Exhibit 10.1
AGREEMENT
AGREEMENT made and entered into by and between Katy Industries, Inc. (the
"Company"), a Delaware corporation, with its principal place of business at 765
Straits Turnpike, Middlebury, Connecticut, and Anthony T. Castor III, of 1200
North Veitch Street, Arlington, Virginia (the "Executive"), effective as of the
1st day of June 2005.
WHEREAS, the operations of the Company and its Affiliates are a complex
matter requiring direction and leadership in a variety of arenas, including
financial, strategic planning, regulatory, community relations and others;
WHEREAS, the Executive is possessed of certain experience and expertise
that qualify him to provide the direction and leadership required by the Company
and its Affiliates; and
WHEREAS, subject to the terms and conditions hereinafter set forth, the
Company therefore wishes to employ the Executive as its President and Chief
Executive Officer and the Executive wishes to accept such employment;
NOW, THEREFORE, in consideration of the foregoing proemises and the mutual
promises, terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:
1. Employment. Subject to the terms and conditions set forth in this
Agreement, the Company hereby offers and the Executive hereby accepts
employment.
2. Term. The term of the Executive's employment hereunder shall commence
as of June 1, 2005 (the "Employment Date") and shall continue until termination
as hereafter provided. The Executive may be terminated by the Company at will at
any time subject to the provisions of Section 5 below. The term of this
Agreement is hereafter referred to as "the term of this Agreement" or "the term
hereof".
3. Capacity and Performance.
(a) During the term hereof, the Executive shall serve the Company as
its Presidentits President and Chief Executive Officer, subject to his
appointment by the Board of Directors of the Company (the "Board") as a
condition precedent to the effectiveness of this Agreement. In addition, during
the term hereof and without further compensation, the Executive shall serve as a
director of the Company and a member of the Executive Committee of the Board, if
so elected or appointed from time to time; provided, however, that the
Executive's failure to be so elected or appointed shall not constitute a breach
of this Agreement.
(b) During the term hereof, the Executive shall be employed by the
Company on a full-time basis, and shall have and perform such usual and
customary duties, responsibilities, and authority of a Chief Executive Officer
and President on behalf of the Company and its Affiliates as may be designated
from time to time by the Board or by its designees.
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(c) During the term hereof, the Executive shall devote his full
business time (except for permitted vacation periods and reasonable periods of
illness or other incapacity) and his best efforts, business judgment, skill and
knowledge exclusively to the advancement of the business and interests of the
Company and its Affiliates and to the discharge of his duties and
responsibilities hereunder. The Executive shall not engage in any other business
activity or serve in any industry, trade, professional, governmental or academic
position during the term of this Agreement, except as may be expressly approved
in advance by the Board in writing.
(d) The foregoing restrictions shall not limit or prohibit the
Executive from engaging in passive investment, inactive business ventures, and
community, charitable, and social activities, including without limitation
serving as a member of boards of directors (or other similar bodies) of entities
not engaged in competition with the Company or any of its Affiliates and
approved by the Board (which approval shall not be unreasonably withheld), in
each case, so long as such activities do not interfere with the Executive's
performance and obligations hereunder.
(e) At the Executive's discretion and consistent with the business
interests of the Company, the headquarters of the Company may be relocated from
Middlebury, CT to the Washington, DC or Arlington, VA metropolitan areas,
subject to the approval of the Board, which approval shall not be unreasonably
withheld.
4. Compensation and Benefits. As compensation for all services performed
by the Executive under and during the term hereof and subject to performance of
the Executive's duties and obligations to the Company and its Affiliates,
pursuant to this Agreement or otherwise:
(a) Base Salary. During the term hereof, the Company shall pay the
Executive a base salary at the rate of Five Hundred Twenty Five Thousand Dollars
($525,000.00) per annum, payable in accordance with the payroll practices of the
Company for its executives and subject to increase from time to time by the
Compensation Committee of the Board, in its sole and unreviewable discretion.
The Board will review the Executive on or about June 1 of each year. Such base
salary, as from time to time increased, is hereafter referred to as the "Base
Salary".
(b) Annual Bonus Compensation. During the term hereof, the Executive
will be eligible to earn an annual bonus of up to 70% of Base Salary actually
paid to the Executive (the "Target Bonus"), subject to the achievement of
performance targets set by the Board, after consultation with the Executive, and
subject further to the terms of the Company's management incentive plan (the
"Bonus Plan"). The performance targets for each fiscal year will be set by the
Board, after consultation with the Executive, within sixty (60) days of the
beginning of said fiscal year. The amount of any Target Bonus awarded shall be
determined by the Board based upon the achievement of said performance targets
and the terms and conditions of the Bonus Plan. Notwithstanding the above, for
calendar year 2005, the Executive's bonus will be based upon an EBITDA target to
be determined jointly by the Executive Committee of the Board and the Executive,
within thirty (30) days of the Executive's Employment Date, based upon the
Company's current EBITDA forecasts and planned current period cost reductions;
provided,
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however, that the Executive is guaranteed a bonus in 2005 of no less than 50% of
the Target Bonus, regardless of achievement of the determined EBITDA target.
(c) Supplemental Bonus Compensation. During the term hereof, the
Executive will be eligible to receive an additional, annual, supplemental bonus
for performance materially in excess of annual targets. The decision whether to
award a supplemental bonus and the amount of any such bonus shall be determined
by the Compensation Committee of the Board in its sole and unreviewable
discretion.
(d) Stock Options. Subject to the approval of the Board, the
Executive shall be granted options to purchase a total of 750,000 shares of
common stock of the Company (the "Options"), subject to the terms and conditions
set forth in any applicable award agreement and, in the 1997 Long-Term Incentive
Plan and in any other applicable plan. The Options will be exercisable at the
public trading price of the shares of the Company's common stock on the New York
Stock Exchange on the date of the grant. The Options shall vest in three (3)
equal installments on the first, second and third anniversaries of the
Executive's Employment Date. Upon the occurrence of a Change of Control, the
Options shall vest and become immediately exercisable. During the term hereof,
the following provisions shall also apply:
(i) If Kohlberg Affiliates exercise their right to convert the
Convertible Preferred Stock of the Company held by them into common stock
of the Company, the Company will grant to the Executive additional options
to purchase common stock equal to 5% of the number of new common shares
issued in connection with such conversion. These additional options will
be exercisable at the conversion price of the Convertible Preferred Stock
(equal to $6.00 per share), or, if the public trading price of the common
stock of the Company on the New York Stock Exchange at the time of such
grant is different from the conversion price, whether higher or lower,
then at the public trading price of the common stock. In addition, if
Kohlberg Affiliates purchase additional newly-issued shares of the
Company's common stock, the Company will grant to the Executive additional
options to purchase common stock equal to 5% of the number of shares
purchased by Kohlberg Affiliates (up to a maximum Kohlberg purchase value
of $25 million) with such options exercisable at the per share price paid
by Kohlberg Affiliates in connection with such transactions, or, if
greater, at the public trading price of the common stock of the Company on
the date of the grant. Any options issued pursuant to this Section 4(d)(i)
shall be subject to the terms and conditions set forth in any applicable
award agreement (which shall be substantially similar to the Options award
agreement) and incentive or stock option plan, and shall vest in three (3)
equal installments on the first, second and third anniversaries of the
Executive's execution of any applicable award agreement(s).
(ii) Except as specifically provided in Section 4(d)(i)
above, nothing herein shall prohibit or restrict the Company from taking
any corporate action or engaging in any corporate transaction of any kind,
including, without limitation, the issuance and sale of additional shares
of capital stock of the Company, any merger, consolidation, liquidation or
sale of assets, or create in the Executive any rights to acquire
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or receive additional shares of capital stock of the Company or otherwise
be protected against dilution.
(e) Vacations. During the term hereof, the Executive shall be
entitled to four (4) weeks of vacation per annum, to be taken at such times and
intervals as shall be determined by the Executive, subject to the reasonable
business needs of the Company. The Executive shall be entitled to cash
compensation for vacation time not taken during the term hereof only to the
extent approved by the Board or its designee in writing.
(f) Other Benefits. During the term hereof and subject to any
contribution therefor generally required of employees of the Company, the
Executive shall be entitled to participate in any and all employee benefit
plans from time to time in effect for employees of the Company generally, except
to the extent such plans are in a category of benefit otherwise provided to the
Executive. Such participation shall be subject to (i) the terms of the
applicable plan documents, (ii) generally applicable Company policies and (iii)
the discretion of the Board or any administrative or other committee provided
for in or contemplated by such plan. The Company may alter, modify, add to or
delete its employee benefit plans at any time as it, in its sole judgment,
determines to be appropriate, without recourse by the Executive; provided,
however, that any such alteration, modification, addition, or deletion applies
to the Company's executive officers or employees generally.
(g) Life Insurance. During the term hereof, the Company will pay a
portion of the premium on the Executive's existing split-dollar life insurance
policy with the annual Company contribution equal to 1.5% of the Executive's
annual total cash compensation (Base Salary and bonuses) for every 1% of such
annual total cash compensation (Base Salary and bonuses) contributed by the
Executive, up to a maximum annual Company contribution equal to 9% of the
Executive's total annual cash compensation (Base Salary and bonuses).
(h) Automobile. During the term hereof, the Company will provide the
Executive with an automobile at the Company's expense, or pay the Executive an
automobile allowance, in either case not to exceed One Thousand Two Hundred
Fifty Dollars ($1,250.00) per month.
(i) Club Membership. During the term hereof, the Company will pay
dues for the Executive's membership in a country club of his choosing not to
exceed Ten Thousand Dollars ($10,000.00) per year.
(j) Business Expenses. The Company shall pay or reimburse the
Executive for reasonable, customary and necessary business expenses incurred or
paid by the Executive in the performance of his duties and responsibilities
hereunder, subject to such reasonable substantiation and documentation as may be
specified by the Board or Company policy from time to time.
5. Termination of Employment and Severance Benefits. The Executive's
employment hereunder shall terminate under the following circumstances:
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(a) Death. In the event of the Executive's death during the term
hereof, the Company shall pay to the Executive's designated beneficiary or, if
no beneficiary has been designated by the Executive, to his estate, (i) any
earned and unpaid Base Salary through the date of his death; (ii) a portion of
his Target Bonus for the fiscal year in which such termination occurs, prorated
through the date of death based on the good faith estimate of the Board of the
actual Target Bonus that would have been payable to the Executive for such
fiscal year (assuming the Executive had remained employed by the Company through
the end of such fiscal year); and (iii) reimbursement for expenses accrued and
payable under Section 4 hereof through the date of death.
(b) Disability.
(i) The Company may terminate the Executive's employment
hereunder, upon written notice to the Executive, in the event that, in the
good faith judgment of the Company, the Executive becomes disabled during
his employment hereunder through any illness, injury, accident or
condition of either a physical or psychological nature and, as a result,
is unable to perform substantially all of his duties and responsibilities
hereunder for one hundred twenty (120) days during any period of three
hundred and sixty-five (365) consecutive calendar days. The Board may
designate another employee to act in the Executive's place during any
period of the Executive's disability.
(ii) If any question shall arise as to whether during any
period the Executive is disabled through any illness, injury, accident or
condition of either a physical or psychological nature so as to be unable
to perform substantially all of his duties and responsibilities hereunder,
the Executive may, and at the request of the Company shall, submit to a
medical examination by a licensed physician with the appropriate specialty
selected by the Company and practicing within a 100-mile radius of the
city or township nearest to the Executive's place of residence to whom the
Executive or his duly appointed guardian, if any, has no reasonable
objection to determine whether the Executive is so disabled and such
determination shall for the purposes of this Agreement be conclusive of
the issue. If such question shall arise and the Executive shall fail to
submit to such medical examination, the Company's determination of the
issue shall be binding on the Executive.
(iii) Upon the giving of notice of termination of the
Executive's employment hereunder, the Company shall have no further
obligation or liability to the Executive, other than (1) for Base Salary
earned and unpaid through the date of termination; (2) a portion of his
Target Bonus for the fiscal year in which such termination occurs,
prorated through the date of such termination based on the good faith
estimate of the Board of the actual Target Bonus that would have been
payable to the Executive for such fiscal year (assuming the Executive had
remained employed by the Company through the end of such fiscal year); and
(3) reimbursement for expenses accrued and payable under Section 4 hereof
through the date of termination.
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(c) By the Company for Cause. The Company may terminate the
Executive's employment hereunder for Cause at any time upon written notice to
the Executive setting forth in reasonable detail the nature or such Cause. The
following, as determined by the Board in its reasonable judgment, shall
constitute Cause for termination:
(i) Willful failure to perform, or gross negligence in the
performance of, the Executive's duties and responsibilities to the Company
and its Affiliates; or
(ii) Material breach by the Executive of any provision of this
Agreement; or
(iii) Commission of a material act of fraud, embezzlement or
other material dishonesty; or
(iv) Conviction of, or plea of nolo contendere to, a felony or
other crime involving moral turpitude.
In the event that any of the foregoing events or conditions under clauses (i) or
(ii) above is reasonably capable of being cured, the Company shall provide
written notice to the Executive describing the nature of such event or
condition, and the Executive shall, thereafter, have ten (10) business days from
receipt of such notice to cure such event or condition. Upon the giving of
notice of termination of the Executive's employment hereunder for Cause, the
Company shall have no further obligation or liability to the Executive, other
than for Base Salary earned and unpaid through the date of termination and
reimbursement for expenses accrued and payable under Section 4 hereof through
the date of termination.
(d) By the Company without Cause. The Company may terminate the
Executive's employment hereunder without Cause at any time upon written notice
to the Executive. In the event of such termination, and provided that no
benefits are payable to the Executive under a separate severance agreement or an
executive severance plan as a result of such termination, the Company shall
provide the Executive with the following severance benefits:
(i) If the Company terminates the Executive without Cause on
or before May 31, 2006, the Company shall continue to pay the Executive
his Base Salary at the rate in effect on the date of termination, and the
health, dental and life benefits under Section 4(f) hereof to which the
Executive is then entitled (provided that the plan terms permit and
provided further that the Executive makes a timely COBRA election), for a
period of twelve (12) months from the date of termination; or
(ii) If the Company terminates the Executive without Cause
after May 31, 2006, the Company shall continue to pay the Executive his
Base Salary at the rate in effect on the date of termination, and the
health, dental and life benefits under Section 4(f) hereof to which the
Executive is then entitled (provided that the plan terms permit and
provided further that the Executive makes a timely COBRA election), for a
period of eighteen (18) months from the date of termination.
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(iii) Notwithstanding anything in the foregoing to the
contrary, if the Company terminates the Executive without cause ninety
(90) or less days prior to the occurrence of a Change of Control, such
termination shall be deemed to be as a result of a Change in Control and
the provisions of Section 5(f) hereof shall apply with respect to the
Executive's compensation.
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(e) By the Executive.
(i) Other than in connection with a termination for "Good
Reason," the Executive may terminate his employment hereunder at any time upon
sixty (60) days' notice to the Company, unless such termination would violate
any obligation of the Executive to the Company under a separate severance
agreement. In the event of termination of the Executive pursuant to this Section
5(e), the Board may elect to waive the period of notice, or any portion thereof,
and, if the Board so elects, the Company will pay the Executive his Base Salary
for the notice period (or for any remaining portion of the period). The Company
shall have no further obligation or liability to the Executive other than Base
Salary for the notice period.
(ii) The Executive may terminate his employment at any time
for Good Reason by delivering written notice to the Company. For purposes of
this Agreement, "Good Reason" shall mean and refer to (1) the assignment to the
Executive of any duties inconsistent with the Executive's status as Chief
Executive Officer and President of the Company or a material adverse change made
by the Company to the Executive's duties, responsibilities, or working
conditions such that such duties, responsibilities, or working conditions are
inappropriate and not customary for a Chief Executive Officer and President of a
similarly situated company; (2) any reduction by the Company of the Executive's
Base Salary as in effect on the Executive's Employment Date, as the same may be
increased from time to time, or a reduction of the potential annual Target Bonus
expressed as a percent of base salary (subject to attainment of goals, Board
discretion and other conditions of the applicable bonus program); (32) the
taking of any action by the Company which materially adversely affects the
Executive's participation in, or reduces the Executive's benefits originally
provided under, the Company's benefit plans specified in this Agreement, except
to the extent that such action applies to the Company's executive officers or
employees generally; (3) a material breach of any material provision of this
Agreement, which breach is not cured within ten (10) days of the Executive
having provided the Board with notice of said breach; (4) a material breach by
the Company of its material obligations hereunder, but only if the Executive
provides written notice to the Company describing such breach in reasonable
detail and the Company fails to cure such breach within ten (10) business days
of receipt of such notice; or (543) any failure by a successor or assign of the
Company to assume this Agreement.
(A) If the Executive terminates his employment for Good
Reason on or before May 31, 2006, the Company shall continue to pay the
Executive his Base Salary at the rate in effect on the date of
termination, and the health, dental and life benefits under Section 4(f)
hereof to which the Executive is then entitled (provided that the plan
terms permit and provided further that the Executive makes a timely COBRA
election), for a period of twelve (12) months from the date of
termination; or
(B) If the Executive terminates his employment for Good
Reason after May 31, 2006, the Company shall continue to pay the Executive
his Base Salary at the rate in effect on the date of termination, and the
health, dental and life benefits under Section 4(f) hereof to which the
Executive is then entitled (provided that the plan terms permit and
provided further that the Executive makes a timely COBRA election), for a
period of eighteen (18) months from the date of termination.
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(C) Notwithstanding anything in the foregoing to the
contrary, if the Executive terminates his employment for Good Reason
within ninety (90) or less days prior to the occurrence of a Change of
Control, such termination shall be deemed to be as a result of a Change in
Control and the provisions of Section 5(f) hereof shall apply with respect
to the Executive's compensation.
(f) By a Change of Control. If a Change of Control occurs and as a
result of such Change in Control, or within ninety (90) days prior to, or six
months following, such Change of Control, the Company terminates the Executive's
employment without Cause or the Executive terminates his employment for Good
Reason, then, in lieu of any payments to or on behalf of the Executive under
Section 5(d) or 5(e) hereof, as may be applicable, the Company shall continue to
pay the Executive's Base Salary at the rate in effect on the date of
termination, and the health, dental and life benefits under Section 4(f) hereof
to which the Executive is then entitled (provided that the plan terms permit and
provided further that the Executive makes a timely COBRA election), for a period
of twenty-four (24) months from the date of termination.
6. Effect of Termination. The provisions of this Section 6 shall apply to
termination pursuant to Section 5 or otherwise.
(a) Payment by the Company of any Base Salary, prorated Target
Bonus, health, dental and life benefits under Section 4(f) hereof, and expenses
that may be due to the Executive in each case under the applicable termination
provision of Section 5 shall constitute the entire obligation of the Company to
the Executive. In order to receive any severance benefits pursuant to Sections
5(d), 5(e), or 5(f), the Executive must execute a general release of claims in a
form reasonably acceptable to the Company. With respect to any benefits
continuation pursuant to Sections 5(d), 5(e) or 5(f), the Company shall
contribute toward the premium cost of any such benefits continuation at the same
rate that it contributes toward the premium cost for active employees.
(b) Except as required by law or by the other applicable provisions
of this Agreement, benefits shall terminate pursuant to the terms of the
applicable benefit plans based on the date of termination of the Executive's
employment without regard to any continuation of Base Salary or other payment to
the Executive following such date of termination.
(c) Provisions of this Agreement shall survive any termination if so
provided herein or if necessary or desirable fully to accomplish the purposes of
such provision, including without limitation the obligations of the Executive
under Sections 7, 8 and 9 hereof. The obligation of the Company to make payments
to or on behalf of the Executive under Sections 5(d), 5(e), or 5(f) hereof is
expressly conditioned upon the Executive's continued full performance of
obligations under Sections 7, 8 and 9 hereof. The Executive recognizes that,
except as expressly provided in Sections 5(d), 5(e) or 5(f), no compensation is
earned or due after termination of employment.
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7. Confidential Information.
(a) The Executive acknowledges that the Company and its Affiliates
continually develop Confidential Information, that the Executive may develop
Confidential Information for the Company or its Affiliates and that the
Executive may learn of Confidential Information during the course of employment.
The Executive will comply with the policies and procedures of the Company and
its Affiliates for protecting Confidential Information and shall never disclose
to any Person (except as required by applicable law or for the proper
performance of his duties and responsibilities to the Company and its
Affiliates), or use for his own benefit or gain, any Confidential Information
obtained by the Executive incident to his employment or other association with
the Company or any of its Affiliates. The Executive understands that this
restriction shall continue to apply after his employment terminates, regardless
of the reason for such termination.
(b) All documents, records, tapes and other media of every kind and
description relating to the business, present or otherwise, of the Company or
its Affiliates and any copies, in whole or in part, thereof (the "Documents"),
whether or not prepared by the Executive, shall be the sole and exclusive
property of the Company and its Affiliates. The Executive shall safeguard all
Documents and shall surrender to the Company at the time his employment
terminates, or at such earlier time or times as the Board or its designee may
specify, all Documents then in the Executive's possession or control.
8. Assignment of Rights to Intellectual Property. The Executive shall
promptly and fully disclose all Intellectual Property to the Company. The
Executive hereby assigns and agrees to assign to the Company (or as otherwise
directed by the Company) the Executive's full right, title and interest in and
to all Intellectual Property. The Executive agrees to execute any and all
applications for domestic and foreign patents, copyrights or other proprietary
rights and to do such other acts (including without limitation the execution and
delivery of instruments of further assurance or confirmation) requested by the
Company to assign the Intellectual Property to the Company and to permit the
Company to enforce any patents, copyrights or other proprietary rights to the
Intellectual Property. The Executive will not charge the Company for time spent
in complying with these obligations. All copyrightable works that the Executive
creates shall be considered "work made for hire".
9. Restricted Activities. The Executive agrees that some restrictions on
his activities during and after his employment are necessary to protect the
goodwill, Confidential Information and other legitimate interests of the Company
and its Affiliates:
(a) While the Executive is employed by the Company and for a period
of eighteen (18) months after his employment terminates (the "Non-Competition
Period"), the Executive shall not, directly or indirectly, whether as owner,
partner, investor, consultant, agent, employee, co-venturer or otherwise,
compete with the Company or any of its Affiliates or undertake any planning for
any business competitive with the Company or any of its Affiliates within the
Restricted Territory. For purposes of this Agreement, "Restricted Territory"
means (i) any state in the continental United States; (ii) Alaska and Hawaii;
(iii) any other territory or possession of the United States; and (iv) any other
country in which any Product has been
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manufactured, provided, sold or offered or promoted for sale by the Company or
any of its Affiliates at any time during the Employment Period or with respect
to which the Company or any of its Affiliates has devoted substantial expense in
anticipation of launching into such geographic area a portion of their business.
Specifically, but without limiting the foregoing, the Executive agrees not to
engage in any manner in any activity that is directly or indirectly competitive
or potentially competitive with the business of the Company or any of its
Affiliates as conducted or under consideration at any time during the
Executive's employment. Restricted activity includes without limitation
accepting employment or a consulting position with any Person who is, or at any
time within twelve (12) months prior to termination of the Executive's
employment has been, a customer of the Company or any of its Affiliates. For the
purposes of this Section 9, the business of the Company and its Affiliates shall
include all Products and the Executive's undertaking shall encompass all items,
products and services that may be used in substitution for Products.
(b) The Executive agrees that, during his employment with the
Company, he will not undertake any outside activity, whether or not competitive
with the business of the Company or its Affiliates, that could reasonably give
rise to a conflict of interest or otherwise interfere with his duties and
obligations to the Company or any of its Affiliates.
(c) The Executive further agrees that while he is employed by the
Company and during the Non-Competition Period, the Executive will not hire or
attempt to hire any employee of the Company or any of its Affiliates, assist in
such hiring by any Person, encourage any such employee to terminate his or her
relationship with the Company or any of its Affiliates, or solicit or encourage
any customer or vendor of the Company or any of its Affiliates to terminate its
relationship with them, or, in the case of a customer, to conduct with any
Person any business or activity which such customer conducts or could conduct
with the Company or any of its Affiliates.
10. Enforcement of Covenants. The Executive acknowledges that he has
carefully read and considered all the terms and conditions of this Agreement,
including the restraints imposed upon him pursuant to Sections 7, 8 and 9
hereof. The Executive agrees that said restraints are necessary for the
reasonable and proper protection of the Company and its Affiliates and that each
and everyone of the restraints is reasonable in respect to subject matter,
length of time and geographic area. The Executive further acknowledges that,
were he to breach any of the covenants contained in Sections 7, 8 or 9 hereof,
the damage to the Company would be irreparable. The Executive therefore agrees
that the Company, in addition to any other remedies available to it, shall be
entitled to preliminary and permanent injunctive relief against any breach or
threatened breach by the Executive of any of said covenants, without having to
post bond. The parties further agree that, in the event that any provision of
Section 7, 8 or 9 hereof shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.
11. Conflicting Agreements. The Executive hereby represents and warrants
that the execution of this Agreement and the performance of his obligations
hereunder will not breach or
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be in conflict with any other agreement to which the Executive is a party or is
bound and that the Executive is not now subject to any covenants against
competition or similar covenants that would affect the performance of his
obligations hereunder. The Executive will not disclose to or use on behalf of
the Company any proprietary information of a third party without such party's
consent
12. Indemnification. The Company shall indemnify the Executive to the
extent provided in its then current Articles or By-Laws. The Executive agrees to
promptly notify the Company of any actual or threatened claim arising out of or
as a result of his employment with the Company.
13. Definitions. Words or phrases which are initially capitalized or are
within quotation marks shall have the meanings provided in this Section 13 and
as provided elsewhere herein. For purposes of this Agreement, the following
definitions apply:
(a) "Affiliates" means all persons and entities directly or
indirectly controlling, controlled by or under common control with the Company,
where control may be by either management authority or equity interest.
(b) "Change in Control" means (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.
(c) "Confidential Information" means any and all information of the
Company and its Affiliates that is not generally known by others with whom they
compete or do business, or with whom they plan to compete or do business and any
and all information, publicly known in whole or in part or not, which, if
disclosed by the Company or its Affiliates would assist in competition against
them. Confidential Information includes without limitation such information
relating to (i) the development, research, testing, manufacturing, marketing and
financial activities of the Company and its Affiliates, (ii) the Products, (iii)
the costs, sources of supply, financial performance and strategic plans of the
Company and its Affiliates, (iv) the identity and special needs of the customers
of the Company and its Affiliates and (v) the people and organizations with whom
the Company and its Affiliates have business relationships and those
relationships. Confidential Information also includes comparable information
that the Company or any of its Affiliates have received belonging to others or
which was received by the Company or any of its Affiliates with any
understanding that it would not be disclosed. Confidential Information will not
include any information that has been published in a form generally available to
the public prior to the date the Executive proposes to disclose or use such
information. Confidential information will not be deemed to have been published
merely because individual portions of the information have been separately
published, but only if all material features comprising such information have
been published in combination.
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(d) "Intellectual Property" means inventions, discoveries,
developments, methods, processes, compositions, works, concepts and ideas
(whether or not patentable or copyrightable or constituting trade secrets)
conceived, made, created, developed or reduced to practice by the Executive
(whether alone or with others, whether or not during normal business hours or on
or off Company premises) during the Executive's employment and during the period
of six (6) months immediately following termination of his employment that
relate to either the Products or any prospective activity of the Company or any
of its Affiliates.
(e) "Kohlberg Affiliates" means all persons and entities directly or
indirectly controlling, controlled by or under common control with Kohlberg &
Co. LLC, where control may be either management authority or equity interest.
(f) "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.
(g) "Products" mean all products planned, researched, developed,
tested, manufactured, sold, licensed, leased or otherwise distributed or put
into use by the Company or any of its Affiliates, together with all services
provided or planned by the Company or any of its Affiliates, during the
Executive's employment.
14. Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
15. Assignment. Neither the Company nor the Executive may make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of the Executive in the event that the Company shall
hereafter affect a reorganization, consolidate with, or merge into, any other
Person or transfer all or substantially all of its properties or assets to any
other Person. This Agreement shall inure to the benefit of and be binding upon
the Company and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation, or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no succession had taken place.
16. Severability. If any portion or provision of this Agreement shall to
any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
17. Waiver. No waiver of any provision hereof shall be effective unless
made in
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writing and signed by the waiving party. The failure of either party to require
the performance of any term or obligation of this Agreement, or the waiver by
either party of any breach' of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
18. Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person or deposited in the United States mail,
postage prepaid, registered or certified, and addressed to the Executive at his
last known address on the books of the Company or, in the case of the Company,
at its principal place of business, attention of the Chief Financial Officer, or
to such other address as either party may specify by notice to the other
actually received.
19. Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of the
Executive's employment.
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20. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by an expressly authorized representative
of the Company.
21. Headings. The headings and captions in this Agreement are for
convenience only and in no way define or describe the scope or content of any
provision of this Agreement.
22. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together shall
constitute one and the same instrument.
23. Governing Law. This is a Connecticut contract and shall be construed
and enforced under and be governed in all respects by the laws of the State of
Connecticut, without regard to the conflict of laws principles thereof.
IN WITNESS WHEREOF. this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized representative, and by the
Executive, as of the date first above written.
THE EXECUTIVE: KATY INDUSTRIES, INC.
/s/ Anthony T. Castor III By: /s/ William F. Andrews
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Anthony T. Castor III Title: Chairman
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