**Exhibit 10.2**

 

**3CI EMPLOYEE RETENTION PROGRAM**

 

# 1.             **ESTABLISHMENT OFPROGRAM**.  The Companyestablishes the 3CI Employee Retention Program, as set forth herein and as itmay amended from time to time (the “Program”), effective as of December 31,2005.   Bonuses granted under thisProgram shall be subject to (a) the terms and conditions of this Programand the respective Retention Award Agreement (defined below) executed by eachemployee of the Company who is granted a Bonus under the Program, as suchdocuments may be amended from time to time, (b) Court Approval (definedbelow), and (c) distribution of the Settlement Proceeds (defined below).

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# 2.             **PURPOSE**.  The Company is a party to a settlementagreement pursuant to which Stericycle, Inc., a Delaware corporation andthe Company’s majority stockholder (“Stericycle”), has agreed to pay theSettlement Proceeds to settle the Louisiana Suit (defined below).  Subject to Court Approval, the SettlementProceeds are to be distributed on the Effective Time of Settlement (definedbelow).  Prior to the Effective Time ofSettlement, the Company will continue its business operations.  The purpose of this Program is to assist theCompany in maintaining those operations by providing incentive to the Company’semployees to remain employed and to continue working for the Company throughthe Effective Time of Settlement.

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# 3.             **DEFINITIONS**.  As used herein, unless the context requiresotherwise, the following terms shall have the meanings indicated below:

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## (a)           “Board”means the Board of Directors of the Company.

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## (b)           “Bonus”means the right granted to an Employee under the Program and his respectiveRetention Award Agreement to receive a cash bonus in the amount and under theterms, conditions and limitations that the Special Committee establishes.

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## (c)           “Cause”means (a) Employee’s gross negligence in the performance of his duties asan employee of the Company, or the intentional nonperformance or intentionalmis-performance of such duties; (b) Employee’s failure to abide by orcomply with the Company’s written policies and procedures as of December 31,2005; (c) Employee’s dishonesty, fraud or willful misconduct with respectto the business or affairs of the Company; (d) Employee’s conviction of afelony or other crime involving moral turpitude; or (e) Employee’s abuseof alcohol or drugs (legal or illegal) that, in the Special Committee’s solejudgment, impairs the Employee’s ability to perform his duties as an employeeof the Company.

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## (d)           “Code”means the Internal Revenue Code of 1986, as amended, and any successorstatute.  Reference in the Program to anysection of the Code shall be deemed to include any amendments or successorprovisions to such section and any Treasury regulations promulgated undersuch section.

 

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## (e)           “Committee”means the Special Committee of the Board, the members of which are Stephen B.Koenigsberg and Kevin J. McManus.

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## (f)            “Company”means 3CI Complete Compliance Corporation, dba American 3CI, a Delawarecorporation.

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## (g)           “Court”means the First Judicial District Court, Caddo Parish, Louisiana, HonorableJudge Roy L. Brun presiding.

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## (h)           “CourtApproval” means when the order and judgment of the Court in the LouisianaSuit, including, but not limited to, approval of the payment of the Bonusesgranted pursuant to this Program, become final and no longer subject to reviewby appeal.

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## (i)            “Director”means a member of the Board.

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## (j)            “Disability”means the “disability” of a person as defined in a then effective long-termdisability plan maintained by the Company that covers such person, or if such aplan does not exist at any relevant time, “Disability” means the permanent andtotal disability of a person within the meaning of Section 22(e)(3) ofthe Code.  Section 22(e)(3) ofthe Code provides that an individual is totally and permanently disabled if heis unable to engage in any substantial gainful activity by reason of anymedically determinable physical or mental impairment that can be expected toresult in death or that has lasted or can be expected to last for a continuousperiod of not less than twelve (12) months.

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## (k)           “EffectiveTime of Settlement” means 9 a.m. central time on the later of (a) theday following the date on which the Final Order and Judgment is no longersubject to review by appeal, or (b) the day following the date on whichany appeal from the Final Order and Judgment is finally resolved, eitherbecause a petition for certiorari is denied or by reason of affirmance by acourt of last resort or by lapse of time following affirmance or dismissal of theappeal by an intermediate appellate court or otherwise, provided that the FinalOrder and Judgment is not reversed or materially modified by the Court or anyreviewing court.

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## (l)            “Employee”means any person, including an officer but not a Director, who is employed bythe Company.

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## (m)          “FinalOrder and Judgment” means the final order and judgment of the Courtdismissing the Louisiana Suit with prejudice and without further costs,including, but not limited to, claims for interest, penalties, costs and attorneys’fees, that the plaintiffs or defendants have alleged or may have alleged inconnection with the Louisiana Suit or that are covered by the releases executedin conjunction with the dismissal of the Louisiana Suit.

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## (n)           “LouisianaSuit” means cause no. 467704-A, *Robb et al. v. Stericycle, Inc.et al.,*in the Court.

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## (o)           “RetentionAward Agreement” means the written agreement evidencing the award of aBonus pursuant to this Program executed by the Company and an Employee,including any amendments thereto.

 

American 3CI

Employee Retention Program

 

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## (p)           “Section”means a section of this Program unless otherwise stated or the contextotherwise requires.

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## (q)           “SettlementAgreement” means that certain settlement agreement, dated as of November 11,2005, as it may be amended or modified from time to time, pursuant to which theparties to the Louisiana Suit have agreed to settle all claims in the LouisianaSuit.

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## (r)            “SettlementProceeds” means the $32,500,000 in cash that Stericycle has paid to settlethe allegations against it and its affiliates in the Louisiana Suit.

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# 4.             **BONUSES UNDER THEPROGRAM**. Subject to Court Approval, the maximum aggregate amountof the Settlement Proceeds with respect to which Bonuses may be granted underthis Program shall be $1,000,000 in cash (the “Bonus Pool”).  Any amount of the Bonus Pool granted pursuantto this Program or a Retention Award Agreement that is forfeited or canceledshall be deemed not to have been granted for purposes of determining themaximum aggregate amount that may be paid under the Program and shall again beavailable for Bonus grants under the Program. Notwithstanding any provision of this Program or any Retention AwardAgreement to the contrary, no Bonus or any other amount shall be paid to anyEmployee under the Program or any Retention Award Agreement unless and untilthe Effective Time of Settlement and distribution of the Settlement Proceeds.

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# 5.             **ELIGIBILITY**.  Bonuses may only be granted to Employees ofthe Company. The Special Committee in its sole discretion shall select therecipients of Bonuses.  An Employee maybe granted more than one Bonus under the Program, and Bonuses may be granted atany time or times during the term of the Program.  The grant of a Bonus to an Employee shall notbe deemed either to entitle that individual to, or to disqualify thatindividual from, participation in any other grant of Bonuses under the Programor any other employee benefit given by the Company.

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# 6.             **TERMS AND CONDITIONSOF BONUSES**.  The SpecialCommittee shall determine from time to time and in its sole discretion theprovisions, terms and conditions of each Bonus, including, but not limited to,the amount of each Bonus, employment requirements, termination of employmentprovisions, and all other terms and conditions, subject to the following:

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## (a)           Form ofRetention Award Agreement.  EachBonus granted under this Program shall be evidenced by a written RetentionAward Agreement in such form (which need not be the same for each Employee) asthe Special Committee approves, but which is consistent with this Program.

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## (b)           Dateof Bonus.  The initial date of grantof all Bonuses under this Program will be as of December 31, 2005.  Thereafter, the date of any grant of a Bonusunder this Program will be the date on which the Special Committee makes thedetermination to grant such Bonus, unless otherwise specified by the SpecialCommittee.  A Retention Award Agreementevidencing the Bonus will be delivered to the Employee for his execution withina reasonable time after the date of grant of a Bonus.

 

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## (c)           Payment.  All Bonuses granted under the Program arepart of the Settlement Proceeds to be obtained by the Company pursuant to theSettlement Agreement.  **No Bonuses will be paid unless the Settlement Agreement obtains CourtApproval and until the Effective Time of Settlement and distribution of theSettlement Proceeds.**

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## (d)           Employment.   Nothing in this Program, any Retention AwardAgreement or any Bonus alters the employment at-will relationship between theCompany and its Employees. The Company shall have the right at any time toterminate the employment of any Employee. Notwithstanding this right of termination, however, if an Employee’semployment with the Company prior to the Effective Time of Settlement isterminated (a) by the Company, for any reason other than for “Cause,”including death or Disability, or (b) by an Employee, because the Companyhas changed any of the material terms of an Employee’s employment (e.g. jobduties, existing remuneration and benefits, place of work) and such change hasmade an Employee’s job substantially more onerous for such Employee, then, suchEmployee shall be entitled to, and the Company shall pay, such Employee hisBonus at the time and on the terms otherwise specified in the Employee’sRetention Award Agreement.  Subject tothe provisions of a particular Retention Award Agreement, on termination of anEmployee’s employment with the Company, any Bonus awarded to such Employeeshall be forfeited by the Employee.  Uponany forfeiture, all rights of the Employee with respect to his Bonus and hisRetention Award Agreement shall cease and terminate without any furtherobligation on the part of the Company.  The Special Committee will have discretion to determine whether theemployment of any Employee has terminated and the date on which such employmentterminates or has terminated and whether the Employee’s employment terminatedas a result of the Disability or death of the Employee.

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## (e)           Non-Assignability.  No Employee may assign, pledge or otherwisedispose of any of his rights, obligations or interests in a Bonus or aRetention Award Agreement, otherwise than by will or by the laws of descent anddistribution.

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## (f)            WithholdingTaxes.  The Special Committee mayestablish such rules and procedures as it considers desirable in order tosatisfy any obligation of the Company to withhold the statutory prescribedminimum amount of federal or state income taxes or other taxes with respect toany Bonus.   Prior to payment of anyBonus, the Company will withhold, or cause to be withheld, from any Bonus allincome, employment and other taxes and benefits as the Company deems necessaryto satisfy the Employee’s obligations pursuant to any and all laws orgovernment regulations or rulings, or if applicable, employee benefit plans.

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## (g)           NoOffset.   The Company does not have,and will not attempt to exercise, any right of offset, recoupment, counterclaimor similar right to reduce or excuse payment of any Bonus for any claim orpayment, except with regard to the obligations set forth in Section 6(f) above.

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## (h)           Modification,Extension And Renewal.  The Special Committee shall have the power to modify,cancel, extend or renew any and all Retention Award Agreements and to authorizethe grant of new Bonuses and the entry of new Retention Award Agreements insubstitution therefor, provided that any such action may not, without thewritten consent of the effected Employee, impair any rights under any Bonus andRetention Award Agreement previously granted to such Employee.

 

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# 7.             **INTERPRETATION**.  Subject to Court Approval, the SpecialCommittee shall have full and sole power and authority to interpret, construeand administer the Program and all Retention Award Agreements and shallprescribe such rules and regulations in connection with the operation ofthe Program as it determines to be advisable for the administration of theProgram.  The Special Committee’sinterpretations and construction of the Program, all Retention Award Agreementsand all Bonuses, and all actions hereunder and thereunder, including, but notlimited to the amount of and the recipient of any Bonus, shall be binding andconclusive on the Company and on all other persons and entities for allpurposes.  None of the individual membersof the Special Committee, the Special Committee, the Company or any officer or directorof the Company, shall be liable to any person or entity, including any Employeeand his representatives, heirs or agents, for any action taken or omitted to betaken, in connection with the interpretation and administration of thisAgreement unless attributable to his or its lack of good faith.

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# 8.             **EFFECT OF PROGRAM**.  Neither the adoption of this Program nor anyaction of the Special Committee shall be deemed to give any Employee****any right to be granted a Bonus or anyother rights except as may be evidenced by the Retention Award Agreement, orany amendment thereto, duly authorized by the Special Committee****and executed on behalf of the Company, andthen only to the extent and on the terms and conditions expressly set forththerein.  The existence of the Program,the Retention Award Agreements, and the Bonuses granted thereunder shall notaffect in any way the right of the Special Committee to make, authorize orapprove any change, amendment or modification in the Settlement Agreement orany other corporate act or proceeding by or for the Company that the SpecialCommittee is authorized or empowered to take on behalf of the Company.

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## (a)           **NO EFFECT ON RETIREMENT AND OTHER BENEFIT PROGRAMS**.  This Program is not a “retirement plan” or “welfareplan” under the Employee Retirement Income Security Act of 1974, asamended.  For purposes of any retirementor employee benefit plans of the Company, including its 401K plan, any paymentsmade pursuant to this Program or any Retention Award Agreement shall be subjectto the terms and conditions, including the method of computing compensation orcontributions, of any retirement or employee benefit plan of the Company asthey exist at the Effective Time of Settlement.

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# 9.             **AMENDMENT ORTERMINATION OF PROGRAM**. The Special Committee in its sole discretion may, at any time and fromtime to time after the date of adoption of this Program, terminate or amend theProgram in any respect, including amendment of any form of Retention AwardAgreement to be executed pursuant to this Program.  No Bonus may be granted after the EffectiveDate of Settlement.  Any amendment ortermination of the Program shall not affect Bonuses previously granted and therespective Retention Award Agreement, and such Bonuses and Agreements shallremain in full force and effect as if the Program had not been amended orterminated, unless agreed otherwise in a writing signed by the effectedEmployee or his representative.

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# 10.           **EFFECTIVE DATE ANDTERM OF PROGRAM**.  TheProgram as set forth herein is effective as of December 31, 2005, andshall continue in force and effect until both of the following events haveoccurred: (a) the Effective Time of Settlement, and (b) thedistribution

 

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# ofthe Bonuses to Company employees pursuant to the terms of this Program and theRetention Award Agreements entered into by the Company under this Program.

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# 11.           **GOVERNING LAW**.  The Program shall be construed andinterpreted in accordance with the laws of the State of Texas (without regardto any conflicts of law principles that would require the application of thelaws of any other jurisdiction). Litigation concerning any dispute over the interpretation or enforcementof this Program will be filed and resolved in a federal or state court inTarrant County, Texas.

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# 12.           **INTERPRETIVE MATTERS.**  Whenever required by the context, pronounsand any variation thereof shall be deemed to refer to the masculine, feminine,or neuter, and the singular shall include the plural, and visa versa.  The term “include” or “including” does notdenote or imply any limitation.  Thecaptions and headings used in the Program are inserted for convenience andshall not be deemed a part of the Program for construction or interpretation.

 

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