Placement Agent Agreement
Exhibit 10.43
March 3, 2008
Xxxxxxx Xxxxx & Company, L.L.C.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
000 Xxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Xxxxx Xxxxxxx & Co.
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Section 1. Appointment of Placement Agents. This Placement Agent Agreement (this “Agreement”)
confirms our understanding that Heritage-Crystal Clean, Inc., a Delaware corporation (the
“Company”), hereby appoints Xxxxxxx Xxxxx & Company, L.L.C. and Xxxxx Xxxxxxx & Co. pursuant to the
terms of this Agreement as its exclusive placement agents (the “Placement Agents”) in connection
with the proposed direct placement (the “Placement”) to certain of the existing members of
Heritage-Crystal Clean, LLC, an Indiana limited liability company (“Heritage LLC”), and other
individuals or entities identified by them as shown in Exhibit A hereto of one million two
hundred thousand (1,200,000) shares (the “Shares”) of the Company’s common stock, par value $0.01
per share (the “Common Stock”). The offering price for the Shares shall equal the initial public
offering price of the shares of Common Stock to be sold pursuant to the Underwriting Agreement to
be entered into between the Company and Xxxxxxx Xxxxx & Company, LLC, as representative of the
underwriters named therein (the “Underwriting Agreement”). On the basis of the representations and
warranties contained herein, but subject to the terms and conditions set forth herein, the
Placement Agents severally agree to use their respective commercially reasonable efforts to assist
the Company in its solicitation, confirmation and receipt of offers to purchase the Shares. Such
efforts under this Agreement shall include distributing the Prospectus to the potential purchasers,
providing administrative services as reasonably requested by the Company in connection with
confirming orders of purchases of shares, collecting payment for the shares and distributing the
shares in the Placement, and assisting the Company with (i) evaluating the structure of the
offering, (ii) preparing the Prospectus (as defined below), (iii) negotiating the terms of the
Placement, (iv) soliciting indications of interest from potential purchasers and (v) allocating the
shares in the Placement. Notwithstanding anything to the contrary contained in this Agreement,
neither Placement Agent shall have any obligation to purchase any of the Shares or, other than as a
result of such Placement Agent’s breach of this Agreement or bad faith, wilful misconduct or gross
negligence, any other liability to the Company if any prospective purchaser (each a “Purchaser”)
fails to consummate a purchase of any of the Shares. In the event that any Purchaser fails to
consummate a purchase of any of the Shares, the Placement Agents may use their respective
commercially reasonable efforts to solicit orders from and confirm sales, first, to other
Purchasers
identified in Exhibit A and, second, to other individuals or entities identified
by the Company or the Placement Agents.
Section 2. Compensation. In connection with the Placement and sale of the Shares by the
Company, the Placement Agents will charge the Company a placement fee (the “Placement Fee”) payable
in immediately available funds on the date of the consummation of the Placement and sale of Shares
(the “Closing Date”). The Placement Fee shall be equal to seven percent (7%) of the aggregate price
at which the Shares are sold by the Company in the Placement and shall be paid sixty percent (60%)
to Xxxxxxx Xxxxx & Company, L.L.C. and forty percent (40%) to Xxxxx Xxxxxxx & Co. For avoidance of
doubt, no Placement Fee will be charged on shares of Common Stock sold pursuant to the Underwriting
Agreement. Nothing contained herein, however, shall limit any right of the underwriters to receive
underwriting fees, discounts or commissions for shares of Common Stock sold pursuant to the
Underwriting Agreement. The parties acknowledge and agree that no fee shall be payable hereunder
unless the sale of Shares is consummated.
Section 3. Information Regarding the Company. The Company has prepared and filed with the
Securities and Exchange Commission a prospectus relating to the Placement (such prospectus, as it
may be amended or supplemented from time to time, the “Prospectus”).
Section 4. Representations and Warranties. The Company represents and warrants to the
Placement Agents that:
(a) This Agreement has been duly authorized, executed and delivered by the Company;
(b) The making and performance by the Company of this Agreement (i) will not violate any
provision of the Company’s charter or bylaws and (ii) will not result in the breach, or be in
contravention, of any provision of any agreement, franchise, license, indenture, mortgage, deed of
trust, or other instrument to which the Company or any subsidiary is a party or by which the
Company, any subsidiary or the property of any of them may be bound or affected, or any order, rule
or regulation applicable to the Company or any subsidiary of any court or regulatory body,
administrative agency or other governmental body having jurisdiction over the Company or any
subsidiary or any of their respective properties, or any order of any court or governmental agency
or authority entered in any proceeding to which the Company or any subsidiary was or is now a party
or by which it is bound, except in the case of clause (ii) to the extent such breach or
contravention would not have a material adverse effect on the Company or Heritage LLC.
(c) No consent, approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution and delivery of this
Agreement or the consummation of the transactions contemplated herein, except for compliance with
the Securities Act of 1933, as amended (the “1933 Act”), and blue sky laws applicable to the sale
of the Shares, and, to the extent applicable, clearance of the sale of the Shares with the
Financial Industry Regulation Authority.
(d) The representations and warranties of the Company contained in the Underwriting Agreement
will be true and correct as of the date on which the Underwriting Agreement is executed and as of the Closing Date.
Section 5. Agreements.
(a) The Company agrees with the Placement Agents that, during the term of this Agreement, if
any event occurs or condition exists as a result of which the Prospectus would include an untrue
statement of a material fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend or supplement the Prospectus to comply with applicable law, the
Company will promptly notify the Placement Agents of any such event, condition or opinion of
counsel to the Company and shall prepare an amendment or supplement to the Prospectus that will
correct such statement or omission or effect such compliance and will supply such amended or
supplemented Prospectus to the Placement Agents.
(b) The Company agrees to comply with all of its obligations under the Underwriting Agreement,
including those contained in Section 5 thereof.
(c) The consummation of the Placement and the sale of the Shares shall occur simultaneously
with the consummation of the sale of shares of Common Stock pursuant to the Underwriting.
(d) Each of the parties hereto hereby agrees that it will comply with all laws, rules and
regulations applicable to it in conducting the Placement and carrying out its obligations under
this Agreement.
(e) The Placement Agents shall deliver to each Purchaser a copy of the Prospectus, together
with all supplements and amendments thereto provided to the Placement Agents by the Company.
Section 6. Closing Documents. On the Closing Date, the Company shall deliver to the Placement
Agents:
(a) an opinion of XxXxxxxxx Will & Xxxxx LLP, counsel for the Company, dated as of the Closing
Date, in form and substance reasonably satisfactory to the Placement
Agents;
(b) an
opinion of Ice Xxxxxx LLP, Indiana counsel for the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to
the Placement Agents;
(c) a certificate of the chief executive officer and the principal financial officer of the
Company, dated as of the Closing Date, to the effect that the representations and warranties of the
Company set forth in this Agreement are true and correct as of the date of this Agreement and as of
the Closing Date, and the Company has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the Closing Date;
(d) copies of any other documents delivered to the Purchasers in connection with the sale of
the Shares; and
(e) such further certificates and documents as the Placement Agents may reasonably request.
Section 7. Exclusive Appointment. The Company shall not, directly or indirectly (except pursuant to the Underwriting Agreement, the reorganization described in the Prospectus or
employee stock benefit plans as described in the Prospectus), sell or offer to sell any of the
Shares or any substantially similar equity security from the date hereof through the Closing Date.
Any sale or disposition of such Shares or any substantially similar equity security (other than
pursuant to the Underwriting Agreement, the reorganization described in the Prospectus or employee
stock benefit plans as described in the Prospectus) by the Company during that period will be
deemed to be as if such sale or disposition were undertaken by the Placement Agents directly for
purposes of calculating the compensation due hereunder.
Section 8. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each Placement Agent and each person, if
any, who controls either Placement Agent within the meaning of the 1933 Act or the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which such Placement Agent
or such controlling person may become subject under federal or state statutory law or regulation,
at common law or otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements therein
not misleading or (ii) arise in any manner out of or are based upon any claims made by Purchasers
relating to the Placement (except to the extent related to shares of Common Stock purchased by a
Purchaser from the underwriters in the public offering contemplated by the Underwriting Agreement
and other than losses, claims, damages or liabilities that result from such Placement Agent’s
breach of this Agreement or bad faith, wilful misconduct or gross negligence); and will reimburse
each Placement Agent and each such controlling person for any legal or other expenses reasonably
incurred by such Placement Agent or such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or action. In addition to its other obligations
under this Section 8(a), the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding subject to indemnification pursuant to
this Section 8(a), upon receipt of notices setting forth in reasonable detail the matter for which
indemnification is sought, it will reimburse the Placement Agents on a monthly basis for all
reasonable legal and other expenses incurred in connection with investigating or defending any such
claim, action, investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Company’s obligation to
reimburse the Placement Agents for such expenses and the possibility that such payments might later
be held to have been improper by a court of competent jurisdiction. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) Promptly after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the Company under this Section 8, notify the Company of the commencement thereof; but
the omission so to notify the Company will not relieve it from any liability which it may have to
any indemnified party except to the extent that the Company was prejudiced by such failure to
notify. In case any such action is brought against any indemnified party, and it notifies the
Company of the commencement thereof, the Company will be entitled to participate in, and, to
the extent that it may
wish, to assume the defense thereof, with counsel satisfactory to such
indemnified party; provided, however, if the defendants in any such action include both the
indemnified party and the Company and the indemnified party shall have reasonably concluded, based
on advice of counsel, that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the Company, or the
indemnified parties and the Company may have conflicting interests which would make it
inappropriate for the same counsel to represent both of them, the indemnified party or parties
shall have the right to select separate counsel to assume such legal defense and otherwise to
participate in the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the Company to such indemnified party of its election so to assume the
defense of such action and approval by the indemnified party of counsel, the Company will not be
liable to such indemnified party under this Section 8 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the assumption of legal
defense in accordance with the proviso to the immediately preceding sentence (it being understood,
however, that the Company shall not be liable for the expenses of more than one separate counsel
representing all indemnified parties not having different or additional defenses or potential
conflicting interest among themselves who are parties to such action), (ii) the Company shall not
have employed counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the Company has
authorized in writing the employment of counsel for the indemnified party at the expense of the
Company. The Company shall not, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of which any indemnified party is
or could have been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such indemnified party from all
liability arising out of such proceeding.
(c) If the indemnification provided for in this Section 8 is unavailable to an indemnified
party under paragraph (a) in respect of any losses, claims, damages or liabilities referred to
therein, then the Company, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by
the Company and the Placement Agents from the Placement or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Placement Agents, as well as any other relevant equitable considerations.
The respective relative benefits received by the Company and the Placement Agents shall be deemed
to be in the same proportion, in the case of the Company, as the net proceeds to be received by the
Company in the Placement (after deducting the Placement Fee but before deducting expenses) bears
to, and in the case of the Placement Agents, as the Placement Fee received by them bears to, the
total of such amounts paid by Purchasers in the Placement. The relative fault of the Company and
the Placement Agents shall be determined by reference to, among other things, (i) in the case of
any untrue or alleged untrue statement of a material fact or omission or alleged omission to state
a material fact, whether the untrue or alleged untrue statement of a material fact or the omission
to state a material fact relates to information supplied by the Company and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission, and (ii) in the case of any other action or omission, whether such action or omission was taken or omitted to be taken
by
the Company or by the Placement Agents and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action or omission. The amount paid or
payable by a party as a result of the losses, claims, damages and liabilities referred to above
shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any action or claim.
The Company and the Placement Agents agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata allocation or by any other
method of allocation which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 8(c), neither
Placement Agent shall be required to contribute any amount in excess of the amount by which the
Placement Fee actually received by it exceeds the amount of any damages that such Placement Agent
has otherwise been required to pay. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Placement Agents’ obligations to contribute
pursuant to this Section 8(c) are several in proportion to the respective Placement Fees to be paid
to them hereunder.
Section 9. Guarantee. Heritage LLC hereby guarantees to the Placement Agents the performance
by the Company of all covenants, agreements, terms, conditions, undertakings, indemnities and other
obligations to be performed and observed by the Company under this Agreement.
Section 10. Miscellaneous
(a) Representations, Indemnity and Agreements to Survive. The respective representations,
warranties and indemnities set forth herein will remain in full force and effect regardless of any
investigation made by or on behalf of the Placement Agents or the Company or any of their
respective officers, directors or controlling persons, and will survive delivery of any payment for
the Shares. The provisions of this Section and Sections 2, 4, 8 and 9 hereof shall survive the
termination or cancellation of this Agreement.
(b) Termination. The Placement Agents’ services hereunder shall terminate automatically in
the event of a termination of the Underwriting Agreement without liability or continuing obligation
to the Placement Agents or the Company, except for any compensation earned or expenses incurred by
the Placement Agents prior to the date of termination. This Agreement and the Placement Agents’
exclusive appointment hereunder shall terminate in the event the Underwriting Agreement is not
executed on or before February 14, 2008.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Illinois.
(d) Counterparts; Headings. This Agreement may be signed in counterparts with the same effect
as if the signatures thereto were on the same instrument. The headings of the Sections of this
Agreement have been inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
(e) No Third Party Beneficiaries. This Agreement has been and is made solely for the benefit
of the parties hereto, the indemnified persons and their respective successors and assigns, and
nothing in this Agreement, expressed or implied, is intended to confer or does confer on any other
person or entity any rights or remedies under or by reason of this Agreement or the covenants of
the parties contained herein.
(f) No Fiduciary Relationship. It is understood and agreed that the Placement Agents will act
under this Agreement as independent contractors and nothing in this Agreement or the nature of the
Placement Agents’ services shall be deemed to create a fiduciary or agency relationship between the
Placement Agents and the Company or its affiliates or stockholders.
* * * * * * *
If the foregoing is in accordance with your understanding of our agreement, please sign and
return to us the enclosed duplicate hereof, whereupon this Agreement shall represent a binding
agreement between the Placement Agents, the Company and Heritage LLC.
| Very truly yours, | ||||||||
| Heritage-Crystal Clean, Inc. | ||||||||
| By: | /s/ Xxx Xxxxxxxx | |||||||
| Name: Xxx Xxxxxxxx | ||||||||
| Title: President and Chief Executive Officer | ||||||||
| Heritage-Crystal Clean, LLC | ||||||||
| By: | /s/ Xxx Xxxxxxxx | |||||||
| Name: Xxx Xxxxxxxx | ||||||||
| Title: President and Chief Executive Officer | ||||||||
| Accepted as of March 3, 2008 | ||||||||
| Xxxxxxx Xxxxx & Company, L.L.C. | ||||||||
By: |
/s/ Xxxxx Xxxxxxxxx | |||||||
| Name: Xxxxx Xxxxxxxxx | ||||||||
| Title: Principal | ||||||||
| Xxxxx Xxxxxxx & Co. | ||||||||
By: |
/s/ Xxxx X. Xxxxxxxx | |||||||
| Name: Xxxx X. Xxxxxxxx | ||||||||
| Title: Managing Director | ||||||||
