exv10w19



 





EXHIBIT 10.19




MEMBERS
AGREEMENT




HERITAGE-CRYSTAL
CLEAN, LLC




     This
Members Agreement made this 1st day of August, 1999 by and between The
Heritage Group (“Heritage”), an Indiana general partnership having its principal place of
business at 5400 West
86th Street, Indianapolis, Indiana USA, and Joseph Chalhoub
(“Chalhoub”), 101 Upper Bellevue, Westmount, Quebec, Canada H3Y IB7;



WITNESSETH




     WHEREAS,
Heritage and Chalhoub have entered into a Letter of Intent, dated June 9, 1999,
outlining the general terms under which Heritage and Chalhoub or his nominee would organize and
capitalize a new limited liability company to conduct business in the environmental and fluid
management, parts washing and drum disposal business under the name “Heritage-Crystal Clean, LLC”
(“HCC”); and



     WHEREAS, Heritage and Chalhoub have arrived at certain definitive agreements relative to
operational aspects of HCC and its business relationship with Heritage and Heritage’s controlled
subsidiary, Heritage Environmental Services, Inc., an Indiana corporation (“HES”);



     NOW THEREFORE, in consideration of the premises and the mutual covenants and promises
contained in this Agreement, the legal sufficiency of which are acknowledged and agreed to,
Heritage and Chalhoub, hereby agree as follows:




	 	1.	 	Board of Directors. The Board of Directors of HCC shall consist of
three (3) members, consisting of Fred Fehsenfeld, Jr. (“Fehsenfeld”) acting as Chairman,
Chalhoub and a third person designated by Heritage.
	 
	 	2.	 	Officers and Incentive Compensation. Chalhoub shall serve as Chief
Executive Officer and President pursuant to an employment agreement. The Board of Directors
will select executive officers of the Company upon recommendation of Chalhoub.
	 
	 	3.	 	Key Employee Bonus Pool. The Company will develop an annual cash
bonus program for key employees which will set aside 10% of pretax operating profit into
a pool to be divided among all executives in a manner determined by the Board of
Directors upon recommendation of Chalhoub.
	 
	 	4.	 	Financial Oversight. The HCC Chief Financial Officer shall report to
the President and Chief Executive Officer of HCC or his designee, with the Chief Financial Officer
of Heritage providing audit oversight. HCC’s annual financial reports will be
independently audited.
	 
	 	5.	 	Insurance. HCC will procure and maintain directors and officers
liability insurance in form and amount acceptable to Fehsenfeld and Chalhoub.




1









 






	 	6.	 	Intercompany Arrangements. Except as provided below, HCC will be the
exclusive service provider for all parts washer business unless mutually agreed to by Heritage
and Chalhoub. HBS may provide parts washer service separately to any customers
declined by HCC, If HCC subsequently determines to serve those customers,
Heritage will cause HES to transfer the business to HCC as soon as practical under
the circumstances. The parties acknowledge that Crystal Flash Limited Partnership
of Michigan, an affiliate of Heritage, is involved in the parts washer business in the
State of Michigan under a franchise agreement with Crystal Clean Services, LLC
(“Crystal Clean”), an affiliate of Heritage, the shares of which are partially owned by
Heritage Transport, LLC, an Indiana-limited liability company and a wholly owned
subsidiary of HES (“HT”); provided Heritage will make a good faith effort to
negotiate with franchisee for the transfer of franchisee’s business to HCC. HES will
provide HCC “SG & A” support at the same level of effort and for the same cost that
it is currently providing to Crystal Clean subject to the understanding that
Crystal Clean has not been charged for the services of two (2) full time accountants
employed by Heritage affiliates. Those costs will be charged to HCC but not counted
against EBIDA for purposes of Section 6 of the Preorganization Agreement to which
this Members Agreement is attached as an exhibit (“Preorganization Agreement”). If
services greater than those customarily provided by Heritage are required or desired,
Heritage will negotiate a fair cost allocation with HCC. All non-SG&A services
provided by HES and HT to HCC will be billed at “most favored nations pricing”. For
all other services contracted by HCC, which are provided by HES, including but not
limited to processing and laboratory work, HCC will use HES, provided these services
are cost competitive with third parties.
	 
	 	7.	 	Financial Agreements. So long as HCC is meeting the goals established in its
business plan, Heritage and Chalhoub are committed to provide guaranties and
collateral for their pro rata share based upon Common Unit holdings of up to US$15
million in bank financing for HCC if, guaranties are necessary or requested in
connection with bank financing. Heritage and Chalhoub intend for HCC to commence
with and proceed to completion the retirement of the Preferred Units issued by HCC
and held by Heritage and Chalhoub or his nominee, subject to HCC’s cash flow
requirements and/or the requirements in any applicable bank financing agreements.
Notwithstanding anything to the contrary, there shall be no distribution of Preferred
Unit Member Capital Contributions prior to the expiration of Chalhoub’s ‘Purchase
Option” as defined in Section 6 of the Preorganization Agreement.
	 
	 	8.	 	No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the parties and their respective successors and
permitted assigns.
	 
	 	9.	 	Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the parties, written or
oral, to the extent they related in any way to the subject matter hereof.




2









 






	 	10.	 	Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties named herein and their respective successors and permitted
assigns. Except as otherwise specifically provided above, no party may assign either
this Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of Heritage and Chalhoub.
	 
	 	11.	 	Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together will constitute one and
the same instrument.
	 
	 	12.	 	Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this
Agreement.
	 
	 	13.	 	Notices. All notices, requests, demands, claims, and other communications hereunder
will be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given if (and then two business days after) it is sent
by courier and addressed to the intended recipient at the address indicated above.
Any party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any other
means (including personal delivery, expedited courier, messenger service, telecopy,
telex, or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it actually
is received by the intended recipient. Any party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other parties notice in the manner herein set forth.
	 
	 	14.	 	Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the United States of America and the State of Indiana
without giving effect to any choice or conflict of law provision or rule (whether of the
State of Indiana or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the United States of America and the State of Indiana.
	 
	 	15.	 	Amendments and Waivers. No amendment of any provision of this Agreement shall
be valid unless the same shall be in writing and signed by the parties hereto. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
	 
	 	16.	 	Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other situation or in any other
jurisdiction.




3









 






	 	17.	 	Construction. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Agreement. Any reference to any
domestic federal, state or local statute or law, or to any foreign statute or law, shall
be deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. The word “including” shall mean including without
limitation. The parties intend that each representation, warranty, and covenant
contained herein shall have independent significance. If any party has breached any
representation, warranty, or covenant contained herein in any respect, the fact that
there exists another representation, warranty, or covenant relating to the same subject
matter (regardless of the relative levels of specificity) which the party has not
breached shall not detract from or mitigate the fact that the party is in breach of the
first representation, warranty, or covenant.
	 
	 	18.	 	Specific Performance. Each of the parties acknowledges and agrees that the other
parties would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the parties agrees that the other parties shall be
entitled to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and provisions
hereof in any action instituted in any court of the United States or any state
thereof having jurisdiction over the parties and the matter (subject to the provisions
set forth in Section 19 below), in addition to any other remedy to which they may be
entitled, at law or in equity.
	 
	 	19.	 	Submission to Jurisdiction. Each of the parties submits to the jurisdiction of
any state or federal court sitting in Marion County, Indiana or Cook County,, Illinois, in
any action or proceeding arising out of or relating to this Agreement and agrees that
all claims in respect of the action or proceeding may be heard and determined in any
such court. Each of the parties waives any defense of inconvenient
forum to the maintenance of any action or proceeding so brought and waives any bond, surety, or
other security that might be required of any other party with respect thereto. Any
party may make service on any other party by sending or delivering a copy of the
process to the party to be served at the address and in the manner provided for the
giving of notices in Section 13 above. Nothing in this Section 19, however, shall
affect the right of any party to serve legal process in any other manner permitted by
law or at equity. Each party agrees that a final judgment in any action or proceeding
so brought shall be conclusive and may be enforced by suit on the judgment or in any
other manner provided by law or at equity.
	 
	 	20.	 	Cooperation. The parties shall cooperate with each other and their respective
attorneys, accountants and other agents, and do such other acts and things in good faith as
may be reasonable, necessary or appropriate in order to timely effectuate the
intents and purposes of this Agreement and the consummation of the transactions contemplated hereby.




4









 






	 	21.	 	Independent Agreement. The parties intend that this is an independent agreement.
This Agreement shall be considered to be superseded or controlled by the Operating
Agreement for HCC or other agreements or instruments executed in connection
with the organization and capitalization of HCC except for Sections 1, 3, 4, 5, 6
and 7 which supersede any contrary provisions or interpretations of the Operating
Agreement or other agreements. Certain provisions of this Agreement are
statements of the parties’ intentions as to matters which will be deemed to require
them to negotiate in good faith toward meeting those intentions.
	 
	 	22.	 	Termination. This Agreement is effective as of the Effective Date of the
Operating . Agreement and shall continue in effect until the
first to occur of (i) the termination of Chalhoub’s employment with
HCC under his Executive Employment Agreement (provided that Sections
1, 3, 4, 5, 6 and 7 shall survive in that event until this Members
Agreement would otherwise terminate); (ii) the date Chalhoub, either
personally or through 3571645 Canada, Inc., no longer owns, directly
or indirectly, five percent (5%) of the Common Units of HCC or its
successor business enterprise; or (iii) the date a registration
statement covering at least twenty percent (20%) of the common equity
interests of HCC or its successor business enterprise is allowed to go
effective by the United States Securities and Exchange Commission or
there is otherwise a public market on or through which common equity
securities of HCC may be legally purchased and sold without regulatory
clearance or approval.





     IN WITNESS WHEREOF, the parties have executed this Members Agreement, the year and
date first above written.




	 	 	 	 	 
	THE HERITAGE GROUP	 	 
	 
	 	 	 	 
	By:

	 	/s/ Fred M. Fehsenfeld
	 	/s/ Joseph Chalhoub
	 

	 	 
	 	 
	 

	 	Fred M. Fehsenfeld
	 	Joseph Chalhoub






5









 





FIRST AMENDMENT TO MEMBERS AGREEMENT

HERITAGE-CRYSTAL CLEAN, LLC




     This First Amendment made this 27th day of December, 2000 (“Amendment”), to the
Members Agreement dated August 1, 1999 (“Members Agreement”) by and among The Heritage Group
(“Heritage”), an Indiana general partnership, having its principal place of business at 5400 West
86th Street, Indianapolis, Indiana, USA, 3571645 Canada Inc., organized under the Canada Business
Corporation Act, having its principal place of business at 101 Upper Bellevue, Westmount, Quebec,
Canada H3Y 1B7 (“Canada Inc.”), as successor in interest by assignment from Joseph Chalhoub,
Gregory Paul Ray, as Trustee under the Gregory Paul Ray Trust Agreement dated March 7, 2000
(“Ray”), Frank Fehsenfeld (“Fehsenfeld”), Mike DeAngelis (“DeAngelis”) and John Lucks (Lucks”)
(Heritage, Canada, Inc., Ray, Fehsenfeld, DeAngelis and Lucks collectively “Members”).



WITNESSETH:




     WHEREAS,
the Members wish to amend the Members Agreement.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises
contained in this Amendment, the legal sufficiency of which are acknowledged and agreed to, the
Members hereby agree as follows:



     1. Section 6. Intercompany Arrangements is hereby amended in its entirety to read as follows:




     “6. Intercompany Arrangements. Except as provided below, HCC will be
the exclusive service provider for all parts washer business unless mutually agreed
to by Heritage and Canada Inc. HES may provide parts washer service separately to
any customers declined by HCC. If HCC subsequently determines to serve those
customers. Heritage will cause HES to transfer the business to HCC as soon as
practical under the circumstances. The parties acknowledge that Crystal Flash
Limited Partnership of Michigan, an affiliate of Heritage, is involved in the parts
washer business in the State of Michigan under a Franchise Agreement with Crystal
Clean Services, LLC (“Crystal Clean”), an affiliate of Heritage, the shares of which
are partially owned by Heritage Transport, LLC, an Indiana limited liability
company, and a wholly-owned subsidiary of HES (“HT”); provided Heritage will make a
good faith effort to negotiate with franchisee for the transfer of franchisee’s
business to HCC. Commencing on January 1, 2001, HCC will pay additional monthly
charges to HES for operating facility space and other support services, and as soon
as reasonably practical certain accounting and administrative functions still being
performed by HES will be transitioned to HCC. HES and HCC will negotiate in good
faith a fair compensation for said additional charges which shall be confirmed in
writing. Notwithstanding anything to the contrary, the Heritage corporate staff will
continue to provide human resources, payroll processing, tax support and cash



 









 







management support services to HCC through the period ending December 31, 2002, at
no additional charge. If services greater than those customarily provided by
Heritage to HCC are required or desired, Heritage will negotiate a fair cost
allocation with HCC which shall be confirmed in writing. All non-SG&A services
provided by HES and HT to HCC will be billed at ‘most favored nations’ pricing’.
For all other services contracted by HCC, which are provided by HES, including
but not limited to processing and laboratory work, HCC will use HES, provided
these services are cost competitive with third parties.”



     2. The first sentence of Section 7. Financial Agreements is hereby amended in its
entirety to read as follows:




     “The Members are committed to providing guaranties and collateral for their
pro rata shares based upon Common Unit holdings in bank financing for HCC, if
guaranties are necessary or requested in connection with bank financing. Heritage
and Canada, Inc. are committed to providing guaranties and collateral for their
pro rata shares based upon their Common Unit holdings of up to $15,000,000 in bank
financing for HCC and Ray (with regard to “Trust A”), Fehsenfeld, DeAngelis and
Lucks are committed to providing guaranties and collateral for their pro rata shares based on their Common Unit holdings of up to $10,000,000 in bank financing
for HCC.”



     3. In all other respects not inconsistent herewith, the Members Agreement remains
in full force and effect.



     IN WITNESS WHEREOF, the Members have executed this Amendment to the Members Agreement the
year and date first above written.



	 	 	 	 	 	 	 
	THE HERITAGE GROUP	 	GREGORY PAUL RAY TRUST
	 
	 	 	 	 	 	 
	By:

	 	/s/ John Vercruysse
	 	By:
	 	/s/ Gregory Paul Ray, 
	 

	 	 
	 	 	 	 
	 	 	John Vercruysse	 	 	 	Gregory Paul Ray, Trustee
	 
	 	 	 	 	 	 
	3571645 CANADA INC.	 	/s/ Frank Fehsenfeld
	 	 	 	 	 
	 

	 	 	 	 	 	Frank Fehsenfeld
	 
	 	 	 	 	 	 
	 	 	 	 	/s/ Mike DeAngelis
	 	 	 	 	 
	 

	 	 	 	 	 	Mike DeAngelis
	By:

	 	/s/ Joseph Chalhoub	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Joseph Chalhoub, President	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	/s/ John Lucks
	 	 	 	 	 
	 

	 	 	 	 	 	John Lucks







2










 





MEMBERS AGREEMENT

HERITAGE-CRYSTAL CLEAN, LLC




     This Members Agreement dated as of February 24, 2004 (“Members Agreement”) by and
among THE HERITAGE GROUP (“THG”), an Indiana general partnership; J. CHALHOUB HOLDINGS,
LTD., organized under the Canada Business Corporation Act, GREGORY PAUL RAY, AS TRUSTEE UNDER THE
GREGORY PAUL RAY TRUST AGREEMENT DATED MARCH 7, 2000, DONALD BRINCKMAN, MIKE DEANGELIS, JOHN LUCKS,
GLENN JONES, and JOSEPH CHALHOUB, AS TRUSTEE OF THE HERITAGE-CRYSTAL CLEAN KEY EMPLOYEE MEMBERSHIP
INTEREST TRUST (collectively, the “Chalhoub Group”); FRED M. FEHSENFELD, JR., JAMES C.
FEHSENFELD, AS TRUSTEE OF MAGGIE FEHSENFELD TRUST NO. 103 and AS TRUSTEE OF THE IRREVOCABLE TRUST
FOR THE BENEFIT OF FRANK STOCKDALE FEHSENFELD AND HIS ISSUE, and FRANK FEHSENFELD (collectively,
the “THG Group”); and BRS-HCC INVESTMENT CO., INC., a Delaware corporation (“BRS”);
(THG, the Chalhoub Group, the THG Group, and BRS collectively, the “Members”).



WITNESSETH:




     WHEREAS, the Members are holders of all the Preferred Units and Common Units of
Heritage-Crystal Clean, LLC, an Indiana limited liability company (“Company”); and



     WHEREAS, notwithstanding anything to the contrary in the Operating Agreement of the Company
dated August 10, 1999, as amended, or in the Members Agreement dated August 10, 1999 between THG
and Joseph Chalhoub, the Members want to provide for the election of Company Directors.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises
contained in this Agreement, the legal sufficiency of which are acknowledged and agreed to, the
Members hereby agree as follows:



     1. During the period that BRS owns any Preferred or Common Units of the Company, the Members,
to the extent they have voting rights, shall vote their Units to elect the following as Directors
of the Company or in the alternative in accordance with Sections 2, 3 and 4 hereof:




	 	•	 	Four (4) Directors designated by THG (collectively, the “THG
Directors”);
	 
	 	•	 	Joseph Chalhoub;
	 
	 	•	 	Donald Brinckman (Chalhoub and Brinckman collectively, the
“Chalhoub Directors”); and
	 
	 	•	 	One (1) Director designated from time to time by BRS (“BRS
Director”), with Bruce C. Bruckmann to the initial BRS
Director.




 









 











     2. In the event that any of the THG Directors die, become otherwise unable to serve as a
director, resign, or is determined by the non-THG Directors, in their reasonable judgment, to have
engaged in material misconduct prejudicial to the Company or otherwise disqualifying said person as
a director, THG will designate a replacement and the parties hereto agree to vote their Units in
favor of said designation.



     3. In the event that any Chalhoub Director dies, becomes otherwise unable to serve as a
director, resigns, or is determined by the non-Chalhoub Directors, in their reasonable judgment, to
have engaged in material misconduct prejudicial to the Company or otherwise disqualifying said
person as a director, the Chalhoub Group will designate a replacement who will become a Chalhoub
Director, and the parties hereto agree to vote their Units in favor of said designation.



     4. In the event that the BRS Director dies, becomes otherwise unable to serve as a director,
resigns, or is determined by the THG Directors and Chalhoub Directors, in their reasonable
judgment, to have engaged in material misconduct prejudicial to the Company or otherwise
disqualifying said person as a director, BRS will designate a replacement, who will become the BRS
Director, and the parties hereto agree to vote their Units in favor of said designation.



     5. Upon the cessation of BRS’ ownership of all Preferred and/or Common Units of the Company:




	 	a.	 	The BRS Director (pursuant to the direction of
BRS) will resign as Director,
	 
	 	b.	 	One of the THG Directors (pursuant to the
direction of THG) will resign as Director,
	 
	 	c.	 	The remaining Directors (pursuant to the
direction of THG, the THG Group and the Chalhoub Group) will
amend the Operating Agreement to reduce the number of Directors
from seven (7) to five (5), and
	 
	 	d.	 	The Members, to the extent they have voting
rights, shall vote their Units to elect the following as
Directors of the Company, or in the alternative in accordance
with Sections 2 and 3 hereof:






	 	-	 	Three (3) directors designated by THG,
	 
	 	-	 	Joseph Chalhoub, and
	 
	 	-	 	Donald Brinckman




 









 











     IN WITNESS WHEREOF, the Members have executed this Members Agreement as of the date first
above written.



	 	 	 	 	 	 	 	 	 
	THE HERITAGE GROUP	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Vercruysse	 	 	 	By:	 	/s/ Glenn Jones
	 

	 	 
	 	 	 	 	 	 
	 

	 	John Vercruysse
	 	 	 	 	 	Glenn Jones
	 
	 	 	 	 	 	 	 	 
	J. CHALHOUB HOLDINGS, LTD.	 	 	 	THE HERITAGE-CRYSTAL CLEAN KEY 
	 	 	 	 	 	 	EMPLOYEE MEMBERSHIP INTEREST 
	 	 	 	 	 	 	TRUST
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Joseph Chalhoub	 	 	 	By:	 	/s/ Joseph Chalhoub
	 

	 	 
	 	 	 	 	 	 
	 

	 	Joseph Chalhoub, President
	 	 	 	 	 	Joseph Chalhoub, Trustee
	 
	 	 	 	 	 	 	 	 
	GREGORY PAUL RAY TRUST
U/T/A DTD.	 	 	 	 	 	 
	MARCH

	 	7, 2000	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gregory Paul Ray	 	 	 	By:	 	/s/ Fred M. Fehsenfeld, Jr.
	 

	 	 
	 	 	 	 	 	 
	 

	 	Gregory Paul Ray, Trustee
	 	 	 	 	 	Fred M. Fehsenfeld, Jr.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	MAGGIE FEHSENFELD TRUST NO. 103
	 	 	 	 	 	 	 and IRREVOCABLE TRUST FOR 
	 	 	 	 	 	 	THE BENEFIT OF FRANK STOCKDALE 
	 	 	 	 	 	 	FEHSENFELD AND HIS ISSUE
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald Brinckman	 	 	 	By:	 	/s/ James C. Fehsenfeld
	 

	 	 
	 	 	 	 	 	 
	 

	 	Donald Brinckman
	 	 	 	 	 	James C. Fehsenfeld, Trustee
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Mike DeAngelis	 	 	 	By:	 	/s/ Frank Fehsenfeld
	 

	 	 
	 	 	 	 	 	 
	 

	 	Mike DeAngelis
	 	 	 	 	 	Frank Fehsenfeld
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	BRS-HCC INVESTMENT CO., INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Lucks	 	 	 	By:	 	/s/ Bruce C. Bruckmann
	 

	 	 
	 	 	 	 	 	 
	 

	 	John Lucks
	 	 	 	 	 	Bruce C. Bruckmann
	 

	 	 	 	 	 	 	 	President







 









 





PREFERRED MEMBERS AGREEMENT




HERITAGE-CRYSTAL CLEAN, LLC




     This Preferred Members Agreement is effective as of December 31, 2003 (“Members Agreement”) by
and among THE HERITAGE GROUP (“THG”), an Indiana general partnership; J. CHALHOUB HOLDINGS, LTD.,
organized under the Canada Business Corporation Act, GREGORY PAUL RAY, AS TRUSTEE UNDER THE GREGORY
PAUL RAY TRUST AGREEMENT DATED MARCH 7, 2000, DONALD BRINCKMAN, FRED M. FEHSENFELD, JR., AND JAMES
C. FEHSENFELD, AS TRUSTEE OF MAGGIE FEHSENFELD TRUST NO. 103 and AS TRUSTEE OF THE IRREVOCABLE
TRUST FOR THE BENEFIT OF FRANK STOCKDALE FEHSENFELD AND HIS ISSUE (collectively, the “Preferred
Members”).



WITNESSETH:




     WHEREAS, the Preferred Members are holders of all the Preferred Units of Heritage-Crystal
Clean, LLC, an Indiana limited liability company (“Company”); and



     WHEREAS, notwithstanding anything to the contrary in the Operating Agreement of the Company
dated August 10, 1999, as amended (“Operating Agreement”), the Preferred Members want to confirm
their mutual agreement about their “Cumulative Preferred Return” balances as of December 31, 2003.



     NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises
contained in this Agreement, the legal sufficiency of which are acknowledged and agreed to, the
Preferred Members hereby agree that their “Cumulative Preferred Return” balances under the
Operating Agreement are as indicated on Exhibit A attached hereto and made a part hereof.



 









 





     IN WITNESS WHEREOF, the Members have executed this Members Agreement as of the date first
above written.



	 	 	 	 	 	 	 	 	 
	THE HERITAGE GROUP	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	/s/ John Vercruysse
    	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	John Vercruysse	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	J. CHALHOUB HOLDINGS, LTD.	 	 	 	MAGGIE FEHSENFELD TRUST NO. 103
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Joseph Chalhoub	 	 	 	By:	 	/s/ James C. Fehsenfeld
	 

	 	 
	 	 	 	 	 	 
	 

	 	Joseph Chalhoub, President
	 	 	 	 	 	James C. Fehsenfeld, Trustee
	 
	 	 	 	 	 	 	 	 
	GREGORY PAUL RAY TRUST U/T/A
DTD.	 	 	 	 	 	 
	MARCH

	 	7, 2000	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gregory Paul Ray	 	 	 	By:	 	/s/ Fred M. Fehsenfeld, Jr.
	 

	 	 
	 	 	 	 	 	 
	 

	 	Gregory Paul Ray, Trustee
	 	 	 	 	 	Fred M. Fehsenfeld, Jr.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	IRREVOCABLE TRUST FOR THE BENEFIT OF
	 	 	 	 	 	 	FRANK STOCKDALE FEHSENFELD AND HIS
	 

	 	 	 	 	 	ISSUE	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Donald Brinckman	 	 	 	By:	 	/s/ James C. Fehsenfeld
	 

	 	 
	 	 	 	 	 	 
	 

	 	Donald Brinckman
	 	 	 	 	 	James C. Fehsenfeld, Trustee






 









 






Schedule A




Heritage Crystal Clean, LLC

Preferred Return Balances as of 12/31/03




	 	 	 	 	 
	 	 	Preferred	 
	 	 	Return	 
	Investor	 	Balance	 
	The Heritage Group
	 	$	2,305,161.90	 
	 
	 	 	 	 
	Joe Chalhoub Holdings
	 	$	877,140.10	 
	 
	 	 	 	 
	Fred Fehsenfeld Jr.
	 	$	580,264.70	 
	 
	 	 	 	 
	Frank S. Fehsenfeld (Maggie Fehsenfeld Trust)
	 	$	36,266.44	 
	 
	 	 	 	 
	Frank S. Fehsenfeld (Frank S Fehsenfeld Trust)
	 	$	36,266.44	 
	 
	 	 	 	 
	Gregory Ray Trust
	 	$	72,996.02	 
	 
	 	 	 	 
	Donald Brinkman
	 	$	261,048.67	 
	 
	 	 	 
	 
	 	 	 	 
	Total Preferred Return As Of: 12/31/03
	 	$	4,169,144.27	 
	 
	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	The Heritage Group	 
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	 	 	 
	Initial Capital Invested 8/10/99
	 	$	5,700,000.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Less Transfers Out
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	12/27/00
	 	($	343,500.00	)	 	 	 	 
	- Pref. Return Retained
	 	 	 	 	 	$	28,458.74	 
	(50% of Return for the Time Invested  —  504 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	01/01/01
	 	($	1,282,469.00	)	 	 	 	 
	- Pref. Return Retained
	 	 	 	 	 	$	107,305.76	 
	(50% of Return for the Time Invested  —  509 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	01/18/02
	 	($	549,600.00	)	 	 	 	 
	- Pref. Return Retained
	 	 	 	 	 	$	80,497.58	 
	(50% of Return for the Time Invested  —  891 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested for Entire Period since Inception
	 	$	3,524,431.00	 	 	 	 	 
	- Pref. Return Calc (8/10/99 - 12/31/03) (1,604 days)
	 	 	 	 	 	$	1,858,582.13	 
	 
	 	 	 	 	 	 	 	 
	New Capital Invested 3/19/03
	 	$	2,432,464.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	230,317.69	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	5,956,895.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	2,305,161.90	 
	 
	 	 	 	 	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	J Chalhoub Holdings	 
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	 	 	 
	Initial Capital Invested 8/10/99
	 	$	1,170,000.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Less Transfers Out
	 	 	 	 	 	 	 	 
	 
	11/15/99
	 	($	77,998.00	)	 	 	 	 
	- Pref. Return Retained
	 	 	 	 	 	$	1,243.69	 
	(50% of Return for the Time Invested  —  97 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	02/22/03
	 	($	429,814.00	)	 	 	 	 
	- Pref. Return Retained
	 	 	 	 	 	$	91,214.77	 
	(50% of Return for the Time Invested  —  1,291 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested for Entire Period since Inception
	 	$	662,188.00	 	 	 	 	 
	- Pref. Return Calc (8/10/99 - 12/31/03) (1,604 days)
	 	 	 	 	 	$	349,199.85	 
	 
	Add Transfers In
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	12/27/00
	 	$	320,602.59	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	26,561.70	 
	(50% of Return for the Time Invested before Transfer —  504 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (12/27/00 - 12/31/03) (1,100 days)
	 	 	 	 	 	$	115,943.95	 
	 
	 	 	 	 	 	 	 	 
	01/18/02
	 	$	512,960.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	75,131.07	 
	(50% of Return for the Time Invested before Transfer  —  891 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (01/18/02 - 12/31/03) (713
days)
	 	 	 	 	 	$	120,243.45	 
	 
	 	 	 	 	 	 	 	 
	New Capital Invested 3/19/03
	 	$	1,030,804.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	97,601.61	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	2,526,554.59	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	877,140.10	 
	 
	 	 	 	 	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	Fred Fehsenfeld Jr.	 
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	Initial Capital Invested 8/10/99
	 	$	0.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Add Transfers In
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	01/01/01
	 	$	1,139,973.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	95,382.95	 
	(50% of Return for the Time Invested before Transfer —  509 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (01/01/01 - 12/31/03) (1,095 days)
	 	 	 	 	 	$	410,390.28	 
	 
	 	 	 	 	 	 	 	 
	New Capital Invested 3/19/03
	 	$	786,730.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	74,491.48	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	1,926,703.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	580,264.70	 
	 
	 	 	 	 	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	Frank S. Fehsenfeld	 
	 	 	(Maggie-Trust)	 
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	 	 	 
	Initial Capital Invested 8/10/99
	 	$	0.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Add Transfers In
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	01/01/01
	 	$	71,248.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	5,961.41	 
	(50% of Return for the Time Invested before Transfer —  509 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (01/01/01 - 12/31/03)
(1,095 days)
	 	 	 	 	 	$	25,649.28	 
	 
	 	 	 	 	 	 	 	 
	New Capital Invested 3/19/03
	 	$	49,171.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	4,655.75	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	120,419.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	36,266.44	 
	 
	 	 	 	 	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	Frank S. Fehsenfeld	 
	 	 	(Frank S. Fehsenfeld	 
	 	 	Trust)	 
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	 	 	 
	Initial Capital Invested 8/10/99
	 	$	0.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Add Transfers In
	 	 	 	 	 	 	 	 
	 
	01/01/01
	 	$	71,248.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	5,961.41	 
	(50% of Return for the Time Invested before Transfer —  509 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (01/01/01 - 12/31/03) (1,095 days)
	 	 	 	 	 	$	25,649.28	 
	 
	 	 	 	 	 	 	 	 
	New Capital Invested 3/19/03
	 	$	49,171.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	4,655.75	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	120,419.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	36,266.44	 
	 
	 	 	 	 	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	Gregory Ray Trust	 
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	 	 	 
	Initial Capital Invested 8/10/99
	 	$	0.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Add Transfers In
	 	 	 	 	 	 	 	 
	 
	11/15/99
	 	$	77,998.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	1,243.69	 
	(50% of Return for the Time Invested before Transfer —  97 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (11/15/99 - 12/31/03) (1,507 days)
	 	 	 	 	 	$	38,644.27	 
	 
	12/27/00
	 	$	22,897.41	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	1,897.03	 
	(50% of Return for the Time Invested before Transfer —  504 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (12/27/00 - 12/31/03) (1,100 days)
	 	 	 	 	 	$	8,280.71	 
	 
	 	 	 	 	 	 	 	 
	01/18/02
	 	$	36,640.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	5,366.51	 
	(50% of Return for the Time Invested before Transfer —  891 days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (01/18/02 - 12/31/03) (713
days)
	 	 	 	 	 	$	8,588.82	 
	 
	New Capital Invested 3/19/03
	 	$	94,788.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	8,975.00	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	232,323.41	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	72,996.02	 
	 
	 	 	 	 	 	 	 






 









 






Heritage Crystal Clean, LLC

Individual Member Preferred Return Calculations




	 	 	 	 	 	 	 	 	 
	 	 	Donald Brinkman
	 	 	 	 	 	 	Preferred	 
	 	 	Invested	 	 	Return	 
	 	 	Capital	 	 	(12%)	 
	 	 	 
	Initial Capital Invested 8/10/99
	 	$	0.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Add Transfers In
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	02/22/03
	 	$	429,814.00	 	 	 	 	 
	- Pref. Return Received from Original Investor
	 	 	 	 	 	$	91,214.77	 
	(50% of Return for the Time Invested before Transfer —  1,291
days)
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Pref. Return Earned Since Transfer (02/22/03 - 12/31/03) (313
days)
	 	 	 	 	 	$	44,229.63	 
	 
	Capital Invested 3/22/02
	 	$	227,118.00	 	 	 	 	 
	- Pref. Return Calc (3/22/02 - 12/31/03) (650 days)
	 	 	 	 	 	$	48,534.81	 
	 
	 	 	 	 	 	 	 	 
	Capital Invested 8/30/02
	 	$	151,412.00	 	 	 	 	 
	- Pref. Return Calc (8/30/02 - 12/31/03) (489 days)
	 	 	 	 	 	$	24,342.07	 
	 
	 	 	 	 	 	 	 	 
	New Capital Invested 3/19/03
	 	$	556,872.00	 	 	 	 	 
	- Pref. Return Calc (3/19/03 - 12/31/03) (288 days)
	 	 	 	 	 	$	52,727.39	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	Net Capital Invested as of 12/31/03
	 	$	1,365,216.00	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	- Total Preferred Return as of 12/31/03
	 	 	 	 	 	$	261,048.67