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3CI Complete Compliance Corp – ‘PRE 14A’ for 9/3/03

On: Wednesday, 7/16/03, at 5:26pm ET · For: 9/3/03 · Accession #: 950134-3-10180 · File #: 1-11097

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 7/16/03  3CI Complete Compliance Corp      PRE 14A     9/03/03    1:78K                                    RR Donnelley

Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: PRE 14A     Preliminary Proxy Statement                           23    131K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) All Other Fees Common Stock Financial Information Systems Design and Implementation Fees ISOs NQSOs
1	1st Page - Filing Submission
6	Common Stock
11	ISOs
12	NQSOs
21	Financial Information Systems Design and Implementation Fees
"	All Other Fees

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant [X]

Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[X] Preliminary Proxy Statement

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

[ ] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12

3CI COMPLETE COMPLIANCE CORPORATION
(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

1) Title of each class of securities to which transaction
applies: NOT APPLICABLE

2) Aggregate number of securities to which transaction applies:
NOT APPLICABLE

3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: NOT APPLICABLE

4) Proposed maximum aggregate value of transaction:
NOT APPLICABLE

5) Total fee paid: NOT APPLICABLE

[ ] 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: NOT APPLICABLE

2) Form, Schedule or Registration Statement No.:
NOT APPLICABLE

3) Filing Party: NOT APPLICABLE

4) Date Filed: NOT APPLICABLE

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3CI COMPLETE COMPLIANCE CORPORATION
1517 W. NORTH CARRIER PARKWAY #104
GRAND PRAIRIE, TEXAS 75050
(972) 375-0006

July 29, 2003

Dear Stockholder:

You are cordially invited to attend the annual meeting of stockholders
of 3CI Complete Compliance Corporation (the "Company") to be held at the offices
of Gardere Wynne Sewell LLP located at 1601 Elm Street, Suite 3000, Dallas,
Texas 75201, at 3:00 p.m., central daylight time, on Wednesday, September 3,
2003. At this meeting you will be asked to:

(i) Elect seven directors to serve until the next Annual Meeting of
Stockholders or until their respective successors are elected and
qualified.

(ii) Approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the
Company's Common Stock from 40,450,000 shares to 60,450,000
shares.

(iii) Approve an amendment to the Company's 1992 Stock Option Plan to
increase the number of shares of the Company's Common Stock that
may be issued upon exercise of options granted under that plan
from 500,000 shares to 1,250,000 shares.

(iv) Transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.

These matters and the procedures for voting your shares are discussed
in the accompanying Notice of Annual Meeting and Proxy Statement.

The directors urge each stockholder, whether or not intending to attend
the meeting in person, to execute the enclosed proxy and return it in the
enclosed envelope. Returning a proxy will not prevent a stockholder from voting
in person at the meeting.

Sincerely,

Jack W. Schuler
Chairman of the Board

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3CI COMPLETE COMPLIANCE CORPORATION

1517 W. North Carrier Parkway #104
Grand Prairie, Texas 75050-1288
(972) 375-0006

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON SEPTEMBER 3, 2003

The annual meeting of stockholders of 3CI Complete Compliance
Corporation, a Delaware corporation (the "Company"), will be held at 3:00 p.m.,
central daylight time, on September 3, 2003, at the offices of Gardere Wynne
Sewell LLP located at 1601 Elm Street, Suite 3000, Dallas, Texas 75201, for the
following purposes:

(i) To elect seven directors to serve until the next annual meeting
of stockholders or until their respective successors are elected
and qualified.

(ii) To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of the
Company's Common Stock from 40,450,000 shares to 60,450,000
shares.

(iii) To approve an amendment to the Company's 1992 Stock Option Plan
to increase the number of shares of the Company's Common Stock
that may be issued upon exercise of options granted under that
plan from 500,000 shares to 1,250,000 shares.

(iv) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.

The Board of Directors has fixed the close of business on July 14, 2003
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting. Only those stockholders of record on that date will
be entitled to notice of and to vote at the meeting.

A complete list of the stockholders entitled to vote at the meeting will
be open for inspection at the Company's offices during normal business hours by
any stockholder, for any purpose related to the meeting, for a period of ten
days before the meeting.

Your participation in the Company's affairs is important. To insure your
representation, whether or not you expect to be present at the meeting, please
sign and date the enclosed proxy and return it promptly in the enclosed postage
prepaid envelope that has been provided for your convenience. Stockholders who
attend the meeting may revoke their proxies and vote in person if they so
desire.

By Order of the Board of Directors,

Otley L. Smith III
President

July 29, 2003

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3CI COMPLETE COMPLIANCE CORPORATION

1517 W. North Carrier Parkway #104
Grand Prairie, Texas 75050
(972) 375-0006

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 3, 2003

This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of 3CI Complete Compliance
Corporation (the "Company") for use at the Company's annual meeting of
stockholders to be held at the offices of Gardere Wynne Sewell LLP located at
1601 Elm Street, Suite 3000, Dallas, Texas 75201, at 3:00 p.m., central daylight
time, on Wednesday, September 3, 2003 (the "Annual Meeting"), and at any
adjournment thereof. This Proxy Statement and the accompanying form of proxy are
first being mailed to the Company's stockholders on or about July 29, 2003.

The purpose of the Annual Meeting is to consider and act upon (i) the
election of seven directors; (ii) the approval of an amendment to the Company's
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
to increase the number of authorized shares of the Company's common stock, par
value $0.01 per share ("Common Stock") (the form of such amendment is attached
to this Proxy Statement as Exhibit A); (iii) the approval of an amendment to the
Company's 1992 Stock Option Plan (the "Option Plan") to increase the number of
shares of Common Stock that may be issued upon exercise of options granted under
the Option Plan; and (iv) such other matters as may properly come before the
Annual Meeting or any adjournment thereof.

The Company will bear all costs of solicitation of proxies. In addition
to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their reasonable
out-of-pocket expenses incurred in connection with the distribution of such
proxy materials.

REVOCABILITY OF PROXIES

Any stockholder giving a proxy has the power to revoke it at any time
before it is exercised, by delivering to the Secretary of the Company at its
principal executive offices located at 1517 W. North Carrier Parkway #104, Grand
Prairie, Texas 75050, a written notice of revocation or another duly executed
proxy bearing a later date. A stockholder also may revoke his or her proxy by
attending the Annual Meeting and voting in person. Attendance at the Annual
Meeting will not in and of itself constitute a revocation of a proxy.

RECORD DATE, VOTING AND SHARE OWNERSHIP

Only holders of record of Common Stock at the close of business on July
14, 2003 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting and at any adjournments thereof. Each share of Common Stock is entitled
to one vote. On the Record Date, there were 10,324,611 shares of Common Stock
outstanding and entitled to vote.

The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the votes entitled to be cast will constitute a quorum
for the transaction of business at the Annual Meeting. A proxy, if received in
time for voting and not revoked, will be voted at the Annual Meeting in
accordance with the instructions contained therein. All shares represented by
valid proxies, unless the stockholder otherwise specifies, will be voted (i) FOR
the election of the seven persons named under "Election of Directors;" (ii) FOR
the approval of an amendment to the Certificate of Incorporation to increase the
number of authorized shares of Common Stock; (iii) FOR the approval of an
amendment to the Option Plan to increase the number of shares of Common Stock
that may be issued upon exercise of options granted under the Option Plan; and,
(iv) at the discretion of the proxy holders, either FOR or AGAINST any other
matter or business that may properly come before the Annual Meeting. A
stockholder marking the proxy "Abstain" will not be

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counted as voting in favor of or against the particular proposals from which the
stockholder has elected to abstain.

If a quorum exists, the affirmative vote of the holders of a plurality
of the votes cast at the Annual Meeting is required for the election of
directors (Proposal One). There are no cumulative voting rights for the election
of directors. The affirmative vote of a majority of the votes entitled to be
cast at the Annual Meeting is required to approve the amendment to the
Certificate of Incorporation (Proposal Two) and to approve the amendment to the
Option Plan (Proposal Three).

Votes cast at the Annual Meeting will be tabulated by a duly appointed
inspector of election. The inspector will treat shares represented by a properly
signed and returned proxy as present at the Annual Meeting for purposes of
determining a quorum without regard to whether the proxy is marked as casting a
vote or abstaining. Likewise, the inspector will treat shares represented by
"broker non-votes" as present for purposes of determining a quorum, although
such shares will not be voted on any matter for which the record holder of such
shares lacks authority to act. Broker non-votes are proxies with respect to
shares held in record name by brokers or nominees as to which (i) instructions
have not been received from the beneficial owners of persons entitled to vote;
(ii) the broker or nominee does not have discretionary voting power under
applicable national securities exchange rules or the instrument under which it
serves in such capacity; and (iii) the record holder has indicated on the proxy
card or otherwise notified the Company that it does not have authority to vote
such shares on that matter.

Abstentions and broker non-votes will have no effect on the voting for
the election of directors, which requires the affirmative vote of a plurality of
the votes cast on the proposal. Abstentions and broker non-votes have the effect
of a vote against Proposal Two and Proposal Three.

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PROPOSAL ONE

TO ELECT SEVEN DIRECTORS

NOMINEES

At the Annual Meeting, seven nominees are to be elected to the Board,
each director to hold office until the next annual meeting of stockholders or
until their respective successors are duly elected and qualified. Unless your
proxy specifies otherwise or withholds authority to vote for one or more
nominees named on the proxy and described below, the shares represented by your
proxy will be voted for the election of the seven nominees. Proxies cannot be
voted for a greater number of persons than the number of nominees named. If any
nominee should become unavailable for election, your proxy may be voted for a
substitute nominee selected by the Board, or the Board may be reduced
accordingly. The Board is unaware of any circumstances likely to render any
nominee unavailable.

Certain information with respect to the nominees is set forth below:

[Enlarge/Download Table]

COMMON STOCK
BENEFICIALLY OWNED(1)
-----------------------
DIRECTOR PERCENT
NAME POSITION AGE SINCE SHARES OF CLASS(2)
--------------------------- --------------------- ---- -------- ------ -----------

Jack W. Schuler Chairman of the Board 62 1998 -- *
Stephen B. Koenigsberg (3) Director -- 2003 -- *
Kevin McManus (3)(4) Director 59 2003 -- *
Mark C. Miller Director 47 2000 -- *
Frank J. M. ten Brink Director 46 1998 -- *
Anthony J. Tomasello (4) Director 56 1998 -- *
Robert M. Waller (3)(4) Director [58] 1999 66,666

* Less than one percent.

(1) Includes all shares of Common Stock with respect to which each person,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares the power to vote or direct
voting of such shares, or to dispose or direct the disposition of such
shares.
(2) Based on 10,324,611 shares of Common Stock outstanding on the Record
Date, plus for each beneficial owner, those number of shares of Common
Stock underlying options or warrants excersiable within 60 days of the
Record Date held by such director.
(3) Member of Audit Committee.
(4) Member of Compensation Committee.

Jack W. Schuler has served as a director of the Company since October
1998. Mr. Schuler has served as Chairman of the Board of Directors of
Stericycle, Inc. ("Stericycle") 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 Medtronic,
Inc., a medical technology company, and Ventana Medical Systems, Inc., a
supplier of automated diagnostic systems. 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 an M.B.A. from the Stanford University
Graduate School of Business Administration.

Stephen B. Koenigsberg has served as a Director of the Company since
July 2003. Mr. Koenigsberg has served as Chief Financial Officer of various
hospitals and President of State Sales and Service Corporation, a $52 million
distribution company, where he was involved in various acquisitions and
international marketing. Prior to that, he served as Vice President of Finance
and Systems for the Good Samaritan Hospital, the University of Maryland Hospital
and Bon Secours Hospital. He also previously served in various positions with
Ernst & Ernst. Mr. Koenigsberg has served with national trade associations, a
charitable foundation and the Maryland Governor's task force to reinvent
hospital rate reviews. He received a B.S. in accounting from the University of
Maryland and an M.B.A. from Loyola College in Baltimore, Maryland.

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Kevin McManus has served as a Director of the Company since July 2003.
Mr McManus serves as Vice President-Services of New England Health Enterprises,
Inc., which is an owner and operator of fixed-site MRI facilities and mobile
stereotactic biopsy services located in Concord, Maine. Mr. McManus also acts as
Treasurer, director of business planning and development and financial
management of New England Health Enterprises. Mr. McManus also recently served
as Chief Financial Officer of Saints Memorial Health Systems in Lowell, Maine,
during which he was involved in the merger of St. Joseph's and St. John's
Hospitals in Lowell, Maine, directed the process to obtain a $78 million
tax-exempt bond and unified the entity's financial functions after the mergers.
He has served as Senior Vice President for Finance and Treasurer for Saint
Vincent Healthcare Systems, a 578-bed acute care hospital in Worcester, Maine
with associated 530-bed nursing homes, Newton-Wellesley Hospital in Newton,
Maine and Charles Choate Memorial Hospital in Woburn, Massachusetts. Mr. McManus
has served on the Mass Hospital Association in various capacities from 1976
through 1990, the Healthcare Financial Management Association and the Action
Community Housing Corporation. He received an M.B.A. from Northeastern
University.

Mark C. Miller has served as a Director of the Company since October
1998. Mr. Miller has served as President and Chief Executive Officer and a
Director of Stericycle since May 1992. From May 1989 until he joined Stericycle,
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 Ventana Medical Systems, Inc., a supplier of automated diagnostic systems,
and Lake Forest Hospital. Mr. Miller received a B.S. in computer science from
Purdue University.

Frank J. M. ten Brink has served as a Director of the Company since
October 1998. Mr. ten Brink has served as Stericycle's Vice President, Finance
and Chief Financial Officer since June 1997. From 1991 until 1996, he served as
Chief Financial Officer of Hexacomb Corporation, and from 1996 until joining
Stericycle, he served as Chief Financial Officer of Telular Corporation. Prior
to 1991, Mr. ten Brink held various financial management positions with
Interlake Corporation and Continental Bank of Illinois. He received a B.B.A. in
international business and an M.B.A. in finance from the University of Oregon.

Anthony J. Tomasello has served as a Director of the Company since
October 1998. Mr. Tomasello has served as Stericycle's Executive Vice President
and Chief Technical Officer since January 1999 and previously had served as Vice
President, Operations, since August 1990. For eight years prior to joining
Stericycle, Mr. Tomasello was President and Chief Operating Officer of Pi
Enterprises and Orbital Systems, companies providing process and automation
services. Mr. Tomasello received a B.S. in mechanical engineering from the
University of Pittsburgh.

Robert M. Waller has served as a Director of the Company since April
1999. Mr. Waller is currently Executive Vice President of Medline Industries,
Inc. He has served in that capacity since 2001. From 2000 to 2001, Mr. Waller
served as Chief Operating Officer of Urbanfetch.com. From 1994 to 2001, Mr.
Waller served as President of RMW Logistics. From 1992 until 1994, Mr. Waller
served as Chief Operating Officer of DSC Logistics. Mr. Waller received a B.S.
in business administration from Northwestern University and an M.B.A. from Lake
Forest Graduate School of Management.

REQUIRED VOTE

The seven nominees for election as directors who receive the greatest
number of votes will be elected as directors. The Board recommends that the
stockholders vote for the election of each of the nominees listed above. Waste
Systems, Inc. ("WSI"), which owns 54.7% of the issued and outstanding shares of
Common Stock, intends to vote its shares in favor of the nominees listed above.

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PROPOSAL TWO

TO APPROVE AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM
40,450,000 SHARES TO 60,450,000 SHARES

BACKGROUND

The Certificate of Incorporation authorizes the Company to issue up to
40,450,000 shares of Common Stock and 16,050,000 shares of Preferred Stock,
par value $0.01 per share (the "Preferred Stock"). On July 10, 2003, the Board
unanimously approved and recommended to the Company's stockholders that they
approve a Certificate of Amendment (the "Amendment") to the Certificate of
Incorporation increasing the number of authorized shares of Common Stock from
40,450,000 shares to 60,450,000 shares.

As of the Record Date, the Company had 10,324,611 shares of Common
Stock outstanding and 7,750,000 shares of Common Stock reserved for future
issuance upon the conversion of the outstanding shares of the Company's Series B
Preferred Stock and Series C Preferred Stock. Based on the foregoing, as of the
Record Date, the Company had 22,375,389 shares of Common Stock authorized under
the Certificate of Incorporation remaining available for other purposes,
including, without limitation, the granting and exercise of options under the
Option Plan. Currently, options on a maximum of 500,000 shares of Common Stock
may be issued under the Option Plan.

PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION

The Amendment, if approved, will amend Article 4 of the Certificate of
Incorporation so that Article 4 will state in its entirety as follows:

"4. The total number of shares of stock which the corporation shall
have authority to issue is 76,500,000 shares, of which 60,450,000
shares shall be common stock, par value $.01 per share, and 16,050,000
of which shares shall be preferred stock, par value $.01 per share. The
designations, rights, preferences, privileges and voting powers of the
preferred stock, and any restrictions and qualifications thereof, shall
be determined by the Board of Directors."

A copy of the Amendment is attached to this Proxy Statement as Exhibit A.

PURPOSE OF THE AMENDMENT

The Board believes that the Amendment is desirable so that, as the need
may arise, the Company will have the flexibility to issue shares of Common
Stock, without additional expense or delay, in connection with possible future
sales of Common Stock to obtain additional capital funds, equity financings,
future opportunities for expanding the Company's business through investments or
acquisitions, management incentive and employee benefit plans and for other bona
fide corporate purposes.

In addition, the Board believes that the Amendment is desirable in
order to allow the Company to issue the appropriate number of shares of Common
Stock upon conversion of the 7,000,000 shares of the Company's Series B
Preferred Stock and 750,000 shares of the Company's Series C Preferred Stock
(collectively, the "Preferred Shares") currently owned by WSI. Pursuant to the
terms and conditions of the respective Certificates of Designations governing
the Preferred Stock, all issued and outstanding shares of Preferred Stock were
to automatically convert into shares of Common Stock five years after their
issuance, or April 6, 2003.

Prior to April 6, 2003, WSI and Stericycle, which owns 100% of WSI's
capital stock, asserted that the conversion rate of the Preferred Stock is such
that each Preferred Share is convertible into that number of shares of Common
Stock determined by dividing $7,000,000 (with respect to the Series B Preferred
Stock) or $750,000 (with respect to the Series C Preferred Stock) by the market
value of the Common Stock on the date of conversion. On the Record Date, the per
share closing price of the Common Stock was $0.25. Accordingly, assuming the per
share market value of the Common Stock is $0.25 on the conversion date, the
Company would issue 31,000,000 shares of Common Stock upon conversion of the
Preferred Shares under this interpretation.

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WSI and Stericycle's interpretation of the conversion rate is contrary
to the Company's interpretation of the conversion rate. Based on the respective
Certificates of Designations governing the Preferred Stock and certain documents
executed contemporaneously with the issuance of the Preferred Shares, the
Company believes that the appropriate conversion rate is (i) the per share
market value of the Common Stock on the conversion notice date, less (ii) $1.00
per share, but that the minimum conversion rate is $1.00 per share. Thus, if the
per share market value of the Common Stock is less than $1.00, each Preferred
Share would be converted into one share of Common Stock. Under this
interpretation, assuming the per share market value of the Common Stock is less
than $1.00 on the conversion date, the Company would issue 7,750,000 shares of
Common Stock upon conversion of the Preferred Shares.

As of the date hereof, the Preferred Shares have not been converted
into Common Stock. The Company, WSI and Stericycle have entered into an
Agreement to Defer Conversion of Preferred Stocks, dated as of April 2, 2003,
pursuant to which WSI has agreed not to exercise its right to convert the
Preferred Shares and that no automatic conversion of the Preferred Shares will
occur until a judicial judgment as to the appropriate conversion rate has become
final and non-appealable.

On May 9, 2003, the Company filed a declaratory judgment action in the
269th District Court in Harris County, Texas (the "Court"), the court that in
1997 approved a settlement agreement pursuant to which the Company's Series B
Preferred Stock was issued, to obtain a judicial determination of the conversion
rate of the Preferred Stock. Subject to the final decision of the Court or other
settlement, the Company may not currently have enough shares of Common Stock
authorized under the Certificate of Incorporation to effect a conversion of the
Preferred Shares. Accordingly, the Amendment will give the Company the
flexibility to issue the appropriate number of shares of Common Stock in
connection with such conversion.

The Board has not taken any action to use the additional authorized
shares of Common Stock (the "Additional Shares") for any purpose. Other than
with respect to the conversion of the Preferred Shares and the proposed increase
in the number of shares of Common Stock covered by the Option Plan as described
in Proposal Three, the Board has no immediate plans, understandings, agreements
or commitments to issue the Additional Shares for any other purpose.

The Board believes that the proposed increase in the number of
authorized shares of Common Stock will make a sufficient number of shares
available should the Company decide to use the Additional Shares for one or more
of such previously mentioned purposes or otherwise. The Company reserves the
right to seek a further increase in authorized shares from time to time in the
future as considered appropriate by the Board.

POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT

If the Company's stockholders approve the proposed Amendment, the Board
may cause the issuance of the Additional Shares without further vote of the
Stockholders, except as provided under Delaware corporate law or any national
securities exchange on which shares of Common Stock are then listed. Under the
Certificate of Incorporation, the stockholders do not have preemptive rights to
subscribe to additional securities which may be issued by the Company, which
means the current stockholders do not have a prior right to purchase any new
issue of capital stock of the Company in order to maintain their proportionate
ownership of Common Stock. If the Board elects to issue any Additional Shares,
such issuance could have a dilutive effect on the earnings per share, voting
power and holdings of current stockholders.

REQUIRED VOTE

The affirmative vote of a majority of the votes entitled to be cast at
the Annual Meeting is required to approve the Amendment. The Board recommends
that the stockholders vote for the Amendment. WSI intends to vote its shares in
favor of the Amendment.

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PROPOSAL THREE

TO APPROVE AN AMENDMENT TO THE OPTION PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK THAT MAY BE ISSUED UPON
EXERCISE OF OPTIONS GRANTED UNDER THE OPTION PLAN

BACKGROUND AND SUMMARY OF TERMS OF THE OPTION PLAN

In January 1992, the Option Plan was adopted by the Board and approved
by the Company's stockholders. The purpose of the Option Plan is to provide
additional incentive to the officers and employees of the Company who are
primarily responsible for the management and growth of the Company. Each option
granted pursuant to the Option Plan is designated at the time of grant as either
an incentive stock option ("ISO") or as a non-qualified stock option ("NQSO").
The following description of the Option Plan is only a summary; it does not
purport to be a complete or detailed description of all of the provisions of the
Option Plan. A copy of the Option Plan will be furnished by the Company to any
stockholder upon written request to the Secretary of the Company at the
Company's executive offices.

On July 10, 2003, the Board adopted an amendment to the Option Plan to
increase the number of shares of Common Stock that may be issued upon exercise
of stock options under the Option Plan from 500,000 shares to 1,250,000 shares.
The proposed increase will permit the Company to continue to provide incentives
to qualified employees and non-employee directors of the Company by aligning
their interests directly with those of the Company's stockholders. At the Annual
Meeting, the Company's stockholders will be asked to approve that amendment to
the Option Plan.

THE OPTION PLAN

The Option Plan is administered by the Board, which determines to whom
among those eligible, and the time or times at which, options will be granted,
the number of shares subject to options, the duration of options, any conditions
to the exercise of options and the manner in and price at which options may be
exercised. In making such determinations, the Board may take into account the
nature and period of service of eligible employees, their level of compensation,
their past, present and potential contributions to the Company and such other
factors as the Board, in its discretion, deems relevant.

The Board is authorized to amend, suspend or terminate the Option Plan,
except that it is not authorized without stockholder approval (except with
regard to adjustments resulting from changes in capitalization) to (i) increase
the maximum number of shares that may be issued pursuant to the exercise of
options granted under the Option Plan; (ii) permit the grant of an ISO under the
Option Plan with an option price less than 100% of the fair market value of the
shares at the time such option is granted; (iii) change the eligibility
requirements for participation in the Option Plan; (iv) extend the term of any
option or the period during which any option may be granted under the Option
Plan; or (v) decrease an option exercise price (although an option may be
canceled and a new option granted at a lower exercise price).

The Option Plan provides that options may be granted with respect to a
total of 500,000 shares of Common Stock. Under certain circumstances involving a
change in the number of shares of Common Stock without receipt by the Company of
any consideration therefor, such as a stock split, stock consolidation or
payment of a stock dividend, the class and aggregate number of shares of Common
Stock in respect of which options may be granted under the Option Plan, the
class and number of shares subject to each outstanding option and the option
price per share will be proportionately adjusted. In addition, if the Company is
involved in a merger, consolidation, dissolution or liquidation, the options
granted under the Option Plan will be adjusted or, under certain conditions,
will terminate, subject to the right of the option holder to exercise his option
or a comparable option substituted at the discretion of the Company prior to
such event. If any option expires or terminates for any reason, without having
been exercised in full, the unpurchased shares subject to such option will be
available again for the purposes of the Option Plan.

Any employee of the Company is eligible to receive ISOs or NQSOs
granted under the Option Plan. On the Record Date, the Company had 105 full-time
employees.

The exercise price of each option is determined by the Board, but may
not be less than 100% of the fair market value of the shares of Common Stock
covered by the option on the date the option is granted in the case of an ISO,
nor less than 75% of the fair market value of the shares of Common Stock covered
by the option on the date the option is

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granted, in the case of a non-qualified stock option. If an ISO is to be granted
to an employee who owns over 10% of the total combined voting power of all
classes of the Company's stock, then the exercise price may not be less than
110% of the fair market value of the Common Stock covered by the option on the
date the option is granted.

The Board, in its discretion, fixes the term of each option, provided
that the maximum term of each option shall be 10 years. Options granted to an
employee who owns over 10% of the total combined voting power of all classes of
stock of the Company expire not more than five years after the date of grant.
The Option Plan provides for the earlier expiration of options of a participant
in the event of certain terminations of employment. An option may not be
transferred other than by will or the laws of descent and distribution and,
during the lifetime of the option holder, may be exercised solely by him. The
aggregate fair market value (determined at the time the option is granted) of
the shares as to which an employee may first exercise ISOs in any one calendar
year may not exceed $100,000. The Board may impose any other conditions to
exercise as it deems appropriate.

During the 2002 fiscal year, the Company issued 100,000 options under
the Option Plan at exercise prices ranging from $0.20 to $0.28 per share, which
vest evenly over a three-year period. On the Record Date, options to purchase a
total of 305,000 shares of Common Stock under the Option Plan, with exercise
prices ranging from $0.20 to $1.50 per share, were outstanding, and a total of
195,000 shares were available for future option grants. On the Record Date, the
total market value of all shares of Common Stock subject to outstanding options
was $76,250 (based upon the closing price of the Common Stock on the OTC
Bulletin Board of $0.25 per share on that date).

UNITED STATES TAX CONSEQUENCES OF OPTIONS

The following summarizes the major United States tax consequences to
United States individuals that are expected to occur in connection with stock
options granted under the Option Plan.

ISOs. An optionee has no taxable income, and the Company is not
entitled to a deduction, at the time of the grant of an option. All options that
qualify under the rules of Section 422 of the Internal Revenue Code (the "Code")
will be entitled to ISO treatment. To receive ISO treatment, an optionee must
not dispose of the acquired Common Stock within two years after the ISO is
granted or within one year after the ISO is exercised. In addition, the optionee
must have been an employee of the Company or any of its subsidiaries (or their
predecessors) for the entire time from the date the ISO is granted until three
months (one year if the optionee is disabled) before the date of exercise. The
requirement that the optionee be an employee and the two-year and one-year
holding periods are waived in the case of death of the optionee. If all such
requirements are met, no tax will be imposed upon exercise of the ISO, and any
gain upon sale of the Common Stock will be entitled to capital gain treatment.
The optionee's gain on exercise (the excess of the fair market value of the
Common Stock at the time of exercise over the exercise price) of an ISO is a tax
preference item and, accordingly, is included in the computation of alternative
minimum taxable income.

If an optionee does not meet the two-year and one-year holding
requirements (a "disqualifying disposition"), tax will be imposed at the time of
sale of the Common Stock. In such event, the optionee's gain on exercise of the
ISO will be compensation to him taxed as ordinary income rather than capital
gain to the extent the fair market value of the acquired Common Stock on the
date of exercise of the ISO exceeds the aggregate exercise price paid for that
Common Stock, and the Company will be entitled to a corresponding deduction at
the time of sale. Any remaining gain on sale of that Common Stock (equal to the
excess of the amount realized on the disqualifying disposition of that Common
Stock over its fair market value on the date of exercise of the ISO) will be
long-term capital gain if the optionee held that Common Stock for more than one
year. If the amount realized on the disqualifying disposition is less than the
fair market value of the Common Stock on the date of exercise of the ISO, the
total amount includible in the optionee's gross income, and the amount
deductible by the Company, will equal the excess of the amount realized on the
disqualifying disposition over the exercise price.

If the optionee pays all or a portion of the exercise price of an ISO
by tendering other shares of Common Stock he owns, then the following
consequences occur. If the tendered shares of Common Stock were acquired by the
optionee through the prior exercise of an ISO (the "Prior ISO") and do not
satisfy both the two-year and one-year holding requirements ("Disqualified
Payment Shares"), then the tender by the optionee of such shares constitutes a
disqualifying disposition that will result in compensation to the optionee taxed
as ordinary income in an amount equal to the excess of the fair market value of
such Disqualified Payment Shares, determined when the Prior ISO was exercised,
over the exercise price previously paid for such Disqualified Payment Shares.
Any appreciation that has occurred in the Disqualified Payment Shares that is
not taxed to the optionee as compensation income under the disqualifying
disposition rules is not recognized as gain under Section 1036 of the Code. The
number of shares of Common Stock received upon

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exercise of the ISO equal to the number of Disqualified Payment Shares tendered
in payment thereof will have a basis equal to the optionee's basis in the
Disqualified Payment Shares plus any ordinary income recognized by the optionee
as a result of the disqualifying disposition. The number of shares of Common
Stock received upon exercise of the ISO in excess of the number of Disqualified
Payment Shares will have a basis equal to the amount of the exercise price of
the ISO paid in cash (if any). The number of shares of Common Stock received
upon exercise of the ISO, equal to the number of shares of Disqualified Payment
Shares tendered, will have the same holding period on the date that the ISO is
exercised as such Disqualified Payment Shares had on that date and the holding
period of any additional shares of Common Stock received upon exercise of the
ISO will begin on that date. For purposes of the two-year and one-year holding
requirements relating to a disqualified disposition, however, the holding period
of all shares received on exercise of the ISO will begin on the date the ISO is
exercised.

Alternatively, if the exercise price of the ISO is funded by tendering
shares of Common Stock owned by the Optionee other than Disqualified Payment
Shares ("Qualified Payment Shares"), including shares of Common Stock received
by the Optionee from exercise of a prior ISO that satisfied both the two-year
and one-year holding requirements, shares of Common Stock acquired from exercise
of an NQSO or otherwise as an option, and shares of Common Stock purchased on
the open market, then the following consequences occur. Under Section 1036 of
the Code, the Optionee will not recognize gain or loss on the tender of the
previously owned Qualified Payment Shares. The number of new shares of Common
Stock received upon exercise of the ISO, equal to the number of shares of
Qualified Payment Shares tendered, will have the same basis as such Qualified
Payment Shares had in the hands of the Optionee and the basis in any additional
shares of Common Stock received will equal the exercise price paid in cash (if
any). The number of shares of Common Stock received upon exercise of the ISO,
equal to the number of shares of Qualified Payment Shares tendered, will have
the same holding period on the date the ISO is exercised as such Qualified
Payment Shares had on that date and the holding period of any additional shares
of Common Stock received upon exercise of the ISO will begin on that date. For
purposes of the two-year and one-year holding requirements relating to a
disqualified disposition, however, the holding period of all shares received on
exercise of the ISO will begin on the date the ISO is exercised.

NQSOs. Upon exercise of an NQSO, an optionee will recognize
compensation taxed to him as ordinary income to the extent the fair market value
of the acquired Common Stock on the date of exercise of the NQSO exceeds the
aggregate exercise price paid for that Common Stock. The exercise of an NQSO
entitles the Company to a tax deduction for the year in which the exercise
occurred in the same amount as is includible in the income of the optionee. Any
gain or loss realized by an optionee on subsequent disposition of the shares of
Common Stock acquired by exercise of an NQSO generally is a capital gain or loss
and does not result in any tax deduction to the Company.

If the optionee pays all or a portion of the exercise price of an NQSO
by tendering other shares of Common Stock he owns ("Payment Shares"), then the
following consequences occur regardless if such Payment Shares are Disqualified
Payment Shares, Qualified Payment Shares or otherwise. With respect to the
number of shares of Common Stock received on exercise of the NQSO that exceeds
the number of Payment Shares used to exercise the NQSO, the optionee will
recognize compensation taxed to him as ordinary income to the extent the fair
market value of such shares of Common Stock on the date of exercise of the NQSO
exceeds the aggregate exercise price paid in cash (if any). Under Section 1036
of the Code, no income, gain or loss is recognized upon the exchange of Payment
Shares for shares of Common Stock received upon the exercise of the NQSO to the
extent of the number of Payment Shares tendered. The number of shares of Common
Stock received upon exercise of the NQSO, equal to the number of shares of
Payment Shares tendered, will have the same basis as such Payment Shares had in
the hands of the optionee. The basis of the optionee in the number of any
additional shares of Common Stock received upon exercise of the NQSO will equal
the amount of the exercise price of the NQSO paid in cash plus any compensation
income recognized by the optionee. The number of shares received upon exercise
of the NQSO, equal to the number of shares of Payment Shares tendered, will have
the same holding period on the date that the NQSO is exercised as such Payment
Shares had on that date and the holding period of any additional shares of
Common Stock received upon exercise of the NQSO will begin on that date.

CASHLESS EXERCISE: ISOs AND NQSOs. If an optionee exercises an ISO or
NQSO through the cashless exercise method, the optionee will authorize a broker
designated by the Company to sell a specified number of the shares of Common
Stock to be acquired by the optionee on the exercise of the Option, having a
then fair market value equal to the sum of the exercise price of the ISO or
NQSO, as applicable, plus any transaction costs (the "Cashless Shares"). The
remainder of the shares not sold (the "Non-Cashless Shares") will be delivered
to the optionee. It appears that an optionee who uses the cashless exercise
method will be treated as constructively receiving the full amount of shares of
Common Stock that otherwise would be issued upon payment of the exercise price
of the Option in cash, followed immediately by a sale of the Cashless Shares by
the optionee. In the case of an ISO, the cashless exercise method would result
in a disqualifying disposition of the Cashless Shares with the tax consequences
set forth above under "ISOs." In

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the case of an NQSO, the cashless exercise method would result in compensation
to the optionee with respect to both the Cashless Shares and Non-Cashless Shares
as discussed above under "NQSOs." Since the optionee's basis in the Cashless
Shares that are received and simultaneously sold on exercise of the NQSO is
equal to the sum of the exercise price and the compensation to the optionee, no
additional gain must be recognized by the optionee upon the simultaneous sale of
the Cashless Shares.

Under certain circumstances, the Company's tax deductions may be
limited under Section 162(m) of the Code.

The foregoing statements are based upon present United States federal
income tax laws and regulations and are subject to change if the tax laws and
regulations, or interpretations thereof, are changed.

REQUIRED VOTE

The affirmative vote of a majority of the votes entitled to be cast at
the Annual Meeting is required to approve the amendment to the Option Plan. The
Board recommends that the stockholders vote for the amendment to the Option Plan
to increase the number of shares of Common Stock that may be issued upon
exercise of options granted under the Option Plan. WSI intends to vote its
shares in favor of the amendment to the Option Plan.

OTHER INFORMATION

BOARD AND COMMITTEE ACTIVITY, STRUCTURE AND COMPENSATION

The Company's business is managed by and under the direction of the
Board and its committees. The Board establishes corporate policies, approves
major business decisions and monitors the performance of the Company's
management. The Company's full-time officers and executive employees perform the
Company's day-to-day management functions and operating activities. The Board
met four times during the fiscal year ended September 30, 2002, and all
directors attended 75% or more of the meetings with the exception of Mr. Schuler
who was in attendance at 25% of the meetings. The Board currently has appointed
two committees: the Audit Committee and the Compensation Committee.

AUDIT COMMITTEE. The functions of the Audit Committee include meeting
with independent auditors annually to review financial results, audited
financial statements, internal financial controls and procedures and audit plans
and recommendations. The Audit Committee also recommends the selection,
retention or termination of the Company's independent accountants, approves
services provided by the independent public accountants before those services
are rendered and evaluates the possible effect the performance of those services
will have on the accountants' independence. The Board has adopted a written
charter for the Audit Committee effective January 22, 2001, a copy of which was
attached to the Company's proxy statement filed with the Securities and Exchange
Commission ("SEC") on April 2, 2001. The Audit Committee met four times during
the 2002 fiscal year and was composed of Frank J. M. ten Brink, David J.
Schoonmaker and Robert M. Waller. On July 10, 2003, David J. Schoonmaker was
replaced on the Audit Committee by Stephen B. Koenigsberg, and Frank J.M. ten
Brink was replaced on the Audit Committee by Kevin McManus. All of the current
members of the Audit Committee are independent in accordance with the existing
requirements of NASDAQ's listing standards.

COMPENSATION COMMITTEE. The Compensation Committee recommends to the
Board the compensation for the Company's executive officers, administers and
makes awards under the Company's compensation plans and monitors and makes
recommendations with respect to the Company's various employee benefit plans.
The Compensation Committee met once during the 2002 fiscal year and was
composed of Messrs. Schoonmaker, Waller and Tomasello. On July 10, 2003, Mr.
Schoonmaker was replaced on the Audit Committee by Kevin McManus.

DIRECTOR COMPENSATION

Directors who are officers or employees of the Company, or who are
affiliated with Stericycle, receive no additional compensation for their
services as members of the Board. During the 2002 fiscal year, Messrs.
Schoonmaker and Waller, the Company's only outside directors during the 2002
fiscal year, each were paid $2,000 plus expenses for each Board meeting and $500
for each committee meeting they attended.

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EXECUTIVE OFFICERS

The following is the only current executive officer of the Company, his
age, position with the Company and the period during which he has served in such
position:

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NAME AGE POSITION OFFICER SINCE
------------------ --- --------- -------------

Otley L. Smith III 54 President 2000

The Company's executive officers are subject to annual appointment by
the Board. There are no arrangements or understandings with respect to the
selection of officers and directors, and there are no family relationships
between any of such persons. In June 2003, James A. Cole resigned as Chief
Financial Officer of the Company and Donald P. Zima was subsequently appointed
as interim Chief Financial Officer of the Company. Mr. Zima is not currently an
executive officer of the Company.

Otley L. Smith III has served as President since June 2000 and served
as a Director of the Company from June 2000 until July 2003. From 1998 until
2000, he served as a consultant to businesses in the medical waste industry. In
1986 he founded Med-Compliance Services, Inc. and served as President until
1998. In 1995, he founded Technology 2100, Inc. and managed the development of a
new medical waste treatment technology that was approved for use by the U.S.
Environmental Protection Agency (under the Federal Insecticide, Fungicide, and
Rodenticide Act) and several states. For the past ten years Mr. Smith has served
as an industry representative in public sector initiatives to standardize
medical waste management regulations in several southwestern states.

COMMON STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of the Record Date the number of
shares of Common Stock beneficially owned by (i) each person who is known to the
Company to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) each current director and executive officer and (iii) all directors
and executive officers as a group. Except as noted below, each holder has sole
voting and investment power with respect to all shares of Common Stock listed as
beneficially owned.

[Enlarge/Download Table]

NUMBER OF PERCENTAGE OF
NAME SHARES(1) CLASS

Waste Systems, Inc.(2) ............................................ 13,395,734 74.1%
28161 N. Keith Drive
Lake Forest, Illinois 60045

Stericycle, Inc (2) ............................................... 14,328,504 79.3%
28161 N. Keith Drive
Lake Forest, Illinois 60045

Otley L. Smith III (3) ............................................ 85,000 *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

Jack W. Schuler ................................................... -- *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

Stephen B. Koenigsberg ............................................ -- *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

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[Download Table]

Kevin McManus ..................................................... -- *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

Mark C. Miller .................................................... -- *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

Frank J. M. ten Brink ............................................. -- *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

Anthony J. Tomasello .............................................. -- *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

Robert M. Waller (4) .............................................. 66,666 *
1517 W. North Carrier Parkway
Grand Prairie, Texas 75050

All directors and executive officers as a group (8 persons)(5)..... 151,666 1.5%

----------

(*) Less than 1 percent

(1) Includes all shares of Common Stock with respect to which each person or
entity directly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares the power to vote or direct voting
of such shares or to dispose or direct the disposition of such shares.
Includes shares issuable upon exercise of stock options exercisable within
60 days of the Record Date and shares that will be issued upon conversion
of the Preferred Stock. See the discussion under Proposal Two regarding
additional shares of Common Stock that will be issued upon conversion of
the Preferred Stock.

(2) An Amended Schedule 13D filed with the SEC on May 9, 2002 (the "Amended
Schedule 13D"), reflects that WSI is the beneficial owner of 5,104,448
shares of Common Stock. The Amended Schedule 13D reflects that Stericycle
owns 100% of WSI. Assumes the conversion of the Preferred Shares owned by
WSI into 7,750,000 shares of Common Stock and includes 541,286 shares which
WSI acquired via the exercise of warrants on December 19, 2002.
Additionally, the Amended Schedule 13D reflects that Stericycle directly
owns 932,770 shares of Common Stock. Including the shares of Common Stock
held directly by Stericycle and those shares of the Company's capital stock
held through WSI, and assuming conversion of the Preferred Shares at a
ratio of 1-to-1, Stericycle is the beneficial owner of 79.3% of the Common
Stock. Without assumed conversion of the Preferred Shares, Stericycle
directly and through WSI owns 63.7% of the issued and outstanding shares of
Common Stock. See the discussion under Proposal Two regarding additional
shares of Common Stock that will be issued upon conversion of the Preferred
Stock.

(3) Includes 75,000 shares issuable upon the exercise of stock options
exercisable within 60 days of the Record Date.

(4) Represents 66,666 shares issuable upon the exercise of stock options
exercisable within 60 days of the Record Date.

(5) Includes options to purchase an aggregate of 141,666 shares exercisable
within 60 days of the Record Date.

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EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth information with respect to the cash
compensation awarded to, earned by or paid to the Company's executive officers
earning in excess of $100,000 during the fiscal year ended September 30, 2002
for services rendered to the Company during the fiscal years ended September 30,
2002, 2001 and 2000.

[Enlarge/Download Table]

LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
NAME AND PRINCIPAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS OPTIONS/SARs COMPENSATION

Otley L. Smith, III 2002 $ 125,000 $ 20,000 -- --
President (1)

2001 $ 125,000 -- -- --

2000 $ 50,000(2) -- 75,000(3) --

(1) On June 8, 2000, Mr. Smith was appointed as President of the Company.

(2) Represents base salary paid by the Company to Mr. Smith for the period from
June 2000 through September 2000.

(3) On June 8, 2000, Mr. Smith received an option to purchase 75,000 shares of
Common Stock at an exercise price of $0.33 per share, of which 25,000
shares vested after one year with the remaining 50,000 shares vesting
evenly over the next two years.

OPTION GRANTS IN LAST FISCAL YEAR

There were no options granted to the Company's executive officers
during the fiscal year ended September 30, 2002.

OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table provides certain information regarding unexercised
options to purchase shares of Common Stock granted by the Company during the
2002 fiscal year to the Company's executive officers earning in excess of
$100,000 during the fiscal year ended September 30, 2002. No executives
exercised any Common Stock options during the 2002 fiscal year.

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VALUE OF UNEXERCISED IN-THE-MONEY
NUMBER OF UNEXERCISED OPTIONS AT OPTIONS AT
NAME SEPTEMBER 30, 2002 SEPTEMBER 30, 2002 (1)
Exercisable Unexercisable Exercisable Unexercisable

Otley L. Smith III 57,740 17,260 -- --

----------

(1) The exercise price per share exceeded the per share closing price of Common
Stock on the OTC Bulletin Board on September 30, 2002, and accordingly,
none of Mr. Smith's stock options were in the money at fiscal year end.

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EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information about the Common Stock that
may be issued upon exercise of options, warrants and rights under all of the
Company's equity compensation plans as of September 30, 2002, including the
Option Plan. The Option Plan has been approved by the Company's stockholders.

[Enlarge/Download Table]

NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
BE EXERCISE EQUITY COMPENSATION
ISSUED UPON EXERCISE OF PRICE OF OUTSTANDING PLANS
OUTSTANDING OPTIONS, OPTIONS, WARRANTS AND (EXCLUDING SECURITIES
WARRANTS AND RIGHTS RIGHTS REFLECTED IN COLUMN (a))
PLAN CATEGORY (a) (b) (c)

Equity compensation plans approved by
security holders 305,000 $ 0.43 195,000
Equity compensation plans not approved
by security holders -- -- --

Total 305,000 $ 0.43 195,000

EMPLOYMENT AGREEMENTS

Mr. Smith serves as the Company's President pursuant to a letter
agreement executed on June 6, 2000 (the "Smith Employment Agreement"). Pursuant
to the Smith Employment Agreement, Mr. Smith receives a base salary of $125,000
annually and was granted an option to purchase 75,000 shares of Common Stock at
an exercise price of $0.33 per share on June 8, 2000, of which 25,000 shares
vested after one year with the remaining 50,000 shares vesting evenly over the
next two years. Also, as an additional incentive, Mr. Smith is eligible for an
annual bonus of up to $40,000 based on the Company achieving certain goals
related to earnings and cash flow. Mr Smith received a bonus of $20,000 during
the 2002 fiscal year.

Other than as set forth above, there are no compensatory plans or
arrangements with respect to any individual named in the Summary Compensation
Table above or otherwise which would result from the resignation, retirement or
other termination of such individual's employment with the Company or a change
in control.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During the 2002 fiscal year, Anthony J. Tomasello, David J. Schoonmaker
and Robert M. Waller served on the Compensation Committee and participated in
the deliberations concerning executive officer compensation. None of these
persons serve on the compensation committee of any other company.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation Committee is responsible for establishing the
Company's compensation philosophy and policies, setting the terms of and
administering its option plans, reviewing and approving employment contracts and
salary recommendations for the Company's executive officers and setting the
compensation for the chief executive officer. The Company's overall compensation
philosophy is to align the financial interests of management with those of the
Company's stockholders, taking into account the Company's expectations for
growth and profitability, the necessity to attract and retain the best possible
executive talent and to reward its executives commensurate with their ability to
enhance stockholder value. Accordingly, employment arrangements with the
executive officers approved by the Compensation Committee provide for
compensation consisting of base salary, stock options and other stock-based
awards. The employment arrangements with the Company's executive officers also
allow for significant bonuses based upon achieving certain earnings goals and
the attainment of individual qualitative goals relating to the employee's
position and responsibilities. The Compensation Committee believes that
providing executives with opportunities to acquire significant stakes in the
Company's growth and prosperity through grants of stock options and other
incentive

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awards will enable the Company to attract and retain executives with the
outstanding managerial abilities essential to the Company's success, motivate
these executives to perform to their full potential and enhance stockholder
value.

Mr. Smith's 2002 fiscal year compensation as President was based on the
compensation structure set forth in the Smith Employment Agreement, which
provides for a base salary of $125,000 and incentive bonuses based on the
Company's financial performance. In addition, as a further incentive, Mr. Smith
was granted an option to purchase 75,000 shares of Common Stock at an exercise
price of $0.33 per share, which was the per share closing price of Common Stock
on the date the option was granted. The option vests over a three-year period in
order to align Mr. Smith's interest with improving the Company's performance and
improving the trading price of the Common Stock. The terms of Mr. Smith's
employment were determined after consideration and analysis of, among other
things, the Company's performance history and the relationship of that
performance to internal projections and targets; average cash and other
compensation and equity positions of chief executive officers of selected
companies deemed by the Compensation Committee to be comparable; and Mr. Smith's
central role in the Company's operating results.

The Compensation Committee believes that its current policies have been
and will continue to be successful in aligning the financial interests of the
executive officers with those of the Company's stockholders and the Company's
performance. Nevertheless, the Compensation Committee intends to continue to
review whether and how to modify its policies to further link executive
compensation with both individual and the Company's performance.

Robert M. Waller
Kevin McManus
Anthony J. Tomasello

AUDIT COMMITTEE REPORT

The Audit Committee is composed of three directors, all of whom are
independent in accordance with the existing requirements of NASDAQ's listing
requirements. The Audit Committee operates under a written charter adopted by
the Board on January 22, 2001, in accordance with applicable rules of the SEC. A
copy of the charter was attached to the Company's proxy statement filed with the
SEC on April 2, 2001. The Audit Committee's general role is to assist the Board
in overseeing the Company's financial reporting process and related matters. The
Company's independent accountants are responsible for performing an independent
audit of the Company's consolidated financial statements in accordance with
generally accepted auditing standards and to issue a report on those financial
statements. The Audit Committee's responsibility is to monitor and oversee that
process. The Audit Committee also recommends to the Board the selection of the
Company's independent accountants.

The Audit Committee has reviewed and discussed with management the
Company's financial statements as of and for the fiscal year ended September 30,
2002. The Audit Committee has discussed with the independent public accountants
the matters required to be discussed by SAS 61 (Codification of Statements on
Auditing Standards, AU Section 380), as amended, of the Auditing Standards Board
of the American Institute of Certified Public Accountants. Additionally, the
Audit Committee has received the written disclosures and a letter from the
Company's independent accountants, Ernst & Young, LLP ("Ernst & Young"),
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees), as amended, and has discussed with Ernst &
Young the issue of its independence from the Company.

Based on its review of the audited financial statements and the various
discussions noted above, the Audit Committee recommended to the Board that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 2002.

Kevin McManus
Stephen B. Koenigsberg
Robert M. Waller

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COMMON STOCK PERFORMANCE GRAPH

The following performance graph compares the performance of the Common
Stock to the S&P 500 Stock Index and to a peer group of other public companies.
The Peer Group Index is comprised of New York Stock Exchange, American Stock
Exchange and NASDAQ-listed companies having the standard industry classification
codes 4950-4959. The graph assumes that the value of the investment in the
Common Stock and each Index was $100.00 at September 30, 1997, and that all
dividends were reinvested.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG 3CI COMPLETE COMPLIANCE CORPORATION, THE S & P 500 INDEX
AND A PEER GROUP

(PERFORMANCE GRAPH)

[Enlarge/Download Table]

Cumulative Total Return
--------------------------------------------------------------
9/97 9/98 9/99 9/00 9/01 9/02

3CI COMPLETE COMPLIANCE CORPORATION 100.00 161.54 46.15 28.92 36.92 29.54
S & P 500 100.00 109.05 139.37 157.88 115.85 92.12
PEER GROUP 100.00 117.14 51.02 47.42 66.78 60.41

* $100 invested on 9/30/97 in stock or index-including reinvestment of
dividends. Fiscal year ending September 30.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Messrs. Schuler, Miller, ten Brink and Tomasello are senior officers of
Stericycle, which on September 30, 1998, acquired 100% of the common stock of
WSI for $10 million (the "Transaction"). As a result of the Transaction, WSI
became a wholly owned subsidiary of Stericycle. As of the Record Date, WSI owned
5,645,734 shares of Common Stock, which represents 54.7% of the issued and
outstanding shares of Common Stock, and 100% of the issued and outstanding
shares of Preferred Stock, consisting of the Preferred Shares. Assuming that the
Preferred Shares are convertible into 7,750,000 shares of Common Stock, upon
conversion, WSI's ownership percentage would increase to 74.1%. Assuming that
the Preferred Shares are convertible into 31,000,000 shares of Common Stock,
based on a Common Stock per share market value of $0.25 on the conversion date,
upon conversion, WSI's ownership percentage would increase to 88.7%. Including
the shares of Common Stock held directly by Stericycle and those shares of the
Company's capital stock held through WSI, and assuming conversion of the
Preferred Shares at a ratio of 1-to-1, Stericycle is the beneficial owner of
14,328,504 shares of Common Stock or 79.3% of the Common Stock. See Proposal Two
for further discussion regarding the conversion of the Preferred Shares.

The Company has historically financed its working capital needs,
capital expenditures and acquisitions using advances from WSI, internally
generated funds and borrowings from third parties. The Company's indebtedness
currently consists of amounts owed to WSI (which are described below), and a
portion of the Company's insurance premiums that are financed over the course of
each fiscal year.

On October 1, 1998, WSI and the Company amended and restated a
revolving promissory note (the "WSI Note"), which was originally due September
30, 2000. As of June 30, 2000, the Company notified WSI that it anticipated it
would fail to meet a net income requirement under the WSI Note for the quarter
ended June 30, 2000. The WSI Note was renegotiated and extended at that time and
the default was waived. Since that time the WSI Note has been extended either
quarterly or semi-annually under interest rate terms ranging from prime plus
1.0% to prime plus 3.5% not to exceed 13%. In connection with the WSI Note's
extension on August 1, 2000, the Company issued warrants to WSI for the purchase
of up to 351,836 shares of Common Stock at an exercise price of $0.20 per share.
These warrants expired on September 20, 2002. When the WSI Note was extended on
October 1, 2000, the Company issued warrants to WSI for the purchase of up to
541,286 shares of Common Stock at an exercise price of $0.10 per share, which
were exercised on December 19, 2002.

As of September 30, 2002, the Company owed $3,890,635 to WSI pursuant
to the WSI Note. An agreement effective October 1, 2001 extended the WSI Note's
maturity to July 1, 2002. The terms of this extension included a reduction of
the interest rate to the prime rate, plus 1.0%, and called for a principal
payment of $200,000 at renewal and an additional $200,000 principal payment in
June 2002. The agreement also required the Company to achieve minimum levels of
EBITDA for each of the six-month periods ended March 31, 2002 and June 30, 2002.
This level was not achieved for the six months ended March 31, 2002, requiring
the Company to record an additional $120,404 in interest expense.

The WSI Note was again renegotiated pursuant to an agreement dated May
23, 2002, pursuant to which the WSI Note was extended to October 1, 2003. The
terms of this extension included an interest rate equal to the prime rate,
currently 4.25%, plus 1.0%, and called for a principal payment of $700,000 at
renewal and additional monthly payments of $100,000 to be applied to accrued
interest and principal. The agreement also required the Company to achieve a
minimum level of EBITDA for the six-month period ended June 30, 2002 and for
each trailing six-month period thereafter until maturity. This level was
achieved for the six months ended June 30, 2002 and September 30, 2002.

In June 1999, the Company established a master lease agreement (the
"Master Lease Agreement") in the amount of $3,000,000 with LaSalle National
Leasing Corporation. Of the total $3,000,000, (i) $2,000,000 is to be utilized
for the leasing of transportation equipment, of which $82,312 and $179,569 had
been utilized as of September 30, 2002 and 2001, respectively, and (ii)
$1,000,000 is to be utilized for the financing of equipment, none of which was
being utilized as of September 30, 2002 and $398,851 of which had been utilized
as of September 30, 2001. The Master Lease Agreement is guaranteed by
Stericycle.

The Company outsources the treatment of its medical waste to treatment
facilities in Terrell, Texas; Conroe, Texas; Memphis, Tennessee; Beaver Dam,
Kentucky; Reserve, Louisiana and Lake City, Georgia, which are owned by
Stericycle. The treatment fees are paid currently in accordance with 30-day
terms. Commencing in 2002, Stericycle also

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provided long-haul transportation services for the Company. In February 1999,
the Company entered into a 36-month operating lease agreement with Stericycle to
lease medical waste containers.

The Company parks trucks and trailers at Stericycle transportation
depots at Reserve, Louisiana and Memphis, Tennessee. Stericycle did not charge
the Company for such use of these facilities. In return, Stericycle parks trucks
and trailers at various Company transportation depots at no charge for the use
of these facilities. Also during the 2002 fiscal year, the Company utilized
Stericycle personnel for tax preparation and analysis and was provided with
internal audit services from a firm utilized by Stericycle. Stericycle did not
charge the Company for these services.

On May 1, 2002, Stericycle completed a transaction in which it
purchased from James H. Shepherd, James Michael Shepherd and Richard T.
McElhannon (the "Sellers") certain profit-sharing rights, put rights and other
rights of the Sellers that the Sellers had acquired pursuant to a settlement
agreement entered into with the Company in January 1996 (the "Settlement
Agreement"). Stericycle's purchase included interest in all security agreements,
mortgages and other instruments securing the Company's obligations to the
Sellers under the Settlement Agreement, and 932,770 shares of Common Stock owned
by the Sellers. During the 2002 fiscal year, the Company paid $138,000 to
Stericycle under the profit sharing terms of the Settlement Agreement.

INDEPENDENT PUBLIC ACCOUNTANTS

The Board appointed the certified public accounting firm of Ernst &
Young to examine the Company's financial statements for the fiscal year ending
September 30, 2002. Ernst & Young has served as the Company's independent
auditors since September 10, 1999.

Before engaging Ernst & Young, the Company had not consulted with that
firm in any matter regarding either the application of accounting principles to
a completed transaction or the type of audit that might be reached on the
Company's financial statements.

The Company anticipates that representatives of Ernst & Young will
participate in the Annual Meeting, may make a statement if they desire to do so
and will be available to respond to appropriate questions concerning the
Company's financial statements.

Audit Fees. The aggregate fees billed by Ernst & Young for professional
services rendered in connection with its audit of the Company's financial
statements included in the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2002, and its review of the Company's interim financial
statements included in the Company's Quarterly Reports on Form 10-Q during the
2002 fiscal year, were approximately $135,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. The
Company did not engage Ernst & Young to provide any professional services during
the 2002 fiscal year in connection with financial systems design or
implementation.

ALL OTHER FEES. The Company did not engage Ernst & Young to provide any
other professional services during the 2002 fiscal year.

The Audit Committee has considered whether the provision of the
services described under the captions, "Financial Information Systems Design and
Implementation Fees" and "All Other Fees" is compatible with maintaining Ernst &
Young's status as the Company's independent auditors.

CHANGES IN THE BOARD

In July 2003, David J. Schoonmaker and Otley L. Smith III resigned from
the Board, and Stephen B. Koenigsberg and Kevin McManus were subsequently
elected to the Board.

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under Section 16(a) of the Securities Exchange Act of 1934, as amended,
directors, certain officers and beneficial owners of 10% or more of any class of
the Company's capital stock (the "Reporting Persons") are required from time to
time to file with the SEC reports of beneficial ownership and changes of
beneficial ownership of Common Stock. Reporting Persons are required to furnish
the Company with copies of all Section 16(a) reports they file. Based solely on
its review of forms and written representations received from the Reporting
Persons by it with respect to the fiscal year ended September 30, 2002, the
Company believes that all filing requirements applicable to the Company's
officers, directors and greater than 10% stockholders have been met.

OTHER MATTERS

The Board does not know of any other matters that may come before the
Annual Meeting; however, if any other matters are properly presented to the
Annual Meeting, the persons named in the accompanying proxy intend to vote, or
otherwise act, in accordance with their best judgment on such matters.

The Company expects to hold the 2004 annual meeting on or about
September 3, 2004. A stockholder who intends to present a proposal at the 2004
annual meeting of stockholders for inclusion in the Company's 2004 proxy
statement relating to that meeting must submit such proposal by March 31, 2004.
For the proposal to be included in the proxy statement, the stockholder
submitting the proposal must meet certain eligibility standards and comply with
certain procedures established by the SEC, and the proposal must comply with the
requirements as to form and substance established by applicable laws and
regulations. The proposal must be mailed to the Company's principal executive
office, at the address stated herein, and should be directed to the attention of
the Chief Financial Officer.

The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2002, is being furnished with this Proxy Statement and has been
filed on Form 10-K with the SEC on January 15, 2003.

By Order of the Board of Directors

JACK W. SCHULER
Dated: July 29, 2003 Chairman of the Board of Directors

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EXHIBIT A

CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
3CI COMPLETE COMPLIANCE CORPORATION

3CI Complete Compliance Corporation (the "Corporation"), a corporation
organized and existing under and by virtue of the Delaware General Corporation
Law (the "DGCL"), does hereby certify:

FIRST: That the Board of Directors of the Corporation, by unanimous
written consent pursuant to Section 141(f) of the DGCL, duly adopted resolutions
setting forth a proposed amendment to the Certificate of Incorporation of the
Corporation (the "Certificate of Incorporation"), declaring such amendment to be
advisable and calling a meeting of the stockholders of the Corporation for
consideration thereof. The amendment adopted provides as follows:

That Article 4 of the Certificate of Incorporation shall be amended to
read in its entirety as follows:

"4. The total number of shares of stock which the corporation shall
have authority to issue is 76,500,000 shares, of which 60,450,000 shares shall
be common stock, par value $.01 per share, and 16,050,000 of which shares shall
be preferred stock, par value $.01 per share. The designations, rights,
preferences, privileges and voting powers of the preferred stock, and any
restrictions and qualifications thereof, shall be determined by the Board of
Directors."

SECOND: That such amendment was duly adopted in accordance with the
provisions of Sections 228 and 242 of the DGCL.

THIRD: This Certificate of Amendment shall become effective upon the
filing hereof in the Office of the Secretary of State of the State of Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be duly executed by its President as of _________________, 2003.

3CI COMPLETE COMPLIANCE CORPORATION

By:
-------------------------------
Otley L. Smith III, President

A-1

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘PRE 14A’ Filing	Date	First	Last	Other Filings

	9/3/04	22
	3/31/04	22		10-Q, 10-Q/A
	10/1/03	20
For Period End:	9/3/03	2	4	DEF 14A
	7/29/03	2	22
Filed on:	7/16/03
	7/14/03	3	4
	7/10/03	8	13
	5/9/03	9
	4/6/03	8
	4/2/03	9
	1/15/03	22		10-K
	12/19/02	15	20
	9/30/02	13	22	10-K, NT 10-K
	9/20/02	20
	7/1/02	20
	6/30/02	20		10-Q
	5/23/02	20
	5/9/02	15		SC 13D/A
	5/1/02	21
	3/31/02	20		10-Q
	10/1/01	20
	9/30/01	16	20	10-K405, NT 10-K
	4/2/01	13	18	DEF 14A
	1/22/01	13	18
	10/1/00	20
	9/30/00	16	20	10-K405
	8/1/00	20
	6/30/00	20		10-Q
	6/8/00	16	17
	6/6/00	17		3
	9/10/99	21		8-K
	10/1/98	20
	9/30/98	20		10-K, 8-K, NT 10-K
	9/30/97	19		10-K, NT 10-K
				List all Filings

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Filing Submission 0000950134-03-010180 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

3CI Complete Compliance Corp – ‘PRE 14A’ for 9/3/03

On: Wednesday, 7/16/03, at 5:26pm ET · For: 9/3/03 · Accession #: 950134-3-10180 · File #: 1-11097

Preliminary Proxy Solicitation Material — Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Preliminary Proxy Solicitation Material — Schedule 14A
Filing Table of Contents