Document:

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

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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

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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
	 	 	 	 	 	$	261,048.67exv10w20

 

EXHIBIT
10.20

UNIT REDEMPTION AGREEMENT 

(Gregory Ray)

     This UNIT REDEMPTION AGREEMENT (“Agreement”), made this 15th day of November, 1999 (“Effective
Date”), by and between Gregory Ray, 39W750 Crosscreek Lane, St. Charles, Illinois 60175 (“Member”),
and Heritage-Crystal Clean, LLC, an Indiana limited liability company (“Company”);

WITNESSETH THAT:

     WHEREAS, Member owns Three Hundred Forty-Nine and Seventeen/Hundred (349.17) Common Units in
the Company and One Hundred Thirteen and Thirty-Three/Hundred (113.33) Preferred Units in the
Company;

     WHEREAS, Member has entered into an Executive Employment Agreement with the Company dated the
Effective Date (“Employment Agreement”); and

     WHEREAS, Member and the Company desire to enter into certain agreements relative to the
repurchase of the Two Hundred Fifty (250) Common Units of the Company that Member acquired from
the Company as of the Effective Date (referred to as the “Employee Units”), upon the termination
of Member’s employment with the Company;

     NOW, THEREFORE, in consideration of the mutual promises set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged by both
parties, the parties hereby agree as follows:

SECTION 1

Redemption of Units

     1.1. Redemption; Redemption Price; and Closing. Upon the occurrence of a “Triggering
Event” as defined in Section 1.2 below, Member agrees to sell, transfer and convey to the Company,
and the Company agrees to purchase and redeem from Member at closing (“Closing”) as provided for
in Section 3 below, the Employee Units for a purchase price (“Redemption Price”) equal to the
product of (i) the Unit Price determined in the manner provided b Exhibit A attached as applicable
to the first Triggering Event to occur-times (ii) the number of Employee Units owned by Member.

     1.2 Triggering Events. The following occurrences are “Triggering Events” for purposes
of this Agreement having differing consequences on the Redemption Price depending upon when
occurring, all as provided in Exhibit A:

1

 

	 	(a)	 	Death. The death of Executive;
	 
	 	(b)	 	Disability. The disability of the Executive as defined in Section 8 of
the Employment Agreement;
	 
	 	(c)	 	Termination for Cause/Resignation for Without Cause. The
termination of Executive’s employment with the Company for cause or the resignation of
Executive from employment with the Company without cause, all as defined in Section
9(a) of the Employment Agreement; and
	 
	 	(d)	 	Termination Without Cause/Resignation for Good Reason. The
termination of Executive’s employment with the Company without cause or the resignation
of Executive from employment with the Company for good reason, all as defined in
Section 9(b) of the Employment Agreement,

     1.3. Manner of Payment. The Redemption Price shall be payable at:

(a) Death. The Redemption Price payable following the Death of Member shall be
payable in cash at the Closing.

(b) Other Triggering Events. The Redemption Price payable at Closing shall be paid
by Company by delivery of a Single Payment Promissory Note in an amount equal to the
Redemption Price in the form attached as Exhibit B (“Note”). The Note shall have a maturity
date (“Maturity Date”) of the second anniversary of the Closing Date and shall bear interest
from the Closing Date to the Maturity Date at a rate equal to one (1) percentage point less
than the Prime Rate as published by The Wall Street Journal from time to time during that
period and at a rate five percent (5%) more than the Prime Rate after the Maturity Date
until paid in full.

SECTION 2 

Representations and Warranties

     2.1 Member’s Representations and Warranties. As a material inducement to the Company
to enter into this Agreement on the Effective Date, Member represents and warrants to the Company
as follows:

     (a) Title to Employee Units. Except for restrictions in the Operating
Agreement of the Company, Member has good and marketable title to the Employee Units, free
and clear of any and all liens, security interests, restrictions, encumbrances, equities,
options, claims, adverse claims, pledges and other limitations on the ownership or voting
of, or ability to sell, transfer and convey, the Employee Units.

2

 

     (b) Member’s Authority and No Conflicts. Member has the capacity, right, power
and authority to enter into, execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to comply with and fulfill the terms and conditions of
this Agreement, This Agreement constitutes a valid and binding obligation of Member,
enforceable against Member in accordance with its terms, except as the same may be limited
by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of
creditor’s rights generally. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate, conflict with or result
in a breach of any of the terms, conditions and provisions of, or constitute (with or
without the giving of notice or lapse of time, or both) a default under any agreement,
instrument, mortgage, judgment, order, decree or other restriction to which Member is a
party or by which any of Member’s property is bound.

     (c)  Advice and Counsel. Member acknowledges that he has obtained the advice
of counsel, certified public accountants and/or other advisers in connection with this
Agreement, and no representations or warranties, oral or otherwise, except as provided in
this Agreement have been made to Member or to any such attorney, accountant or other adviser
as to the financial condition or prospects of the Company or the value of the Employee Units
on which Member has relied; rather, Member has relied entirely upon his own independent
investigation.

     (d) Consents. To Member’s knowledge, no consent (not obtained), approval,
order or authorization of, or registration, declaration or filing with, any federal, state
or local governmental or regulatory agency or authority is required to be made or obtained
by Member in order to execute this Agreement.

     2.2 Company’s Representations and Warranties. As a material inducement to Member
to enter into this Agreement, the Company represents and warrants to Member as follows:

     (a) Organization and Power. The Company is a limited liability company duly
organized and validly existing under the laws of the State of Indiana, with all requisite
company power and authority to enter into and perform its obligations under this Agreement.

     (b) Company’s Authority and No Conflicts. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary action of the Company. This Agreement constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in accordance with
its terms. Neither the execution of this Agreement nor the consummation of the transactions
contemplated hereby will violate, conflict with or result in a breach of any of the terms,
conditions or provisions of or constitute with or without giving of notice or lapse of time,
or both, a default under any agreement, instrument, mortgage, judgment, order, decree or
other restriction to which the Company is a party or by which any of its property is bound.

3

 

     (c) Consents. No consent (not obtained), approval, order or
authorization of, or registration, declaration or filing with, any federal, state or local
governmental or regulatory agency or authority is required to be made or obtained by the
Company in order to execute this Agreement or to consummate the transaction contemplated
hereby.

SECTION 3

 Closing

     3.1. Closing. The closing shall occur within thirty (30) days following the occurrence
of a Triggering Event and the determination of the Redemption Price.

     3.2. Deliveries by Member. At the Closing, Member shall deliver to the Company an
assignment of the Employee Units duly endorsed and other documents or instruments sufficient to
transfer all rights of Member in the Employee Units to the Company.

     3.3. Deliveries by the Company. At the Closing, the Company shall deliver to Member
the Redemption Price in cash or the Note representing the Redemption Price, as the case may be.

SECTION 4

 Termination

     4.1. Termination by Consent. Member and Company may agree to terminate this
Agreement by their mutual written consent.

     4.2. Public Offering. This Agreement shall automatically terminate on the date when
any Registration Statement on Form S-1, S-2 or S-3 or successor forms (“Registration Statement”)
covering Common Units of the Company (or the common equity interests in any business organization
into which the Common Units are converted upon a transfer of the Company’s business assets or
reorganization) is declared effective by the United State Securities and Exchange Commission (“SEC
Effective Date”), it being the intent of the parties to eliminate any redemption requirements
relative to the Employee Units if and when the Company completes an “initial public offering” of a
common equity interest. Any redemption pending but not Closed on the SEC Effective Date may be
canceled by the Company in the exercise of its own discretion.

4

 

SECTION 5

 Provisions of General Application

     5.1. Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be deemed to have been
duly given on the date of service if served personally on the party to whom notice is given, or on
the third (3rd) day after mailing to the party to whom notice is to be given by
reputable courier service and properly addressed to the intended recipient at the address in the
signature block at the conclusion of the body of this Agreement or to such other address(es) as any
party shall have specified by notice in writing to the other party.

     5.2. Further Assurances. The parties agree that, following the Closing, they will from
time to time, upon request of any other party hereto and without further consideration, execute,
acknowledge and deliver in proper form any further instruments and take such other action as such
other party may reasonably require in order to effectively carry out the intents and purposes of
this Agreement.

     5.4. Governing Law; Consent to Jurisdiction; Severability. This Agreement, and all
transactions contemplated hereby, shall be governed, construed and enforced in all respects in
accordance with the laws of the State of Indiana. The parties hereto agree that all disputes under
or with respect to this Agreement or the transaction contemplated hereby shall be resolved by
litigation in Marion County Circuit or Superior Court or the United States District Court for the
Southern District of Indiana, and each of the parties irrevocably submits to the jurisdiction of
such forums and irrevocably waives any objection the party may have based upon improper venue,
forum non conveniens or similar doctrines or rules.

     5.5. Successors and Assignees. Whenever used, the words “Member” and “Company” shall
be deemed to include the respective successors and assigns of such parties. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of each party and their
respective heirs, personal representatives, successors and assigns; provided, however,
that the benefits and obligations of any party may not be assigned without the other’s prior
written consent.

     5.6. Expenses. Each of the parties shall pay its own expenses incurred in connection
with the transactions provided for in this Agreement.

     5.7. Attorneys’ Fees. Should any action be brought to enforce the terms of this
Agreement, the prevailing party in any such action shall be entitled to recover reasonable
attorneys’ fees incurred in the action in addition to any remedies otherwise available.

     5.8. Modifications. This Agreement may not be changed, amended or modified orally.
This Agreement may be changed, amended or modified only by a written instrument executed by the
parties hereto.

5

 

     5.9. Non-Waiver. Neither the waiver of any breach nor the failure to enforce
any term or condition of, this Agreement shall operate as a waiver or release of any such term or
condition, nor constitute nor be deemed a waiver or release of any other rights, in law or at
equity, or claims which any party may have against any other party for any matter arising out of,
connected with or based upon this Agreement. No waiver shall be enforceable against any party
hereto unless set forth in a written instrument or agreement signed by such party.

     5.10. Captions. The captions of this Agreement are for convenience only and shall not
be deemed to affect the meaning or interpretation of any provision of this Agreement.

     5.11. Entire Agreement. This Agreement, together with the Disclosure and Offering
Statement, the Subscription Agreement, the Operating Agreement for the Company (as amended), the
Executive Employment Agreement between Member and the Company, and the Non-Competition and
Non-Disclosure Agreement between Member and the Company, all dated the Effective Date
(collectively, the “Other Agreements”) contains the entire understanding as to the subject matter
hereof. There are no representations, promises, warranties, covenants or undertakings relating
hereto other than those expressly set forth or provided for in the Closing documents and the Other
Agreements. Except for the Other Agreements, this Agreement supersedes all prior agreements and
understandings of the parties hereto with respect to the transactions contemplated hereby.

     5.12. Survival. The representations, warranties and covenants of the parties contained
in this Agreement shall survive the Closing .

[Remainder of page intentionally left blank]

6

 

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

	 	 	 	 	 
	 	 	“MEMBER”

	 
	 	 	 	 
	 	 	/s/ Gregory Ray
	 	 	 
	 	 	Gregory Ray

39W750 Crosscreek Lane

St. Charles, Illinois 60175
	 
	 	 	 	 
	 	 	“COMPANY”

	 
	 	 	 	 
	 	 	HERITAGE-CRYSTAL CLEAN, LLC
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Fred M. Fehsenfeld Jr.
	 

	 	 	 	 
	 

	 	 	 	Fred M. Fehsenfeld, Jr., Chairman
	 

	 	 	 	 5400 West 86th Street
	 

	 	 	 	Indianapolis, Indiana 46268

7

 

HERITAGE-CRYSTAL CLEAN, LLC

EXHIBIT A TO UNIT REDEMPTION AGREEMENT

Employee Unit Redemption Price Upon Certain Triggering Events

	 	 	 	 	 
	Triggering Event	 	Date of Occurrence	 	Redemption Price
	Death

	 	Before 5th Anniversary
	 	3 times EBITDA Formula Per Unit
	 
	 	 	 	 
	Death

	 	From
5th Anniversary Through

10th Anniversary
	 	4 times EBITDA Formula Per Unit
	 
	 	 	 	 
	Death

	 	From 10th Anniversary
	 	5 times EBITDA Formula Per Unit
	 
	 	 	 	 
	Disability or Resignation for Good
Reason/Termination
without Cause per
Employment Agreement
§9(b)

	 	Before 5th Anniversary
	 	Greater of 5 times EBITDA
Formula Per Unit or Fixed Price
(based upon time of occurrence) of:

Years 1 and 2-$0

Year 3-$50,000

Year 4-$125,000

Year 5-$200,000

	 
	 	 	 	 
	Disability or Resignation for Good
Reason/Termination
without Cause per
Employment Agreement
§9(b)

	 	From 5th Anniversary
	 	5 times EBITDA Formula Per Unit
	 
	 	 	 	 
	Voluntary Resignation
or Termination with
Cause per Employment
Agreement §9(a)

	 	Before 5th Anniversary
	 	Fixed Price 

Years 1 and 2-$0

Year 3-$50,000

Year 4-$125,000

Year 5-$200,000

	 
	 	 	 	 
	Voluntary Resignation
or Termination with
Cause per Employment
Agreement §9(a)

	 	From 5th Anniversary
Through 7th

Anniversary
	 	4 times EBITDA Formula Per Unit
	 
	 	 	 	 
	Voluntary Resignation
or Termination with
Cause per Employment
Agreement §9(a)

	 	From 7th Anniversary
	 	5 times EBITDA Formula Per Unit

“Fixed Price” is not on a Per Unit basis but is a gross price for all Employee Units held by
Member

“EBITDA Formula” refers to the average earnings before interest, taxes, depreciation and
amortization reflected on the income statement of the Company for the last 2 full fiscal year of
the Company occurring before the Triggering Event multiplied by the indicated multiple minus (i)
any debt on the Company’s balance sheet on the last day of the second year used to make the
calculation, and (ii) any outstanding Cumulative Preferred Return and unrecovered Capital
Contribution for Preferred Units on that same date.

 

 

HERITAGE-CRYSTAL CLEAN, LLC.

EXHIBIT B TO UNIT REDEMPTION AGREEMENT

PROMISSORY NOTE

Maturity Date:[ 2nd Anniversary of Closing]

Indianapolis, Indiana

$                                        

     FOR VALUE RECEIVED, on or before the second (2nd) anniversary date of the
Closing, as defined in a Unit
Redemption Agreement between Gregory Ray and Heritage-Crystal Clean,
LLC, dated November         , 1999 (the
“Maturity Date”), Heritage-Crystal Clean, LLC, an Indiana limited liability company having its
principal place of business at 5400 West 86th Street, Indianapolis, Indiana 46268 (the
“Maker”), hereby promises to pay to the order of Gregory Ray (“Holder”), or his assigns, at 39W750
Crosscreek Lane, St. Charles, Illinois 60175, or at such other place as the Holder hereof may
designate in writing, in lawful money of the United States of America, the principal sum of
                     Dollars ($                     ), together with (i) interest on the unpaid principal balance existing from
time to time at a rate equal to one percent (1%) less than the prime rate as published daily by
The Wall Street Journal (“Prime Rate”), beginning as of the Closing through the Maturity Date; and
(ii) interest after the Maturity Date at a rate equal to five percent (5%) more than the Prime
Rate until paid in full.

     Interest shall be paid on actual daily balances of outstanding principal for the exact number
of days principal remains outstanding from and after the Closing, and shall be computed on the
basis of a three hundred sixty five(365) day year.

     The entire unpaid principal balance of this Note shall be due and payable on the Maturity
Date. The principal balance of this Note may be prepaid, in whole or in part, at any time without
notice, premium or penalty.

     Upon the occurrence of any Default and at any time thereafter prior to the Default being
cured, the entire balance of this Note, irrespective of the Maturity Date, together with
attorneys’ fees and other costs and expenses incurred in collecting and enforcing payment or
performance hereof, and with interest from the date of Default on the unpaid principal balance
hereof at the rate specified above, shall, at the election of the Holder, and without relief from
valuation and appraisement laws, become immediately due and payable.

     The occurrence of any of the following events shall be considered an event of “Default”
under this Note:

     (a) Maker shall fail to pay any installment of principal and/or interest under this
Note (or any extension, renewal, amendment, restatement or replacement of this Note) when
due; or

     (b) Maker shall (i) institute or consent to any proceedings in insolvency, bankruptcy, moratorium or other similar laws affecting the enforcement of creditor’s rights generally,
or for the
adjustment, liquidation, extension or composition or arrangement of debts or for any other
relief under any bankruptcy or insolvency law or laws relating to the relief or
reorganization of debtors, (ii) become the subject of an order for relief under the United
States Bankruptcy Code or in any manner is adjudged insolvent, or (iii) make an assignment
for the benefit of creditors or admit in writing an inability to pay debts as they become
due.

     All notices and other communications in connection with this Note shall be sent in writing to
Holder or to the Maker, as the case may be, at their respective addresses set forth in the
Agreement to which this Note is attached as an Exhibit.

 

 

     Maker irrevocably waives diligence in collection and prosecution, demand,
presentment for payment, notice of dishonor, protest, notice of protest, dishonor, and notice of
nonpayment of this Note and expressly agrees that this Note and any payment coming due hereunder
may be extended or otherwise modified from time to time without in any way affecting liability
hereunder.

     If any provision of this Note is prohibited by or invalid under applicable law, that provision
will be ineffective
to the extent of the prohibition or invalidity, without invalidating the rest of that
provision or the remaining provisions of this Note. This Note shall bind the Maker and the Maker’s
successors, legal representatives and assigns. No provision of this Note may be waived, amended,
released or otherwise changed, except by a writing signed by the party against which enforcement is
sought.

     The trustee executing this Note has full power and authority to enter into this Note and to
assume and perform all of its obligations hereunder. The execution and delivery of this Note and
the performance by Maker of its obligations hereunder have been duly authorized by Maker and no
further action or approval is required in order to constitute this Note as a binding and
enforceable obligation of Maker; and the execution and delivery of this Note and the consummation
of the transaction contemplated hereunder on the part of Maker do not and will not violate any
provisions of Maker’s partnership agreement or other agreement of Maker.

     This Note shall be construed according to and governed by the laws of the State of Indiana.

     IN WITNESS WHEREOF, Maker has executed this Note as of the day and year first hereinabove
written.

	 	 	 	 	 
	 	 	HERITAGE-CRYSTAL CLEAN, LLC
	 
	 	 	 	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	 	 	Fred M. Fehsenfeld, Jr., Chairman

 

 

FIRST AMENDMENT TO UNIT REDEMPTION AGREEMENT

GREGORY PAUL RAY, AS TRUSTEE OF THE GREGORY PAUL RAY TRUST

UNDER TRUST AGREEMENT DATED MARCH 7, 2000,

AS SUCCESSOR IN INTEREST BY ASSIGNMENT TO GREGORY RAY

     This First Amendment (“Amendment”) made this 16th day of February, 2006, to the
Unit Redemption Agreement (“Agreement”) dated November 15, 1999, by and between Gregory Paul Ray,
as Trustee of the Gregory Paul Ray Trust under Trust Agreement dated March 7, 2000, as successor in
interest by assignment to Gregory Ray, 39W750 Crosscreek Lane, St. Charles, Illinois 60175
(“Member”), and Heritage-Crystal Clean, LLC, an Indiana limited liability company (“Company”).

WITNESSETH:

     WHEREAS, Pursuant to Section 5.8 of the Agreement, Member and Company have agreed that the
Agreement should be amended.

     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, Member
and Company hereby agree as follows:

     1. The first “WHEREAS” of the Agreement is hereby deleted in its entirety and replaced by the
following:

     “WHEREAS, Gregory Paul Ray, as Trustee of the Gregory Paul Ray Trust under
Trust Agreement dated March 7, 2000, as successor in interest by assignment from
Gregory Ray, owns Four Hundred Twenty Five (425) Common Units in the Company and Two
Hundred (200) Preferred Units in the Company.

     2. The title of Section 1 and Section 1.1 of the Agreement are hereby deleted in its entirety
and replaced by the following:

     ”SECTION 1 — Option to Sell or Redemption of Units
     
1.1 Option to Sell or Redemption Price; Closing. Upon the occurrence
of a “Triggering Event” as defined in Section 1.2 below, Member or its legal
representative, as the case may be, shall have the option of selling all but not a
portion of the Units to one or more of the Members of the Company at such price and
upon such terms as agreed upon by the Member and such other Member(s). This option
shall extend for a period of one hundred eighty (180) days from the date of such
Triggering Event. The Member shall notify the Company of the exercise of said
option, and the parties to such transaction shall execute such additional
documentation as reasonably required by the Company, including without limitation,
an amendment to any applicable existing Unit Redemption Agreement or adoption of a
new Unit Redemption Agreement. Failure of the Member or its legal representative,
as the case may be, to timely

 

 

exercise said option shall be deemed a forfeiture of said option. In the event
said option is not so timely exercised, Member shall sell, transfer and convey the
Units to the Company at closing as provided for in Section 3 below (“Closing”), for
a purchase price (“Redemption Price”) equal to the product of (i) the Unit Price
determined in the manner provided in Exhibit A-1 attached hereto and made a part
hereof as applicable to the first Triggering Event to occur, times (ii) the number
of Units owned by Member. From the occurrence of said Triggering Event, the
Interest Holder, as defined in the Restated Operating Agreement dated October 26,
2004, for the Company, as amended (“Operating Agreement”) of the Units, shall be
deemed an Assignee, as defined in and governed by the Operating Agreement”

     3. Section 3.1 of the Agreement is hereby deleted in its entirety and replaced by the
following:

     3.1 Closing. In the event of a closing on the sale of the Unites to
another member as provided hereinabove, the closing shall occur within thirty (30)
days after the exercise of said option, and in the event of a redemption of the
Units by the Company as provided hereinabove, the Closing shall occur within one
hundred eighty (180) days following the occurrence of a Triggering Event and the
determination of the Redemption Price.

     4. Section 3.2 of the Agreement is hereby deleted in its entirety and replaced by the
following:

     3.2 Deliveries by Member for a Redemption. In the event of a
redemption of the Units by the Company, at the Closing, Member shall deliver to the
Company an assignment of the Units duly endorsed and other documents or instruments
sufficient to transfer all rights of Member in the Units to the Company.

     5. Section 3.3 of the Agreement is hereby deleted in its entirety and replaced by the
following:

     3.3 Deliveries by the Company for a Redemption. In the event of a
redemption of the Units by the Company, at the Closing, the Company shall deliver to
Member the Redemption Price in cash or the Note representing the Redemption Price,
as the case may be.

     6. Exhibit A to the Agreement is hereby deleted in its entirety and replaced by Exhibit A-1
attached hereto and made a part hereof.

     7. In all other respects not inconsistent herewith, the Agreement remains in full force and
effect, including without limitation, Section 4.2 of the original Agreement, providing for
termination of the Agreement and any redemption rights relative to Units if and when the Company
completes an “initial public offering” of a common equity interest.

 

 

        .

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment to the Unit Redemption
Agreement the year and date first above written.

	 	 	 	 	 	 	 	 	 
	HERITAGE-CRYSTAL CLEAN, LLC	 	 	 	Gregory Paul Ray, as Trustee of the Gregory Paul
	 	 	 	 	 	 	Ray Trust under Trust Agreement dated March 7,
	 	 	 	 	 	 	2000, as successor in interest by assignment to
	 	 	 	 	 	 	Gregory Ray
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Joseph Chalhoub 	 	 	 	By:	 	/s/ Gregory Paul Ray 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Joseph Chalhoub, President
	 	 	 	 	 	Gregory Paul Ray

 

 

HERITAGE-CRYSTAL CLEAN, LLC

EXHIBIT A-1 TO UNIT REDEMPTION AGREEMENT

Unit Redemption Price Upon Certain Triggering Events

	 	 	 	 	 
	Triggering Event	 	Date of Occurrence	 	Redemption Price
	Death

	 	Until November 14,
2009
	 	4 times EBITDA Formula Per Unit
	Death

	 	On or after
November 14, 2009
	 	5 times EBITDA Formula Per Unit
	Disability or Resignation for 

Good Reason/Termination 

without Cause per 

Employment 

Agreement §9(b)

	 	Until and through
December 31, 2010
	 	Greater of 5 times EBITDA
Formula Per Unit or Fixed
Price of $200,000
	Disability or Resignation for 

Good Reason/Termination 

without Cause per Employment 

Agreement §9(b)

	 	After December 31,
2010
	 	5 times EBITDA Formula Per Unit
	Voluntary Resignation or 

Termination with Cause per 

Employment 

Agreement §9(a)

	 	Until November 14,
2006
	 	4 times EBITDA Formula Per Unit
	Voluntary Resignation or 

Termination with Cause per 

Employment Agreement §9(a)

	 	On or after
November 14, 2006
	 	5 times EBITDA Formula Per Unit

“Fixed Price” is not on a Per Unit basis but is a gross price for all Units held by Member.

“EBITDA Formula” refers to the average earnings before interest, taxes, depreciation and
amortization reflected on the income statement of the Company for the last 2 full fiscal year of
the Company occurring before the Triggering Event multiplied by the indicated multiple minus (i)
any debt on the Company’s balance sheet on the last day of the second year used to make the
calculation, and (ii) any outstanding Cumulative Preferred Return and unrecovered Capital
Contribution for Preferred Units on that same date.

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