EMPLOYMENT AGREEMENT
This Employment Agreement, by and between Elliot Seth Stein
(Stein) and Burke Industries, Inc. (Burke), is made and entered into as of
the last date that this Agreement is executed by the parties.
RECITALS
WHEREAS, Burke is a California corporation, with offices and
business operations in the state of California; and
WHEREAS, Burke desires assurance of the continued association
and services of Stein in order to retain his experience, abilities and
knowledge, and is therefore is willing to engage the services of Stein subject
to the terms and conditions stated herein; and
WHEREAS, Stein desires to be employed by Burke subject to the
terms and conditions stated herein;
NOW THEREFORE, it is hereby agreed by and between the parties
as follows:
1. TERM: This Agreement shall have a term of one
(1) year beginning on March 1, 2000, and ending on February 28, 2001, subject
to annual extensions as hereinafter provided unless earlier terminated in
accordance with the provisions of this Agreement. After February 28, 2001,
this Agreement shall be extended for additional successive one-year terms
unless terminated by either party with not less than 90 days notice.
2. DUTIES OF STEIN:
A. Burke shall employ Stein as the Chief Operating
Officer, or in such other capacity or capacities as Burke may from time to
time prescribe. The scope of Stein's duties hereunder may be modified from
time to time at the discretion of the Chief Executive Officer of Burke. Stein
shall devote his exclusive and full-time services, energy and attention to
the business of Burke. Stein shall not, without Burke's prior written
consent, render to others services of any kind for compensation, or engage in
any other business activity that would materially interfere with the
performance of his duties under this Agreement. Stein represents to Burke
that he has no outstanding commitments inconsistent with any of the terms of
this Agreement or the services to be rendered hereunder.
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B. During the employment term, Stein shall not,
directly or indirectly, whether as partner, employee, creditor, shareholder
or otherwise, promote, participate or engage in any activity or other
business competitive with Burke's business.
3. COMPENSATION:
A. Burke shall pay to Stein a base salary of $198,000
annually. This base salary may be (but shall not be required to be) increased
by the Board of Directors of Burke if the Board of Directors of Burke
determines, in its sole and complete discretion, to provide for such
increase. Stein's salary shall be paid to him in installments on the dates
customarily set for the payment of executive salaries at Burke.
B. Stein may also receive an annual bonus of up to
sixty (60) percent of his base salary, which annual bonus, if awarded, shall
be based upon performance criteria established by the Board of Directors of
Burke in its sole discretion. Stein shall also participate in any performance
based or profit participation programs as may be established for all Burke
executives.
C. Stein shall also be selected by the Board of
Directors to receive options to acquire not less than one (1) percent of the
stock of Burke pursuant to the Burke Industries, Inc. 1997 Stock Option Plan
("The Plan") that was approved by the shareholders of Burke, which options
will be exercisable within thirty (30) days after the termination of Stein's
employment in accordance with Section 5.10 of The Plan.
4. EMPLOYMENT BENEFITS: Stein shall also be entitled
to participate in any and all employee benefit plans or programs of any
nature or kind whatsoever now existing or that may hereafter be adopted by
Burke for its employees and executives when and as Stein becomes eligible for
such benefits, including, but not limited to, vacations, retirement plans,
thrift plans, medical plans, life insurance plans, disability insurance
plans, and any other employee benefit plans or programs. A copy of the
schedule of the current employee benefit plans is attached to this Agreement.
In addition to such plans, Burke will pay to Stein a monthly automobile
allowance in the amount of $1,400. Burke reserves the right to modify,
suspend or discontinue any and all of the above benefit plans, policies and
practices at any time without notice to or recourse by Stein, so long as such
action is taken generally with respect to other similarly situated persons.
5. COMPENSATION DURING DISABILITY: In the event that
Stein shall fail or be unable to perform his services by reason of illness,
or if he should become incapacitated for a period of more than one (1) month,
the compensation payable to Stein under this Agreement shall be suspended
during such illness or incapacity, this Agreement shall remain in effect and
Stein shall be compensated in accordance with Burke policies, if any, then in
effect for similarly situated employees who become disabled to the extent
that Stein has elected to participate in the programs available under such
policies. Full compensation shall be restored to Stein upon his return to
full time employment, following any period of leave as required or provided
by applicable law or then existing Burke polices, and this Agreement shall
not otherwise be affected by such disability
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provided, however, that nothing in this Section shall affect Burke's right to
terminate this Agreement in accordance with Section 9.B.
6. BUSINESS EXPENSES: Stein shall be authorized to
incur reasonable and customary business expenses, including expenses for
entertainment and travel, in accordance with Burke policies. Stein shall be
reimbursed for itemized accounts of business expenditures presented in
accordance with Burke policies and procedures.
7. CONFIDENTIAL INFORMATION: Stein agrees not to use
or disclose, either directly or indirectly, any confidential information of
Burke, except as required in the course of his employment with Burke. For the
purposes of this Section 7, the term "Confidential Information" includes
information relating to the processes, products, manufacturing techniques,
methodology, practices, policies, technical plans, computer programs,
reports, customer or employee lists, marketing plans, distribution channels
and financial information that may have been developed by, derived from or
obtained in the course of the business of Burke.
8. TERMINATION:
A. TERMINATION FOR CAUSE: Burke shall have the right
to terminate this Agreement at any time without notice if Stein commits any
of the following acts (each of which is referred to herein as "cause"):
(i) breach of any provision of this Agreement
and Stein's failure to cure such breach
within ten (10) days of receipt of notice of
such breach;
(ii) any act of fraud, dishonesty or sexual
harassment with respect to any aspect of the
business of Burke;
(iii) drug or alcohol abuse or behavior that
impedes Stein's job performance or does or
could bring Stein or Burke into disrepute;
(iv) disclosure of confidential information of
Burke;
(v) misappropriation of funds of any corporate
opportunity of Burke;
(vi) conviction of Stein of a crime of moral
turpitude, or a plea of NOLO CONTENDERE
thereto;
(vii) conduct by Stein attempting to secure or
securing any personal profit not fully
disclosed to and approved by the President
or Chief Executive Officer in connection
with any transaction entered into on behalf
of or involving Burke;
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(viii) gross, wilful or wanton carelessness or
misconduct that constitutes a breach of any
fiduciary duty owed to Burke;
(ix) unjustifiably neglecting, failing or
refusing to perform the duties that he is
required to perform hereunder; or,
(x) conduct, even if not in connection with the
performance of his duties contemplated under
this Agreement, that would result in serious
prejudice to the interests of Burke and his
failure to cease such conduct with fifteen
(15) days of his receipt of notice to cease
such conduct.
B. TERMINATION ON DISABILITY: If Stein is unable to
perform the essential functions of his position due to any mental or physical
illness or disability for four (4) consecutive full calendar months, or if he
is unable to so perform for 80 percent of more of the normal working days or
hours during such four (4) consecutive calendar months, then Burke shall have
the right to declare this Agreement terminated if such disability continues
following the expiration of any sick leave, medical leave or other leave
available pursuant to any Burke policy applicable to Stein.
9. COMPENSATION UPON TERMINATION:
A. TERMINATION FOR CAUSE: If Stein's employment is
terminated for cause, Burke shall pay to Stein his full base salary through
the date of termination at the rate in effect at the time of the termination,
and any unpaid expenses, and any unused earned vacation to the extent
required by law, as well as any life insurance, disability payments or other
benefits then owed to Stein under any benefit plans or programs then
maintained by Burke (the "Accrued Benefits"). Burke shall, thereafter, have
no further obligations to Stein under this Agreement.
B. TERMINATION UPON DEATH OR DISABILITY: If Stein's
employment is terminated by Stein's death or disability (as defined above),
Burke shall pay to Stein's estate the accrued portion of any salary and bonus
through the date of termination. Burke shall, thereafter, have no further
obligations to Stein under this Agreement.
C. TERMINATION UPON NOTICE OR CHANGE IN CONTROL: If
Stein's employment is terminated after February 28, 2001 pursuant to notice
given by Burke in accordance with Section 1, or is terminated as a result of
a Change in Control as defined by Section 19, then Burke shall pay to Stein
the salary, expenses and benefits due to him pursuant to this Agreement
through the date of termination, and shall also pay to Stein only his then
applicable base salary in accordance with Section 3.A. for the nine (9)
months immediately following the date of termination.
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10. RIGHTS AND OBLIGATIONS AFTER NOTICE OF
TERMINATION: If Stein gives notice of termination of this Agreement, or if it
becomes known that this Agreement will otherwise terminate in accordance with
its provisions, Burke may, in its sole discretion and subject to its other
obligations under this Agreement, relieve Stein of his duties under this
Agreement and assign Stein other duties and responsibilities to be performed
until the termination becomes effective.
11. INJUNCTIVE RELIEF: Stein acknowledges that the
breach of any of the agreements contained herein, including, without
limitation, any of the non-competition covenants specified in Section 13,
will give rise to irreparable injury to Burke, which injury is inadequately
compensable in damages. Accordingly, Burke shall be entitled to injunctive
relief to prevent or cure breaches or threatened breaches of the provisions
of this Agreement and to enforce specific performance of the terms hereof in
any court of competent jurisdiction, in addition to any other legal or
equitable remedies that may be available to Burke. Stein further acknowledges
and agrees that in the event of the termination of this Agreement, his
experience and capabilities are such that he can obtain employment in
business activities that are of a different or noncompeting nature with his
activities pursuant to this Agreement; and that the enforcement of a remedy
hereunder by way of injunction shall not prevent Stein from earning a
reasonable livelihood. Stein further acknowledges and agrees that the
covenants contained herein are necessary for the protection of Burke's
legitimate business interests and are reasonable in scope and content.
12. BURKE'S OWNERSHIP OF INTANGIBLES: All processes,
inventions, patents, copyrights, trademarks, and other intangible rights that
may be conceived or developed by Stein either alone or with others during the
term of his employment, whether or not conceived or developed during Stein's
working hours, and with respect to which the equipment, supplies, facilities,
or trade secret information of Burke was used, or that relate at the time of
conception or reduction to practice of the invention to the business of the
Burke or to Burke's actual or demonstrably anticipated research and
development, or that result from ANY work performed by Stein for Burke shall
be the sole property of Burke. Stein shall disclose to Burke all inventions
conceived during the term of employment, and for one year thereafter,
regardless of whether such inventions may be the property of Burke under the
terms of the preceding sentence, provided that such disclosure shall be
received by Burke in confidence. Stein shall execute all documents, including
patent applications and assignments, required by Burke to establish Burke's
rights under this section.
13. UNFAIR COMPETITION, SOLICITATION OF EMPLOYEES AND
DISCLOSURE OF CONFIDENTIAL INFORMATION:
A. Because of his employment by Burke, Stein will
have access to trade secrets and confidential information about Burke, its
products, its customers and its methods of doing business. In consideration
of his access to this information, Stein agrees that for a period of five
years after termination of his employment, he will not, directly or
indirectly, compete with Burke in the field of manufacturing silicone and
organic rubber products for the aerospace, automotive and flooring industries
within the state of California. Stein understands and agrees that direct
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competition means the design, development, production, promotion or sale of
products or services competitive with those of Burke. Indirect competition
means employment by any competitor or third party providing products that
compete with Burke's products, for whom Stein will perform the same or
similar functions as he performed for Burke pursuant to this Agreement.
B. In the course of his employment, Stein will have
access to confidential records and data pertaining to Burke's customers. Such
information is considered secret and is disclosed to Stein in confidence.
During his employment by Burke and for a period of five years after
termination of such employment, Stein shall not directly or indirectly
disclose or use any such information except as required in the course of his
employment by Burke. In addition, during his employment and for five years
after termination of his employment, Stein shall not induce or solicit, or
attempt to induce or solicit any employee of Burke to discontinue employment
with Burke for the purpose of being employed by a competitor of Burke.
14. CONSTRUCTION: This Agreement shall be construed in
accordance with the laws of the State of California. If any provision of this
Agreement is held invalid or unenforceable, the remainder of this Agreement
shall remain in full force and effect. If any provision is held invalid or
unenforceable with respect to particular circumstances, it shall nevertheless
remain in full force and effect in all other circumstances. This Agreement
shall also be construed according to its fair meaning and not for or against
Stein or Burke regardless of who is responsible for its preparation in whole
or in part.
15. INTEGRATED COMPLETE AGREEMENT: This agreement
integrates and supersedes all other prior and contemporaneous written and
oral agreements and understandings of every character between Stein and Burke
and comprises the entire agreement between Stein and Burke regarding the
terms of Stein's employment. This Agreement may be amended only by a further
express, written agreement between Stein and Burke and cannot be amended by
informal discussions or written communications from either party to the
other. No waiver of any rights or obligations under this Agreement shall be
deemed to have occurred unless made in writing signed by the party against
whom such waiver is asserted, and no waiver shall be deemed a waiver of any
other or subsequent rights or obligations. Nothing in this Agreement shall be
construed to limit any amount that Stein is entitled to receive under any
applicable federal or state law or any other written agreement, policy,
program or plan.
16. ARBITRATION: Any controversy or claim arising out
of or relating to this Agreement, or the breach, termination or invalidity
thereof, and all other related claims shall be exclusively and finally
settled by arbitration in accordance with the Labor Arbitration Rules of the
American Arbitration Association, and judgment upon the award rendered by the
arbitrator may be rendered in any court having jurisdiction thereof. Such
arbitration shall be held in Los Angeles County.
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17. NOTICES: Any notices to be given hereunder by
either party to the other may be effected either by personal delivery in
writing or by mail, registered or certified, postage prepaid with return
receipt requested. Mailed notices shall be addressed to the parties at the
addresses set forth below, but each party may change his address by written
notice in accordance with this paragraph. Notices delivered personally shall
be deemed communicated as of actual receipt. Mailed notices shall be deemed
communicated as of three (3) days after mailing, as follows:
If to Burke: Ted Clark, President
Burke Industries, Inc.
2250 South Tenth Street
San Jose, CA 95112
If to Stein: Elliot S. Stein
15856 Falconrim Drive
Canyon Country, CA 91351
18. ASSIGNMENT: The rights and obligations of Burke
under this Agreement shall inure to the benefit of, and shall be binding
upon, its successors and assigns in accordance with Section 19. Any successor
or assignee of Burke shall be deemed substituted for Burke under the terms of
this Agreement for all purposes.
19. SALE, MERGER OR DISSOLUTION:
A. For the purposes of this agreement, a "Change in
Control" of Burke, shall be defined as follows:
(i) Any event by which an individual,
entity, or group (a "Person"), other
than J.F. Lehman Group, acquires
direct or indirect ownership or
control of at least a majority of
the combined voting power of the
then outstanding voting shares of
Burke; or
(ii) The consummation of a
reorganization, merger or
consolidation, or such other
disposition or transfer of a
majority of the assets of Burke,
whether in one or more separate
transactions, to any Person or
Persons.
(iii) In the event of a Change in Control
in which Burke in not the surviving
entity, Burke may, at its sole
option, (1) assign this Agreement
and all rights and obligations under
it to any business entity that
succeeds to all or substantially all
of Burke's assets or business, or
(2) on at least 30 days prior
written notice to Stein, terminate
this Agreement effective on the date
of the Change in Control.
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20. COUNTERPARTS: This agreement may be signed in
one or more counterparts, each of which shall be deemed to be an original.
EXECUTED and made effective this 22nd day of March 2000 at
Santa Fe Springs, California.
/s/ Elliot Seth Stein
- ---------------------- Burke Industries, Inc.
Elliot S. Stein
By: Ted Clark
Its: CEO
---------------------
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