Exhibit 10.12


 


 


SECOND
AMENDED AND RESTATED SECURED PROMISSORY NOTE


 


 


	
  $1,302,826.48

  	
   

  	
  September
  30, 2004

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dallas,
  Texas

  



 


FOR VALUE
RECEIVED, 3CI Complete Compliance Corporation, a Delaware corporation (the
“Maker”), promises to pay to the order of Waste Systems, Inc., a Delaware
corporation (the “Payee”), in lawful money of the United States of America, the
sum of One Million Three Hundred Two Thousand Eight Hundred Twenty-six Dollars
and 48/100 ($1,302,826.48), or so much thereof as may be advanced and
outstanding hereunder, together with accrued interest on the outstanding
portion thereof, with such outstanding principal amount to include any unpaid
interest as described below, at a rate of interest equal to the lesser of
(i) the prime rate of interest as set forth from time to time in the
“Money Rates” section of the Wall Street Journal
(Southwestern Edition) (the “Prime Rate”), not to exceed 13%, and (ii) the
Maximum Rate (as defined below) from time to time in effect.  Any change in the Prime Rate shall become
effective, without further notice, on the first day of each calendar month
based upon the published quote of the Prime Rate for the business day
immediately preceding the first day of each calendar month.  The Maker agrees to pay interest at the
Maximum Rate on all past due principal and interest on this Note from the
maturity thereof until paid.  This Note
may be prepaid in whole or in part at any time without notice or prepayment
penalty.  All payments paid on this Note
shall be applied first to accrued but unpaid interest and the balance, if any,
to unpaid principal.  Interest hereunder
shall be computed on the basis of the actual number of days elapsed based on a
365 or 366-day year, as the case may be, and will accrue at the rate applicable
hereunder on the unpaid principal amount of this Note outstanding from time to
time. This Note shall be payable at such address as the Payee may from time to
time designate in writing.


 


Principal and
accrued interest under this Note in the aggregate amount of $25,000.00 shall be
due and payable in monthly installments on the fifth business day of each month
with the first such installment being due and payable on October 7, 2004.  The outstanding principal of this Note and
any accrued but unpaid interest is due and payable on April 3, 2006 (the
“Maturity Date”).


 


If any payment of
principal or interest on this Note shall become due on a day other than a
business day, such payment shall be made on the next succeeding business day
and such extension of time shall in such case be included in computing interest
in connection with such payment.


 


Prior to the
Maturity Date, the Maker shall be entitled to borrow additional amounts
hereunder, not to exceed in the aggregate $100,000, upon not less than three
days notice to the Payee.  Any additional
amounts borrowed by the Maker hereunder shall be due and payable on the
Maturity Date, and shall constitute additional principal under this Note.


 


“Maximum
Rate” means the
lesser of (a) 18% per annum or (b) the maximum lawful nonusurious rate of
interest (if any) that under Applicable Law (as hereinafter defined) the Payee
is permitted to charge the Maker on this Note from time to time.


 


“Applicable
Law” means the
law in effect from time to time and applicable to this Note that permits the
charging and collection of the highest permissible lawful nonusurious rate of
interest on this Note, including the laws of the State of Texas and laws of the
United States of America.


 


In no event shall
the aggregate of the interest on this Note, plus any other amounts paid in
connection with the loan evidenced by this Note that would under Applicable Law
be deemed “interest,” ever exceed the maximum amount of interest which, under
Applicable Law, could be lawfully charged on this Note.  The Payee and the Maker specifically intend
and agree to limit contractually the interest payable on this Note to not more
than an amount determined as being the Maximum Rate.  Therefore, none of the terms of this Note
shall ever be construed to create a contract to pay, charge, demand, or receive
interest at a rate in excess of the Maximum Rate, and neither the Maker nor any
other party liable on this Note shall ever be liable for interest in excess of
that determined as being the Maximum Rate, and the provisions of this paragraph
shall control over all provisions of this Note or of any other instruments
pertaining to or securing this Note.  If
any amount of interest taken or received by the Payee shall be in excess of the
maximum amount of which, under Applicable Law, could lawfully have been
collected on this Note, then the excess shall be deemed to have been the result
of a mathematical or other error by the parties hereto and shall be refunded
promptly to the Maker.  All amounts paid
or agreed to be paid in


 


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connection with the
indebtedness evidenced by this Note that would under Applicable Law be deemed
“interest’ shall, to the extent permitted by Applicable Law, be amortized,
prorated, allocated, and spread throughout the full term of this Note.


 


The Maker will
not, directly or indirectly, create, incur, assume or suffer to exist any Lien
(as hereinafter defined) on any Property (as hereinafter defined) now owned or
hereafter acquired by the Maker, except:


 


1.                                       Liens in favor of the Payee;


 


2.                                       Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith, by appropriate proceeding by or on behalf of the Maker, and with respect
to which adequate reserves therefore have been established;


 


3.                                       Liens of vendors, carriers, warehousemen,
repairmen, mechanics, workmen, or materialmen arising by operation of law in
the ordinary course of business in respect of obligations that are not yet due
or that are being contested in good faith by appropriate proceedings by or on
behalf of the Maker and with respect to which adequate reserves therefore have
been established;


 


4.                                       Liens and minor irregularities in title
that do not materially interfere with the occupation, use, and enjoyment by the
Maker of the Maker’s Properties or materially impair the value of such
Properties;


 


5.                                       Liens in connection with the original
purchase or lease of any Property hereafter acquired by the Maker involving
annual aggregate payments not exceeding $25,000, or total payments not
exceeding $100,000, unless approved in advance by Maker’s board of directors;


 


6.                                       Liens in connection with any capital
lease which has annual aggregate payments not exceeding $25,000, or total
payments not exceeding $100,000,  and
Liens in connection with any capital lease which has annual aggregate payments
greater than $25,000 unless approved in advance by the Maker’s board of
directors;


 


7.                                       Liens created pursuant to or in
connection with the Settlement Agreement and Release of All Claims dated
January 10, 1996 (the “Shepherd Settlement Agreement”), between James H.
Shepherd, James Michael Shepherd and Richard T. McElhannon as Releasors, and
the Maker, Georg Rethmann, Herman Niehues, Jurgen Thomas, Charles Crochet and
the Payee as Releasees, as acquired by Stericycle, Inc. (“Stericycle”) on or
about May 1, 2002; and


 


8.                                       all other valid and existing Liens of
record with respect to the Properties as of the date hereof securing prior
indebtedness of the Maker, including reaffirmations thereof, with no increase
in priority versus Payee, in connection with the refinancing of the debt
secured thereby (collectively, the “Permitted Liens”).


 


“Lien” means with respect to any Property, any
mortgage, lien (statutory or other), pledge, charge, security interest, claim,
lease, sublease, deed of trust, option, right of first refusal, easement,
servitude, transfer restriction under any stockholder or partner or similar
agreement, or encumbrance, restriction, or other limitations of any kind in
respect of such Property.


 


“Property” means any interest in any kind of
property or asset, whether real, personal or mixed, or tangible or intangible
(including, without limitation, legal rights and all leasehold interests).


 


The Maker and the
Payee (a) acknowledge that this Note amends and restates in its entirety, but
does not constitute a novation of, the Amended and Restated Secured Promissory
Note dated October 1, 1998, in the principal amount of $5,487,308.13, as
amended (the “Amended Note”), executed by the Maker in favor of the Payee, (b)
acknowledge that the Payee has extended valuable financial consideration for
the amendment and restatement of the Amended Note, (c) ratify and confirm that
all liens and related security interests existing under the Amended Note,
including without limitation those created pursuant to or in connection with
the Shepherd Settlement Agreement and those created under a Security
Agreement/Collateral Chattel Mortgage dated September 30, 1995, a Deed of
Trust and Security Agreement dated February 2, 1996, a Leasehold Mortgage and
Security Agreement dated February 2, 1996, a Deed of Trust and Security
Agreement dated March 25, 1996, and a Mortgage dated January 1, 1997, as
acquired by Stericycle (the “Security Documents”), remain in full force and
effect with the same priorities as are in effect before the date of this Note,
and (d) there are no existing, or to the knowledge of Maker or Payee any events
or facts that with time or notice would be become, defaults under the Amended
Note or any instrument or agreement executed in connection with this Note.


 


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For the six months ending September 30, 2004 and
for each of the Maker’s fiscal quarters thereafter until the Maturity Date, the
Maker shall have EBITDA of not less than $500,000  (the
“EBITDA Threshold”).  For purposes of
this Note, EBITDA shall be measured on a trailing six-month basis and shall not
include, effective for the Maker’s fiscal quarter ended June 30, 2004, and
subsequent, all sums paid by Maker that arise from or are related to (a) the
claims of Stericycle regarding the conversion rate of the Maker’s previously
outstanding preferred stock (“Preferred Stock”), including, but not limited to,
Cause No. 95-024912 and Cause No. 2003-46899 in the District Court of Harris
County, Texas, and (b) the claims in Robb et al. v. Stericycle,
Inc. et al., including, but not limited to, the fees and expenses of
the Special Committee of the Maker’s Board of Directors, but excluding any fees
or expenses related to reversal of dividends declared on the Preferred Stock by
the Maker’s Board of Directors.  If the
Maker fails to attain the EBITDA Threshold with respect to any six-month period
ending on each of the Maker’s fiscal quarters from and after September 30, 2004
until the Maturity Date, the Maker shall pay to the Payee within 15 business
days after the end of the applicable fiscal quarter, a fee equal to one-fourth
of the product of (i) the outstanding principal amount of this Note on the last
day of the applicable fiscal quarter, and (ii) 0.03.


 


If one or more of
the following events shall have occurred and be continuing after the expiration
of any cure or grace period specifically set forth hereunder:


 


(a)                                  the Maker fails to pay any principal or
interest of this Note within 15 days following written notice by the Payee to
the Maker of failure to make such payment;


 


(b)                                 the Maker commences a voluntary case or
other proceeding seeking liquidation, reorganization, or other relief with
respect to the Maker or the Maker’s debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of the Maker
or any part of the Maker’s Property, or shall consent to any such relief or to
the appointment of or taking possession by any such official in an involuntary
case or other proceeding commenced against the Maker, or shall make a general
assignment for the benefit of creditors, or shall fail generally to pay, or
shall admit in writing the Maker’s general inability to pay, the Maker’s debts
as they become due, or shall take any action to authorize any of the foregoing;
or


 


(c)                                  an involuntary case or other proceeding
shall be commenced against the Maker seeking liquidation, reorganization, or
other relief with respect to the Maker or the Maker’s debts under any
bankruptcy, insolvency, or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian, or other
similar official of the Maker or any part of the Maker’s Property, and such
involuntary case or other proceeding shall remain undismissed and unstayed for
a period of 60 days, or an order for relief shall be entered against the Maker
under any bankruptcy, insolvency, or other similar laws as now or hereafter in
effect;


 


then in
any such event, the Payee may (a) declare this Note and the loan evidenced
thereby (together with accrued interest thereon) and all other amounts payable
hereunder to be, and this Note, the loan, and amounts shall thereupon become,
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration, or other notice of any kind whatsoever,
all of which are hereby waived by the Maker, (b) exercise any or all of
the rights under any or all of the Security Documents or pursuant to any law or
at equity, and (c) exercise any or all of the rights and remedies of a
secured party under the UCC or under other applicable law or any other legal
and equitable rights to which the Payee may be entitled, all of which rights
and remedies shall be cumulative, and none of which shall be exclusive, and
shall be in addition to any other rights or remedies contained in this Note or
any of the Security Documents.  Should
the Payee ever foreclose on any Property, the Payee shall have the right to
apply the proceeds thereof in any manner it deems appropriate.  All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of the Maker
contained in this Note and the other Security Documents shall be deemed
cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of the Maker herein contained.  The failure or delay of the Payee to exercise
or enforce any rights, Liens, powers, or remedies hereunder or under any of the
other agreements or other documents or security or Property shall not operate
as a waiver of any such Liens, rights, powers, and remedies, but all such
Liens, rights, powers, and remedies shall continue in full force and effect
until the loans evidenced by this Note and all other obligations, indebtedness,
and liabilities shall have been irrevocably and indefeasibly repaid in full in
cash.  All Liens, rights, powers, and
remedies herein provided for are cumulative and none are exclusive.


 


The Payee may not
transfer this Note except to an affiliate of the Payee, and the rights and
privileges of the Payee under this Note shall inure to the benefit of the
Payee’s permitted successors and assigns.


 


The parties hereto
acknowledge and agree that this Note and the obligations and undertakings of
the parties hereunder shall be performable in Dallas, Dallas County, Texas.   This Note shall be governed by, and construed
in accordance with, the laws of the State of Texas, without giving effect to
such State’s principles of conflict of laws.


 


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The Payee waives, if
applicable, all existing defaults or events of default under the Amended Note
through the date hereof.


 


The individuals who execute
this Note on behalf of the Maker and the Payee have the right and authority of
their respective corporations to execute this Note so that it is binding on
such corporation.


 


 


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remainder of this page is left intentionally blank.]


 


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IN WITNESS WHEREOF, the
Maker and the Payee have executed this Note effective as of the date first set
forth above.


 


 


	
  3CI COMPLETE COMPLIANCE
  CORPORATION

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Matthew D.
  Peiffer

  	
   

  	
   

  
	
   

  	
  Matthew D. Peiffer

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED AND CONSENTED TO:

  	
   

  
	
   

  	
   

  
	
  WASTE SYSTEMS, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   /s/ Elizabeth L.
  Brandel

  	
   

  	
   

  
	
  Name:

  	
  Elizabeth L. Brandel

  	
   

  	
   

  
	
  Title:

  	
   VP Finance of
  Stericycle, owner of WSI

  	
   

  	
   

  
							



 


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