Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.
On January 8, 2021, Heritage-Crystal Clean, Inc. (the "Company") and Mr. Brian
Recatto, the Company's Chief Executive Officer (the "Executive") entered into an
amended Executive Employment Agreement (the "Amended Agreement") which is
effective on February 1, 2021. Pursuant to the Amended Agreement, we replaced in
its entirety section 4.3 of the First Amendment to the Executive Employment
Agreement relating to equity compensation that was effective February 1, 2017.
The following is a brief description of the terms and conditions of the Amended
Agreement:
On each of December 31, 2021, December 31, 2022, and December 31, 2023, to the
extent Executive remains employed by the Company under the Amended Agreement on
such date, Executive shall receive a grant of restricted stock as of such date
valued at Five Hundred Thousand Dollars ($500,000), with the number of shares of
restricted stock constituting such grant determined by applying the average
closing price for a share of the Company's common stock for the 90-day period
ending on such date (the "Time-Based Restricted Stock"). Such awards of
Time-Based Restricted Stock shall be granted pursuant to and governed by the
terms of the 2019 Incentive Plan and an award agreement in a form provided by
the Company. The Time-Based Restricted Stock shall vest only if Executive
remains employed by the Company under the Amended Agreement through December 31,
2023; provided, that, upon a Change of Control of the Company (as such term is
defined in the Amended Agreement), all shares of the Time-Based Restricted Stock
awarded up through the date of closing of the Change in Control shall become
vested, and no further award of Time-Based Restricted Stock shall be awarded.
As of February 1, 2021, Executive will receive a one-time award of 500,000
shares of restricted stock, subject to the achievement of performance criteria
established by the Compensation Committee of the Board of Directors pursuant to
the Company's 2019 Incentive Plan. The award date for such Performance-Based
Restricted Stock will be February 1, 2021. Such award shall be granted pursuant
to and governed by the terms of the 2019 Incentive Plan and an award agreement
in a form provided by the Company. The Performance-Based Restricted Stock
one-time award of 500,000 shares to be received on February 1, 2021, shall vest
on January 31, 2025 (the "Vesting Date") if Mr. Recatto is employed by the
Company on that date, in an amount determined by applying the applicable
percentage from the chart below that corresponds to the growth in the share
price of the Company's common stock from the award date for the
Performance-Based Restricted Stock (the "Award Date") to the Vesting Date, with
the share price as of each such date determined by the average closing price of
a share of the Company's common stock for the 90-day period ending on such date
(and with the percentage of shares vesting for share price increases between the
designated levels in the chart to be determined using linear interpolation):
Column A Column B
Increase in Stock Price From Award Date to Percentage of Executive's shares of
Vesting Date (using average closing price of a Performance- Based Restricted Stock that
share of the Company's common stock for the
Will Become Vested
90-day period ending on each such date)
Less than $5 per share increase -%
$5 per share increase 25% (vest in 125,000 shares)
$10 per share increase 50% (vest in 250,000 shares)
$15 per share increase 75% (vest in 375,000 shares)
$20 or more per share increase 100% (vest in 500,000 shares)
In addition, notwithstanding the vesting schedule set forth above, if the
average closing price of a share of the Company's common stock for any period of
180 consecutive days between the Award Date for the Performance-Based Restricted
Stock and the Vesting Date exceeds the share price as of the Award Date by one
of the stated marginal increase levels set forth in Column A above, and
Executive remains employed by the Company throughout that 180-day period, then
the number of shares of Performance-Based Restricted Stock in which Executive
shall vest on the last day of that 180-day period shall be calculated as fifty
percent (50%) of the corresponding applicable percentage set forth in the chart
above (the "Additional Vesting Amount"); provided, that this vesting provision
shall not apply to any increase in share price for which Executive has already
received vesting credit.
If (i) Executive terminates employment prior to the Vesting Date due to death,
Disability, termination without cause or termination for good reason and (ii)
the share price as of the Vesting Date remains greater than or equal to the
share price calculated above as of the date of Executive's termination, then
Executive shall remain eligible to vest as of the Vesting Date in a portion of
the shares of Performance-Based Restricted Stock, determined as follows: the
share price of the Company's common stock shall be determined as of the date of
Executive's termination of employment (using the average closing price of
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a share of the Company's common stock for the 21-day period ending on the
termination date); if such share price is higher than the share price on the
Award Date, the vesting percentage from the chart corresponding to the share
price increase shall be determined (which shall include linear interpolation to
determine the applicable percentage for share price increases between the
designated levels in the chart), then that percentage shall be prorated to
reflect the portion of time Executive was employed between the Award Date and
Vesting Date; and Executive shall become vested on the Vesting Date in the
resulting percentage of shares of Performance-Based Restricted Stock. This
vesting provision shall not apply to the extent that shares have already vested
with respect to such dollar share price increase as Additional Vesting Amounts.
Executive previously received an award of performance-based restricted stock
subject to a January 31, 2021 vesting date under the prior provisions of Section
4.3(b) of the First Amendment to the Executive Employment Agreement that was in
effect prior to the execution of the Amended Agreement. If on January 31, 2021,
Executive vests in no additional shares of restricted stock under the First
Amendment to the Executive Employment Agreement, the Company will grant to
Executive 62,500 shares of restricted stock as of February 1, 2021 pursuant to
and governed by the terms of the 2019 Incentive Plan and an award agreement in a
form provided by the Company. These 62,500 Restricted Stock Awards shall vest
only if Executive remains employed by the Company under the Amended Agreement
through January 31, 2024, provided, that, upon a Change of Control, all of the
restricted stock issued on or prior to the Change of Control shall vest.
The foregoing description of the Amended Agreement is not intended to be
complete and is qualified in its entirety by reference to the Amended Agreement
which is hereto attached as Exhibit 10.1 and is incorporated by reference in its
entirety into this Item 5.02.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit Number Description
10.1 Second Amendment to Executive Employment Agreement
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