THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE SUCH A
REGISTRATION IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFERS SET FORTH IN A SHAREHOLDERS' AGREEMENT, DATED AS OF
AUGUST , 1997 (AS AMENDED, MODIFIED OR SUPPLEMENTED THROUGH THE DATE HEREOF,
THE "SHAREHOLDERS' AGREEMENT"), BY AND AMONG BURKE INDUSTRIES, INC., A
CALIFORNIA CORPORATION ("BURKE") AND THE SHAREHOLDERS NAMED THEREIN, A COPY
OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICES OF JFL MERGER CO., A
CALIFORNIA CORPORATION (THE "COMPANY") AND BURKE. NO TRANSFER OF SUCH
SECURITIES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY
EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENTS.
EXERCISABLE AT ANY TIME SUBJECT TO THE PROVISIONS HEREOF
NO. 1 JFL MERGER CO.
WARRANT CERTIFICATE
Warrant Certificate for _______ Warrants
to Purchase _______ Warrant Shares
This Warrant Certificate certifies that, for value received,
[Massachusetts Mutual Life Insurance Company, MassMutual Corporate Value
Partners, L.P. and MassMutual High Yield Partners, L.L.C.]
[Jackson National Life Insurance Company] [Paribas Principal Partners] (the
"Holder") is the owner of the number of Warrants (as defined in Section
1.2(a) below) set forth above, each of which entitles the Holder to purchase
from JFL Merger Co., a California corporation (the "Company") at any time
from and after the date hereof and until the Expiration Date (as defined in
Section 2.1 hereof) one Warrant Share (as defined below), at the purchase
price stated in Section 2.3 hereof (the "Exercise Price"). The number of
Warrant Shares purchasable upon exercise of the Warrants and the Exercise
Price shall be subject to adjustment from time to time as herein provided.
For purposes of this Warrant Certificate, "Warrant Shares" shall
mean shares of the Company's Common Stock, no par value (the "Common Stock");
PROVIDED, HOWEVER, that if, in accordance with Section 6.3 hereof, the
securities issuable upon exercise of the Warrants are issued by an entity
other than the Company or there is a change in the class of securities so
issuable, then the "Warrant Shares" shall mean the securities so issuable by
such entity or the securities of the class of securities so issuable.
The Warrants are subject to the following terms, conditions and
provisions:
SECTION 1. REGISTRATION; TRANSFERABILITY; EXCHANGE OF WARRANT
CERTIFICATE.
1.1 REGISTRATION. The Company shall number and register the
Warrants in a register (the "Warrant Register") maintained at the principal
office of the Company (the "Office"). The Company shall be entitled to treat
the Holder of the Warrants as the owner thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in such
Warrants on the part of any other person.
1.2 TRANSFER AND EXCHANGE.
(a) Subject to compliance with any restrictions on transfer set
forth in the Shareholders' Agreement, dated as of August __, 1997, by and
among Burke Industries, Inc. ("Burke"), Holder, [Massachusetts Mutual Life
Insurance Company] [Jackson National Life Insurance Company] [Paribas Principal
Partners] and the other shareholders named therein (the "Shareholders'
Agreement") (Holder and [Massachusetts Mutual Life Insurance Company]
[Jackson National Life Insurance Company] [Paribas Principal Partners] shall
sometimes be collectively referred to herein as the "Initial
Warrantholders"), the warrants issued to the Initial Warrantholders (the
"Warrants") shall be transferable only on the Warrant Register upon delivery
thereof by the Holder or by his duly authorized attorney or representative or
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any such registration of transfer, a new Warrant Certificate,
in substantially the form of this Warrant Certificate, evidencing the
Warrants so transferred shall be issued to the transferee of such Warrants
and a new Warrant Certificate, in substantially the form of this Warrant
Certificate, evidencing the remaining Warrants, if any, not so transferred,
shall be issued to the Holder. In all cases of transfer by an attorney, the
original power of attorney, duly approved, or a copy thereof, duly certified,
shall be deposited and shall remain with the Company. In case of transfers
by executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority shall be produced, and may be
required to be deposited and to remain with the Company in its discretion. No
transfer of the Warrants or any interest therein other than in compliance
with this Section 1.2 shall be made or recorded in the Warrant Register, and
any such purported transfer shall be void and of no effect.
(b) This Warrant Certificate is exchangeable, in whole or in part,
upon the surrender hereof by the holder hereof at the Office for new Warrant
Certificates, in substantially the form of this Warrant Certificate,
evidencing in the aggregate the right to purchase the number of Warrant
Shares that may then be purchased hereunder, each of such new Warrant
Certificates to be dated the date of such exchange and to represent the right
to purchase such number of Warrant Shares as shall be designated by the
holder of such new Warrant Certificates at the time of such surrender.
2
SECTION 2. TERM OF WARRANTS; EXERCISE OF WARRANTS.
2.1 TERM OF WARRANT. Subject to the terms of this Warrant
Certificate, the Holder shall have the right, which may be exercised by the
registered Holder hereof from time to time on any Business Day before 5:00
P.M. (New York City time) during the period through and including February
, 2008 (the "Expiration Date") to purchase from the Company an aggregate of
_______ fully paid and nonassessable Warrant Shares or such other number of
Warrant Shares which the Holder may at the time be entitled to purchase in
accordance with this Warrant Certificate. At 5:00 P.M. (New York City time)
on the Expiration Date, each Warrant not exercised prior thereto shall be and
become void and of no value.
2.2 EXERCISE OF WARRANTS. Subject to the terms of this Warrant
Certificate, the Warrants evidenced by this Warrant Certificate may be
exercised in whole or in part, upon surrender to the Company, at its Office,
of this Warrant Certificate, with a Purchase Form substantially in the form
attached hereto duly completed and signed, and upon payment to the Company of
the Exercise Price. Payment of the aggregate Exercise Price shall be in cash;
PROVIDED, HOWEVER, that in lieu of payment in cash, the Holder may, at its
option, pay all or a portion of the aggregate Exercise Price by tendering
shares it holds of the Series A 11.5% Cumulative Redeemable Preferred Stock
of the Company, which shares shall be valued at their stated liquidation
value, plus any accrued but unpaid dividends thereon, to the date of exercise
pursuant to this Section 2.2. Payment of the aggregate Exercise Price in
cash shall be by wire transfer in immediately available funds to an account
designated in writing by the Company to the Holder.
Upon the surrender of this Warrant Certificate, with the Purchase
Form duly executed, and payment of the Exercise Price as aforesaid, the
Company shall (subject to compliance, if necessary, with applicable
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended), promptly and, in any event within ten Business Days, issue and
deliver to or upon the written order of the Holder and in such name or names
as the Holder may designate a certificate or certificates for such number of
Warrant Shares so purchased. Such certificate or certificates shall be dated
and deemed to have been issued as of the date of the surrender of this
Warrant Certificate and payment of the Exercise Price, as aforesaid. The
right of purchase represented by this Warrant Certificate shall be
exercisable, at the election of the Holder, in full at any time or in part
from time to time. In the event the Holder shall exercise fewer than all the
Warrants evidenced hereby, a new Warrant Certificate shall be issued
evidencing the remaining unexercised Warrants.
2.3 EXERCISE PRICE. The price per share at which each Warrant
Share shall be purchased upon exercise of each Warrant (the "Exercise Price")
shall be $____, subject to adjustment pursuant to Section 6 LESS an amount
per Warrant equal to the dividends in respect of the Warrant Shares that the
holder would have received had such Warrant been exercised on August 20,
1997. The aggregate Exercise Price for all Warrant Shares subject to this
Warrant Certificate shall be rounded to the next higher $0.01.
3
SECTION 3. PAYMENT OF TAXES. The Company covenants and agrees that
it will pay when due and payable all documentary, stamp and other similar
taxes, if any, which may be payable in respect of the issuance or delivery of
the Warrants or of the Warrant Shares purchasable and issuable upon the
exercise of the Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any such tax or other charge imposed in respect of the
transfer of Warrants, or the issuance or delivery of certificates for Warrant
Shares or other Securities in respect of the Warrant Shares upon the exercise
of Warrants, to a person or entity other than a then-existing registered
Holder of Warrants.
SECTION 4. MUTILATED OR MISSING WARRANTS. In the event this
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the
Company shall issue and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and in
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate of like tenor and representing an equivalent right or
interest, but only upon, in the event of a lost, stolen or destroyed
certificate, receipt of evidence satisfactory to the Company of such loss,
theft or destruction and, if requested by the Company, upon indemnity that
also is satisfactory to it; PROVIDED that a written undertaking of such loss,
theft or destruction of this Warrant Certificate by the registered Holder
hereof shall be deemed a satisfactory indemnity of the Company for purposes
of this Section 4. In making application for such a substitute Warrant
Certificate, the Holder shall also comply with such other reasonable
requirements as the Company may prescribe.
SECTION 5. RESERVATION AND AVAILABILITY OF WARRANT SHARES; PURCHASE
AND CANCELLATION OF WARRANTS.
5.1 RESERVATION OF WARRANT SHARES.
(a) The Company shall at all times reserve and keep available free
from preemptive rights, out of the aggregate of its authorized but unissued
shares of Common Stock, for the purpose of enabling it to satisfy any
obligations to issue the Warrant Shares upon exercise of the Warrants, the
full number of Warrant Shares deliverable upon the exercise of all the
Warrants evidenced by this Warrant Certificate. The Company or, if
appointed, the transfer agent for the Common Stock and every subsequent
transfer agent for any shares of the Company's capital stock issuable upon
the exercise of any of the rights of purchase aforesaid (each, a "Transfer
Agent") shall be irrevocably authorized and directed at all times to reserve
such number of authorized shares of Common Stock as shall be required for
such purpose. The Company will keep a copy of this Warrant Certificate on
file with each Transfer Agent. The Company will furnish such Transfer Agent
a copy of all notices of adjustments and certificates related thereto which
are transmitted to the Holder pursuant to Section 6 hereof.
(b) The Company covenants that all Warrant Shares issuable upon
exercise of the Warrants will, upon issuance, be fully paid, nonassessable
and free from preemptive
4
rights and free from all taxes, liens, charges and security interests with
respect to the issuance thereof.
(c) Before taking any action which would cause an adjustment
pursuant to Section 6, the Company will take any and all corporate action
which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares at the Exercise Price as so adjusted.
5.2 WARRANT SHARES RECORD DATE. Each person in whose name any
stock certificate for Warrant Shares is issued shall for all purposes be
deemed to have become the holder of record of the Warrant Shares represented
thereby, and such stock certificate shall be dated the date upon which this
Warrant Certificate was duly surrendered and payment of the Exercise Price
(and any applicable transfer taxes) was made.
5.3 CANCELLATION OF WARRANT. Upon surrender of the Warrant
Certificate for exchange, substitution, transfer or exercise, it shall be
cancelled by the Company and retired.
SECTION 6. ADJUSTMENT OF NUMBER OF WARRANT SHARES AND EXERCISE
PRICE. The number of securities purchasable upon the exercise of each Warrant
and the Exercise Price shall be subject to adjustment from time to time upon
the happening of certain events as hereinafter described.
6.1 MANDATORY ADJUSTMENTS. The number of securities purchasable
upon the exercise of the Warrants and the Exercise Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) declare or pay a dividend on
any of its outstanding Common Stock in shares of Common Stock or make a
distribution to holders of its outstanding Common Stock in shares of
Common Stock, (ii) subdivide any of its outstanding Common Stock into a
greater number of shares of Common Stock, (iii) combine any of its
outstanding Common Stock into a smaller number of shares of Common Stock
or (iv) issue by reclassification of any of its shares of Common Stock
other securities of the Company (including any such reclassification in
connection with a consolidation, merger or other business combination in
which the Company is the surviving corporation), the number and kind of
Warrant Shares purchasable and issuable upon exercise of the Warrants
shall be adjusted so that the Holder, upon exercise thereof, shall be
entitled to receive the number and kind of Warrant Shares and other
securities of the Company that the Holder would have owned or have been
entitled to receive after the happening of any of the events described
above had the Warrants been exercised and the relevant Warrant Shares
issued in the name of the Holder immediately prior to the happening of
such event or, if applicable, any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective on
the date of the dividend payment, subdivision, combination or issuance
retroactive to the record date with respect thereto, if any, for such
event. Upon adjustment of the number of Warrant
5
Shares as provided in this paragraph (a), the Exercise Price payable upon
exercise of each Warrant shall be adjusted by multiplying such Exercise
Price immediately prior to such adjustment by a fraction of which the
numerator shall be the number of Warrant Shares purchasable upon the
exercise of each Warrant immediately prior to such adjustment and of
which the denominator shall be the number of Warrant Shares purchasable
immediately thereafter.
(b) In case the Company shall distribute to all holders of its
outstanding Common Stock evidences of indebtedness of the Company, cash
(including cash dividends payable out of consolidated earnings or earned
surplus) or assets or securities other than its Common Stock (including
stock of a subsidiary or securities convertible into or exercisable for
such stock but excluding dividends or distributions referred to in
Sections 6.1(a) above or Section 6.1(c) below) (any such evidences of
indebtedness, cash, assets or securities, the "assets or securities"),
then, in each case, the Exercise Price shall be adjusted by subtracting
from the Exercise Price then in effect the value per share (as determined
in accordance with Section 6.2(b)) of the assets or securities that the
Holder would have been entitled to receive as a result of such
distribution had the Warrant been exercised and the relevant Warrant
Shares issued in the name of the Holder immediately prior to the record
date for such distribution; PROVIDED that if, after giving effect to such
adjustment, the Exercise Price would be less than $0.01 per share, the
Company shall distribute such assets or securities to the Holder as if
the Holder had exercised the Warrants and the Warrant Shares had been
issued in the name of the Holder immediately prior to the record date for
such distribution. Any adjustment required by this Section 6.1(b) shall
be made whenever any such distribution is made, and shall become
effective on the date of distribution retroactive to the record date for
the determination of shareholders entitled to receive such distribution.
(c) If at any time after the date hereof the Company shall
issue or sell any shares of Common Stock or any warrants, options or
rights to subscribe for or purchase Common Stock or securities
convertible into Common Stock (but excluding distributions referred to in
paragraph (a) or (b) above or (d) below), and the consideration per share
for, or the price per share at which such warrant, option or right is
exercisable for or convertible into, such Common Stock is less than the
Fair Market Value (as defined below) of the Common Stock immediately
prior to such issuance or sale, then, forthwith upon such issuance or
sale, the Exercise Price shall be reduced to the price determined by
multiplying the Exercise Price in effect immediately prior to the time of
such issuance or sale by a fraction the numerator of which shall be the
sum of (i) the number of shares of Common Stock outstanding immediately
prior to such issuance or sale MULTIPLIED BY the Fair Market Value
immediately prior to such issuance or sale and (ii) the consideration
received by the Company upon such issuance or sale, and the denominator
of which shall be the total number of shares of Common Stock outstanding
immediately after such issuance or sale MULTIPLIED BY the Fair Market
Value immediately prior to such issuance or sale.
6
Notwithstanding the foregoing, the Company may, without
adjustment to the Exercise Price pursuant to this Section 6.1(c), issue
options, warrants or rights to subscribe for shares of its Common Stock
to officers, directors, employees, consultants or agents of the Company
pursuant to the terms of any stock option plan or arrangement approved by
the Board of Directors, and may issue shares of its Common Stock upon the
exercise of any such stock options, warrants or rights; PROVIDED,
HOWEVER, that the aggregate number of shares of Common Stock that may be
issued at any one time under such stock option plan or arrangement
without adjustment to the Exercise Price under this Section 6.1(c) shall
not exceed 10% of the shares of Common Stock outstanding on the date
hereof, calculated on a fully diluted basis.
As used herein, "Fair Market Value" of the Common Stock or
other securities means, on any date, the average of the last sale price,
regular way, for the 10-business day period immediately preceding such
date, or if no such sales took place during such 10-business day period,
the average of the closing bid and asked prices, regular way, for each
day in such 10-business day period, in either case as reported on the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the shares of Common Stock or such other securities are listed, or, if
the Common Stock or such other securities are not listed or admitted to
trading on any national securities exchange, the average of the last
quoted sale price for such 10-business day period or, if not so quoted,
the average of the high bid and low asked prices for each day in such
10-business day period in the over-the-counter market, as reported by the
National Association of Securities Dealers, Inc. Automated Quotation
System or such other system then in use, or, if on any such date the
Common Stock is not quoted by any such organization, the average of the
closing bid and asked prices during such 10-business day period as
furnished by a professional market maker making a market in the Common
Stock or such other securities selected by the Board of Directors of the
Company. If the shares of Common Stock or such other securities are not
publicly held or so listed or publicly traded, "Fair Market Value" shall
mean the fair market value per share of Common Stock or such other
securities as determined by the Company and the holders of at least a
majority of the Warrants issued to the Warrantholders that are then
outstanding. negotiating in good faith toward agreeing upon such value.
If no agreement can be reached within 14 days from the date of receipt by
Required Purchasers of the notice required by Section 6.2(a), the Company
and the Required Purchasers shall appoint within 21 days from the date of
such receipt a mutually acceptable independent investment banking firm to
determine the Fair Market Value. Such firm shall make the necessary
determination which shall be binding absent actual fraud or manifest
error. The fees of such firm for making such determination and any
related reimbursable expenses shall be paid by the Company.
(d) If at any time after the date hereof the Company shall
issue or sell to any person any securities convertible into or
exercisable for Common Stock
7
("Convertible Securities") (other than securities distributed in a
transaction described in paragraph (b) or (c) above), whether or not the
rights to exchange or convert thereunder are immediately exercisable, and
the price per share for which Common Stock is issuable upon such
conversion or exchange shall be less than the Fair Market Value in effect
immediately prior to the time of such issue or sale, then the Exercise
Price shall be adjusted as provided in subparagraph (c) above on the
basis that (i) the maximum number of shares of Common Stock necessary to
effect the conversion or exchange of all such Convertible Securities
shall be deemed to have been issued and outstanding, (ii) the price per
share of such shares shall be deemed to be the lowest possible price in
any range of prices at which such additional shares are available to such
holders, and (iii) the Company shall be deemed to have received all of
the consideration payable therefor, if any, as of the date of actual
issuance of such Convertible Securities. No adjustment of the Exercise
Price shall be made under this subparagraph (d) upon the issuance of any
Convertible Securities which are issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any such
adjustment shall previously have been made upon the issuance of such
warrants or other rights pursuant to subparagraph (c) above. No further
adjustments of the Exercise Price shall be made upon the actual issuance
of such Common Stock upon conversion or exchange of such Convertible
Securities and, if any issue or sale of such Convertible Securities is
made upon exercise of any warrant or other right to subscribe for or to
purchase any such Convertible Securities for which adjustments of the
Exercise Price have been or are to be made pursuant to other provisions
of this Section 6.1, no further adjustments of the Exercise Price shall
be made by reason of such issue or sale. For the purposes of this
subparagraph (d), the date as of which the Exercise Price shall be
computed shall be the earlier of (i) the date on which the Company shall
enter into a firm contract for the issuance of such Convertible
Securities and (ii) the date of actual issuance of such Convertible
Securities. Such adjustments shall be made upon each issuance of
Convertible Securities and shall become effective immediately after such
issuance.
(e) No adjustment in the number of Warrant Shares purchasable
hereunder shall be required unless such adjustment would require an
increase or decrease of at least one quarter of one percent (0.25%) in
the number of Warrant Shares purchasable upon the exercise of each
Warrant; PROVIDED, HOWEVER, that any adjustments which by reason of this
Section 6.1(e) are not required to be made shall be made immediately
prior to any exercise of any Warrants or, if no such exercise occurs
prior to the time that any subsequent adjustment would be made, carried
forward and taken into account in such subsequent adjustment. All
calculations shall be made to the nearest one-thousandth of a share. No
adjustment need be made for a change in the par value of the Warrant
Shares.
(f) Upon each adjustment of the Exercise Price pursuant to
paragraphs (b) through (d) of this Section 6.1, this Warrant Certificate
shall be deemed to evidence the right to purchase, at the adjusted Exercise
Price, that number
8
of Warrant Shares obtained by multiplying the number of Warrant Shares
covered by this Warrant Certificate immediately prior to such adjustment
by the Exercise Price in effect prior to such adjustment and dividing the
product so obtained by the Exercise Price in effect after such adjustment.
(g) The number of shares of Common Stock outstanding at any given
time shall not include shares directly or indirectly owned or held by or for
the account of the Company or any of its subsidiaries, and the disposition
of any such shares shall be considered an issue or sale of Common Stock for
the purposes of this Section 6.1.
6.2 NOTICE OF ADJUSTMENT.
(a) The Company hereby agrees that whenever any adjustment of the
number of Warrant Shares purchasable upon the exercise of the Warrants or the
Exercise Price of such Warrants is effected as herein provided, the Company
shall promptly notify the Holder, by first class mail, postage prepaid, of
such adjustment and shall deliver to the Holder a certificate of the Chief
Financial Officer of the Company, setting forth in reasonable detail (i) the
number of Warrant Shares purchasable upon the exercise of the Warrants and
the Exercise Price of the Warrants after such adjustment, (ii) a brief
statement of the facts requiring such adjustment and (iii) the computation by
which such adjustment was made.
(b) If any adjustment is required to be made pursuant to Section
6.1(b) (unless the PROVISO to the first sentence of that Section is
applicable to the action), the Company and the holders of at least a majority
of the Warrants issued to the Warrantholders that are then outstanding shall
negotiate in good faith toward agreeing upon the value of the assets or
securities and the necessary adjustment. If no agreement can be reached
within 14 days from the date of receipt by Required Purchasers of such
notice, the Company and the Required Purchasers shall appoint within 21 days
from the date of such receipt a mutually acceptable independent investment
banking firm to determine the necessary adjustment. Such firm shall make the
necessary determination which shall be binding absent actual fraud or
manifest error. The fees of such firm for making such determination and any
related reimbursable expenses shall be paid by the Company.
6.3 PRESERVATION OF PURCHASE RIGHTS UPON MERGER, CONSOLIDATION, ETC.
(a) In the event of any merger, consolidation or other acquisition
or business combination in which the Company is not the surviving corporation
or in which all of the outstanding Common Stock of the Company is converted
into, acquired or exchanged for securities, cash or property or in the event
of the sale or other disposition of all or substantially all the assets of
the Company, then, and in each such case, proper provision shall be made so
that, upon the basis and upon the terms and in the manner provided in this
Section 6.3, the holder of this Warrant Certificate, upon the exercise of any
of its Warrants at any time after the consummation of such consolidation,
merger, transfer, reorganization or
9
reclassification, shall be entitled to receive, in lieu of shares of Common
Stock issuable upon such exercise prior to such consummation, the stock,
securities, cash and assets to which such holder would have been entitled
upon such consummation if such holder had so exercised such Warrant
immediately prior thereto, at the aggregate Exercise Price in effect for all
shares of Common Stock issuable upon such exercise immediately prior to such
consummation as adjusted to the time of such transaction (subject to
adjustments subsequent to such corporate action as nearly equivalent as
possible to the adjustments provided for in Section 6.1 above); provided,
however, that the holder of this Warrant Certificate shall not be required to
accept as consideration any property or securities the holding of which by
such holder would be prohibited by any law, rule or regulation of any
governmental entity or insurance industry regulatory body. Such undertaking
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 6; PROVIDED,
HOWEVER, that if upon such consolidation, merger, transfer, reorganization or
reclassification, different holders of Common Stock shall be entitled to
receive different forms of consideration for their Common Stock, the form of
such consideration thereafter deliverable upon the exercise of the Warrants
shall be as determined in good faith by the Board of Directors, whose
determination shall be conclusive; PROVIDED, HOWEVER, that it is understood
and agreed that the Company will be merged with and into Burke (the
"Merger"), with Burke as the surviving corporation, pursuant to the Agreement
and Plan of Merger, dated as of August __, 1997, by and among the Company,
Burke and the other parties thereto (the "Merger Agreement"), and, upon
consummation of the Merger, this Warrant Certificate and the rights and
obligations hereunder will be assumed by Burke and this Warrant Certificate
will, by operation of law, become exercisable for a like number of shares of
common stock of Burke, on the same terms (including Exercise Price) and
conditions as set forth herein. The provisions of this Section 6.3 shall also
apply to successive mergers or consolidations.
(b) Upon any liquidation, dissolution or winding up of the Company,
the Holder shall receive such cash or property (less the Exercise Price)
which the Holder would have been entitled to receive upon the happening of
such liquidation, dissolution or winding up had the Warrants been exercised
and the Warrant Shares issued immediately prior to the occurrence of such
liquidation, dissolution or winding up.
6.4 STATEMENT ON THE WARRANT. Irrespective of any adjustments in
the number or kind of securities purchasable upon the exercise of the Warrant
or the Exercise Price, any Warrant Certificate theretofore or thereafter
issued may continue to express the same price and number and any kind of
shares as are stated in this Warrant Certificate.
SECTION 7. FRACTIONAL INTERESTS. The Holder shall not be required
to accept fractional securities on the exercise of Warrants. If any fraction
of a security would be issuable on the exercise of Warrants, the Holder may,
at its option, require the Company to pay to the Holder of such Warrants an
amount in cash equal to the fair market value of such fraction.
10
SECTION 8. REGISTRATION. The Holder shall, from time to time, have
the rights, if any, with respect to registration of Warrant Shares as are set
forth in the Registration Rights Agreement for such Warrant Shares.
SECTION 9. NO RIGHTS AS A SHAREHOLDER; NOTICES TO HOLDER. Nothing
contained in this Warrant Certificate shall be construed as conferring upon
the Holder the right to vote or to consent or to receive notice as a
shareholder in respect of any meeting of shareholders of the Company for the
election of the directors of the Company or any other matter, or any rights
whatsoever as a shareholder of the Company. If, however, at any time prior to
the exercise of the Warrants evidenced by this Warrant Certificate, any of
the following events shall occur:
(a) the Company shall declare any dividend payable in cash or in
any securities upon its shares of Common Stock or make any distribution to
the holders of its shares of Common Stock;
(b) the Company shall offer to all holders of its shares of
Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any right
to subscribe for or purchase any thereof;
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, sale, transfer or
lease of all or substantially all of its property, assets and business as
an entirety) shall be proposed; or
(d) any consolidation or merger to which the Company is a
party and for which approval of the holders of Common Stock is required,
or of the conveyance or transfer of all or substantially all assets of
the Company as, or substantially as, an entirety, or of any
reclassification or change of outstanding shares of Common Stock issuable
upon exercise of the Warrant (other than a change in par value to no par
value, or from no par value to par value) or as a result of a subdivision
or combination,
then in any one or more of said events, the Company shall give to the Holder
the greater of 15 business days' written notice and the number of days
written notice required to be given to shareholders with respect to such
action prior to the applicable record date hereinafter specified, stating (i)
the date as of which the holders of record of shares of Common Stock to be
entitled to receive any such dividends, rights or warrants are to be
determined or (ii) the date on which any such dissolution, liquidation,
winding up, consolidation, merger, conveyance or transfer is expected to
become effective and the date as of which it is expected that holders of
record of shares of Common Stock shall be entitled to exchange their shares
of Common Stock for securities or other property, if any, deliverable upon
such
11
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation, or winding up.
SECTION 10. IDENTITY OF TRANSFER AGENT. Forthwith upon the
appointment of any Transfer Agent for the Common Stock, or any other shares
of the Company's capital stock issuable upon the exercise of the Warrants,
the Company shall promptly notify the Holder of the name and address of such
Transfer Agent.
SECTION 11. NOTICES. Any notice, except as provided in Section 9
of this Warrant Certificate, or demand authorized by this Warrant Certificate
to be given by the Holder to the Company, shall be in writing and shall be
delivered in person or by facsimile transmission, or mailed by overnight
courier, or otherwise delivered, to the Company, at 2250 South Tenth Street,
San Jose, California 95112, attention of Chief Executive Officer, with a copy
to J.F. Lehman Equity Investors I, L.P., 450 Park Avenue, New York, New York
10022, attention of Mr. Donald Glickman. The Company may change the address
to which notices to it are to be delivered or mailed hereunder by notice to
the Holder.
Any notice pursuant to this Warrant Certificate by the Company to
the Holder shall be in writing and shall be mailed by overnight courier or
otherwise delivered, to the Holder at its address set forth in the Warrant
Register.
Notices delivered personally shall be effective at the time
delivered by hand, notices sent by mail shall be effective when received,
notices sent by facsimile transmission shall be effective when confirmed and
notices sent by courier guaranteeing next day delivery shall be effective on
the next business day after timely delivery to the courier.
SECTION 12. AMENDMENT AND WAIVER. Any term, covenant, agreement or
condition in this Warrant Certificate may be amended, or compliance therewith
may be waived (either generally or in a particular instance and either
retroactively or prospectively), by a written instrument or written
instruments executed by the Company and the holders of at least 66-2/3% a
majority of the Warrants issued to the Warrantholders that are then
outstanding; PROVIDED, HOWEVER, that no such amendment or waiver shall change
the number of Warrant Shares issuable under the Warrants, change the Exercise
Price, change the period during which the Warrants may be exercised or modify
any provision of Section 6 or this Section 12 without the consent of the
holders of all such Warrants then outstanding or shall have a disparate and
adverse impact on any Warrantholder.
SECTION 13. SUCCESSORS. All the covenants and provisions of this
Warrant Certificate by or for the benefit of the Company shall bind and inure
to the benefit of its respective successors and assigns hereunder. As set
forth in Section 6.3(a) hereof, it is understood and agreed that the Company
will merge with and into Burke pursuant to the Merger Agreement, with Burke
as the surviving corporation, and upon consummation of the Merger, this
Warrant Certificate and the rights and obligations hereunder will be assumed
by Burke and this Warrant Certificate will, by operation of law, become
exercisable for a like
12
number of shares of common stock of Burke, on the same terms (including
Exercise Price) and conditions as set forth herein.
SECTION 14. GOVERNING LAW. This Warrant Certificate shall be
construed in accordance with and governed by the internal laws of the State
of California applicable to contracts executed and to be performed wholly
within such state, without regard to the principles of conflicts or choice of
law.
SECTION 15. BENEFITS OF THIS WARRANT CERTIFICATE. Nothing in this
Warrant Certificate shall be construed to give to any person or entity other
than the Company and the Holder any legal or equitable right, remedy or claim
under this Warrant Certificate; and this Warrant Certificate shall be for the
sole and exclusive benefit of this Company and the Holder.
SECTION 16. SURVIVAL OF RIGHTS AND DUTIES. This Warrant
Certificate shall terminate and be of no further force and effect on the
earlier of 5:00 P.M. (New York City time) on the Expiration Date or the date
on which all of the Warrants have been exercised. Notwithstanding anything
herein to the contrary, it is understood and agreed that the Company shall
have the right, power and authority to cause the holders of the Warrants to
exercise such Warrants in full in the event of the sale (by purchase, merger
or other form of business combination) of the Company as a going concern (a
"SALE EVENT"); PROVIDED that any Warrants that shall be outstanding at the
time of the consummation of any such Sale Event (or at the relevant record
date established to determine which shareholders are eligible to participate
in such Sale Event) shall be deemed (without any further action on the part
of the Company or any holder of the Warrants) to have been exercised
immediately prior to the consummation of such Sale Event, with each holder
thereof entitled to receive the same consideration as such holder would
receive pursuant to the terms of Section 6.3.
SECTION 17. AGREEMENT TO BE BOUND. The Holder acknowledges and
hereby agrees to be bound by such terms and conditions of the Shareholders'
Agreement as are by their terms applicable to the Holder. Any and all
Warrant Shares issued upon exercise hereof shall, immediately upon such
issuance, and without further action by or on behalf of the Holder or the
Company, become subject to such terms and conditions of the Shareholders'
Agreement as are by their terms applicable to such Warrant Shares.
SECTION 17. CAPTIONS. The captions of the Sections and paragraphs
of this Warrant Certificate have been inserted for convenience only and shall
have no substantive effect.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed this 20th day of August 1997.
BURKE INDUSTRIES, INC.
By: _________________________________
Rocco C. Genovese, President
14
FORM OF ELECTION TO PURCHASE
(To Be Executed by the Holder if the Holder Desires to Exercise
Warrants Evidenced by the Foregoing Warrant Certificate)
To JFL Merger Co.:
The undersigned hereby irrevocably elects to exercise ____________
Warrants evidenced by the foregoing Warrant Certificate for, and to purchase
thereunder, ____________ full shares of Common Stock issuable upon exercise
of said Warrants and delivery of $_____ in cash (or in liquidation preference
of the Series A 11.5% Cumulative Redeemable Preferred Stock of the Company,
or any combination thereof) with and any applicable taxes payable by the
undersigned pursuant to such Warrant Certificate.
The undersigned requests that certificates for such shares be issued
in the name of ____________________________.
PLEASE INSERT SOCIAL SECURITY
OR TAX IDENTIFICATION NUMBER
(Please print name and address) ____________________________________
____________________________________
____________________________________
If said number of Warrants shall not be all the Warrants evidenced
by the foregoing Warrant Certificate, the undersigned requests that a new
Warrant Certificate evidencing the Warrants not so exercised be issued in the
name of and delivered to:
________________________________________________________________________
________________________________________________________________________
(Please print name and address)
By: ______________________________
Name:
Title:
Dated: __________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers to each assignee set forth below all of the rights of the
undersigned in and to the number of Warrants (as defined in and evidenced by
the foregoing Warrant Certificate) set opposite the name of such assignee
below and in and to the foregoing Warrant Certificate with respect to said
Warrants and the shares of Common Stock issuable upon exercise of said
Warrants:
NAME OF ASSIGNEE ADDRESS NUMBER OF WARRANTS
---------------- ------- ------------------
If the total of said Warrants shall not be all the Warrants
evidenced by the foregoing Warrant Certificate, the undersigned requests that
a new Warrant Certificate evidencing the Warrants not so assigned be issued
in the name of and delivered to the undersigned.
By: ______________________________
Name:
Title:
Dated: __________________