HERITAGE-CRYSTAL CLEAN, INC. (NASDAQ:HCCI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers


HERITAGE-CRYSTAL CLEAN, INC. (NASDAQ:HCCI) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Item 5.02.

Item 5.02
Departure of Directors or Certain Officers; Election of
Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
(a) On December 6, 2016 Heritage-Crystal Clean, Inc. (the Company)
announced the retirement of its Founder, President and CEO, Joe
Chalhoub. The Company entered into a Retirement and Release
Agreement (the Retirement Agreement) with Mr. Chalhoub, setting
forth the terms of Mr. Chalhoubs retirement from his position as
President and Chief Executive Officer of the Company, which will be
effective January 31, 2017. Under the terms of the Retirement
Agreement, Mr. Chalhoub is entitled to a cash bonus for calendar
year 2016 on the same terms as other executives and a stock award
for calendar year 2016 under the Long-Term Incentive Plan (LTIP) as
though Mr. Chalhoub were still employed. In addition, upon his
retirement, the Company will provide Mr. Chalhoub with the
following benefits:
The Company will pay severance equal to two years of base
salary and an amount equal to the cash bonus paid for fiscal
All amounts due to Mr. Chalhoub mentioned above shall be paid
in a lump sum no later than 30 days after the date on which
the Company receives its independent auditors report with
respect to its fiscal 2016 audited financial statements, but
no later than 90 days after the retirement date.
The Company has entered into a consulting agreement with Mr.
Chalhoub. Under this agreement the Company will pay Mr.
Chalhoub $150,000 in in its first year and $100,000 in its
second year.
Mr. Chalhoubs previously granted stock options and grants
will fully vest and any outstanding options may be exercised.
LTIP grants will continue to vest as provided in the Stock
Award, without regard to whether Mr. Chalhoub remains
employed by the Company.
In addition, Mr. Chalhoub confirmed his agreement to comply with
the Non-Competition and Non-Disclosure Agreement executed on August
24, 1999.
The foregoing description of the Retirement Agreement does not
purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Retirement Agreement, a copy of
which is filed as Exhibit 10.1 to this Current Report on Form 8-K
and incorporated herein by reference.
(b) >On December 5, 2016, the Board appointed Brian Recatto as
President and Chief Executive Officer of the Company, effective
February 1, 2017.
Mr. Recatto has served, since 2014, as President U.S. Operations
for Gibson Energy Inc., one of the largest independent midstream
energy companies in Canada and a major U.S. crude oil logistics
operator. Mr. Recatto joined Gibsons through its acquisition of
OMNI Energy Services, where he had served in various executive
positions since 2007, including Vice President and Chief Operating
Officer, and President and Chief Executive Officer. Mr. Recatto was
President from 2004 to 2007 of Charles Holston, Inc., a waste
management and environmental cleaning company, which OMNI acquired.
He served in various operating and executive positions from 1997 to
2004 with Philip Services Corporation, an environmental and
industrial services company, including roles as General Manager of
Gulf Coast Waste Operations, Senior Vice President By-Products
Services Group and President Industrial Services. Mr. Recatto
joined Philip Services Corporation through its acquisition of
Meklo, Inc., an industrial waste management company, where he had
served as President for six years. Mr. Recatto holds a bachelors
degree in Finance from Louisiana State University.
On December 6, 2016, the Company and Mr. Recatto entered into an
Executive Employment Agreement (the Employment Agreement), to
which, effective February 1, 2017, Mr. Recatto will receive an
annual base salary of $350,000 and an annual opportunity to earn
shares of the Companys common stock based on the achievement of
certain performance criteria established by the Compensation
Committee of the Companys Board of Directors. The annual target
bonus amount for such performance shares shall be equal to 50% of
Mr. Recattos base salary, with additional performance criteria that
would permit Mr. Recatto to increase the bonus opportunity to 150%
of his annual base salary. Subject to the achievement of
performance criteria established by the Compensation Committee, Mr.
Recatto will receive a one-time award up to a maximum of 500,000
shares of restricted stock vesting from his employment commencement
date through January 2021. The Company shall provide Mr. Recatto
with a one-time cash signing bonus of $150,000.
In the event that Mr. Recattos employment terminates due to a
Change in Control (as defined in the Employment Agreement) then:
If Mr. Recatto remains in his position as Chief Executive
Officer and the Company remains a public company, Mr.
Recattos equity awards will continue to vest to their terms;
If Mr. Recatto is terminated in connection with the Change in
Control or the Company no longer is a public company, then a
portion of Mr. Recattos restricted stock shall vest in an
amount determined by applying a vesting percentage from the
chart below, which shall be determined by taking the
difference between the closing price of the Companys common
stock as of the award date and the Change in Control date,
and rounding such number up to the nearest marginal dollar
increase level set forth in the chart below. If there is a
decrease in the share price, then no additional shares shall
vest. Any non-vested shares shall be forfeited.

Column A

Column B
Increase in Stock Price From Award Date to Vesting Date
(using weighted average closing price of a share of the
Company’s common stock for the 90-day period ending on
each such date)
Percentage of Mr. Recatto’s shares of Restricted Stock
that Will Become Vested

Less than $5 per share increase


$5 per share increase

(vest in 125,000 shares)

$10 per share increase

(vest in 250,000 shares)

$15 per share increase

(vest in 375,000 shares)

$20 or more per share increase

(vest in 500,000 shares)
>In the event of his death, Disability (as defined in the
Employment Agreement), termination without cause or termination for
good reason, then:
Mr. Recatto shall remain eligible to vest his restricted stock as
follows: the share price of the Companys common stock shall be
determined as of the date of the termination of employment and if
such share price is higher than the price on the award date, the
vesting percentage from the chart above corresponding to the share
price increase shall be determined and that percentage shall be
prorated to reflect the portion of the time Mr. Recatto was
employed and he will become vested on the vesting date in the
resulting percentage of shares of restricted stock.
In addition, upon a termination without Cause (as defined in the
Employment Agreement) or for Good Reason (as defined in the
Employment Agreement), Mr. Recatto shall be entitled to severance
compensation equal to one and a half times his base salary then in
effect, payable on the Companys regular payroll terms.
The Employment Agreement also provides that Mr. Recatto may not
disclose or use any confidential information of the Company during
or after the Term of the Employment Agreement.
During his employment with the Company and for a period of
eighteen months following his termination of employment for any
reason, Mr. Recatto is also precluded from engaging or assisting
in any business which is in competition with the Company and from
soliciting any Company employee, consultant, vendor or supplier.
The foregoing description of the terms of the Employment
Agreement does not purport to be a complete description and is
qualified in its entirety by reference to the Employment
Agreement, which is attached hereto as Exhibit 10.2 and is
incorporated by reference in its entirety into this Item 5.02.
Exhibit No.
Retirement Agreement
Employment Agreement
Press Release


Heritage-Crystal Clean, Inc. provides full-service parts cleaning, containerized waste management, used oil collection, vacuum truck services and antifreeze recycling. The Company owns and operates a used oil re-refinery. The Company operates through two segments: Environmental Services and Oil Business. The Company provides hazardous and non-hazardous waste services to small and mid-sized customers in both the manufacturing and vehicle maintenance sectors. The Environmental Services segment consists of its parts cleaning, containerized waste management, vacuum truck, antifreeze and field services. The Company’s services allow its customers to outsource their handling and disposal of parts cleaning solvents, as well as other hazardous and non-hazardous waste. The Oil Business segment consists of used oil collection activities, sale of recycled fuel oil and re-refining activities. Through its re-refining process, the Company recycles used oil into lubricant base oil and by-products.


HERITAGE-CRYSTAL CLEAN, INC. (NASDAQ:HCCI) closed its last trading session down -0.15 at 15.80 with 47,000 shares trading hands.