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Exhibit 10.10

 
THIS NOTE WAS ISSUED IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD, ASSIGNED,
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT COVERING THE TRANSFER OR AN OPINION OF COUNSEL
ACCEPTABLE TO THE ISSUER THAT SUCH REGISTRATION UNDER THE ACT IS NOT REQUIRED.
 
THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED TO
THE PRIOR PAYMENT OF CERTAIN OBLIGATIONS OF THE ISSUER TO THE HOLDERS OF SENIOR
INDEBTEDNESS (AS DEFINED HEREIN).
 

KATY INDUSTRIES, INC.

 
Subordinated Note Due November 26, 2013
 
$50,000                                                                                                                                                  February
14, 2011
 
FOR VALUE RECEIVED, the undersigned, Katy Industries, Inc., a Delaware
corporation (the “Company”), hereby promises to pay to the order of David J.
Feldman or registered assigns (such original payee or any assignee from time to
time, the “Noteholder”), at the address specified in Section 9.1 hereof, or at
such other place as the Noteholder shall from time to time have designated to
the Company in writing, on November 26, 2013 (the “Maturity Date”), Fifty
Thousand and No/100ths Dollars ($50,000.00), and to pay interest thereon as
provided in Section 2 hereof.
 
1. THE NOTE; DEFINITIONS.  Capitalized terms are used herein as defined in
Section 8 below.
 
2. INTEREST PROVISIONS.  This Note shall bear interest from the date hereof on
the principal amount hereof from time to time unpaid, to and including the
maturity hereof and repayment of all sums due hereunder, at a rate equal to 15%
per annum.  Interest shall be payable quarterly in arrears on the last day of
each of March, June, September and December (each, a “Payment Date”) and on the
Maturity Date, commencing on March 31, 2011; provided, however, that such
interest may be paid on any Payment Date by the Company by capitalizing such
interest and adding such capitalized interest to the principal amount of the
Note (such accrued interest capitalized from time to time is referred to herein
as “PIK Interest”).
 
Any PIK Interest on this Note shall be deemed for all purposes to be principal
of this Note (including without limitation with respect to the accrual of
interest on any PIK Interest amounts), whether or not this Note is marked to
indicate the addition of such PIK Interest, and interest shall begin to accrue
on PIK Interest beginning on and including the Payment Date on which such
PIK Interest is added to the principal amount (including PIK Interest) of this
Note, and such interest shall accrue and be paid, together with the interest on
the entire remaining principal amount of this Note, in accordance with this
Section 2.
 
 
 

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Notwithstanding any provisions of this Note, in no event shall the amount of
interest paid or agreed to be paid by the Company exceed an amount computed at
the highest rate of interest permissible under applicable law.
 
3. PAYMENT PROVISIONS.  The Company covenants that so long as this Note is
outstanding:
 
3.1 Payment at Maturity of the Note.  On the Maturity Date, or on any
accelerated maturity of this Note permitted hereby, the Company will pay the
entire principal amount (including any PIK Interest) of this Note then
outstanding, together with all accrued and unpaid interest thereon.
 
3.2 Voluntary Prepayments.  Except as otherwise provided in Section 7 hereof,
the Company may at any time and from time to time prepay all or part of the
principal amount of this Note then outstanding without penalty or premium.
 
3.3 Notice of Prepayments.  Notice of each voluntary prepayment of this Note
pursuant to Section 3.2 hereof shall be given to the Noteholder in accordance
with Section 9.1 hereof not fewer than three days before the prepayment date, in
each case by delivering to the Noteholder a notice of intention to prepay
specifying the date of prepayment, the aggregate amount of this Note to be
prepaid on such date, and the accrued interest applicable to such prepayment.
 
3.4 Interest on Prepayment.  Upon each permitted prepayment of this Note, in
whole or in part, the Company will pay to the Noteholder the amount of this Note
to be prepaid, as set forth in the notice delivered pursuant to Section 3.3
hereof, together with unpaid interest in respect thereof accrued to and
including the prepayment date.
 
3.5 Application of Payments.  All cash payments made by the Company hereunder
shall be applied:  (a) first, to the payment in full of accrued unpaid interest;
and (b) second, to the reduction of the unpaid principal balance hereof.
 
3.6 Payments Subject to Subordination.  Notwithstanding the foregoing provisions
of this Section 3, no cash payment or prepayment of interest or principal or any
other amounts payable under this Section 3 shall be made at any time when the
payment thereof is prohibited by the provisions of Section 7 hereof.
 
4. DEFAULTS.
 
4.1 Event of Default.  An “Event of Default” shall exist if any of the following
conditions or events shall occur and be continuing:
 
 
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4.1.1 The Company shall fail to make any payment in respect of principal of or
interest on this Note (other than any payment of interest which the Company is
prohibited from making pursuant to Section 7.2 hereof) as the same shall become
due, whether at maturity, by acceleration or otherwise, and such default is not
remedied within 10 days after the same becomes due; or
 
4.1.2 The Company shall: (i) commence a voluntary case concerning itself under
Title 11 of the United States Code entitled “Bankruptcy” as now or hereafter in
effect, or any successor thereto (the “Bankruptcy Code”); (ii) have commenced
against it an involuntary case under said Bankruptcy Code and the petition is
not dismissed within 60 days of the commencement of the case; (iii) have
appointed for it a custodian (as defined in the Bankruptcy Code) to take charge
of all or substantially all of its property; (iv) have filed against it any
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect, which such proceeding remains
undismissed for a period of 60 days, or shall suffer the appointment of any
receiver or custodian or the like for it or a substantial part of its property
which continues undischarged or unstayed for a period of 60 days; (v) make a
general assignment for the benefit of its creditors; or (vi) take any corporate
action for the purpose of effecting any case referred to in the foregoing
clauses (i) or (v); or
 
4.1.3 All or any part of any Senior Indebtedness shall be accelerated or shall
become due or payable prior to its stated maturity pursuant to the default
provisions related thereto.
 
4.2 Acceleration.  Except as otherwise provided in Section 7 hereof, upon the
occurrence and during the continuance of any Event of Default, after first
providing 10 days’ notice to the Company (except in the case of an Event of
Default under Section 4.1.2, in which event no such notice to the Company is
required), but subject to the provisions of Section 7 hereof, the Noteholder may
proceed to protect and enforce its rights by suit in equity, action at law
and/or other appropriate proceeding, and/or may by notice to the Company declare
all or any part of the unpaid principal amount of this Note then outstanding to
be forthwith due and payable (each, an “Acceleration”), and thereupon such
unpaid principal amount or part thereof, together with interest accrued thereon
and all other sums, if any, payable under this Note, shall become so due and
payable without presentation, presentment, protest or further demand or notice
of any kind, all of which are hereby expressly waived, and such holder or
holders may proceed to enforce payment of such amount or part thereof in such
manner as it or they may elect; provided, however, notwithstanding the
foregoing, in the case of an Event of Default under Section 4.1.2, Acceleration
shall be deemed automatic without notice to the Company.
 
4.3 Annulment of Defaults.  An Event of Default shall not be deemed to be in
existence for any purpose of this Agreement if the Noteholder shall have waived
such event in writing or stated in writing that the same has been cured to the
Noteholder’s reasonable satisfaction.  No waiver or statement of satisfactory
cure pursuant to this Section 4.3 shall extend to or affect any subsequent or
other Event of Default not specifically identified in such waiver or statement
of satisfactory cure or impair any of the rights of any holder of this Note upon
the occurrence thereof.
 
 
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5. RESTRICTIONS ON TRANSFER OF NOTE.  The Noteholder may not transfer or assign
this Note, whether in full or in part, without obtaining the Company’s prior
written consent; provided, however, the Noteholder may transfer or assign this
Note, without obtaining the Company’s consent, to (i) any Permitted Transferee
of the Noteholder, or (ii) in the event of the Noteholder’s death, the
Noteholder’s estate or beneficiaries thereof; provided, further, following the
occurrence and during the continuance of an Event of Default, the Company shall
not unreasonably withhold its consent to any transfer or assignment by the
Noteholder to any other Person.
 
6. NOTICE OF SENIOR ACCELERATION.  In the event any Lender of Senior
Indebtedness delivers a notice of acceleration in respect thereof to the
Company, the Company shall promptly give notice thereof to the Noteholder.
 
7. SUBORDINATION.  Each of the Company and the Noteholder, by its acceptance
hereof, covenants that, until the Credit Termination Date, each of them will
comply with the following provisions:
 
7.1 Subordination.  To the extent and in the manner provided in this Note, the
payment of any Subordinated Indebtedness is and shall be expressly subordinated
and junior in right of payment to the prior payment in full in cash of all
Senior Indebtedness, and the Subordinated Indebtedness is subordinated as a
claim against the Company, any of its Subsidiaries, any guarantor of the Senior
Indebtedness or any of their respective assets to the prior payment in full in
cash of the Senior Indebtedness, in each case whether such claim is in the
ordinary course of business, in the event of any Reorganization, or
otherwise.  Each holder of Senior Indebtedness, whether such Senior Indebtedness
is now outstanding or hereafter created, incurred, assumed or guaranteed, shall
be deemed to have acquired Senior Indebtedness in reliance upon this Section 7.
 
7.2 Restricted Payments.  The Company will not make, and the Noteholder will not
accept or receive, any payments or prepayments (other than payments constituting
PIK Interest) in respect of this Note, including, without limitation, payments
of interest and payments and prepayments of principal (other than Reorganization
Securities), and no such payments or prepayments shall become due; provided,
that the Company may make scheduled payments in cash of interest on this Note,
unless and until a “Default” or “Event of Default” shall have occurred under
(and as such terms are defined in) the Credit Agreements, in which case no such
payments may be made until such Default or Event of Default shall have been
waived or cured in accordance with the terms of the Credit Agreements, and any
such missed payments shall be deferred until, and shall not be due or payable
until, the Credit Termination Date.
 
 
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7.3 Reorganization.  In the event of any Reorganization, all Senior Indebtedness
shall first be paid in full in cash before any payment is made on account of any
Subordinated Indebtedness (other than Reorganization Securities).  Prior to the
Credit Termination Date, in any proceedings seeking to effect a Reorganization
any payment which may be payable or deliverable in respect of any such
Subordinated Indebtedness shall be paid or delivered (in the form received duly
endorsed to the Agent) directly to the Agent for application to payment of the
Senior Indebtedness, until all Senior Indebtedness shall have been paid in full
in cash.
 
7.4 Specific Powers in Reorganization.  If any Subordinated Indebtedness is
outstanding, then in any proceedings with respect to any Reorganization, the
Noteholder, by its acceptance hereof, irrevocably authorizes the Agent:
 
(i) to prove and enforce any claims on the Subordinated Indebtedness owed by the
Company and its Subsidiaries to the Noteholder either in the name of the Agent
or in the name of the Noteholder as the attorney-in-fact of the Noteholder;
 
(ii) to accept and execute receipts for any  payment made with respect to any
such Subordinated Indebtedness and to apply such payment to the payment of the
Senior Indebtedness; and
 
(iii) to take any action and to execute any instruments necessary to effectuate
the foregoing, either in the name of  the Agent or in the name of the Noteholder
as the attorney-in-fact of the Noteholder.
 
7.5 Payments Held in Trust.  If, notwithstanding the foregoing provisions of
this Section 7, the Noteholder shall receive any  payment from the Company or
any of its Subsidiaries of any kind or character in contravention of
Sections 7.2 or 7.3 above before the Credit Termination Date, such payment shall
be held in trust by the Noteholder and promptly paid over to the Agent for
application to the payment of Senior Indebtedness until all such Senior
Indebtedness shall have been paid in full in cash, after giving effect to any
concurrent payment to the holders of Senior Indebtedness, and the Lenders’
obligations to extend credit under all  Credit Transaction Documents shall have
been terminated.
 
7.6 Restrictions on Demand and Acceleration.  Notwithstanding any contrary
provision of any Subordinated Indebtedness or of any agreement or instrument
relating thereto, no Subordinated Indebtedness (including all regularly
scheduled payments of interest on this Note, which are not permitted to be made
under Section 7.2) shall become or be declared to be due and payable prior to
the date on which the Senior Indebtedness becomes or is declared to be due and
payable.
 
7.7 Restrictions on Remedies.  Notwithstanding any provision to the contrary
contained in any Subordinated Indebtedness or in any agreement or instrument
relating thereto, and notwithstanding the occurrence and continuance of any
Event of Default, the Noteholder shall not, without the prior written consent of
the Agent, institute proceedings to enforce any Subordinated Indebtedness or
exercise any other remedies in respect of the Subordinated Indebtedness, until
the Credit Termination Date shall have occurred, other than an acceleration of
any Subordinated Indebtedness in accordance with the term of Section 7.6.
 
 
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7.8 No Collateral.  The Company and its Subsidiaries shall not grant, and the
Noteholder shall not demand, accept or receive, any collateral, direct or
indirect, for any Subordinated Indebtedness, whether by way of security
interest, pledge, lien or otherwise.
 
7.9 No Other Subordination.  The Noteholder represents that the Subordinated
Indebtedness is not subordinated to any obligations other than the Senior
Indebtedness and covenants that it will not subordinate the Subordinated
Indebtedness to any other obligations except with the prior written consent of
the Agent.
 
7.10 Reinstatement.  If the Lenders are required by reason of a judgment or
order of any court or administrative authority having competent jurisdiction to
repay any amounts or property received by the Lenders on account of the Senior
Indebtedness or other obligations under the  Credit Transaction Documents and
the Lenders repay or return such amounts or property, then the subordination
provisions of this Note shall be reinstated retroactively with respect to the
amounts so repaid or property so returned as if such amounts or property had
never been received by the Lenders, notwithstanding any termination thereof or
the cancellation of any  Credit Transaction Documents.
 
7.11 Effect of Provisions; Subrogation.
 
7.11.1 Effect of Provisions; Relative Rights.  The provisions hereof as to
subordination are solely for the purpose of defining the relative rights of the
holders of Senior Indebtedness on one hand and the Noteholder on the other hand,
and such provisions shall not impair as between the Company and the Noteholder
the obligation of the Company to pay to the Noteholder any Subordinated
Indebtedness owed by the Company to the Noteholder under this Note, nor shall
any such provisions prevent the Noteholder from exercising all remedies
otherwise permitted by applicable law or under the terms of the this Note upon
the occurrence and during the continuance of a default hereunder, except to the
extent prohibited by this Note.
 
7.11.2 Subrogation.  After the Credit Termination Date, the Noteholder shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of assets of the Company or any of its Subsidiaries
that would be deemed payable on the Senior Indebtedness until the Subordinated
Indebtedness shall be paid in full.  For the purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Noteholder would be entitled except for the
provisions of this Note, and no payment over pursuant to the provisions of this
Note to the holders of Senior Indebtedness by the Noteholder, shall, as between
the Company or any of its Subsidiaries and their creditors other than the
holders of Senior Indebtedness, on one hand, and the Noteholder, on the other
hand, be deemed to be a payment by the Company or any of its Subsidiaries to or
on account of Senior Indebtedness.
 
7.11.3 Legend, etc.  Each of the Company and the Noteholder, by its acceptance
hereof, covenants to cause each instrument or certificate representing or
evidencing any of the Subordinated Indebtedness to have affixed upon it a legend
substantially as follows:
 
 
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“THIS NOTE AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATED TO
THE PRIOR PAYMENT OF CERTAIN OBLIGATIONS OF THE COMPANY TO THE HOLDERS OF SENIOR
INDEBTEDNESS (AS DEFINED HEREIN).”
 
The Company will cause any financial statement describing or listing or
otherwise reflecting the existence of any Indebtedness included in the
Subordinated Indebtedness to indicate clearly the subordinated character
thereof.
 
7.12 Third Party Beneficiaries.  The provisions of this Section 7 shall
constitute a continuing agreement among the Noteholder and all Persons who hold
Senior Indebtedness, whether now outstanding or hereafter created, incurred or
assumed, and the provisions of this Section 7 are made for the benefit of the
holders of Senior Indebtedness, and such holders of Senior Indebtedness are made
obligees hereunder and express third-party beneficiaries hereof (with the same
force and effect as if parties thereto) and any one or more of them may enforce
such provisions.
 
7.13 Waiver of Notice.  The Noteholder, by its acceptance hereof, waives all
notice of the acceptance of the subordination provisions contained herein by
each holder of Senior Indebtedness, whether now outstanding or hereafter
created, incurred or assumed, and waives reliance by each such holder of Senior
Indebtedness upon such provisions.
 
7.14 Power to Modify Senior Indebtedness.  The holders of Senior Indebtedness
may at any time or from time to time, and in their absolute discretion, change
the manner, place or terms of payment of, change or extend the time of payment
of, or renew or alter, any Senior Indebtedness, or amend, modify or supplement
any  Credit Transaction Document or other document evidencing Senior
Indebtedness, or exercise or refrain from exercising any other or their rights
or remedies under the Senior Indebtedness, including, without limitation, the
waiver of any Default or Event of Default (as defined in the  Credit Transaction
Documents) or any other default or event of default thereunder, all without
notice to or assent from the Noteholder and all in accordance with the terms of
the Credit Transaction Documents .
 
7.15 No Impairment of Rights.  No right of any present or future holder of
Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Company or the Noteholder or by any act or failure to act, in good
faith, by any such holder of Senior Indebtedness, or by any noncompliance by the
Company or the Noteholder with the terms, provisions and covenants of this Note,
regardless of any knowledge thereof with which any such holder of Senior
Indebtedness may have or otherwise be charged.
 
 
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7.16 Continuing Agreement.  This Section 7: (a) is binding upon the Company and
its successors and assigns and upon the Noteholder and such Noteholder’s
successors and assigns, each of whom, by its acceptance of this Note, agrees to
be bound by and comply with all of the provisions of this Section 7 and (b) is a
continuing agreement, is irrevocable by the Company and the Noteholder and their
respective successors and assigns and shall remain in full force and effect
until the Credit Termination Date.  No term or provision contained (i) in this
Note (other than those contained in this Section 7) may be amended or modified
in any material respect without the prior written consent of the Agent and (ii)
in this Section 7 may be amended or modified in any respect without the prior
written consent of the Agent.
 
7.17 Further Assurances.  Each of the Company and the Noteholder, by its
acceptance hereof, covenants to execute and deliver to the Agent such further
instruments and to take such further action as the Agent may at any time or
times reasonably request in order to carry out the provisions and intent of this
Section 7.
 
8. DEFINED TERMS.
 
8.1 Cross Reference Table.  The following terms defined elsewhere in this Note
in the Sections set forth below shall have the respective meanings therein
defined
 
Term                                                                Definition

“Acceleration”                                              Section 4.1
“Bankruptcy Code”                                      Section 4.1.2
“Company”                                                    Preamble
 “Event of Default”                                       Section 4.1
“Maturity Date”                                            Preamble
“Note”                                                            Section 1
“Noteholder”                                                 Preamble
“Payment Date”                                            Section 2
“PIK Interest”                                                Section 2

8.2 Other Defined Terms.  As used in this Note, the following terms will have
the following meanings:
 
“Credit Agreements” means, collectively, (i) the Revolving Credit, Term Loan and
Security Agreement and (ii) the Export-Import Revolving Credit and Security
Agreement, each dated as of May 26, 2010 by and among the Company, certain of
its Subsidiaries, as borrowers, the lenders party thereto, and PNC Bank,
National Association, as agent, as such agreements are from time to time in
effect, and as the same may be amended, supplemented, restated, modified,
renewed, refunded, restructured, replaced (whether upon or after termination or
otherwise) or refinanced, in whole or in part.
 
“Credit Termination Date” means the date on which the Senior Indebtedness is
paid in full in cash (other than contingent indemnification obligations not then
due and payable), the Lenders’ obligations to extend credit under each  Credit
Transaction Document shall have been terminated, and the Credit Agreements shall
have been terminated.
 
 
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“Credit Transaction Documents” means the Credit Agreements, together with all of
the “Other Documents” (as defined therein), as the same may from time to time
be  amended, supplemented, restated, modified, renewed, refunded, restructured,
replaced (whether upon or after termination or otherwise) or refinanced, whether
in whole or in part, and whether or not with the same lenders.
 
“Agent” means the “Agent” as defined in the Credit Agreements.
 
“Lenders” means the “Lenders” as defined in the Credit Agreements.
 
“Members of the Immediate Family” means, with respect to any natural Person,
(a) each spouse or natural or adopted child of such Person; (b) each natural or
adopted child of any Person described in clause (a) above; (c) each trust
created solely for the benefit of one or more of the Persons described in
clauses (a) and (b) above; and (d) each custodian or guardian of any property of
one or more of the Persons described in clauses (a) through (c) above in his or
her capacity as such custodian or guardian.
 
“payment” shall mean any direct or indirect payment or distribution of assets of
any kind or character, whether in cash, property or securities, by setoff or
otherwise, on or with respect to the Subordinated Indebtedness, including any
principal of or interest on the Subordinated Indebtedness, but excluding any
payments or distributions made in the form of PIK Interest hereunder or
additional subordinated notes or capital stock that is subordinated to the
Senior Indebtedness to at least the same extent as this Note.
 
“Permitted Transferee” means, with respect to any Noteholder, (i) any lineal
descendant or other Member of the Immediate Family of such Noteholder, and
(ii) each trust created solely for the sole benefit of one or more of such
Noteholder and any Person described in clause (i) above.
 
“Person” means any individual or corporation, partnership, association, limited
liability company, joint venture, trust, governmental authority or other entity
of any kind.
 
“Reorganization” means any voluntary or involuntary dissolution, winding-up,
liquidation, reorganization by judicial proceedings, bankruptcy, insolvency,
receivership or other statutory or common law proceedings, including any
proceeding under the federal bankruptcy code or any similar law or any other
jurisdiction, involving the Company or any of its material Subsidiaries or any
of their respective properties and the readjustment of the respective
liabilities of the Company or any such other Person or any assignment for the
benefit of creditors or any marshaling of the assets or liabilities of the
Company or any such other Person.
 
“Reorganization Securities” means common stock, other non-redeemable stock or
debt subordinated to the Senior Indebtedness on terms at least as favorable to
the holders of Senior Indebtedness as the terms of this Note, in each case
issued pursuant to a plan of reorganization or otherwise in a Reorganization in
exchange for Subordinated Indebtedness.
 
 
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“Senior Indebtedness” means all “Obligations” arising under or relating to any
Credit Transaction Document (whether such Obligations arise before or after the
institution of any Reorganization and whether or not such Obligations are
allowed claims in such Reorganization, and whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter incurred), in
each case whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise.  As used herein, the term
“Obligations means all “Obligations” as defined in the Credit Agreements.
 
“Subordinated Indebtedness” means, collectively, all obligations, liabilities
and indebtedness of the Company and any of its Subsidiaries to the Noteholder
under this Note, including, without limitation, accrued and unpaid interest on
and principal of this Note and all costs, fees and expenses or incurred in
connection herewith (whether such obligations, liabilities and indebtedness
arise before or after the institution of any Reorganization and whether or not
such obligations, liabilities and indebtedness are allowed claims in such
Reorganization, and whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred), in each case whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise; provided, however, that reasonable out of pocket
legal fees incurred in connection with the preparation of the Note and the
review of the amendments to the Credit Agreements dated on or about the date
hereof shall not constitute Subordinated Indebtedness.
 
9. MISCELLANEOUS.
 
9.1 Notices.  Any notice or other communication to the Company, Agent or the
Noteholder in connection with this Note must be in writing and must be
delivered: (a) by hand (in which case it will be effective upon delivery),
(b) by facsimile (in which case it will be effective upon receipt of
confirmation of good transmission), or (c) by overnight delivery by a nationally
recognized courier service (in which case it will be effective on the business
day after being deposited with such courier service), and in each case, to the
address (or facsimile number) listed below:
 
If to the Company, to it at:

Katy Industries, Inc.
305 Rock Industrial Park Drive
Bridgeton, MO  63044
Attention:  Chief Financial Officer
Telecopy:  314-656-4388

with a copy to:
 
KKTY Holding Company, L.L.C.
c/o Kohlberg Management IV, LLC
11 Radio Circle
Mount Kisco, NY  10549
Attention:  Chris Anderson
Telecopy:  914-241-7476
 
 
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If to the Noteholder, to him at :
 
David J. Feldman
c/o Katy Industries, Inc.
305 Rock Industrial Park Drive
Bridgeton, MO  63044
Attention:  Chief Financial Officer
Telecopy:  314-656-4388
 
If to the Agent, to:
 
PNC Bank, National Association
340 Madison Avenue
New York, New York  10007
Attention:  Glenn Kreutzer
Telecopy:  212-303-0060
 
9.2 Waiver of Jury Trial.  TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH
CANNOT BE WAIVED, THE COMPANY (BY ITS EXECUTION HEREOF) AND THE NOTEHOLDER (BY
ITS ACCEPTANCE OF THIS NOTE) WAIVES AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY
FORUM IN RESPECT OF ANY ISSUE OR ACTION ARISING OUT OF OR BASED UPON OR RELATING
TO THIS NOTE OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
TRANSACTIONS CONTEMPLATED HEREBY, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING.
 
9.3 Governing Law.  This Note shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by,
construed under, and enforced in accordance with the laws of the State of New
York.
 

[Signature page follows]

 
 
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Subordinated Note
$50,000

 
The undersigned has caused this Note to be executed by a duly authorized officer
as of the date first written above.
 
KATY INDUSTRIES, INC.

By /s/ James W. Shaffer
Name: James W. Shaffer
Title: VP-CFO
 
 
[Signature page to Subordinated Note – David Feldman]

 

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