EX-10.9








Exhibit 10.9




KATY INDUSTRIES, INC.

2008 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 failure to perform, or gross negligence in the
performance of, the Participant’s material duties and responsibilities to the Company and its
Affiliates; (ii) commission by Participant of a material act of fraud or embezzlement or any
material dishonesty with regard to the Company or any of its Affiliates; or (iii) 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 Offer Letter.



     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 “Fair Market Value” means the fair market value of the Common Stock on any given date, as
determined in good faith by the Board of Directors in accordance with the requirements of Section
409A of the Code, as applicable.



     1.12 “Offer Letter” means the Offer Letter between the Company and the Participant effective
as of October 27, 2008.



     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 James W. Shaffer.



     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 Financial Officer’s Plan.



     1.17 “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



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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 125,000 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.



     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 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



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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.



ARTICLE VIII

AMENDMENT




     The Board may amend or terminate this Plan from time to time; provided, however, that 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.



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     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 Exchange Act of 1934, as amended, 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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