exv10w39



 




Exhibit 10.39




EQUITY EXCHANGE AGREEMENT




     This EQUITY EXCHANGE AGREEMENT (this “Agreement”) is entered into this ___day of
March, 2008 (the “Exchange Effective Date”), by and among Heritage-Crystal Clean, Inc., a
Delaware corporation (“HCC Inc.”), Heritage-Crystal Clean, LLC, an Indiana limited
liability company (“HCC LLC”), and each of the members of HCC LLC. Each member of HCC LLC,
other than BRS-HCC Investment Co., Inc. (“BRS-HCC”), are sometimes referred to in this
agreement individually as a “Contributor,” and collectively as the “Contributors.”
The Contributors are listed on Schedule A hereto.



RECITALS:




     WHEREAS, prior to the Exchange Effective Date, HCC LLC and each of its members adopted
the Agreement and Amendment No. 7 (“Amendment No. 7”) to HCC LLC’s Restated Operating
Agreement dated October 26, 2004, as amended October 26, 2004, December 10, 2004, February 16,
2006, February 28, 2006, February 14, 2007 and December 28, 2007 (the “Operating
Agreement”) to simplify the capital structure of HCC LLC, by eliminating all of the outstanding
preferred units of HCC LLC;



     WHEREAS, the Contributors, who collectively own all of the issued and outstanding common units
of HCC LLC, other than those common units held by BRS-HCC (all such common units of HCC LLC not
held by BRS HCC, collectively, the “Exchange Units”), have agreed to exchange the Exchange
Units for shares of the common stock of HCC Inc., par value $0.01 per share (the “HCC
Stock”), at the exchange rate of Five-Hundred (500) shares of HCC Stock per Exchange Unit, in
the amounts listed on Schedule A hereto, effective as of and contingent upon the Closing
(as hereinafter defined), and subject to the terms and conditions of this Agreement (the
“Exchange”);



     WHEREAS, the Exchange is intended to qualify for “tax-free” treatment under Section 351 of the
Internal Revenue Code of 1986, as amended;



     WHEREAS, effective simultaneous with and contingent to the Closing, HCC Inc. shall cancel the
One-Hundred (100) shares of HCC Stock issued to HCC LLC (the “Share Cancellation”);



     WHEREAS, effective immediately subsequent to the Closing and the Share Cancellation, BRS-HCC
will merge with and into HCC Inc., with HCC Inc. as the surviving entity (the “BRS
Merger”), pursuant to the terms and conditions of that certain agreement and plan of merger, of
even date herewith, between HCC Inc., BRS-HCC and the other parties thereto (the “Merger
Agreement”), pursuant to which all right, title and interest in the membership interests of HCC
LLC then held by BRS-HCC shall automatically vest in HCC Inc., and the shares of the Common Stock,
par value $0.01 per share, which constituting one-hundred percent (100%) of the outstanding capital
stock of BRS-HCC (the “BRS-HCC Stock”), shall automatically be extinguished, in
consideration for which the holders of the BRS-HCC Stock shall receive the number of shares of HCC
Stock as set forth in the Merger Agreement;



     WHEREAS, upon the completion of the Exchange, the Share Cancellation and the BRS Merger, HCC
LLC shall become a wholly owned subsidiary of HCC Inc.; and



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     WHEREAS, the Board of Directors of HCC Inc., the Board of Directors of HCC LLC and each of the
Contributors have approved the Exchange on the terms and conditions set forth herein.



     NOW, THEREFORE, in consideration of the premises and the actual promises herein made, and in
consideration of the representations, warranties, and covenants herein contained, the parties
hereto agree as follows:



1. The Exchange




     1.1 The Contributions. Effective as of and contingent upon the occurrence of the
Closing, and on and subject to the terms and conditions of this Agreement, each Contributor shall
contribute, convey, transfer, and assign to HCC Inc. the Exchange Units set forth opposite such
Contributor’s name on Schedule A hereto and, in exchange, HCC Inc. shall issue to each
Contributor the number of shares of the HCC Stock set forth opposite each Contributor’s name on
Schedule A hereto.



     1.2 Instruments of Conveyance. All of the Exchange Units are uncertificated. Prior
to the Closing, each of the Contributors shall deliver to HCC Inc. such good and sufficient duly
executed instruments of conveyance, transfer and assignment as shall be necessary to vest in HCC
Inc. all of the right, title and interest of each of the Contributors in their respective Exchange
Units to put HCC Inc. in actual possession and operating control of such Exchange Units.



     1.3 Termination of Certain Existing Members’ Agreements. Prior to the Closing, all
agreements and arrangements between HCC LLC and any of the Contributors or their successors or
permitted assigns restricting or otherwise limiting the transfer or assignment of the Exchange
Units, entered into prior to the Closing, whether or not reduced to writing (the
“Arrangements”), other than: (i) this Agreement; (ii) the Operating Agreement; (iii)
Amendment No. 7; (iv) the Merger Agreement; (v) the Heritage-Crystal Clean Key Employee Membership
Interest Trust, Under Trust Agreement, dated February 1, 2002, as amended (the “HCC LLC
KEMIT”); and (vi) all other agreements, documents and instruments contemplated hereby or
executed in furtherance of the Exchange, the BRS Merger or the initial public offering of HCC Inc.
(clauses (i) through (vi) collectively, the “Transaction Documents”), are hereby terminated
and of no further force and effect in their entirety, including, without limitation, each of:




                    (a) that certain Members Agreement, dated August 1, 1999 among The Heritage Group, Joseph
Chalhoub, as amended December 27, 2000 by The Heritage Group, 3571645 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, Frank Fehsenfeld, Mike DeAngelis and John Lucks
(the “1999 Members Agreement”);




                    (b) that certain Preferred Members Agreement, dated December 31, 2003 among The Heritage
Group, J. Chalhoub Holdings, Ltd., 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



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as Trustee of the Irrevocable Trust for the Benefit of Frank Stockdale Fehsenfeld and his
Issue (the “2003 Members Agreement”); and




                    (c) that certain Members Agreement, dated February 24, 2004 among The Heritage Group, J.
Chalhoub Holdings Ltd., 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, 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, and BRS-HCC Investment Co., Inc. (the “2004 members Agreement”, and
together with the 1999 Members Agreement, the 2003 Members Agreement and all other Arrangements
(other than the Transaction Documents), collectively, the “HCC LLC Members Agreements”).



The parties hereto expressly waive the application of any rights arising under any of the HCC LLC
Members Agreements.



     1.4 The Closing. The Closing of the Exchange shall occur as soon as practicable after
the receipt by HCC LLC of the Loan Proceeds (as such term is defined in Amendment No. 7). The date
on which the Closing occurs is referred to in this Agreement as the “Closing Date.”



2. Representations and Warranties of the Contributors. Each of the Contributors hereby
represents and warrants to HCC Inc. and HCC LLC that the statements contained in this Section 2 are
correct and complete as of the Closing Date.



     2.1 Organization and Good Standing of HCC LLC. HCC LLC is a limited liability company
duly organized and validly existing and in good standing under the laws of the State of Indiana and
is qualified or licensed to do business and is in good standing as a foreign corporation in each
other jurisdiction in which the conduct of its business or the ownership of property requires such
qualification or licensing, except where failure to be so qualified or licensed would not have a
material adverse effect on HCC LLC.



     2.2 Authorization. Upon the Closing, this Agreement and all documents executed by the
Contributors in connection with the consummation of the transactions contemplated by this Agreement
and each of the other Transaction Documents shall be valid and binding obligations of HCC LLC and
each of the Contributors party hereto and thereto, and will be enforceable in accordance with their
terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules and laws governing specific performance, injunctive relief and other equitable
remedies.



     2.3 Ownership Interests. Each Contributor holds of record and owns beneficially the
Exchange Units set forth opposite his or her name on Schedule A free and clear of any
claims, security interests, liens, pledges, charges, escrows, options, warrants, proxies, purchase
rights, contracts, commitments, rights of first refusal, preemptive rights, mortgages,
hypothecations, prior assignments, title retention agreements, indentures, security agreements or
any other limitations, encumbrances or restrictions of any kind (“Encumbrances”), and upon
transfer of the Exchange Units to HCC Inc., HCC Inc. will have good and valid title thereto free
and clear of



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any Encumbrances. No Contributor is a party to any Encumbrance that could require the
Contributor to sell, transfer or otherwise dispose of any of the Exchange Units (other than this
Agreement or any of the other Transaction Documents, or the agreements terminated pursuant to
Section 1.3 herein). No Contributor is a party to any voting trust, proxy or other agreement or
understanding with respect to the voting of the Exchange Units contributed by him, her or it, other
than with respect to the Exchange Units held in trust pursuant to the HCC LLC KEMIT. The
Contributors collectively own all of the issued and outstanding membership units of HCC LLC, other
than those common units of HCC LLC that will be held by HCC Inc. as successor in interest by merger
from BRS-HCC. As of the Closing Date, no preferred units of HCC LLC are outstanding.



     2.4 Noncontravention. Neither the execution, delivery nor performance of this
Agreement nor any of the other Transaction Documents by HCC LLC or the Contributors will (i)
violate, conflict with or result in a default under any contract or obligation to which HCC LLC or
any Contributor is a party, or by which HCC LLC or any Contributor is bound, or cause the creation
of any Encumbrance upon any of the assets of HCC LLC or the Contributors; (ii) violate or result in
a violation of, or constitute a default (whether after the giving of notice, lapse of time or both)
in any respect under, any provision of any law, regulation or rule, or any order of, or any
restriction imposed by, any court or other governmental agency applicable to HCC LLC or any of the
Contributors; (iii) require from HCC LLC or any of the Contributors any notice to, declaration or
filing with, or consent or approval of any governmental authority or other third party; or (iv)
accelerate any obligation under, or give rise to a right of termination of, any agreement, permit,
license or authorization to which HCC LLC or any of the Contributors are a party or by which HCC
LLC or any of the Contributors are bound.



     2.5 Governmental Consents. The performance by HCC LLC and the Contributors of this
Agreement, and each of the other Transaction Documents and the transactions contemplated hereby and
thereby, do not and will not require any registration with, consent or approval of, or notice to,
with or by, any federal, state or other governmental authority or regulatory body.



     2.6 Investment Representation. Each Contributor acknowledges that the HCC Stock has
not been, and will not be as of the Closing, or in connection with HCC Inc.’s initial public
offering, registered under the Securities Act of 1933, as amended (the “Securities Act”),
or the securities laws of any state or other regulatory body, and such shares are being offered in
reliance upon federal and state exemptions. Each Contributor is acquiring the HCC Stock for its
own account with the present intention of holding such securities for investment purposes and not
with a view to or for sale in connection with any public distribution of such securities in
violation of any federal or state securities laws.



3. Representations and Warranties of HCC Inc. HCC Inc. represents and warrants to each of
the Contributors that the statements contained in this Section 3 are correct and complete as of the
Closing Date.



     3.1 Organization and Power. HCC Inc. is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware. HCC Inc. has all required
corporate power and authority to carry on its business as presently conducted, to enter into and
perform under this Agreement.



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     3.2 Authorization. Upon the Closing, this Agreement shall be a valid and binding
obligation of HCC Inc. enforceable in accordance with their terms, subject to the laws of general
application relating to bankruptcy, insolvency and the relief of debtors and rules and laws
governing specific performance, injunctive relief and other equitable remedies. The execution,
delivery and performance of this Agreement has been duly authorized by all necessary corporate or
other action of HCC Inc.



     3.3 Non-Contravention. Neither the execution, delivery nor performance of this
Agreement by HCC Inc. will (i) violate, conflict with or result in a default under any material
contract or obligation to which HCC Inc. is a party or by which HCC Inc. or its assets is bound, or
any provision of HCC Inc.’s Certificate of Incorporation or bylaws, or cause the creation of any
Encumbrance upon any of the material assets of HCC Inc.; (ii) violate or result in a violation of,
or constitute a default (whether after the giving of notice, lapse of time or both) in any material
respect under, any provision of any material law, regulation or rule, or any order of, or any
restriction imposed by, any court or other governmental agency applicable to HCC Inc.; (iii)
require from HCC Inc. any material notice to, declaration or filing with, or material consent or
approval of any governmental authority or other third party; or (iv) accelerate any obligation
under, or give rise to a right of termination of, any material agreement, permit, license or
authorization to which HCC Inc. is a party or by which HCC Inc. is bound.



4. Additional Documents and Further Assurances. Each of the parties hereto, at the
reasonable request of another party hereto, agree to execute and deliver such other instruments and
documents, and do and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of this Agreement and each of the other Transaction
Documents, and the transactions contemplated hereby and thereby.



5. Survival. All of the representations and warranties contained in this Agreement have
been relied upon and shall survive the execution of this Agreement and continue in full force and
effect forever. The covenants and other agreements contained in this Agreement shall survive the
execution of this Agreement in accordance with the terms thereof.



6. Resale Restrictions. The Contributors covenant, warrant and represent that none of the
HCC Stock issued pursuant to this Agreement will be sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of except after full compliance with all of the applicable
provisions of the Securities Act and the rules of regulations of the Securities and Exchange
Commission and applicable state securities laws and regulations.



7. Indemnity.



     7.1 Indemnification. The Contributors together with their permitted successors and
heirs, executors and administrators (collectively, the “Indemnifying Parties”) shall
jointly and severally indemnify, reimburse, defend (or, where applicable, pay the defense costs
for) and hold harmless HCC Inc., HCC LLC and their successors (collectively, the “Indemnified
Parties”) from and against any and all losses, damages, costs, third party claims, expenses
(including court costs, amounts paid in settlement, judgments, reasonable attorneys’ fees or other
expenses for investigating and defending), suits, actions, claims, deficiencies, Liabilities (as
hereinafter defined) and obligations related to, arising out of or resulting from (i) any
inaccuracy of the



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representations and warranties in Section 2; (ii) breach of Section 6; and/or (iii) any other
breach of this Agreement.



     7.2 Certain Definitions. For purposes of this Section 7, “Liabilities” means
any debt, liability, commitment or obligation of any kind, character or nature whatsoever, whether
known or unknown, choate or inchoate, secured or unsecured, accrued, fixed, absolute, determined,
determinable, contingent or otherwise, whether due or to become due, and whether or not required to
be included in any financial statements or described in any notes thereto.



8. Miscellaneous.



     8.1 No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the parties hereto and their respective successors and
permitted assigns.



     8.2 Entire Agreement. This Agreement together with the other Transaction Documents
constitute the entire agreement between the parties hereto and supersede any prior understandings,
agreements, or representations by or between the parties hereto, written or oral, to the extent
they related in any way to the subject matter hereof.



     8.3 Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, assigns, distributees, heirs, and
grantors of any revocable trusts a party hereto. No Contributor may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior written approval of HCC
Inc.



     8.4 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.



     8.5 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.



     8.6 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 upon receipt if it is sent by facsimile, or reputable express courier,
and addressed or otherwise sent to the intended recipient as set forth below:



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     If to HCC Inc. or HCC LLC:


c/o Heritage-Crystal Clean, Inc.

2175 Point Boulevard, Suite 375

Elgin, Illinois 60123

Attention: Chief Executive Officer

Facsimile: (847) 836-5677




     If to a Contributor, the address for such Contributor on file with HCC Inc.



     In each case, with a copy to:


McDermott Will & Emery LLP

227 West Monroe Street

Chicago, Illinois 60606

Attention: Mark A. Harris and Heidi J. Steele

Facsimile: (312) 984-7700




     8.7 Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Illinois without giving effect to any choice or conflict of
law provision or rule (either of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of Illinois.



     8.8 Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of the parties hereto. No waiver by
any party hereto 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.



     8.9 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.



     8.10 Construction. Any reference to any federal, state, local, or 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 hereto 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.



     8.11 Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified
in this Agreement are incorporated herein by reference and made a part hereof.



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



	 	 	 	 	 
	 	 	HERITAGE-CRYSTAL CLEAN, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	HERITAGE-CRYSTAL CLEAN, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	THE HERITAGE GROUP
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	John Vercruysse
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	J. CHALHOUB HOLDINGS, LTD.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Joseph Chalhoub, President
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Frank Fehsenfeld
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Mike DeAngelis





 




[Signature Page to Exchange Agreement]




 









 





	 	 	 	 	 
	 	 	GREGORY PAUL RAY TRUST U/T/A
DTD. March 7, 2000
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Gregory Paul Ray, Trustee
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	John Lucks
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Fred M. Fehsenfeld, Jr.
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	MAGGIE FEHSENFELD TRUST NO. 103
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	James C. Fehsenfeld, Trustee
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	IRREVOCABLE TRUST FOR THE BENEFIT OF FRANK

STOCKDALE FEHSENFELD AND HIS ISSUE
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	James C. Fehsenfeld, Trustee
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Glenn Jones





 




[Signature Page to Exchange Agreement]




 









 





	 	 	 	 	 
	 	 	THE HERITAGE-CRYSTAL CLEAN KEY EMPLOYEE

MEMBERSHIP INTEREST TRUST
	 
	 	 	 	 
	 

	 	By:
	 	THE HERITAGE GROUP, PURSUANT TO AN

IRREVOCABLE APPOINTMENT OF A PROXY DATED
FEBRUARY 24, 2004
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	John Vercruysse
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Donald Brinckman, as Trustee under the
Donald W. Brinckman Trust Agreement
u/t/a dated October 11, 1999, as amended
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	Ken Price
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	BRS-HCC INVESTMENT CO., INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title	 	 






 



[Signature Page to Exchange Agreement]