R.S.O. 1990, c. S.5, AS AMENDED
IN THE MATTER OF
MED-TECH ENVIRONMENTAL LIMITED
Hearing: November 22 and 23, 1998
John A. Geller, QC - Vice-Chair
Morley P. Carscallen, F.C.A. - Commissioner
R. Stephen Paddon, QC - Commissioner
Donald A. Sheldon - For Med-Tech Environmental
Nadim Wakeam Limited
Robert G.S. Hull - For Browning-Ferris Industries,
Todd M. May Inc. and BFI Medical Waste Ltd.
Michael A. Penny - For Stericycle, Inc.
Lillian Y. Pann
Cathy Singer - For the Staff of the Ontario
Johanna Superina Securities Commission
These proceedings involve take-over bids for the shares of Med-TechEnvironmental Limited ("Med-Tech") made by Stericycle, Inc. ("Stericycle") and by BFIMedical Waste Ltd. ("BFI"), an indirect wholly-owned subsidiary of Browning-FerrisIndustries, Inc. ("Browning"). Neither the bid by Stericycle (the "Stericycle Offer") nor thebid by BFI (the "BFI Offer") complied with the requirements of sections 95 and 98,contained in Part XX, of the Securities Act (the "Act").
By letter dated October 30, 1998, Med-Tech's solicitors applied to the Commission:
"(a) under clause 104(1)(c) of the Securities Act (Ontario) (the "Act"), for an order thatStericycle, Inc. ("Stericycle") comply with Sections 95 to 100 of the Act and theregulations related thereto;
(b) under clause 104(1)(c) of the Act, for an order that Browning-Ferris Industries, Inc.and its indirectly wholly-owned subsidiary, BFI Medical Waste Ltd. (collectively,"BFI") comply with Sections 95 to 100 of the act and the regulations related thereto;
(c) under Ontario Securities Commission 9.3 ("OSC 9.3"), National Policy 62-202 ("NP62-202") and the public interest jurisdiction of the Ontario Securities Commission,for an order that all of those persons who were shareholders of the Corporationprior to any purchases by Stericycle be provided with an opportunity to make a freeand fully informed choice between the take-over bid offer from Stericycle Inc. andthe take-over bid offer from BFI;
(d) under clause 104(1)(c) of the Act and the public interest jurisdiction of theCommission, for an order that Med-Tech not convene any shareholder meeting untilsuch time as the take-over bid offers of Stericycle and BFI have been terminatedand the registered shareholders of Med-Tech have been determined in accordancewith applicable law; and
(e) such other and further relief as the Commission may deem necessary to the publicinterest in these circumstances."
Agreed Facts and Issues
At the Hearing, the parties filed an Agreed Statement of Facts, which read asfollows:
"1. Med-Tech Environmental Limited ("Med-Tech") was incorporated on April 22, 1993.Its articles initially contained the restrictions required by the definition of "privatecompany" in subsection 1(1) of the Securities Act (Ontario)(the "Act") Med-Tech isnot a "reporting issuer" under the securities laws of any jurisdiction and its sharesare not traded on any exchange or in the over-the-counter market.
2. Med-Tech is in the business of collecting, processing and disposing of medical andpharmaceutical wastes in Ontario, Quebec, Alberta and the Eastern United States.
3. Med-Tech has 14,755,000 common shares (the "Shares") outstanding. A copy ofits share register, which contains a document footer with the date September 22,1998, indicates that there are 62 registered holders (the "Shareholders") of Shares.
4. The founding Shareholders consisted of Drew McKeown & Company Limited,Daniel Kennedy, Ron McKeown, David Morrison, Wayne O'Connor and MikeZuckerman. These initial Shares were issued to such persons in trust.
5. Med-Tech has made several acquisitions:
(a) Bio-Med Waste Disposal Systems Ltd. ("Bio-Med") was acquired inSeptember 1995, as a result of which Tenny Teng, Jason Hwang and LorettaHwang, former Bio-Med shareholders, were issued Shares;
(b) Medispose Inc. ("Medispose") amalgamated with Med-Tech on March 20,1997 and, as a result, Oriole Point Investments Inc. ("Oriole Point"), acompany controlled by current Med-Tech director Robert Brooks, receivedShares; and
(c) Laidlaw Medical Services Ltd. and Laidlaw Medical Services, Inc.(collectively, the "Laidlaw Subsidiaries") were acquired on April 4, 1997.
6. Current and former employees of Med-Tech who are also Shareholders includeMario Carpino, Paul Carpino, Rodney Dobson, Jason Hwang, Daniel Kennedy andDavid Morrison. Garth Moore is a former employee whose Registered RetirementSavings Plan is a Shareholder.
7. Med-Tech issued units exercisable for Shares and warrants (the "Units") onSeptember 29, 1995. It removed its private company restrictions from its articleson January 25, 1996 and filed a preliminary prospectus on January 26, 1996. OnJuly 11, 1996, the Ontario Securities Commission (the "Commission") confirmed adecision of the Executive Director refusing to issue a receipt for a final prospectusin respect of Shares issuable upon the exercise of the Units on the grounds that thespecial warrant financing structure employed by Med-Tech to distribute the Unitscould not be effected in reliance upon the "private company exemption" in the Act.The Units were deemed to have been exercised in July 1996 as a result of thefailure to obtain a receipt for a final prospectus.
8. Med-Tech's material long-term debt obligations consist of:
(a) a $3,000,000 senior secured term loan facility dated April 4, 1997, bearinginterest at prime plus 200 basis points, plus an overdraft bearing interest at21% per annum, provided by the National Bank of Canada (the "BankLoan");
(b) a $4,650,000 junior secured non-revolving convertible term facility datedApril 4, 1997, bearing interest at 25% per annum (with interest paid monthlyat the rate of 12.5% per annum and the balance of the 12.5% increasing theamount of debt due March 31, 1999), initially provided by a wholly-ownedsubsidiary of Icon Investments Inc. ("Icon") (the "Junior Secured Debt");
(c) a $200,000 5% convertible debenture (the "Convertible Debenture") datedMarch 20, 1997 and payable to Oriole Point; and
(d) a promissory note (the "Promissory Note") dated August 28, 1997 in theamount of $105,000, bearing interest commencing on October 6, 1997 at4.8% per month (57.6% per annum), payable to Oriole Point.
The loans referred to in (a) and (b) were used to finance the purchase of theLaidlaw Subsidiaries. At the same time, one AGF mutual fund and two BPImutual funds acquired Shares from treasury, Oriole Point (controlled by Mr.Brooks, then a Med-Tech director) and Roan Partners, a Shareholder whosepartners are Ron McKeown and Daniel Hardie, then directors of Med-Tech.
9. In late 1997, Med-Tech received a letter from Icon stating that the Junior SecuredDebt was in default and, in March 1998, received a letter from National Bank statingthat the Bank Loan was in default.
10. Med-Tech held a shareholders' meeting on March 10, 1997, at which time directorswere elected in connection with Shareholders' approval of Med-Tech'samalgamation with Medispose. Med-Tech's articles of amalgamation provide thatthe board of directors (the "Med-Tech Board") shall consist of a minimum of threeand a maximum of ten directors. As of the date of the amalgamation on March 20,1997, the Med-Tech Board consisted of the following six representatives:
Daniel Hardie (resigned April 7, 1997)
John Finley (resigned June 29, 1998)
Ronald McKeown (resigned July 14, 1998)
Henry Knowles (resigned October 1, 1998)
On April 16, 1997, Douglas Drew became a director of Med-Tech.
11. In 1998, the inability of Med-Tech's auditors to obtain information regarding certainof Med-Tech's liabilities resulted in a delay in the release of its financial statementsfor the fiscal year ended March 31, 1998. On October 29, 1998 Med-Tech releasedits audited financial statements to shareholders with a qualified audit report datedMay 20, 1998 and without signatures of directors on the balance sheet. Note 1 tothese financial statements, which were prepared on the basis of the accountingprinciples applicable to a "going concern", states that several adverse conditionscast substantial doubt upon the validity of the "going concern" assumption.
12. Between February 1998 and July 1998, Med-Tech attempted to complete aconvertible debenture financing. The proposed financing was intended to replacethe existing loan facilities and the potential investors included Frederick Innis. OnMay 25, 1998, Med-Tech held a special meeting of Shareholders at which a specialresolution was adopted to approve a new class of special voting shares to beissued to the holders of the convertible debentures. Such a financing has not beeneffected.
13. At the same meeting, the Shareholders passed a special resolution authorizing thedirectors to set the number of directors between the minimum and the maximum.On July 14, 1998 the directors set the number at four.
14. Stericycle, Inc. ("Stericycle") is the second-largest provider of regulated medicalwaste management services in the United States. It is a publicly traded companywhose shares are listed on NASDAQ. It is not a reporting issuer in Ontario.
15. Management of Med-Tech and Stericycle representatives first dealt with each otherin the summer of 1997 when they met and discussed a number of topics, includingthe possibility of a merger. At about the same time, management of Med-Tech andBFI representatives also met and discussed a number of topics, including thepossibility of a merger. Representatives of Stericycle and BFI continued thereafterto communicate with certain individuals associated with Med-Tech, including, in thecase of Stericycle, Mr. McKeown and Graham Warren, a Med-Tech officer, and, inthe case of BFI, Mr. Morrison, with a view to obtaining an update on Med-Tech'saffairs.
16. On July 16, 1998, Mark Miller, the President and Chief Executive Officer ofStericycle, contacted Mr. McKeown, who advised Mr. Miller that he had resignedfrom the Med-Tech Board on July 14, 1998. Mr. McKeown indicated that it mightbe an appropriate time to approach Med-Tech to discuss a transaction.
17. On July 20, 1998, prior to attending a meeting with Med-Tech's board of directors,Mr. Miller met with Messrs. McKeown and Innis. Mr. McKeown talked about howhe and Mr. Innis could assist Stericycle in facilitating a transaction between Med-Tech and Stericycle and what might constitute appropriate compensation for theirefforts. At that time, Messrs. McKeown and Innis proposed a fee representing apercentage of the value of the transaction.
18. Further discussions among Messrs. McKeown, Innis and Frank ten Brink,Stericycle's Chief Financial Officer, relating to the appropriate compensation to bepaid to Messrs. McKeown and Innis have occurred. There is an understanding thatthe issue of fees will be resolved fairly and within market criteria and that the feeswill be based upon a percentage of the value of any transaction involving Med-Tech.
19. At some time prior to July 27, 1998, Mr. ten Brink sent a fax to Med-Tech confirmingthat Messrs. McKeown and Innis were assisting Stericycle in facilitating thetransaction with Med-Tech.
20. On July 20, 1998 Mr. Miller met with the Med-Tech Board to discuss a possibleacquisition of Med-Tech by Stericycle. On July 21, 1998, Stericycle provided Mr.Henry Knowles, then the Chairman of the Med-Tech Board, with a draft letter ofintent regarding a possible acquisition.
21. On July 27,1998 Mr. ten Brink met with the Med-Tech Board and their counsel tonegotiate and settle a letter of intent (the "Stericycle Letter of Intent") relating to aproposed asset purchase transaction. The Stericycle Letter of Intent:
(a) provided to Stericycle an exclusivity period until August 14, 1998;
(b) required Stericycle to pay a nonrefundable deposit of $25,000 to extend theexclusivity period to August 21 and a further $225,000 to extend theexclusivity period to September 18, 1998;
(c) contained no standstill covenant of Stericycle but included a confidentialityagreement; and
(d) permitted Med-Tech to continue its efforts to complete the proposeddebenture financing.
On July 28, 1998 the Stericycle Letter of Intent was executed. Stericyclecommenced due diligence on July 29, 1998.
22. Browning-Ferris Industries, Inc. ("BFI") is a leading North American waste servicescompany, providing collection, recycling and disposal services for residential,commercial, industrial and medical waste. Its common shares are listed on TheNew York Stock Exchange. It is not a reporting issuer in Ontario.
23. Bruce Stanas of BFI sent a letter dated July 31, 1998 to Mr. Knowles. The letterstated that: (a) Mr. Stanas had spoken to Mr. Morrison on July 27 regarding thepossibility of BFI purchasing Med-Tech's New England business; (b) Mr. Morrisonhad conveyed to him that "they would be interested in entertaining an offer for allMed-Tech's assets in the United States and Canada"; and (c) BFI was confirmingits interest in purchasing Med-Tech's assets in their entirety.
24. Mr. Knowles sent a letter dated August 4, 1998 to Mr. Stanas stating that Med-Tech: (a) currently was party to a lock-up agreement that inhibited its ability todiscuss "acquisitions of all or a substantial part of it"; (b) was continuing its effortsto secure financing along the lines of its current term sheet for an offering ofconvertible debentures; and (c) believed there were no restrictions on its ability tosell its convertible debentures.
25. In a letter dated August 12, 1998 to Mr. Knowles, Mr. ten Brink indicated thatStericycle would not be paying to extend the exclusivity period. Mr. ten Brink metwith Donald Sheldon, in his capacity as counsel to Med-Tech, as well as Mr.McKeown, and informed them that Stericycle proposed to structure the acquisitionof Med-Tech as an asset purchase.
26. Mr. Stanas telephoned Mr. Knowles on August 13, 1998 and left a messageinquiring as to the status of the matter.
27. On August 20, 1998 Mr. Knowles informed Stericycle that Robert Foster of CapitalCanada Limited ("Capital Canada") had been retained by Med-Tech s its financialadviser to explore possible transactions and contact potential parties that might beinterested in acquiring Med-Tech.
28. On August 21, 1998, Mr. Foster sent a fax to Mr. Stanas indicating that the lock-uphad expired and requesting that BFI execute a confidentiality agreement. Such anagreement was executed by BFI and returned to Mr. Foster on August 24, 1998.BFI then received from Mr. Foster a package of documentation pertaining to Med-Tech. In addition, BFI engaged in discussions with Messrs. Foster, Morrison andWarren with a view to determining a value that BFI would be willing to pay for Med-Tech.
29. On August 25, 1998 Mr. Foster and Jill Kasner of Capital Canada met in Chicagowith Mr. ten Brink to discuss the structure and price of the proposed asset purchasetransaction between Med-Tech and Stericycle.
30. During September 1998, Med-Tech representatives met with holders of the BankLoan and the Junior Secured Debt, which were in default, to discuss, among otherthings, forbearance arrangements in respect of these facilities.
31. Between September 8, 1998 and September 25, 1998, Stericycle was negotiatinga purchase agreement with Messrs Foster and Sheldon. On September 26 Mr.Sheldon circulated a revised draft agreement to reflect terms which had beendiscussed during a conference call on September 25, 1998 in which Mr. Sheldon,as well as representatives of Stericycle, Capital Canada and Icon, participated.During this period, Med-Tech representatives also pursued negotiations regardinga possible acquisition with representatives of BFI.
32. Pursuant to a letter dated September 28, 1998 to Mr. Foster, BFI submitted an offer,subject to due diligence, to acquire all of the outstanding stock of Med-Tech for apurchase price of $15,000,000. The letter also stated that the offer assumed thatall assets were free of encumbrances and other obligations and BFI would have noobligations relating to outstanding warrants, convertible stock, options or otherownership interests in Med-Tech's assets.
33. On September 28, 1998 the Med-Tech Board met with its advisers and Icon toreview the status of the proposed sale of Med-Tech's business or the Shares.
34. Mr. Foster contacted Stericycle after the September 28 meeting of the Med-TechBoard and informed Mr. ten Brink that the Med-Tech Board wished to proceed witha meeting on September 29, 1998 in an attempt to resolve outstanding businessissues relating to the acquisition. On September 29, 1998 Messrs. Sheldon andFoster and representatives of Stericycle met in Chicago in an attempt to resolveoutstanding business issues relating to the proposed acquisition. Following themeeting, Med-Tech representatives stated that Stericycle's position would besubmitted to the Med-Tech Board.
35. On October 1, 1998 a meeting of the Med-Tech Board occurred for the purpose ofevaluating the merits of the Stericycle and BFI offers. Mr. Drew was not inattendance. The directors' register shows that Mr. Knowles resigned from the Med-Tech Board on October 1, 1998.
36. After the board meeting, Mr. Foster informed Stericycle that the Med-Tech Boardhad decided that it wanted Stericycle to "stand aside" for two weeks while anotherbidder undertook its due diligence investigations. Stericycle responded to Mr.Foster's request by saying that its offer made that morning would be open only until12:00 noon on October 2, 1998, after which the offer would expire. Mr. ten Brinkand Mr. Innis telephoned Mr. Brooks and Dr. Ryan to reiterate that Stericycle's offerwould expire at 12:00 noon. Stericycle's offer expired.
37. On October 2, 1998 Mr. Drew telephoned Mr. Brooks to discuss the results of theboard meeting of October 1, 1998. The directors' register and a Form 1 filed withthe Corporations Branch on October 5, 1998 show that Mr. Drew resigned from theMed-Tech Board on October 2, 1998. Pursuant to a directors' resolution signed byMessrs. Brooks, Drew and Ryan and dated as of October 2, 1998, the number ofdirectors purportedly was set at three. A letter dated October 8, 1998 from SheldonHuxtable to Mr. Drew requested that he execute a directors' resolution fixing thenumber of directors at three.
38. Following the resignations of Messrs. Knowles and Drew, the remaining membersof the Med-Tech Board consisted of Mr. Brooks and Dr. Ryan. Neither individualis an officer or employee of Med-Tech and neither individual receives remuneration,other than stock options, for his services as a director. Through a holdingcompany, Oriole Point, Mr. Brooks indirectly holds Shares, the Promissory Note andthe Convertible Debenture.
39. On October 2, Stericycle contacted Icon to discuss the possibility of purchasing theJunior Secured Debt.
40. According to Med-Tech, on October 9, 1998, BFI submitted to counsel for Med-Tech a letter of intent (the "BFI Letter of Intent") to acquire, through anamalgamation, all of the Shares for a purchase price of $15,000,000, whichprovided for: (a) the deduction of Med-Tech's obligations from the purchase priceon closing; (b) a revenue guarantee with a claw-back; and (c) deferred payment ofthe purchase price for five months.
41. Between October 9, 1998 and October 16, 1998, certain shareholders of med-Techwere contacted either by Mr. McKeown or Andrew Defrancesco, a representativeof one of the Shareholders, Dominick & Dominick Securities Inc. ("DominickSecurities"), to convey Stericycle's offer to purchase their Shares. Mr. Defrancescocommunicated the offer to Dominick Securities' institutional clients, the AGF fund,the two BPI funds, Investor Co., Standard Venture Partners Inc. and TauntonAssociates Ltd. The holdings of these institutions represented approximately41.4% of the outstanding Shares. Mr. McKeown communicated the offer to theother Shareholders.
42. Many offerees were required to execute a confidentiality agreement, dated October9, 1998 and addressed to Ronald McKeown, before information relating to theproposed acquisition was disclosed to them.
43. Between October 10 and October 20, certain Shareholders executed a scheduleto a form of share purchase agreement (the "Share Purchase Agreement") pursuantto which they agreed to sell to Stericycle the number of Shares indicated in theschedule.
44. The list of Shareholders Stericycle used in effecting the private purchases inOctober is stamped "Draft" and contains an identification line indicating that it wasfaxed on June 16, 1998 from the offices of Londonderry Capital, a company ownedby Mr. McKeown.
45. On October 20, Mr. ten Brink informed Dr. Ryan and Mr. Brooks, the two remainingdirectors of Med-Tech, that Stericycle had become the holder of approximately 60%of the Shares and the holder of the Junior Secured Debt. Mr. ten Brink disclosedthe purchase price, including the conversion factor of 0.00751 Stericycle shares foreach purchased Share. Mr. ten Brink also informed Dr. Ryan and Messrs. Brooks,Foster and Sheldon that Stericycle intended to make an offer (the "Follow-up Offer")to acquire the remaining Shares for the same consideration.
46. Through a press release dated October 21, 1998, Stericycle publicly disclosed thatit had purchased a majority interest in the outstanding stock of Med-Tech, as wellthe Junior Secured Debt. The press release stated that the purchase price perShare was not being disclosed "for competitive reasons".
47. On October 21, 1998 and at Stericycle's request, Med-Tech provided it with the listof the Shareholders and warrant holders contained in Med-Tech's minute books.
48. On October 22, 1998 each of Stericycle, as a purchaser of Shares, and TennyTeng, as the Shares' vendor, delivered to Med-Tech a requisition for ashareholders' meeting for the election of directors.
49. On October 23, 1998 BFI issued a press release announcing a $0.25 per Sharecash offer (the "BFI Offer") to acquire all of the issued and outstanding Shares ofMed-Tech. The press release stated that the BFI Offer was conditional uponobtaining acceptance from Shareholders holding not less than 90% of the issuedand outstanding Shares and no material adverse change in Med-Tech's business.
50. On October 26, 1998 Stericycle issued a press release announcing that it wasrejecting the BFI Offer and that Stericycle had informed the Med-Tech Board thatit intended to make an offer to acquire the remaining Shares.
51. On October 26, 1998, the Med-Tech Board issued a press release announcing thatit was unable to make any recommendations with respect to the BFI Offer and theFollow-Up Offer on the basis that such offers had not yet been sent to theShareholders or the Med-Tech Board. The press release also stated that, untilsuch time as Stericycle's acquisition of the Shares was confirmed to have beenmade in compliance with applicable securities law, the Med-Tech Board felt that itcould not properly respond to Stericycle's requisition and, accordingly,Shareholders were advised that, at the present time, no Shareholder meeting hadbeen called for the purpose of electing directors.
52. On October 28, 1998 BFI mailed the BFI Offer to Shareholders. The BFI Offer issubject to the following conditions: a 66 2/3% tender, no material adverse change,satisfaction of all outstanding warrants, options or rights and no prohibition at lawin respect of the sale to, or purchase by, BFI of the Shares.
53. The BFI Offer does not comply with the formal take-over bid requirements of the Actand initially provided for expiry on November 4, 1998 but has subsequently beenextended to November 24, 1998.
54. The BFI Offer stated that BFI considered the payment to holders of options orwarrants of $0.025 in cash in consideration of the termination of such warrants oroptions to be a satisfactory manner of dealing with these convertible securities.Counsel for Stericycle wrote to counsel for BFI seeking that BFI clarify who was topurchase the options and warrants which were required to be satisfied pursuant tothe BFI Offer. There was no response from BFI or its counsel to this request.
55. On October 30, 1998, Med-Tech issued a press release stating that it had receiveda formal offer from BFI and a request that Med-Tech pay $0.025 per warrant oroption to acquire all the outstanding warrants or options.
56. On October 28, 1998 Stericycle advised Med-Tech of its view that the Med-TechBoard no longer had a quorum as a result of the directors' resolution, dated as ofOctober 2, 1998 but signed by Mr. Drew on October 8, 1998, which provided for areduction in the number of directors to three. Each of Stericycle, as purchaser ofShares, and Mr. Drew, as the Shares' vendor, requested that the directors call ameeting to fill the vacancies. Upon the directors' refusal to call such a meeting,Stericycle and Mr. Drew called a special meeting of shareholders of Med-Tech forNovember 11, 1998 for the purpose of filling the alleged vacancies.
57. On October 28, 1998 Stericycle issued a press releasing stating that: (a) in light ofcertain circumstances which had come to its attention, a meeting of Shareholdersmust be called immediately either by the Med-Tech board or a Shareholder; (b) theMed-Tech Board had not called a Shareholders' meeting to elect directors for over18 months; and (c) the Med-Tech Board had not yet delivered to Shareholders thecompany's audited financial statements for the year ended March 31, 1998. OnOctober 29, 1998, Med-Tech released its financial statements for the year endedMarch 31, 1998.
58. On October 30, 1998 the Med-Tech Board issued a press release stating that,subject to certain conditions and assumptions, since the BFI Offer in cash appearedto offer a premium of 20% to 25% over the Follow-up Offer, which was a shareexchange offer, the directors would be recommending the BFI Offer unless a betteroffer were presented.
59. On October 30, 1998 Stericycle mailed the Follow-up Offer, which provided for thepurchase of the issued and outstanding Shares and certain series of warrants. TheFollow-up Offer does not comply with the formal take-over bid requirements andinitially provided for expiry on November 9, 1998 but has subsequently beenextended to November 24, 1998.
60. On November 10, 1998, the Med-Tech Board called an annual general meeting ofShareholders to be held on December 7, 1998.
61. On November 11, 1998 a disputed special meeting of Shareholders took place and,after counsel to Med-Tech stated at the meeting that the current directors disputedthe validity of the meeting, the meeting continued and two directors, namely Mr. tenBrink and John Newman, purportedly were elected to the Med-Tech Board."
The parties also agreed as to the issues to be considered by us in theseproceedings, as follows:
1. Is Stericycle able to rely on the take-over bid exemption in clause 93(1)(d) inconnection with its private purchases and its public offer?
2. Is Stericycle able to rely on the take-over bid exemption in clause 93(1)(c) inconnection with its private purchases?
3. Is Stericycle's conduct in connection with its private purchases of 60% of the Med-Tech shares and its outstanding public offer contrary to the public interest?
We agree that these are the relevant issues.
At the Hearing, counsel for BFI and Browning (collectively, the "BFI Group")conceded that there was no exemption available in respect of the BFI Offer, and expressedtheir willingness to comply with an order of the Commission requiring the BFI Group tocomply with Part XX of the Act in respect of the BFI Offer.
To supplement the agreed facts, counsel for Med-Tech called, at the Hearing, Dr.Edward Ryan, Robert Foster, Graham Warren and Sandy Cameron-Milks, counsel for theBFI Group called Dennis Nolan, counsel for the Staff of the Commission ("Staff") calledTenny Teng, Daniel Kennedy and Wayne O'Connor, and counsel for Stericycle calledAndrew Defrancesco and Frank ten Brink, in each case to give oral evidence.
Although some of the oral evidence related to the first issue before us, whetherStericycle was able to rely on the exemption contained in clause 93(1)(d) of the Act inconnection with the Stericycle Offer, most of it related to the third and fourth issues,whether Stericycle's conduct was contrary to the public interest, and the remedies, if any,to be granted by us.
We do not find it necessary to outline in these Reasons this oral evidence.
First Issue - clause 93(1)(d)
Subsection 93(1) of the Act exempts certain take-over bids from the requirementsof sections 95 to 100 of the Act. One of these exempt bids, described in clause (d) of thesubsection, is where:
(d) the offeree issuer is not a reporting issuer, there is not a published market inrespect of the securities that are the subject of the bid, and the number of holdersof securities of that class is not more than fifty, exclusive of holders who are in theemployment of the offeree issuer or an affiliate of the offeree issuer, and exclusiveof holders who were formerly in the employment of the offeree issuer or an affiliateof the offeree issuer and who while in that employment were, and have continuedafter that employment to be, security holders of the offeree issuer;
It was Stericycle's position that clause (d) applied to exempt the entire StericycleOffer from the requirements of Part XX of the Act.
The offeree issuer, Med-Tech, is not a reporting issuer and there is not a publishedmarket in respect of its securities. In order to determine whether the clause (d) exemptionis available to Stericycle, or, indeed, to the BFI Group, it is, however, necessary toconsider the meaning of the expressions "holders" and "in the employment of", used in theclause but not defined in the Act.
Mr. Penny, on behalf of Stericycle, argued that, when used in the clause, "holders"should mean neither registered holders nor beneficial holders, but rather the persons andcompanies determined by the bidder to be beneficial holders utilizing whatever knowledgeis available to it, and making appropriate judgments based on that information. Underwhat Mr. Penny referred to as the "reasonableness approach", the bidder would start withthe shareholders list derived from the offeree issuer's register of shareholders, and thenadd or deduct, on the basis not of a strict liability duty of inquiry but on the basis ofinformation which was reasonably known to the bidder, whether that information wasgenerally available or not.
He argued that it would not be appropriate to use the register as the basis fordetermining who the holders were, because it would nevertheless be necessary to gobeyond the register to determine which of these holders were employees or formeremployees. It seems to us that Mr. Penny was confusing two different provisions of clause(d). You are required, in applying the clause, to determine who the "holders" are, and,separately, which of these are employees or former employees who became shareholderswhile employed. Each is a separate determination, and the fact that the latter cannot bemade from the register is, in our view, irrelevant in deciding who the former are.
Mr. Penny also argued that both the registered holders test and the beneficialholders test would allow "entrenchment" by management of an issuer by "raising the bar"which a potential bidder would have to meet, thus discouraging bids. The rules imposedby Part XX of the Act in respect of non-exempt bids are principally imposed for theprotection and benefit of the shareholders of the target issuer. Absent the availability ofan exemption, each of which was crafted to deal with a situation in which it was consideredthat these protections were not required, bidders must comply with these rules. The factthat non-exempt take-over bids are relatively common occurences seems to us to bestrong evidence that this "raising of the bar" does not have the effect of "entrenchingmanagement". Accordingly, in our view, we should not give a strained reading to any ofthese exemptions in order to make them apply more broadly than would otherwise be thecase. The BFI Group is prepared to make a bid on a non-exempt basis. So, even in thismatter, the result of applying either test would not be to "entrench management".
Mr. Penny also made several additional arguments against the use of the registeredholder test, but we did not find any of these to be convincing.
Mr. Penny argued against the use of the beneficial holders test because it wouldbe practically impossible to determine who the beneficial holders of Med-Tech shares werewithout, as he said, holding a Royal Commission hearing. However, in our view, thedifficulty of establishing who the beneficial holders were in this situation does not meanthat the beneficial holders approach is not the one contemplated by clause (d). It may,instead, mean that clause (d) can only be taken advantage of in simpler situations, inwhich the beneficial ownership can be clearly established.
Mr. Sheldon, on behalf of Med-Tech, argued that clause (d), being an exemptionprovision, had to be construed narrowly and, accordingly, that "holders" had to beconstrued as meaning registered holders.
Mr. Hull, on behalf of the BFI Group, argued that persons seeking the benefit of anexemption must clearly establish that they come within its terms.
Ms. Singer, on behalf of Staff, did not take a position as to whether "holders", whenused in clause (d), meant registered holders or beneficial holders. She advanced anumber of policy considerations in favour of each interpretation. However, she did arguethat the "reasonableness test" advanced by Mr. Penny was not the one which should beapplied. In her submission,
(a) the exemption should be strictly construed,
(b) there is no "due diligence" or "best efforts" defence under clause (d) - if the bidderchooses to look behind the register, it must obtain a complete picture of who thesecurity holders are,
(c) if the bidder chooses to look behind the register, it must be consistent - it cannotsubtract "duplicate registrations" while ignoring unregistered transferees, and
(d) if there is any uncertainty as to whether the exemption is available, the bidder eithermust make a formal bid or consult with the Commission prior to making a bid inreliance on the exemption.
We believe that, in her reference to the requirement to have a discussion with theCommission, she intended to refer to the possibility of obtaining from the Commission adiscretionary exemption from the requirements of Part XX of the Act. We agree with herthat there is no warrant in clause (d) for the use of the "reasonableness test" proposed byMr. Penny.
We would point out, parenthetically, that even if we had been prepared to adopt the"reasonableness test", it does not appear to us that the methods adopted by Stericycle todetermine who the beneficial holders were, using this test, were reasonable, especially inthe absence of any evidence as to the advice given to Stericycle as to what the legal andequitable requirements for determining beneficial ownership were. It appears to us thatStericycle approached this question with a strong bias in favour of reducing the numberof beneficial holders, and got carried away in the process.
We are inclined to the view that "holders", when used in clause (d), meansregistered holders. This approach results in a simpler and easier determination of whetherthe exemption is available, and a test which does not require what might be a difficultinquiry into beneficial ownership. In addition, it seems to us that, absent specific languageto the contrary, "holder" normally means the person shown as the shareholder on theregister of shareholders at the relevant time.
If this is the test to be used (or, indeed, if the beneficial holders test is to be used),then it becomes necessary to determine what is meant by the phrase "in the employmentof" in clause (d). Mr. Penny argued for a wide interpretation, to include officers anddirectors. Messrs. Sheldon and Hull and Ms. Singer argued for a narrower interpretation,excluding officers and directors. In our view, "in the employment of", when used in clause(d), means the same thing as "employees of", and refers, in the context of the Act, solelyto those individuals who are actively engaged in the operations of a person or companyfor a salary or wages, and not officers who, although they hold an office, are not soengaged, or directors who manage, or supervise the management of, the business but arenot so engaged. The Act, in various provisions, distinguishes between employees andofficers and directors. See, eg., clause 76(5)(c) and sub-section 118(1). The Commissionhas treated "mere" officers and directors as being distinct and different from employees.See, eg., Rule 45-503.
There are 62 registered holders of Med-Tech shares. Of these, only 6 areindividuals who are or were in the employment of Med-Tech. There was no evidencebefore us that any of the 62 holders are or were in the employment of any affiliate of Med-Tech.
Accordingly, if the registered holders test is applicable, Stericycle did not have theexemption in clause (d) available to it in respect of the Stericycle Offer, and the BFI Groupdid not have that exemption available to it in respect of the BFI Offer.
If, on the other hand, the beneficial holders test is the applicable one, it wasincumbent on Stericycle, in claiming to have the benefit of the exemption in clause (d)available to it, to establish that there were no more than 50 beneficial holders of Med-Techshares, excluding individuals in the employment of Stericycle or an affiliate of Stericycleand individuals who were formerly in the employment of Stericycle or an affiliate and whowhile in that employment were, and have continued to be, security holders of Stericycle,and Stericycle made no attempt to do so. As we have said, the BFI Group acknowledgedthat it did not have the benefit of the exemption.
Second Issue - clause 93(1)(c)
In respect of its purported purchases of Med-Tech shares made on October 20,1998, Stericycle, as an alternative to its clause (d) argument, claimed to be entitled to takeadvantage of the exemption contained in clause 93(1)(c) of the Act, which it purported touse in combination with the definition of "take-over bid" contained in subsection 89(1) ofthe Act.
Such definition reads as follows:
"take-over bid" means an offer to acquire outstanding voting or equity securities ofa class made to any person or company who is in Ontario or to any security holderof the offeree issuer whose last address as shown on the books of the offereeissuer is in Ontario, where the securities subject to the offer to acquire, togetherwith the offeror's securities, constitute in the aggregate 20 per cent or more of theoutstanding securities of that class of securities at the date of the offer to acquire.
Clause 93(1)(c) of the Act reads as follows:
(c) all of the following conditions apply,
(i) purchases are made from not more than five persons or companies in theaggregate, including persons or companies outside of Ontario,
(ii) the bid is not made generally to security holders of the class of securitiesthat is the subject of the bid, and
(iii) the value of the consideration paid for any of the securities, includingbrokerage fees or commissions, does not exceed 115 per cent of the marketprice of securities of that class at the date of the bid determined inaccordance with the regulations;
On October 20, 1998, Stericycle purported to acquire shares of Med-Tech from 28persons and companies. The closing took part in two tranches. First Stericycle purportedto acquire just under 20% of the outstanding shares from 23 holders. Immediatelythereafter, it purported to acquire approximately 40% from five shareholders.
Stericycle argues that its purported acquisition of the shares in the first tranche wasnot a take-over bid, as defined in subsection 89(1), and that, in respect of the shares in thesecond tranche, it had the advantage of the exemption in clause 93(1)(c) of the Act. (Ms.Davidge, on behalf of Stericycle, acknowledged that the exemption in clause (c) could notbe applicable in respect of offers made by Stericycle after the purported purchase of theshares in the second tranche.)
Mr. Penny argued that the Act permits a staged approach to accumulating shares,this being inherent in the definition of "take-over bid".
Mr. Sheldon argued that the offers made by Stericycle to about half theshareholders of Med-Tech and accepted by 29 of them, holding about 60% of theoutstanding shares of Med-Tech, all constituted one take-over bid, and that Stericycle'soffer to the remaining shareholders made October 30, 1998 was merely a continuation ofthe same take-over bid.
Ms. Singer argued that Stericycle cannot, and should not be allowed to, circumventthe requirements of Part XX of the Act, and take advantage of clause 93(1)(c), by takingpurchases of over 60% of the shares of Med-Tech from 28 persons or companies, andseparating them at closing. She said that what Stericycle was doing, from October 9, 1998on, was offering to acquire securities of Med-Tech, and it was offering to acquire morethan 20% of these securities, being engaged in a take-over bid. Accordingly, she argued, Stericycle needed to comply with the formal take-over rules from that date on, or makeuse of an exemption. Ms. Singer further argued that the second requirement of clause (c)-- that the bid must not be made generally to shareholders was not met, because, in thiscase, although the bid may not have been made to all shareholders, it was neverthelessmade to shareholders generally.
In our view, Stericycle was and remains engaged in one continuing take-over bidinvolving the shares of the 28 persons and all other shares which are the subject matterof the offer to acquire (as defined in subsection 89(1) of the Act) by it of all of theoutstanding shares of Med-Tech. The phrase "offer to acquire" is defined in subsection89(1) of the Act as follows:
"offer to acquire" includes,
(a) an offer to purchase, or a solicitation of an offer to sell, securities,
(b) an acceptance of an offer to sell securities, whether or not such offer to sell hasbeen solicited,
or any combination thereof, and the person or company accepting an offer to sellshall be deemed to be making an offer to acquire to the person or company thatmade the offer to sell.
In our view, there was not a separate bid for the shares in the first tranche, followedby a bid which had the benefit of the exemption in clause (c). It is clear to us from theevidence that the portion of the Stericycle Offer involving the shares of the second tranchetook place prior to, or at least no later than, the portion involving shares in the first tranche.Indeed, six shareholders, holding in excess of 40% of the outstanding shares of Med-Tech,were represented by one dealer, who acted on behalf of these holders, but the shares ofonly five of these formed the second tranche, the shares of the sixth being included in thefirst tranche.
To fabricate an artificial series of closings as was, in our view, done here, seemsto us to violate not only the spirit, but also the letter, of the take-over bid provisions of theAct.
The two tranches were closed on October 20, 1998. On the next day, Stericycleoffered to acquire the shares of Med-Tech held by Daniel Kennedy. On October 26, 1998,Stericycle offered to buy the shares of Med-Tech held by Wayne O'Connor. We do notknow whether other similar offers were made in the period from October 20 to October 30.On October 30, 1998 Stericycle made its formal offer to by the remaining outstandingshares of Med-Tech not purported to be held by it.
Mr. Penny argued that the agreements for the sale of the shares purported to beacquired on October 20 were similar in result to lock-up agreements entered intopreliminary to a formal bid. We agree with this argument to the extent that theseagreements were designed, in our view, to ensure that no third party would be able tointerfere in Stericycle's bid for all outstanding shares of Med-Tech.
During Mr. Penny's examination of Frank ten Brink, the Chief Financial Officer ofStericycle, the following exchange occurred:
"Q. After you closed the initial transaction, what were your intentions with respect to theremaining Med-Tech shareholders?
A. We wanted to give the other shareholders the same deal.
Q. Was a follow-up offer made?
A. A follow-up offer was made, and we also mentioned that...to the board of directors,that we wanted to do that.
Q. What were the key terms of your follow-up offer?
A. The follow-up offer was the same transaction as the one that was done with the firstgroup of shareholders that had sold to us; which was that they were going to get.00751 Stericycle share for Med-Tech share."
All of this leads us to conclude that the Stericycle Offer was one continuing take-over bid for all of the outstanding shares of Med-Tech, which commenced with Stericycle'sdiscussions on or before October 9, 1998 with Andrew Defrancesco, of Dominick &Dominick, who represented six institutional shareholders holding over 40% of theoutstanding shares of Med-Tech, and continued after the purported closing on October 20,1998 through the time of the making by Stericycle of its formal bid on October 30, 1998,and is still continuing.
Stericycle would like to slice the Stericycle Offer up into a number of separate bids,so as to attempt to take advantage of the definition of "take-over bid" and the exemptionprovided for in clause 93(1)(c) of the Act, and to validate its purported acquisition ofapproximately 60% of the outstanding shares of Med-Tech on October 20, 1998. In ourview, it cannot do this.
Third Issue - Public Interest Jurisdiction
In view of our holdings on the first two issues, it is unnecessary for us to deal indetail with the third issue. Suffice it to say that, on the evidence, it is our view thatStericycle's actions in connection with the Stericycle Offer were abusive both of themarketplace and of the shareholders of Med-Tech, and failed to carry out the policyobjectives of Part XX of the Act. We would, if this were required to correct the abuse, havecease-traded the Stericycle bid under our discretionary public interest jurisdictioncontained in clause 127(1)2 of the Act.
Fourth Issue - Remedies
We have found that neither of the exemptions purportedly relied on by Stericycleis available to it. We have also found that the exemption purportedly relied on by the BFIGroup is not available to them. Neither the Stericycle offer nor the BFI Offer was,therefore, made in compliance with the requirements of Part XX of the Act. It follows thateach of Stericycle and the BFI Group has not complied and is not complying with Part XXor the regulations made under the Act related to that Part.
Sections 104 and 105 of the Act provide as follows:
104. (1) Where, on the application of an interested person, it appears to theCommission that a person or company has not complied or is not complyingwith this Part or the regulations related to this Part, it may issue, subject tosuch terms and conditions as it may impose, an order,
(a) restraining the distribution of any document used or issued in connectionwith a take-over bid or issuer bid;
(b) requiring an amendment to or variation of any document used or issued inconnection with a take-over bid or issuer bid and requiring the distributionof any amended, varied or corrected document; and
(c) directing any person or company to comply with this Part or the regulationsrelated to this Part or restraining any person or company from contraveningthis Part or the regulations related to this Part and directing the directors andsenior officers of the person or company to cause the person or company tocomply with or to cease contravening this Part or the regulations related tothis Part.
(2) On application by an interested person and subject to such terms andconditions as the Commission may impose, if the Commission is satisfiedthat it would not be prejudicial to the public interest, the Commission may,
(a) decide for the purposes of subsection 97(2) that an agreement,commitment or understanding with a selling security holder is madefor reasons other than to increase the value of the consideration paidto the selling security holder for the securities of the selling securityholder and that the agreement, commitment or understanding may beentered into despite that subsection;
(b) vary any time period set out in the Part or the regulations related tothis Part; and
(c) exempt a person or company from any of the requirements of this Partor the regulations related to this Part.
105. (1) An interested person may apply to the Ontario Court (General Division) foran order under this section.
(2) Where, on an application under subsection (1), the judge hearing theapplication is satisfied that a person or company has not complied with thisPart or the regulations related to this Part, the judge may make such interimor final order as the judge thinks fit, including, without limiting the generalityof the foregoing,
(a) an order compensating any interested person who is a party to theapplication for damages suffered as a result of a contravention of thisPart or the regulations related to this Part;
(b) an order rescinding a transaction with any interested person,including the issue of a security or a purchase and sale of a security;
(c) an order requiring any person or company to dispose of anysecurities acquired pursuant to or in connection with a take-over bidor an issuer bid;
(d) an order prohibiting any person or company from exercising any or allof the voting rights attaching to any securities; and
(e) an order requiring the trial of an issue.
No interested person has applied to the Ontario Court (General Division) undersection 105 in respect of the subject matter of these proceedings.
Mr. Sheldon argued that, because the shares of Med-Tech purportedly acquired byStericycle on October 20, 1998 have not been transferred to Stericycle on the books ofMed-Tech, the transactions in respect of those shares have not been fully completed. Hestated that Med-Tech was not requesting rescission of those transactions, but rather thatthe agreements providing for those transactions be amended to comply with the formaltake-over bid rules in Part XX of the Act, as the Commission is specifically authorized bysection 104(1)(b) of the Act to do. He referred us to the Commission's decision in In theMatter of Comaplex Resources International Ltd. et al. (1989), 12 OSCB 1475, in whichthe Commission said, commencing at page 1490:
"That is not to say that the adjudications the Director now asks us to make undersubsection 100c(1) [now section 104] are beyond the expertise of the Commission.Lengthy documentary evidence is frequently filed in Commission proceedings and -especially in disciplinary matters - we frequently hear, test and accept or rejectconflicting oral evidence. But to embark upon such adjudications here, when thesame issues are coming before the court in the section 100d [now section 105]proceeding, seems to us a wrong use of our resources.
As noted above, in its statement of claim in the section 100d proceedings Comaplexasks for a declaration that the Bank and other defendants have not complied withPart XIX [now Part XX] of the Act, for an order requiring the defendants to make afollow-up offer, for orders prohibiting the defendants from voting their Comaplexshares, for $10,000,000 damages and for orders authorizing the present and formershareholders of Comaplex to claim damages. Under subsection 100c(1) theDirector, for his part, asks us to find that the Bank and other respondents have notcomplied with Part XIX of the Act, to direct them to comply and in particular, throughfollow-up and topping-up offers, to compensate present and former shareholdersof Comaplex. The issues in the two proceedings are almost identical. Allegationsof fraud and conspiracy are made by the defendants in the section 100dproceedings and findings of fact will undoubtedly be complex. Finally, by its clearterms subsection 100c(1) speaks primarily to the righting of wrongs done in thecourse of a take-over bid while the bid is in progress; section 100d equally clearlygoes to redress of such wrongs after the event. Although we could - and might well,if the section 100d proceeding had not gone forward - hear and determine theseissues under subsection 100c(1), we consider that section 100d is the proper homefor this case. A trial in court, rather than a Commission hearing, is the better forumfor the level of fact-finding that will be required here. We accordingly granted theBank's request and have stayed the subsection 100c(1) hearing pending finaldisposition of the section 100d proceeding."
Mr. Hull argued that clause 104(1)(b) of the Act provides the appropriate remedyin these proceedings since it provides the Commission with the power to amenddocuments utilized in connection with a take-over bid. As to the overlapping issuesbetween the Commission's jurisdiction under section 104, and that of the court undersection 105, of the Act, he argued that this matter is overwhelmingly a compliance matterunder the Act, that ours was the proper forum for relief to be granted in, and that it was inthe public interest and in the interest of all the minority shareholders, as well as of thosewho purported to tender to Stericycle, to have this matter dealt with in the most efficientand expeditious forum.
Ms. Superina, on behalf of Staff, argued that the Commission should, under clause104(1)(c), order Stericycle to comply with the formal take-over bid requirements of Part XXof the Act. She said that the Commission has the expertise to deal with the issues underthe exemptions, and that it would not be appropriate for a court to determine these matters.She further argued that the Commission has the power and the jurisdiction to find that theshare purchase agreements entered into by Stericycle and Med-Tech shareholders arevoid.
Ms. Pann, on behalf of Stericycle argued that whether an order can be grantedunder section 104 of the Act to redress wrongs after a take-over bid was unclear. InComaplex, she argued, the Commission noted that section 104 speaks primarily of therighting of wrongs done in the course of a take-over bid while the bid is in progress, andthat section 105 of the Act goes to address wrongs done after the event. She furtherargued that the Commissions statement in Comaplex as to its jurisdiction was obiter. Shewent on to argue that the effect of ordering an amendment to the various agreements wasreally to order withdrawal rights into a contract, and that the legal effect would be to turnthe contract into an option, changing the fundamental nature of the agreements. Shereferred us to the decision of the Supreme Court of Canada in Politzer v. MetropolitanHomes Ltd.  S.C.R. 363, and argued that the Commission was not entitled to changethe nature of the contract. She also argued that only a court could declare a contract tobe void.
In our view, we have the power under section 104 of the Act to order Stericycle toamend the Stericycle Offer, and the BFI Group to amend the BFI Offer, and each to complywith Part XX of the Act in respect of its take-over bid. We have found that each has notcomplied, and is not complying, with Part XX of the Act. Either finding would have beensufficient under the express language of section 104(1) to form the basis for our makingthese orders. The effect may be, as was argued by Ms. Pann, to turn the Stericycle Offerinto "options", but this would only be to turn it into what is required by Part XX in respectof a non-exempt take-over bid.
This is not a case like Comaplex where substantially similar remedies have beensought under both section 104 and section 105 of the Act, the issues in the twoproceedings are substantially identical, finding of facts will be complex, or to deal with thismatter would be a misuse of our resources. Almost all of the relevant facts have beenagreed. In our view, the Commission, and not the Court, is the proper home for thismatter. Indeed, the Commission's expertise is particularly suited to determining theavailability of the exemptions in clauses (c) and (d) of subsection 93(1) of the Act.
We do not find it necessary to decide whether we have the power to void theStericycle Offer and contracts resulting from it.
Accordingly, we made the findings and orders set out in the Schedule to theseReasons.
"J. A. Geller" "Morley P. Carscallen"
"R. Stephen Paddon"
1. The exemption provided for in clause 93(1)(d) of the Act is not available in respectof bids for securities of Med-Tech Environmental Limited ("Med-Tech").
2. The exemption provided for in clause 93(1)(c) of the Act has not been properlyrelied on by Stericycle, Inc. ("Stericycle") in connection with its bid for securities ofMed-Tech.
3. All acquisitions by Stericycle of securities of Med-Tech and offers to acquire suchsecurities heretofore purported to be made were part of one and the same bid byStericycle for Med-Tech securities, and there is no exemption in subsection 93(1)which is available in connection with such bid.
4. Stericycle has not complied with and is not complying with Part XX of the Act andthe regulations relating to such Part (collectively, "Ontario Securities Law") inrespect of such bid or in respect of the continuing or subsequent bid made by it forshares of Med-Tech.
5. Stericycle is directed to comply with Ontario Securities Law, and is restrained fromcontravening Ontario Securities Law, in respect of all bids made or to be made byit for securities of Med-Tech.
6. Stericycle is required to amend or vary the agreements by or pursuant to which ithas acquired or purported to acquire securities of Med-Tech to comply with OntarioSecurities Law, and in particular, section 95 of the Act, on the basis that each suchagreement was part of a bid made by Stericycle for securities of Med-Tech;provided that, in respect of each seller of Med-Tech securities under one of suchagreements, the withdrawal rights required by clause 95 4 of the Act shall only beexercisable by such seller if such seller, concurrently with the withdrawal,surrenders to Stericycle for cancellation all certificates for Stericycle sharesreceived by such seller under such agreement.
7. Stericycle is required to distribute to all such sellers the amended and/or variedagreements referred to above as though such agreements were a new take-overbid, accompanied by the take-over bid circular required by Section 98 of the Act.The distribution shall be made in the manner provided in subsection 100(3) of theAct, and, for the purposes of computing time periods in respect of the bid underOntario Securities Law, the date of the bid shall be the date on which suchdistribution is made to all or substantially all of the above mentioned sellers.
8. The directors and senior officers of Stericycle are directed to cause Stericycle tocomply with, and to cease to contravene, Ontario Securities Law.
9. Browning-Ferris Industries, Inc. and BFI Medical Waste Ltd. (collectively, "BF")have not complied with and are not complying with Ontario Securities Law inrespect of the take-over bid which they have made for securities of Med-Tech.
10. BF are directed to comply with Ontario Securities Law, and are restrained fromcontravening Ontario Securities Law, in respect of their said bid.
11. BF are required to amend or vary their said bid to comply with Ontario SecuritiesLaw and, in particular, section 95 of the Act.
12. All time periods provided for in Ontario Securities Law are varied in respect of BF'sbid so that the date of the bid shall be considered to be the date on which theamended and/or varied bid, and accompanying take-over bid circular, are mailedor delivered to all or substantially all shareholders and warrantholders of Med-Tech.
13. The directors and senior officers of Browning-Ferris Industries, Inc. are directed tocause such company to comply with, and to cease to contravene, Ontario SecuritiesLaw, and the directors and senior officers of BFI Medical Waste Ltd. are directedto cause such company to comply with, and to cease to contravene, OntarioSecurities Law.
14. Our Reasons for this Decision will follow in due course.
"J. A. Geller" "Morley P. Carscallen"
"R. Stephen Paddon"