EXHIBIT 10.3
- --------------------------------------------------------------------------------
KATY INDUSTRIES, INC.
2001 Chief Financial Officer's Plan
- --------------------------------------------------------------------------------
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 and repeated failure to comply
with the reasonable and lawful directives of the Board that is not cured within
ten (10) days of notice of such failure being provided by the Company; (ii) any
criminal act or act of dishonesty, disloyalty, negligence, misconduct or moral
turpitude by Participant that is materially injurious to the property,
operations, business or reputation of the Company or any Subsidiary, or (iii)
Participant's material breach of any confidentiality or non-compete obligation,
with the Company or any Subsidiary. A termination for "Cause" shall be
determined by the Board.
1.6 "Change in Control" of the Company means, and shall be deemed to have
occurred upon, any of the following events:
(a) a sale of 100% of the Company's outstanding capital stock;
(b) a sale of all or substantially all of the Company's operating
subsidiaries or assets; or
(c) a transaction or transactions in which any third party acquires stock
of the Company in an amount greater than that held by KKTY Holding
Company, L.L.C. ("KKTY") and in which Kohlberg & Co., L.L.C.
relinquishes control of the Board pursuant to its Management Agreement
with the Company;
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 dated as of August 5, 2001.
1.12 "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.
1.13 "Participant" means Amir Rosenthal.
1.14 "Plan" means the Katy Industries, Inc. 2001 Chief Financial Officer's
Plan.
1.15 "Termination Event" shall have the meaning set forth in Article VII.
-------
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 or Stock Award. All
expenses of administering this Plan shall be borne by the Company.
ARTICLE IV
STOCK SUBJECT TO PLAN
4.1 Shares Issued. Upon the award of shares of Common Stock pursuant to a
-------------
Stock Award, the Company may issue shares of Common Stock from its authorized
but unissued Common Stock. 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.
2
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
123,077 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.
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 be made by surrendering shares of Common Stock to the Company that the
Participant has held for at lease six months. 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 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 throughout their entire
term. The Common Stock issuable upon exercise of the
3
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.
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.
4
9.5 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.
9.6 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.
9.7 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.
5