EXHIBIT (e)(4)
MANAGEMENT AGREEMENT
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This Management Agreement (the "Agreement"), is made as of the ___ day of
June, 2001, by and between Katy Industries, Inc., a Delaware corporation (the
"Company"), and KOHLBERG & CO., L.L.C., a Delaware limited liability company
("KoCo").
WHEREAS, the Company desires that KoCo provide certain ongoing management
and advisory services to the Company, its subsidiaries and any other subsidiary
which the Company may acquire subsequent to the date hereof (collectively, the
"Companies"), and KoCo is willing to provide such services subject to the terms
and conditions contained herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
SECTION 1. Services. During the term of this Agreement, KoCo shall provide such
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advisory and management services to the Companies as the Board of Directors of
the Company shall reasonably request which shall include assistance in (a)
developing and implementing corporate and business strategy and planning
(including plans to improve operating, marketing and financial performance,
budgeting of future corporate investments, identifying, analyzing and
structuring strategic acquisitions and dispositions, and reorganizational
programs); (b) arranging debt and equity financings and refinancings; and (c)
establishing, maintaining and evaluating banking, legal and other business
relationships. Such services shall be performed at KoCo's offices in New York
or California.
SECTION 2. Compensation. In consideration of the services provided in accordance
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with Section 1 above, the Company shall pay to KoCo an annual management fee
equal to $500,000 (the "Management Fee"). The Management Fee shall accrue from
[ ], 2001 and shall be payable quarterly in advance on each January 1, April 1,
July 1 and October 1. KoCo shall cause the directors on the Company's Board of
Directors who are designated by KKTY Holding Company, L.L.C. ("KKTY") to waive
all compensation payable to them by the Company in their capacity as directors
of the Company in any form (including, but not limited to, directors' fees,
stock options, restricted stock, other equity compensation and any other
compensation, including, but not limited to, health and welfare benefits) to
which such directors would otherwise be entitled during the term of this
Agreement, provided that, for the avoidance of doubt, C. Xxxxxxx Xxxxxx shall
not be considered a director designated by KKTY and shall not be subject to the
foregoing
waiver. On termination of this Agreement, any Management Fees paid by the
Company for a period that includes the date of termination shall be pro rated,
and KoCo shall promptly reimburse the Company for any installment of Management
Fees or portion thereof relating to a period or portion thereof after the date
of termination.
SECTION 3. Reimbursement. KoCo and its affiliates shall be entitled to
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reimbursement of all reasonable out-of-pocket expenses (including travel
expenses) incurred in the course of the performance of this Agreement (other
than salary expenses and associated overhead charges). KoCo shall submit monthly
expense statements, and promptly provide such further documentation of expenses
as the Company shall request. The Company shall reimburse KoCo for its expenses
under this Section within thirty days of receiving such a statement.
SECTION 4. No Liability. (a) None of KoCo, any of its affiliates or any of their
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respective principals, officers, directors, stockholders, agents or employees
(each, an "Indemnified Party") shall have any liability to the Companies for any
services provided pursuant to this Agreement, except as may result from such
Indemnified Party's gross negligence or willful misconduct.
(b) The Company hereby agrees to indemnify each Indemnified Party from
and against all losses, liabilities, damages, deficiencies, demands, claims,
actions, judgments or causes of action, assessments, costs or expenses
(including, without limitation, interest, penalties and reasonable fees,
expenses and disbursements of attorneys, experts, personnel and consultants
reasonably incurred by the Indemnified Party in any action or proceeding between
the Companies and the Indemnified Party or between the Indemnified Party and any
third party, or otherwise) based upon, arising out of or otherwise in respect of
this Agreement.
SECTION 5. Independent Contractor Status. KoCo shall perform services hereunder
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as an independent contractor, retaining control over and responsibility for its
own operations and personnel. Neither KoCo nor any of its employees or agents
shall, by virtue of this Agreement or the arrangements hereunder, be employees
or agents of any of the Companies nor shall any of them have authority to
contract in the name of any of the Companies, except (a) to the extent that any
KoCo employee or agent is acting in his or her capacity as a director of the
Company, or (b) as expressly agreed to in writing by any of the Companies. Any
duties of KoCo arising out of its engagement to perform services hereunder shall
be owed solely to the Companies.
SECTION 6. Notices. Any notice or other communication required or permitted
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hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission (provided the sender receives a transmission receipt) or
sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when
so delivered personally or sent by facsimile transmission or, if mailed, five
(5) days after the date of deposit in the United States mails, as follows:
(a) if to KoCo, to:
Kohlberg & Co., L.L.C.
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to (which shall not constitute notice):
Hunton & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Company:
Katy Industries, Inc.
0000 X. Xxxxxxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party may by notice given in accordance with this Section to the other party
designate another address or person for receipt of notices hereunder.
SECTION 7. Counterparts. This Agreement may be executed in counterparts, each of
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which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument.
SECTION 8. Assignment; Third Party Beneficiaries. Neither this Agreement nor any
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of the rights, interests or obligations hereunder shall be assigned by either of
the parties (whether by operation of law or otherwise) without the prior written
consent of the other
party. This Agreement shall not confer any rights or remedies upon any person
other than the parties and, in respect of the limitations of liability and
rights to indemnification in Section 4 hereof, the Indemnified Parties.
SECTION 9. Entire Agreement. This Agreement constitutes the entire agreement,
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and supersedes any other prior agreements and understandings, both written and
oral, between the parties or their affiliates with respect to the subject matter
hereof.
SECTION 10. Headings. Headings in this Agreement are for the convenience of the
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parties only, and shall be given no substantive or interpretive effect
whatsoever.
SECTION 11. Amendments; Waivers. No amendment, modification, supplement or
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discharge of this Agreement, and no waiver hereunder, shall be valid or binding
unless set forth in writing and duly executed by the party or Indemnified Party
against whom enforcement of the amendment, modification, supplement, discharge
or waiver is sought. Any such waiver shall constitute a waiver only with respect
to the specific matter described in such writing and shall in no way impair the
rights of the party or Indemnified Party granting such waiver in any other
respect or at any other time.
SECTION 12. Governing Law. All questions concerning the construction, validity
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and interpretation of this Agreement will be governed by and construed in
accordance with the internal law of the State of New York without giving effect
to its principles or rules of conflicts of laws to the extent such principles or
rules are not mandatorily applicable by statute and would require or permit the
application of another jurisdiction's law.
SECTION 13. Termination. This Agreement may be terminated by KoCo at any time by
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written notice to the Company. In addition, this Agreement will terminate
automatically as of the earlier of (i) the fifth anniversary of this Agreement
and (ii) the end of the fiscal year in which the directors on the Company's
Board of Directors who are designated by KKTY no longer constitute a simple
majority of the directors of such Board. The provisions of Section 4 shall
survive any termination of this Agreement.
[Signatures on Following Page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first written above.
KATY INDUSTRIES, INC.
By:
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Name:
Title:
KOHLBERG & CO., L.L.C.
By:
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Name: Xxxxxxxxxxx Xxxxxxxx
Title: Principal
