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EXHIBIT 10.9




PARTICIPATION RIGHTS AGREEMENT




     This PARTICIPATION RIGHTS AGREEMENT (this “Agreement”) is dated as of                     , 2008 by and
between HERITAGE-CRYSTAL CLEAN, INC., a Delaware corporation (the “Company”) and THE HERITAGE
GROUP, an Indiana general partnership (“THG”).



RECITALS:




     WHEREAS, THG is one of the founding members of Heritage-Crystal Clean, LLC (the Company’s
predecessor in interest);



     WHEREAS, it is a condition to THG’s consent to the Company’s initial public offering (the
“IPO”) that the Company grant THG certain participating rights with respect to Future Offerings (as
hereinafter defined); and



     WHEREAS, on the date hereof, the Company completed its IPO with respect to the Company’s
common stock, $0.01 par value per share (the “Common Stock”).



     NOW THEREFORE, the Company and THG hereby agree as follows:



ARTICLE I




THG’S REPRESENTATIONS AND WARRANTIES




     THG represents and warrants to the Company, as of the date hereof and as of the date of each
Future Closing, that:



     1.1 Organization and Qualification. THG is an Indiana general partnership, duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, with full power and authority to perform its obligations under this Agreement.



     1.2 Authorization; Enforcement. This Agreement and the consummation of the
transactions contemplated hereby (and each Future Closing) have been (or will be) duly and validly
authorized by, and duly executed and delivered on behalf of, THG. This Agreement constitutes the
valid and binding agreement of THG enforceable in accordance with its terms, except as such
enforceability may be limited by: (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws in effect that limit creditors’ rights generally; (ii) equitable
limitations on the availability of specific remedies; and (iii) principles of equity (regardless of
whether such enforcement is considered in a proceeding in law or in equity).



     1.3 No Conflicts. Neither the execution and delivery of this Agreement nor the
performance or consummation of the transactions contemplated hereby will: (i) contravene, conflict
with, result in a breach or violation of, constitute a default under, or accelerate the performance
provided by, in any material respect any provisions of: (A) any law, rule, ordinance or regulation
of any governmental authority, or any judgment, order, writ, decree, permit or license of any
governmental authority, to which THG may be subject or bound; or (B) any contract, agreement,
commitment or instrument to which THG is a party or by which THG is



 









 







bound or committed; (ii) contravene, conflict with, result in a breach or violation of,
constitute a default under, or accelerate the performance provided by, any provisions of the
partnership agreement (or other organizational or constitutional documents) of THG; (iii) require
any notification to, filing with, or consent of, any person or governmental authority; or (iv) give
rise to any right of termination, cancellation or acceleration of any right or obligation of THG or
any other person.



     1.4 Securities Matters. In connection with the Company’s compliance with applicable
securities laws:



          (a) THG understands that certain Equity Securities sold to THG at a Future Closing under this
Agreement may be offered and sold to THG in reliance upon specific exemptions from the registration
requirements of United States and state securities laws (an “Exempt Offering”) and that, in each
Exempt Offering, the Company will rely upon the truth and accuracy of, and THG’s compliance with,
the representations, warranties, agreements, acknowledgments and understandings of THG set forth in
Sections 1.4 and 1.5 hereof in order to determine the availability of such exemption and the
eligibility of THG to acquire such Equity Securities. For purposes of this Agreement, “Equity
Securities” means any equity securities of the Company that are not Exempted Securities (as
hereinafter defined), including, without limitation, Common Stock, any other class or series of
capital stock, and options, warrants and other securities convertible and/or exercisable into
Common Stock or any other class or series of capital stock.




          (b) Any Equity Securities purchased by THG in an Exempt Offering will be purchased by THG for
its own account, not as a nominee or agent, for investment purposes and not with a present view
towards resale, except pursuant to sales exempted from registration under the Securities Act of
1933, as amended (the “1933 Act”), or registered under the 1933 Act.




          (c) THG is and, if required in order for THG to be able to participate in an Exempt Offering,
will be as of the date it purchases Equity Securities in an Exempt Offering, an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D under the 1933 Act, and has such
knowledge and experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Equity Securities. THG understands that its investment in
Equity Securities issued in an Exempt Offering involves a significant degree of risk. THG
understands that no United States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the Equity Securities.




     1.5 Restrictions on Transfer. THG understands that any Equity Securities issued in an
Exempt Offering will not be registered under the 1933 Act or any applicable state securities laws.
THG may be required to hold the Equity Securities issued in an Exempt Offering indefinitely and
such Equity Securities may not be transferred unless (i) such Equity Securities are sold pursuant
to an effective registration statement under the 1933 Act, which the Company may or may not choose
to file with the United States Securities and Exchange Commission in its sole discretion, or (ii)
THG shall have delivered to the Company an opinion of counsel to the effect that such Equity
Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such
registration, which opinion shall be reasonably acceptable to the



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Company. THG understands that until the earlier of (x) such time as the resale of any Equity
Securities issued in an Exempt Offering has been registered under the 1933 Act, or (y) the holding
period for such Equity Securities set forth in Rule 144 under the 1933 Act as in effect from time
to time has expired, certificates evidencing such Equity Securities may bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed against transfer of
the certificates evidencing such Equity Securities):




“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 (THE “ACT”). THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF THE CORPORATION.”



     1.6 Registered Offerings. The provisions of Sections 1.4 and 1.5 shall not apply to
any Equity Securities that are or are to be offered and sold to THG pursuant to an effective
registration statement under the 1933 Act.



ARTICLE II




REPRESENTATIONS AND WARRANTIES OF THE COMPANY




     The Company represents and warrants to THG as of the date hereof that:



     2.1 Organization and Qualification. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction in which it is
incorporated, with corporate power and authority to own, lease, use and operate its properties and
to carry on its business as now operated and conducted.



     2.2 Authorization; Enforcement. The Company has all requisite corporate power and
authority to enter into and perform this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby have been duly authorized by the Company. This Agreement has
been duly executed and delivered by the Company. This Agreement will constitute upon execution and
delivery by the Company, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be limited by: (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws in effect that
limit creditors’ rights generally; (ii) equitable limitations on the availability of specific
remedies; and (iii) principles of equity (regardless of whether such enforcement is considered in a
proceeding in law or in equity).



ARTICLE III




PARTICIPATION IN FUTURE ISSUANCES




     3.1 Participation Rights. THG shall have the right, but not the obligation, during
the Term to participate in any future offerings of Equity Securities for cash consideration, other
than



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offerings of Exempted Securities (as hereinafter defined), for the same purchase price and
payment terms as are offered to other offerees in any such future offerings and in accordance with
the terms and conditions of this Agreement (collectively, the “Future Offerings,” and THG’s right
to participate in each such Future Offering, the “THG Participation Right”).




     3.2 Future Offering Notice. The Company agrees that during the Term, the Company will
not complete a Future Offering unless it shall have first delivered to THG written notice (the
“Future Offering Notice”) of its intent to complete a Future Offering no less than ten (10)
business days prior to the date of such anticipated Future Closing. The Future Offering Notice
shall provide the following information, to the extent such information is known at the time of
delivery of the Future Offering Notice: (i) the number of such new securities to be offered, (ii)
the anticipated price and terms, if any, upon which the Company proposes to offer such securities
(which shall be the same price and payment terms as the Company proposes to offer to other offerees
in such Future Offering), and (iii) the number of Equity Securities that the THG Participation
Right entitles THG to purchase with respect to such Future Offering.



     3.3 Exercise. THG may exercise its THG Participation Right, contingent upon the
occurrence of the Future Closing, by delivering written notice to the Company within five (5)
business days after THG’s receipt of a Future Offering Notice. THG may elect to purchase, at the
per share price and on the terms specified in the Future Offering Notice or that is paid by the
other purchasers of the Future Offering, up to that number of Equity Securities (with respect to
each Future Offering, the “Shares”) that bears a proportion to the total number of Equity
Securities included in the Future Offering equal to the proportion that,



          (a) the number of shares of Common Stock held by THG immediately prior to the date of delivery
of the applicable Future Offering Notice (assuming full conversion and/or exercise, as applicable,
of all Equity Securities convertible into and/or exercisable for Common Stock), plus the
number of votes entitled to be cast in the election of directors with respect to all other classes
of capital stock held by THG immediately prior to the date of delivery of the applicable Future
Offering Notice (assuming full conversion exercise, as applicable, of all Equity Securities
convertible into and/or exercisable for such class of capital stock) (in all cases counted without
duplication) bears to




          (b) the total number of shares of Common Stock then issued and outstanding immediately prior
to the date of delivery of the applicable Future Offering Notice (assuming full conversion and/or
exercise, as applicable, of all Equity Securities convertible into and/or exercisable for Common
Stock), plus the number of votes entitled to be cast in the election of directors with
respect to all other classes of capital stock then issued and outstanding (assuming full conversion
or exercise, as applicable, of all Equity Securities convertible into and/or exercisable for such
class of capital stock).




     3.4 Future Closings. The exercise of the THG Participation Right shall be contingent
upon, and contemporaneous with, the consummation of such Future Offering (the consummation of each
such Future Offering, a “Future Closing”) by the Company. For purposes of clarity, the Company
may, without penalty, discontinue any Future Offering prior to the Future Closing. In connection
with each Future Closing, THG (if it exercises the THG Participation Right in accordance with
Section 3.3) shall deliver to the Company duly and properly executed originals



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of any documents reasonably required by the Company and customary in similar offerings of
securities, and in form reasonably satisfactory to THG, to effectuate such Future Closing, together
with payment of the purchase price for the Shares being purchased by THG in such Future Closing,
and the Company shall promptly issue to THG the Shares purchased thereby.



     3.5 Exempted Securities. The THG Participation Right shall not apply to future
offerings of securities that are not conducted to raise or obtain equity capital or cash,
including, without limitation, any of the following types of securities issued or deemed to be
issued, including in each case shares underlying (directly or indirectly) any such Equity
Securities (collectively, the “Exempted Securities”):



          (a) Equity Securities issued by reason of a dividend, stock split, split-up, reorganization or
other distribution on shares of Common Stock or any other outstanding Equity Securities, provided
that, in each such case, all holders of Common Stock or such outstanding Equity Securities
(including, in each case, THG) receive equal treatment;




          (b) Equity Securities issued to employees or directors of, or consultants or advisors to, the
Company or any of its subsidiaries pursuant to a compensation or employee benefit plan, agreement
or arrangement approved by the Board of Directors of the Company;




          (c) Equity Securities actually issued upon the exercise of options or warrants and Equity
Securities actually issued upon the conversion or exchange of convertible Equity Securities, in
each case provided such issuance, exercise, exchange or conversion is pursuant to the terms of such
option, warrant or convertible Equity Security, and, in each case, provided further that such
options, warrants or convertible securities are either outstanding on the date of this Agreement or
are Exempted Securities issued after the date of this Agreement;




          (d) Equity Securities issued pursuant to the acquisition of another company or product line
by the Company by license, merger, purchase of all or substantially all of the assets of a person
or entity or other reorganization, provided, that such issuances are approved by the Board of
Directors of the Company; or




          (e) Equity Securities issued in connection with any strategic partnership or joint venture
(the primary purpose or material result of which is not to raise or obtain equity capital or cash).




ARTICLE IV




CONDITIONS TO THE COMPANY’S OBLIGATION




     The obligation of the Company hereunder to issue and sell the Shares to THG at a Future
Closing is subject to the satisfaction, at or before the closing date of each Future Closing (each,
a “Future Closing Date”), of each of the following conditions, provided that these conditions are
for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:



     4.1 Delivery of Transaction Documents. THG shall have executed and delivered a
purchase agreement for the Shares in form satisfactory to the Company and THG and in



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substantially the same form as required to be executed and delivered by others in connection
with the purchase of Equity Securities in the applicable Future Offering.



     4.2 Payment of Purchase Price. THG shall have delivered the Purchase Price in
accordance with Section 3.4 above.



     4.3 Representations and Warranties. The applicable representations and warranties of
THG made in this Agreement shall be true and correct in all material respects as of the date when
made and as of the Future Closing Date as though made at that time, and THG shall have performed,
satisfied and complied in all material respects with the applicable covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by THG at or
prior to the Future Closing Date.



     4.4 Litigation. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court
or governmental authority of competent jurisdiction or any self-regulatory organization having
authority over the matters contemplated hereby which prohibits the sale of the Shares or the
consummation of any of the transactions contemplated by this Agreement.



     4.5 Conflict with Charter. No amendment to the Company’s certificate of incorporation
shall have been adopted that prohibits the Company from granting or maintaining participating or
pre-emptive rights with respect to the Common Stock or other securities of the Company.



ARTICLE V




GOVERNING LAW; MISCELLANEOUS




     5.1 Term and Termination. This Agreement becomes effective as of the date of
completion of the IPO and continues in effect until the earlier of the date (i) that the Company is
no longer registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as
amended (the “Term”) and (ii) that the Agreement is deemed terminated in accordance with Section
5.8. In addition, the Term shall automatically expire if THG fails to pay for Shares at a Future
Closing after giving notice of the exercise of its THG Participation Right with respect to such
Shares.



     5.2 Governing Law. This Agreement shall be enforced, governed by and construed in
accordance with the laws of the State of Illinois applicable to agreements made and to be performed
entirely within such state, without regard to the principles of conflict of laws. The parties
hereto hereby submit to the exclusive jurisdiction of the United States Federal Courts located in
the Northern District of the State of Illinois with respect to any dispute arising under this
Agreement, the agreements entered into in connection herewith or the transactions contemplated
hereby or thereby. All parties irrevocably waive the defense of an inconvenient forum with respect
to such courts in the Northern District of the State of Illinois to the maintenance of such suit or
proceeding. All parties further agree that service of process upon a party mailed by first class
mail shall be deemed in every respect effective service of process upon the party in any such suit
or proceeding relating to this Agreement. Nothing herein shall



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affect any party’s right to serve process in any other manner permitted by law. All parties
agree that a final non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other lawful manner. The
party which does not prevail in any dispute arising under this Agreement shall be responsible for
all reasonable fees and expenses, including reasonable attorneys’ fees, incurred by the prevailing
party in connection with such dispute.



     5.3 Counterparts; Electronic Signatures. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which shall constitute one
and the same agreement and shall become effective when counterparts have been signed by each party
and delivered to the other party. This Agreement, once executed by a party, may be delivered to
the other party hereto by electronic transmission of a copy of this Agreement bearing the signature
of the party so delivering this Agreement.



     5.4 Headings. The headings of this Agreement are for convenience of reference only
and shall not form part of, or affect the interpretation of, this Agreement.



     5.5 Severability. In the event that any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform to such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.



     5.6 Entire Agreement; Amendments. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the matters covered herein
and therein and supersede all previous understandings or agreements between the parties with
respect to such matters. No provision of this Agreement may be waived other than by an instrument
in writing signed by the party to be charged with enforcement. The provisions of this Agreement
may be amended only by a written instrument signed by the Company and THG.



     5.7 Notices. Any notices required or permitted to be given under the terms of this
Agreement shall be sent by certified or registered mail (return receipt requested) or delivered
personally or by courier (including a recognized overnight delivery service) or by facsimile and
shall be effective five days after being placed in the mail, if mailed by regular United States
mail, or upon receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The addresses for such
communications shall be:



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If to the Company:



Heritage-Crystal Clean, Inc.

2175 Point Boulevard,

Suite 375

Elgin, IL 60123

Telephone: (847) 836-5670

Facsimile: (847) 836-5677

Attention: President



With copy to:



McDermott Will & Emery LLP

227 West Monroe Street

47th Floor

Telephone: (312) 372-2000

Facsimile: (312) 984-2090

Attention: Heidi J. Steele and Mark A. Harris



If to THG:



The Heritage Group

5400 West 86th Street

PO Box 68123

Indianapolis, IN 46268-0213

Telephone: (317) 228-8314

Facsimile: (317) 228-8325

Attention: John Vercruysse



With copy to:



Ice Miller LLP

One American Square, Suite 3100

Indianapolis, IN 46282-0200

Telephone: (317) 236-2289

Facsimile: (317) 592-4666

Attention: Stephen J. Hackman, Esq.



Each party shall provide notice to the other party of any change in address.




     5.8 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and assigns. THG shall not assign this Agreement or
any of its rights or obligations hereunder, whether by operation of law, merger, sale of all or
substantially all of its general partnership interests or otherwise, without the prior written
consent of the other parties hereto. This Agreement shall terminate upon any purported assignments
by THG not in accordance with this Section 5.8.



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     5.9 Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto, and is not for the benefit of, nor may any provision hereof be enforced by, any
other person.



     5.10 Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.



     5.11 No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.



     5.12 Rights Cumulative. Each and all of the various rights, powers and remedies of
the parties shall be considered cumulative with and in addition to any other rights, powers and
remedies which such parties may have at law or in equity in the event of the breach of any of the
terms of this Agreement. The exercise or partial exercise of any right, power or remedy shall
neither constitute the exclusive election thereof nor the waiver of any other right, power or
remedy available to such party.



     5.13 Survival. Any covenant or agreement in this Agreement required to be performed
following a Closing Date, shall survive the Closing Date.



 [Signature Page Follows]




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     IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed as of the
date first above written.



	 	 	 	 	 	 	 
	 	 	HERITAGE-CRYSTAL CLEAN, INC.	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE HERITAGE GROUP	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title: