KATY INDUSTRIES, INC.
Exhibit
10.2
KATY
INDUSTRIES, INC.
ARTICLE
I
DEFINITIONS
Terms
used herein and not otherwise defined shall have the meaning set forth in the
Agreement.
1.1 “Administrator”
means the Committee.
1.2 “Affiliate”
means any subsidiary or parent corporation (within the meaning of Section 424 of
the Code) of the Company.
1.3 “Agreement”
means a written agreement (including any amendment or supplement thereto)
between the Company and the Participant specifying the terms and conditions of
an Option granted to such Participant.
1.4 “Board”
means the Board of Directors of the Company.
1.5 “Cause”
means (i) Participant’s willful failure to perform, or gross negligence in the
performance of, the Participant’s material duties and responsibilities to the
Company and its Affiliates; (ii) Participant’s material breach of any provision
of the Employment Agreement; (iii) commission by Participant of a material act
of fraud or embezzlement, or commission of any material dishonesty with regard
to the Company or any of its Affiliates; or (iv) conviction of, or plea of nolo
contendere to, a felony or other crime involving moral turpitude. A
termination for “Cause” shall be determined in accordance with the Employment
Agreement.
1.6 “Change
in Control” of the Company means, and shall be deemed to have occurred upon, any
of the following events:
(i) a
sale or transfer (in one or a series of related transactions) of 100% of the
Company’s outstanding capital stock to one Person or a group of Persons acting
in concert;
(ii) a
sale or transfer (in one or a series of related transactions) of all or
substantially all of the Company’s operating subsidiaries or assets to one
Person or a group of Persons acting in concert; or
(iii) a
transaction or transactions in which any Person or a group of Persons acting in
concert acquires stock of the Company in an amount greater than that held by
Kohlberg & Co. LLC (“Kohlberg”) and Kohlberg Affiliates and in which
Kohlberg relinquishes control of the Board.
1.7 “Code”
means the Internal Revenue Code of 1986, and any amendments
thereto.
1.8 “Committee”
means the Compensation Committee of the Board.
1.9 “Common
Stock” means the common stock of the Company.
1.10 “Company”
means Katy Industries, Inc.
1.11 “Employment
Agreement” means the Employment Agreement between the Company and the
Participant effective as of April 21, 2008.
1.12 “Good
Reason” means the occurrence of any of the following conditions, without the
Participant’s consent: (1) material diminution in the Participant’s duties,
authority or responsibilities; (2) any reduction by the Company of the
Participant’s Base Salary (as defined in the Employment Agreement) as in effect
on the Executive's Employment Date (as defined in the Employment Agreement), as
the same may be increased from time to time, or a reduction of the potential
annual Target Bonus (as defined in the Employment Agreement) expressed as a
percent of base salary (subject to attainment of goals, Board discretion and
other conditions of the applicable bonus program); or (3) a material breach of
any material provision of the Employment Agreement, including but not limited to
the Company's obligations to provide the benefits specified in Section 4 of the
Employment Agreement; provided, however, that the Participant gives written
notice to the Company of the condition within thirty (30) days of the occurrence
of the condition, and provided further that the Company shall have thirty (30)
days to remedy the condition and, if the condition is not so remedied, that the
Participant terminate his employment hereunder within thirty (30) days
hereafter.
1.13 “Option”
means a stock option that entitles the holder to purchase from the Company a
stated number of shares of Common Stock at the price set forth in an
Agreement.
1.14 “Participant”
means Xxxxx X. Xxxxxxx.
1.15 "Person"
means an individual, a corporation, an association, a partnership, an estate, a
trust and any other entity or organization, other than the Company or any of its
Affiliates.
1.16 “Plan”
means the Katy Industries, Inc. 2008 Chief Executive Officer’s
Plan.
1.17 “Termination
Event” shall have the meaning set forth in Article
VII.
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ARTICLE
II
PURPOSES
The Plan
is intended to induce the Participant to become an employee of the Company by
enabling the Participant to participate in the future success of the Company and
its Affiliates and to associate his interests with those of the Company and its
shareholders. The proceeds received by the Company from the sale of Common Stock
pursuant to this Plan shall be used for general corporate purposes.
ARTICLE
III
ADMINISTRATION
The Plan
shall be administered by the Administrator. Notwithstanding any such conditions,
the Administrator may, in its discretion, accelerate the time at which any
Option may be exercised. In addition, the Administrator shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither
the Administrator nor any member of the Committee shall be liable for any act
done in good faith with respect to this Plan or any Option. All expenses of
administering this Plan shall be borne by the Company.
ARTICLE
IV
STOCK
SUBJECT TO PLAN
4.1 Shares Issued.
Upon the exercise of any Option the Company may deliver to the Participant (or
the Participant’s broker if the Participant so directs), shares of Common Stock
from its authorized but unissued Common Stock.
4.2 Aggregate
Limit. The maximum aggregate number of shares of Common Stock
that may be issued under this Plan pursuant to the exercise of Options is
750,000 shares. The maximum aggregate number of shares that may be
issued under this Plan shall be subject to adjustment as provided in Article
VI.
ARTICLE
V
OPTIONS
5.1 Award. The
Administrator will specify the number of shares of Common Stock to be covered by
an award of an Option. The Administrator shall also determine the
vesting schedule for such Options, which may be based on performance measures
deemed appropriate by the Administrator.
5.2 Option
Price. The price per share for Common Stock purchased on the
exercise of an Option shall be determined by the Administrator on the date of
grant.
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5.3 Payment. Unless
otherwise provided by the Agreement, payment of the Option price shall be made
in cash or a cash equivalent acceptable to the Administrator. If the
Agreement provides, payment of all or part of the Option price may also be made
by surrendering shares of Common Stock to the Company or through the withholding
of shares of Common Stock otherwise to be delivered upon exercise of the
award. If Common Stock is used to pay all or part of the Option
price, the sum of the cash and cash equivalent and the fair market value
(determined as of the day preceding the date of exercise) of the shares
surrendered and/or withheld must not be less than the Option price of the shares
for which the Option is being exercised.
ARTICLE
VI
ADJUSTMENT
UPON CHANGE IN COMMON STOCK
The
maximum number of shares as to which Options may be granted under this Plan, the
terms of outstanding Options, and the per individual limitations on the number
of shares or for which Options may be granted, shall be adjusted as the
Committee shall determine to be equitably required in the event that (a) the
Company (i) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (ii) engages in a transaction to which Section
424 of the Code applies or (b) there occurs any other event which, in the
judgment of the Committee necessitates such action. Any determination made under
this Article VI
by the Committee shall be final and conclusive.
ARTICLE
VII
EFFECT OF
CHANGE OF CONTROL
In the
event of a Change in Control, unless otherwise specifically prohibited by
applicable laws, or by the rules and regulations of any governing agency or
national securities exchange, any outstanding Options shall become immediately
exercisable, and shall remain exercisable for ninety (90) days, after which the
Options shall terminate. The Common Stock issuable upon exercise of
the Option shall be subject to adjustment in accordance with Article VI hereof in
the event of any changes affecting the Common Stock as a result of such Change
in Control.
Notwithstanding
anything to the contrary set forth in the Agreement, the provisions of this
Article VII
shall not apply to the Participant if, prior to the date on which a Change in
Control takes place (i) the Option ceases to vest for any reason, or (ii) the
Participant ceases to serve in his current position with the
Company. Otherwise, the provisions of this Article VII shall
apply to Participant. Further, notwithstanding anything to the
contrary set forth herein, if the Participant's employment is terminated without
Cause within ninety (90) days prior to, or one hundred and eighty (180) days
after, a Change in Control, such termination shall be deemed to be as a result
of a Change in Control, and the Participant, for purposes of this Agreement,
shall be deemed to have been employed by the Company on the date on which the
Change of Control occurs and shall be entitled to the benefits of this Article
VII.
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ARTICLE
VIII
AMENDMENT
The Board
may amend or terminate this Plan from time to time; provided, however, that no
amendment may become effective until shareholder approval is obtained if (i) the
amendment increases the aggregate number of shares of Common Stock that may be
issued under the Plan, (ii) the amendment changes the class of individuals
eligible to become Participants or (iii) the amendment materially increases the
benefits that may be provided under the Plan. No amendment shall,
without the Participant’s consent, adversely affect any rights of such
Participant under any Option outstanding at the time such amendment is
made.
ARTICLE
IX
GENERAL
PROVISIONS
9.1 Employment.
Nothing in the Plan shall interfere with or limit in any way the right of the
Company to terminate Participant’s employment at any time, nor confer upon
Participant any right to continue in the employ of the Company.
For purposes of this Plan, a transfer
of Participant’s employment between the Company and a Subsidiary, or between
Subsidiaries, shall not be deemed to be a termination of
employment. Upon such a transfer, the Committee may make such
adjustments to outstanding Awards as it deems appropriate to reflect the changed
reporting relationships.
9.2 Tax
Withholding. The Company shall have the power and the right to
deduct or withhold, or require Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of this Plan.
9.3 Share
Withholding. With respect to withholding required upon the exercise
of Options or upon any other taxable event arising as a result of Awards granted
hereunder, Participant may elect, subject to the approval of the Committee, to
satisfy the withholding requirement, in whole or in part, by having the Company
withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be imposed on
the transaction. All such elections shall be irrevocable, made in
writing, signed by the Participant, and shall be subject to any restrictions or
limitations that the Committee, in its sole discretion, deems
appropriate.
9.4 Severability.
In the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.
9.5 Securities Law and Tax Law
Compliance. With respect to insiders, transactions under this Plan
are intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act and Code Section 162(m). To the extent
any provision of the Plan or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
9.6 Governing Law.
To the extent not pre-empted by Federal law, the Plan, and all agreements
hereunder, shall be construed in accordance and governed by the laws of the
State of Delaware.
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