall
execute a shareholders meeting of the Company to be held in order to adopt
resolutions on a capital increase for the amount
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provided in Exhibit "A". At such shareholders meeting, the parties shall
subscribe all of the shares issued due to the capital increase in the
proportions described in paragraph A above. Such shares will be fully
subscribed and assessable.
C. The Parties hereto agree to cause the Company on the Closing Date to
deliver to each Party hereto, certificates representing the shares of the
Stock to be subscribed for on that date by each of the Parties hereto, such
shares to be paid in accordance with paragraph A and B above. Such
certificates, if temporary, shall be replaced by permanent certificates
within a period of not more than six (6) months following the Closing Date.
The parties also agree to grant the initial shareholders of the Company
(founders) a bonus in terms of articles 107 to 1 10 of the Commercial
Companies Law during the term and for the amounts described in Exhibit
"B"attached hereto [omitted].
II. Closing Date
The consummation of the subscription and initial payment for shares in Company
provided for in this Agreement (the "Closing") shall be effective upon the
execution before a Mexican Notary Public selected by and satisfactory to the
Parties hereto of the public instrument containing the charter by-laws of the
Company, at the offices of Sanirent, S.A. de C.V., on such date, as such
charter by-laws are ready for execution, which date shall not be later than May
1 6, 1 997 (the "Closing Date").
III. Conditions of Closing
The respective obligations of each of the Parties hereto to subscribe to the
Stock on the Closing Date shall be subject to the following conditions:
A. The obligations of the Parties hereto to enter into certain agreements
referred to in paragraph A of Article IV of this agreement.
B. The charter by-laws of the company shall have been prepared and transcribed
in the public instrument to be executed by the Parties hereto, in the form
set out in Exhibit "C" attached hereto [omitted] and made a part hereof.
C. All instruments executed and proceedings taken on or prior to the Closing
Date and in connection with or relating to the execution, delivery and
performance of this Agreement and the issuance and subscription of and
payment for the Stock shall be in form and substance satisfactory to each
of the Parties hereto and to their counsel, and each of said Parties hereto
and said counsel shall have received copies of all documents or other
evidence requested by them, such documents where appropriate to be
certified by appropriate corporate or governmental authorities.
D. To hold the shareholders meeting referred to in Article l.B above, to adopt
resolutions on a capital increase for the amount established in Exhibit "A"
and to fully subscribe the shares as provided thereat.
IV. Additional Obligations
A. The Parties agree to enter into the agreements set forth below in the form
of the Exhibits attached hereto [omitted] and set forth below, and the
Parties hereto agree to cause Company to enter into this agreement and the
agreements set forth below in the form of the Exhibits attached hereto and
set forth below:
Exhibit Agreement
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"D" Trademark and patent license and technical assistance agreement
between STERICYCLE and the Company.
"E" Medical Waste Treatment Equipment Agreement between STERICYCLE
and the Company.
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The parties must request prior approval of the others in the event that the
agreements mentioned above are executed by a subsidiary. This approval will
not be unreasonably withheld.
B. The Parties also agree to comply with the terms provided in the schedules
of responsibilities attached as Exhibits "F" and "G" attached hereto
[omitted], in the understanding that pursuant to such schedules, they will
execute the following agreements in the near future:
(i) Schedule of responsibilities attached as Exhibit "F" [omitted]:
Operation and services agreement between PENNONI and the Company.
(ii) Schedule of responsibilities attached as Exhibit "G" [omitted]:
Recollection, transportation and services agreement between
CONOPAM and the Company.
C. The Parties hereto agree and undertake on the Closing Date, to cause the
election to the board of directors of the Company of eight (8) directors
and their alternates, of which each Party hereto shall nominate the number
of directors and alternates therefor set forth opposite its respective name
below:
Party Number of Directors
----- -------------------
STERICYCLE 2
PENNONI 2
CONOPAM 4
The Parties further agree and undertake to appoint at the time of
incorporation of the Company, an operating committee consisting of three
(3) individuals (one designated by each party).
D. The Company reserves the right to renegotiate agreements associated with
Exhibits "D", "F" and "G", in the event of negative market influences,
subject to agreement of both parties.
V. Prior Negotiations
Each Party hereto acknowledges that it has not negotiated with parties other
than the Parties hereto relating to a proposed venture similar in intent and
purpose to the proposals described herein and that will present to the other
Parties hereto an opinion of counsel, which opinion shall be satisfactory to
them and their counsel, stating that no claim, suit or action based upon or
arising from or in connection with any such document can be successfully
asserted against the other Parties hereto or any of them, and the delivery of
such an opinion shall be a condition to the obligations of the other Parties
hereto except Company under this agreement.
VI. Expenses
Each Party will, in the event the transactions contemplated hereby or by the
agreements referred to in paragraph A of Article IV of this agreement are not
consummated, pay its own costs and expenses, and agrees to hold the other
Parties hereto and each of them harmless from and against any and all
liabilities with respect to said costs and expenses.
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The Parties hereto agree that in the event the Company is incorporated as
provided herein, the Company shall assume any and all of the costs and expenses
related to its incorporation.
VII. Non-Competition
The Parties acknowledge that the non-competition commitment is an essential
issue of this agreement. Therefore, the parties hereto agree that they will
not, during the life of this agreement, in Mexico, directly or indirectly,
sell, offer or deal in, services which are the same as, or competitive with,
the services carried out by the Company, except through Company or some other
corporation, firm or entity in which the parties hereto directly or indirectly
own the same proportion of stock as they do in the Company unless the prior
written consent of all the parties hereto is first obtained. The Parties hereto
further agree that the above provision shall apply to any shareholder who
withdraws from the Company in accordance with this agreement for a period of
two (2) years from the date of such withdrawal.
The Parties will not undertake directly or indirectly to render the
above-mentioned services nor own, manage, operate, control, own an interest
(whether as principal, agent, beneficiary, shareholder, consultant, partner,
nominee, trustee, financier, or otherwise) or participate in the ownership,
management, operation or control of, or become associated in any capacity with,
or have any financial interest in or lend their name to any person, enterprise,
firm or corporation engaged in a business that is competitive with the business
of the Company in Mexico, which business consists in the sale, marketing,
on-site service, collection, transportation, treatment, disposal and
recycling/reuse of medical waste materials (biological and infectious residue
and dangerous waste).
If any Party develops a business opportunity in Mexico that is competitive with
the business of the Company, the Company will have the first opportunity to
engage in that business. If the Company is unwilling to or unable, the Party
who developed the business opportunity will have the right to exploit it alone
or with third parties. New technologies covering the field of the Company are
also subject to the requirement to offer them first to the Company.
Nothing in this Article shall restrict or prevent the Parties from owning less
than 3% of the stock or securities of any person whose securities are trading
on a recognized stock exchange;
If pursuant to an arbitration award, there is a breach by one of the Parties of
its obligations under this non- competition clause, the other Parties (jointly)
will be entitled to liquidated damages for an amount of US $5,000,000.00 (five
million dollars) without limiting any other remedies they may have.
Such liquidated damages are not a penalty, but are a reasonable estimate of the
other Parties' damages in the event of a breach by a Party of its obligations
under this clause.
VIII. Confidentiality
The Parties acknowledge that they will have access to and be entrusted with
confidential and proprietary information and trade secrets belonging to each of
the parties (this last term to be used as defined in article 82 of the Mexican
Industrial Property Law "MIPL"), which are confidential (hereinafter referred
to as the "INFORMATION").
Each Party acknowledges that the INFORMATION: (i) is a valuable asset of the
Party which developed the same, (ii) is information of commercial and/or
industrial application, (iii) provides competitive or economic advantages to
the Party which developed the same, and (iv) is not obvious to an expert;
further, each Party acknowledges that each Party has adopted systems to protect
the INFORMATION. Each of the Parties acknowledge that unauthorized disclosure
of the INFORMATION shall automatically cause either a damage to the Party which
developed the same or a benefit to the disclosing Party or to any third party
which has access to the INFORMATION.
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Therefore, the Parties hereby agree to the following terms:
1. To keep strictly secret and confidential and not to disclose to any
individual or legal entity, except to those who have agreed in writing to
maintain the confidentiality of the INFORMATION in the terms hereto,
specially in terms of articles 84 to 86 of the MIPL.
2. Not to make any use whatsoever of the INFORMATION obtained or learned as a
consequence of receiving the INFORMATION, except in connection with the
subject matter of this Agreement.
3. To cooperate with the Party involved in causing all written material
related or contained in the INFORMATION obtained from it or arising out of
said INFORMATION, to be marked to indicate its confidential nature, and to
prevent unauthorized use or reproduction thereof in any manner whatsoever.
4. To take all reasonable steps to control the use of the INFORMATION at all
times and to prevent it from being divulged to or acquired by or becoming
known to any individual or entity other than those expressly authorized by
the involved Party in writing. The Parties also agree to cause any
directors, officers, employees, agents, representatives and consultants to
whom some or all INFORMATION may be disclosed to maintain its secrecy, and
that such INFORMATION will be disclosed in a need to know basis only.
5. The foregoing will not be applicable to (I) information already known to
the Parties, (ii) information developed independently by any of the Parties
without reference to the INFORMATION and (iii) information which becomes a
matter of public knowledge, other than by a breach of a Party's obligations
under this clause.
IX. Termination
The respective commitments made in this agreement by certain of the Parties
hereto to subscribe to shares of Stock are made in contemplation of the
acquisition by each of the other Parties obligated to subscribe to shares of
Stock under this agreement. In the event that any one or more of such Parties
shall fail to complete such subscription on the Closing Date, or pursuant to
the corresponding Exhibit, or shall default any of its obligations under this
agreement, the following shall apply:
a) The ancillary agreements described in Article IV A. which have been
executed between the defaulting party and the Company shall be immediately
terminated.
b) The other Parties shall have the right to purchase the shares owned by the
defaulting Party (on a pro rata basis) at a price equal to the book value
of the shares, as shown on the last financial statements approved by the
share holders meeting of the Company. If the shares of the defaulting Party
have not been paid in full, the price shall be reduced in an amount equal
to the payments pending to be made.
c) The Joint Venture Agreement shall be terminated only with regard to the
defaulting Party. However, any such termination shall not be a bar to any
other rights or causes of action, for damages or otherwise, which such
other Parties may have as a result of any such failure or default against
the defaulting Party.
Furthermore, the non-compete and confidentiality obligations of the
defaulting Party shall survive the termination of this Joint Venture
Agreement.
X. Miscellaneous
a) Each of the Parties hereto represents that there are no claims for
brokerage commissions or finder's fees in connection with the transactions
contemplated by this agreement.
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b) Any notice or request hereunder shall be given in writing. Any such notice
shall be considered as having been given when received by the Party to whom
it was intended,
if the notice is to STERICYCLE: Stericycle, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxx
00000, X.X.X.
with a copy to: Xxxxx, Xxxxxx Xxxxxxx y Xxxxxxxxxx
Bosque de Ciruelos No.304 piso 2
Bosques de las Xxxxx 0 0 000, Xxxxxx,X.X.
if the notice is to PENNONI: X.X. Xxxxxxx, X.X.
Xxxxxxx Associates, Inc.
One Drexel Plaza
0000 Xxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000, X.X.X.
and to: Xxxxxxx X. Xxxxxxx
Xxxxxxx International de Mexico, S.A.
de C.V. Xxxxx Xxxxxxx Xx.00 Xxx.
Xxxxxxxxx Xxxxxxx 00000, Xxxxxx, D.F.
with a copy to: Xxxxxxx-XxXxxxx & Associates, S.C.
Xxxx. Pichacho-Ajusco No.130-404
Col. Jardines en xx Xxxxxxx , 00000
Xxxxxx, D.F.
and if the notice is to CONOPAM: Conopam, S.A. de X.X.
Xxxxx 00X Xx.000 E
Col. Xxxxxxxx, Mexico, D.F.
with a copy to: Xxxxxxxxx y Xxxxx Xxxxxxxxxx,
Abogados, S.C.
Lic. Xxxxxxx Xxxxxxxxx Xxxxxxxx
Xxxxxxx xx xxx Xxxxxx 000-000
Xxxxx xx Xxxxxxxxxxx, Xxxxxx, D.F.
In the event that any Party hereto shall desire to have all notices and
requests given to the other Parties at any other address, notice to this effect
shall be given to each of the other Parties, and such change of address notice
shall be effective upon delivery to the Party to which it is directed.
c) Except as otherwise expressly provided in this Agreement if any of the
Parties to this agreement is temporarily or otherwise unable to perform its
obligations under this agreement because of fire, flood, inclement weather
or other circumstances caused by the elements, government restrictions or
regulations, war (declared or undeclared), invasion, riots, insurrections,
negligent or intentional acts or omissions of any of the other Parties
hereto or third parties, reasonable unforeseeable accident, acts of force
majeure or acts of God, or other causes beyond its reasonable control, no
liability shall exist to any of the other parties for failure of
performance during such period, nor shall any such temporary occurrence
constitute cause for terminating this agreement, except if such temporary
occurrence lasts more than 30 days, in which event any Party affected may
terminate this agreement with a prior 30 day written notice to the others.
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d) No delay on the part of any Party in exercising any rights hereunder or
failure to exercise the same shall operate as a waiver of such rights; no
notice to or demand on any Party shall be deemed to be a waiver of the
obligation of such Party or of the right of such party to take further
action without notice or demand; no right, power or remedy conferred in
this agreement or otherwise shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law,
in equity, by statute or otherwise. A tacit or implicit waiver by a party
of a right or remedy in any particular instance shall not operate as a
wavier of such right or remedy in any other instance.
e) Each of the Parties hereto agrees and accepts that they execute this
agreement of their own free will and that they have not been subject to
duress, coercion, mistake or error, and that they have not suffered injury
(lesion) by its execution and that, therefore, they hereby waive any right
for rescission derived from any of said causes, the term to exercise said
actions, and consequently, the provisions of Articles 2228, 2229 and 2230
of the Civil Code for the Federal District and Territories of Mexico (and
the corresponding Articles of the Civil Code for the States of the Mexican
United States.)
f) This instrument, together with any and all Schedules and Exhibits annexed
hereto, and any document that may be delivered at any Closing required or
provided for hereunder, contains to the subject matters hereof and
supersedes and cancels all previous agreements, negotiations, commitments
and writings in respect of such subject matter and may not be released,
discharged, abandoned, changed or modified in any manner except by an
instrument in writing signed by a duly authorized officer or other
representative of each of the Parties hereto.
g) This agreement may not be assigned by any Party hereto without the prior
written consent of all the other Parties.
h) This agreement shall inure to the benefit of and be binding upon each of
the Parties hereto and their respective heirs, executors, administrators,
legal representatives, successors and assigns.
i) This agreement shall be governed by and construed, and any claims or
controversy arising with respect thereto shall be resolved by binding
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect, and judgement upon any
award rendered by the arbitrators may be entered and a confirmation order
sought in any court having jurisdiction thereof, provided, however, that
the arbitrators shall not amend, supplement, or reform in any regard any of
the rights or obligations of any party hereunder, or the enforceability of
any of the terms hereof. Any arbitration shall be conducted in Houston,
Texas, before a panel of three arbitrators, and the substantive laws of
Mexico shall apply.
j) The headings of the this agreement are inserted for convenience only and
shall not be deemed to constitute a part thereof.
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IN WITNESS WHEREOF, the parties have caused this Joint Venture Agreement to be
duly executed as of the day and year first above written.
STERICYCLE, INC. PENNONI ASSOCIATES INC.
/s/ Xxxxxxx X. Xxxxxxxxx /s/ X.X. Xxxxxxx
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Xxxxxxx X. Xxxxxxxxx X.X. Xxxxxxx
CONOPAM, SA DE C.V. CONTROLADORA AMBIENTAL, SA DE C.V.
/s/ Xxxxxxxx Xxxxx Xxxx /s/ Xxxxxxxx Xxxxx Xxxx
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By: Xxxxxxxx Xxxxx Xxxx By: Xxxxxxxx Xxxxx Xxxx
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