BURKE INDUSTRIES, INC.
1997 Stock Option Plan
1. PURPOSE. This Stock Option Plan (the "Plan") is intended as an
incentive to encourage stock ownership by officers and directors and executive
and professional employees of Burke Industries, Inc. (the "Company") and its
Parent and Subsidiary corporations so that they may acquire or increase their
equity interest in the success of the Company and its Parents and Subsidiaries,
and to encourage them to remain in the service of the Company or of its Parents
or Subsidiaries. Each option granted under this Plan will be designated as
either an "Incentive Stock Option" or a "Nonqualified Stock Option." It is
intended that each option designated as an Incentive Stock Option granted under
this Plan will qualify as an incentive stock option within the meaning of
Section 422(b) of the Code.
2. DEFINITIONS.
2.1 "Board of Directors" means the board of directors of the
Company.
2.2 "Change in Control" shall mean the happening of any of the
following:
2.2.1 any person who is not a stockholder of the Company
or of any Parent on the date of adoption of this Plan (or group of such persons
acting in concert) acquires, during any period of twelve consecutive calendar
months, stock of the Company or of a Parent representing a majority of the
voting power of all stock of the Company or any Parent having the right to vote
for the election of directors;
2.2.2 the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (i) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than eighty percent (80%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (ii) a merger or consolidation
effected to implement a Recapitalization of the Company;
2.2.3 the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets or any
transaction having a similar effect; or
2.2.4 if the Company enters into an agreement with an
unrelated party for the sale of all or substantially all of the assets or
outstanding stock of a Subsidiary (or a transaction having a similar effect), or
any other event occurs by reason of which a Subsidiary ceases to be a Subsidiary
of the Company, a Change in Control shall be deemed to have occurred with
respect to those Employees who are then employed by such Subsidiary.
2.3 "Change in Control Date" shall mean the earliest date on which one
of the events described in the definition of "Change in Control" occurs, as
determined by the Board of Directors, in its sole discretion, provided that, if
Section 2.2.4 of the definition of "Change of Control" applies, the Change in
Control Date shall be deemed to be the date of the agreement, provided that the
transaction does close.
2.4 "Change in Control Price" shall mean the highest fair market value,
or the highest price paid or offered in any bona tide transaction related to a
Change in Control of the Company, at any time during the sixty (60) days
preceding the Change in Control Date.
2.5 "Code" means the Internal Revenue Code of 1986, as amended.
2.6 "Company" means Burke Industries, Inc., a California corporation.
2.7 "Employee" means any bona fide full or part time common law employee
of the Company or of any Parent or Subsidiary of the Company.
2.8 "Incentive Stock Option" means an Option granted pursuant to this
Plan intended to qualify and designated as an incentive stock option within the
meaning of Section 422 of the Code.
2.9 "Nonqualified Stock Option" means any Option granted pursuant to
this Plan other than an Incentive Stock Option.
2.10 "Option" or "Stock Option" means any stock option granted pursuant
to this Plan.
2.11. "Optionee" means any individual to whom an Option is granted
pursuant to this Plan.
2.12 "Parent" means, at the time of granting any Option, any corporation
(other than the Company) in an unbroken chain of corporations ending with the
Company if each of the corporations other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
2.13 "Plan" means the Burke Industries, Inc. 1997 Stock Option Plan.
2.14 "Recapitalization" means any reorganization, merger or other
subdivision, consolidation, recapitalization, reclassification, stock split,
combination of shares, issuance of warrants, stock dividend or similar event
with respect to or affecting the common stock of the Company, no par value per
share.
2.15 "Stock Option Committee" means the committee appointed to administer
the Plan pursuant to Article 7 herein, if such committee is appointed.
2.16 "Subsidiary" means, at the time of granting any Option, any
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty
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percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
2.17 "Ten Percent Shareholder" means any person who owns (or is
considered by reason of Section 425(d) of the Code to own) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or of any Parent or Subsidiary of the Company.
3. ELIGIBILITY. The persons who shall be eligible to receive Options
shall be such officers, directors and executive and professional employees of
the Company or its Parent or Subsidiary Corporations as the Board of Directors
shall select from time to time. An Optionee may hold more than one Option, but
only on the terms and subject to the restrictions hereafter set forth.
4. STOCK. The stock subject to the Options shall be shares of the
Company's authorized but unissued or reacquired no par value common stock,
hereafter sometimes called Stock. The aggregate number of shares which may be
issued under Options shall not exceed five hundred thousand (500,000) shares of
Stock. The limitation established by the preceding sentence shall be subject to
adjustment as provided in Section 5.12 of the Plan. If any outstanding Option
for any reason expires or is terminated, the shares of Stock allocable to the
unexercised portion of such Option may again be subjected to an Option under the
Plan.
5. TERMS AND CONDITIONS.
5.1 OPTION AGREEMENT. Stock Options granted pursuant to the Plan
shall be authorized by the Board of Directors and shall be evidenced by
agreements in such form as the Board of Directors shall from time to time
approve, which agreements shall comply with and be subject to the terms and
conditions set forth in this Article 5. The agreements shall not impose upon
the Company or its Parents or Subsidiaries any obligation to retain the Optionee
in their employ for any period.
5.2 NUMBER OF SHARES. Each Option shall state the number of
shares of Stock to which it pertains.
5.3 OPTION PRICE. Each Option shall state the option price,
which in the case of an Incentive Stock Option shall be not less than (i) one
hundred percent (100%) of the fair market value of the shares of Stock on the
date of the granting of the Option if the Optionee is not a Ten Percent
Shareholder, or (ii) one hundred ten percent (110%) of the fair market value of
the shares of Stock on the date of the granting of the Option if the Optionee is
a Ten Percent Shareholder. The fair market value of the shares of Stock shall
be determined pursuant to Section 7.2.
5.4 MEDIUM AND TIME OF PAYMENT. The option price shall be
payable upon the exercise of the Option and may be paid in cash or by good
check. At the sole option of the Company, it approved by the Board of
Directors, a portion of the purchase price may be paid by delivery of shares
of Stock previously owned by the Optionee, duly endorsed for transfer to
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the Company, with a fair market value (as determined by the Board of
Directors) on the date of delivery equal to the option price, or by delivery
of a recourse promissory note bearing interest at such rate, on such other
terms and in form and with security satisfactory to the Company, or any
combination of the foregoing approved by the Board of Directors. Exercise of
an Option shall not be effective until the Company has received written notice
of exercise, specifying the number of whole and fractional shares of Stock to
be purchased, accompanied by payment in full of the aggregate option price of
the number of shares purchased.
5.5 TERM OF OPTIONS. Each Option, by its terms, shall not be
exercisable after the expiration of ten years from the date the Option is
granted, provided, however, that any Incentive Stock Option granted to a Ten
Percent Shareholder, by its terms, shall not be exercisable after the expiration
of five years from the date the Option is granted. Any Option may provide that
it will expire within a shorter period than the maximum permitted hereby.
5.6 INSTALLMENTS. Each Option shall be exercisable on such dates
and in such amounts (SUBJECT to the other provisions hereof) as shall be
determined by the Board of Directors. It is not required that each Option have
the same installment provisions. In its sole discretion, the Board of Directors
may accelerate the exercise date of part or all of any Option.
5.7 TRANSFERABILITY. Each Option, by its terms, shall not be
transferable by the individual to whom granted otherwise than by will or the
laws of descent and distribution, and shall be exercisable, during the
Optionee's lifetime, only by the Optionee.
5.8 LIMITS ON EXERCISE. Each Option shall be subject to the
requirement that, if at any time the Board of Directors, in its discretion,
shall determine that the listing, registration, or qualification of the shares
subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option, or the issue or purchase of shares thereunder, such Option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors.
5.9 LIMIT ON OPTIONS. An Option shall not be an Incentive Stock
Option to the extent that the aggregate fair market value of stock with respect
to which such Option is exercisable for the first time by any individual during
any calendar year (taking into account all Incentive Stock Options
simultaneously or previously granted under all stock option plans of the Company
and its Parents and Subsidiaries) exceeds One Hundred Thousand Dollars
($100,000).
5.10 TERMINATION OF EMPLOYMENT. Each Option by its terms shall
not be exercisable after thirty (30) days after the termination of employment of
the individual to whom the Option was granted, unless such termination was a
result of the death or disability of the employee, and may provide that it shall
not be exercisable after the date of termination of employment of the individual
to whom the Option was granted.
5.11 EXPIRATION OF PLAN. No Option shall be granted under this
Plan more than ten years from the date on which this Plan was adopted or
approved by the stockholders of the
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Company, whichever is earlier. No Option granted under this Plan shall be
valid unless the Plan is approved by the stockholders of the Company within
twelve (12) months before or after its adoption by the Board of Directors.
5.12 RECAPITALIZATION. Upon any Recapitalization, the Board of
Directors shall make an appropriate and equitable adjustment in the number and
kind of securities with respect to which rights may he granted under this Plan
and the price at which such securities may be purchased, and an appropriate and
equitable adjustment in the number and kind of securities that may be purchased
under each outstanding Option and the price at which shares may be purchased
under each such Option.
The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make or authorize any adjustments,
recapitalizations, reorganizations, or other changes in the Company's capital
structure or business, any merger or consolidation, any issuance of bonds,
debentures, preferred shares or common shares, the dissolution or liquidation of
the Company, any sale or transfer of all or any part of the Company's assets or
business, or any other act, whether or not similar to the events described
above.
5.13 RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an
Option shall have no rights as a stockholder with respect to any shares covered
by the Option until the date of the issuance of a stock certificate for such
shares. No adjustment shell be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 5.12 hereof.
5.14 MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to
the terms and conditions and within the limitations of the Plan, the Board of
Directors may modify, extend or renew outstanding Options granted under the
Plan, or accept the surrender of outstanding Options (to the extant not
theretofore exercised) and authorize the granting of new Options in substitution
therefor (to the extent not theretofore exercised). Notwithstanding the
foregoing, no modification of an Option shall, without the consent of the
Optionee, alter or impair any rights or obligations under any Option theretofore
granted under the Plan.
5.15 INVESTMENT PURPOSE. Each Option under the Plan shall be
granted on the condition that the purchases of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution unless the
stock subject to such Option is registered under the Securities Act of 1933, as
amended, and any applicable state securities laws, or a resale of such stock
without such registration would otherwise be permissible. Each person
exercising an Option must represent that such condition is fulfilled, unless in
the opinion of counsel for the Company such condition is not required under the
Securities Act of 1933 or any other applicable law, regulation, or rule of any
governmental agency.
5.16 WITHHOLDING TAXES. Whenever under the Plan shares are to be
issued or cash is to be paid in satisfaction of Options, the Company shall have
the right to require the recipient to remit to the Company an amount sufficient
to satisfy federal, state and local
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withholding tax requirements prior to the delivery of any certificate or
certificates for such shares or payment of such cash.
5.17 TERMINATION OF OPTIONS. Each Option, by its terms, shall
reserve to the Company the right to terminate the Option in connection with a
Change in Control or a payment in cash equal to the difference between the
exercise price for the shares of Stock subject to the Option and the Change in
Control Price of such Stock.
5.18 OTHER PROVISIONS. The Option agreements authorized under the
Plan shall contain such other provisions, including, without limitation, such
rights of redemption, purchase and first refusal, and such other restrictions
upon the exercise of Options or the transfer of the Stock issued upon exercise,
as the Board of Directors of the Company shall deem advisable. Any Incentive
Stock Option agreement shall contain such limitations and restrictions upon the
exercise of the Option as shall be necessary in order that such Option will be
an incentive Stock Option" as defined in Section 422 of the Code.
6. EXERCISE OF OPTIONS.
6.1 STOCK TRANSFER BOOKS. Notwithstanding any other provision of
this Plan or of any Option, no stock shall be issued by the Company while its
stock transfer books are closed.
6.2 SECURITIES LAWS. Notwithstanding any other provision of this
Plan or of any Option, no Option shall be exercisable, and no stock shall be
issued upon the exercise of any Option, if such exercise or such issuance of
stock would result in any violation of law or the imposition on the Company of a
requirement that it commence filing periodic reports under the Securities
Exchange Act of 1934 or any similar provision of law.
7. ADMINISTRATION.
7.1 ADMINISTRATION BY BOARD OF DIRECTORS. The Plan shall be
administered by the Board of Directors. The interpretation and construction
by the Board of Directors of any provisions of the Plan or of any Option
granted under it shall be final. The Board of Directors shall have the
authority to appoint a Stock Option Committee to assume the duties and
responsibilities of administering the Plan. The Stock Option Committee, if
such be established by the Board of Directors, shall be composed of no less
than three (3) persons (who shall be members of the Board of Directors), each
of whom shall be a "disinterested person" as defined herein, and such Stock
Option Committee shall have the same power, authority and rights in the
administration of the Plan as the Board of Directors. No director shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted under it.
The Board of Directors shall determine from time to time the persons
who shall receive Options hereunder; provided, however, Options may be granted
hereunder only to persons who, at the time of the grant thereof, are officers,
directors or key employees of the Company and its Parents and Subsidiaries,
except as otherwise provided in this Plan; provided, further, that any decision
to award Options hereunder to any person or the determination of the
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maximum number of shares of Stock (as hereinafter defined) which may be
subject to Options granted to any such director, employee or officer shall be
made by either (i) the Board of Directors, all of the directors of which and
all of the directors acting in such matter shall be disinterested persons as
defined herein, or (ii) the Stock Option Committee appointed by the Board of
Directors pursuant to this section. For purposes of this Plan,
"disinterested person" shall mean a director who is not, during the one year
prior to service as an administrator of the Plan, or during such service,
granted or awarded equity securities pursuant to the Plan or any other plan
of the Company or any of its Parents or Subsidiaries entitling the
participants therein to acquire stock, stock options or stock appreciation
rights of the Company or any of its Parents or Subsidiaries.
7.2 DETERMINATION OF FAIR MARKET VALUE. For the purpose of
granting Incentive Stock Options, the Board of Directors shall determine the
fair market value of the Stock of the Company as follows:
7.2.1 If the Company's Stock is traded on any recognized
stock exchange or exchanges, such fair market value shall be deemed to be the
highest closing price of the Stock on such stock exchange or exchanges on the
day the Option is granted or if no sale of the Company's Stock shall have been
made on any stock exchange on that day, on the next preceding day on which there
was a sale of such stock.
7.2.2 During such time as the Stock is not listed on an
established exchange, but, is actively traded on the over-the-counter market,
the fair market value per share shall be the mean between dealer "bid" and "ask"
prices of the Stock in the over-the-counter market on the day the Option is
granted, as reported by the National Association of Securities Dealers, Inc.
7.2.3 During such time as the Company's Stock is neither
listed on any recognized exchange nor actively traded over-the-counter, the fair
market value shall be determined in good faith by the Board of Directors. In
making such determination, the Board of Directors may (but shall not be required
to) rely on the opinions of one or more qualified, independent appraisers.
7.3 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as directors or as members of the Stock
Option Committee, the members of the Board of Directors shall be indemnified
by the Company against the reasonable expenses, including attorneys' fees
actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option granted
hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected
by the Company) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such Board or Stock
Option Committee member is liable for negligence or misconduct in the
performance of his duties; provided that within sixty (60) days after
institution of any such action, suit or
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proceeding a Board or Stock Option Committee member shall in writing offer
the Company the opportunity, at its own expense, to handle and defend the
same.
8. AMENDMENT AND TERMINATION.
8.1 AMENDMENT. The Board of Directors of the Company may,
insofar as permitted by law, from time to time, with respect to any shares at
the time not subject to Options, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever except that, without approval of the
stockholders, no such revision or amendment shall change the number of shares
subject to the Plan, change the designation of the class of employees eligible
to receive Options or decrease the price at which Incentive Stock Options may be
granted, materially increase the benefits accruing to participants under the
Plan, materially increase the number of securities which may be issued under the
Plan, or materially modify the requirements as to eligibility for participation
in the Plan.
9. MISCELLANEOUS.
9.1 GOVERNING LAW. This Plan shall be governed by, and construed
in accordance with, the laws of the State of California.
9.2 CONSTRUCTION. in the event any parts of this Plan are found
to be void, the remaining provisions of this Plan shall nevertheless be binding
with the same effect as though the void parts were deleted.
9.3 APPLICATION OF FUNDS. The proceeds received by the Company
from the sale of Stock pursuant to Options will be used for general corporate
purposes.
9.4 NO OBLIGATION TO EXERCISE OPTION. The grant of an Option
shall impose no obligation upon the Optionee to exercise such Option.
9.5 APPROVAL OF STOCKHOLDERS. The Plan shall take effect
immediately upon adoption by the Board of Directors. However, if this plan is
not approved by the stockholders of the Company within the period beginning
twelve (12) months before and ending twelve (12) months after the date the Plan
is adopted by the Board of Directors, no Options granted hereunder shall
constitute Incentive Stock Options.
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9.6 COMPLIANCE WITH RULE 16b-3. With respect to persons subject
to Section 16 of the Securities Exchange Act of 1934 ("1934 Act"), transactions
under the Plan are intended to comply with all applicable conditions of
Rule 16b-3 or its successors under the 1934 Act. To the extent any provision of
the Plan or action by the Plan administrators fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by the
plan administrators.
BURKE INDUSTRIES, INC.
By:/s/ Rocco C. Genovese
--------------------------------
Dated: December 19, 1997
ATTEST:
/s/ Keith Oster
- ----------------------------------
Secretary
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BURKE INDUSTRIES, INC.
Incentive Stock Option Agreement
No. of Shares subject to Option.: 10,000. Option No.: 3.
This Agreement dated as of December 19, 1997 between Burke Industries,
Inc., a California corporation (the "Company"), and Dave E. Worthington (the
"Optionee").
W I T N E S S E T H:
1. GRANT OF OPTION.
Pursuant to the provisions of the Burke Industries, Inc. Stock option Plan
(the "Plan"), the Company hereby grants to the Optionee, subject to the terms
and conditions of the Plan and subject further to the terms and conditions
herein set forth, the right and option to purchase from the Company all or any
part of an aggregate of Ten Thousand (10 000) shares of Common Stock, no par
value., of the Company (the "Shares"), at the purchase price of Six Dollars and
Fifty Cents ($6.50) per Share, such Option to he exercised as hereinafter
provided. This is an Incentive Stock Option, and shall be so construed. All
terms defined in the Plan are used herein as so defined.
2. TERMS AND CONDITIONS.
It is understood and agreed that the Option evidenced hereby is
subject to the following terms and conditions:
2.3. TIME OF EXERCISE OF OPTION.
2.1.1 INSTALLMENT SCHEDULE. This Option may be exercised
as to
(a) twenty-five percent (25%) of the shares
beginning one (1) year from the Commencement Date;
(b) an additional twenty-five percent (25%) of
the Shares beginning two (2) years from the Commencement
Date;
(c) an additional twenty-five percent (25%) of
the Shares beginning three (3) year. from the Commencement
Date; and
(d) in full, to the extent not theretofore
exercised, beginning on the earlier of the Change in Control
Date or four (4) years from the Commencement Date.
For purposes of this Option, the Commencement Date is agreed to be August 20,
1997.
2.1.2 EXPIRATION DATE. This Option shall expire
absolutely ten (10) years from the date hereof.
2.1.3 EXERCISE UPON TERMINATION OF EMPLOYMENT. If the
Optionee shall cease to be employed by the Company or a Parent or Subsidiary for
any reason other than the Optionee's death or disability (within the meaning of
Section 105(d)(4) of the Code), this Option, to the extent no; then exercisable
in accordance with its terms, shall terminate and be without further effect. To
the extent this Option is exercisable on the date of termination of employment,
it may be exercised at any time within thirty (30) days after such date by the
Optionee or, in case of the subsequent death of the Optionee.. then by the
executors or administrators of the Optionee's estate or by any person or persons
who shall have acquired the Option directly from the Optionee by bequest or
inheritance, and this Option, to the extent not exercised, shall in all events
terminate upon the expiration of such thirty (3D) day period or, if earlier, ten
(10) years from the date hereof.
2.1.4 EXERCISE UPON LOSS OF PARENT OR SUBSIDIARY STATUS.
If the Optionee ceases to be employed by the Company or a Parent or Subsidiary
by reason of the employer of the Optionee ceasing to be a Parent or Subsidiary
of the Company, then this Option, to the extent not then exercisable in
accordance with its terms, shall terminate and be without further effect..
Within a reasonable time after such event (not to exceed thirty (30) days), the
Company shall provide written notice to the Optionee of such event (including
specific reference to the provisions of this section). To the extent this
Option is exercisable on the date of such event it way be exercised at any time
within thirty (30) days after the later of the date of such event or the data of
the notice required by the preceding sentence by the Optionee, or, in case of
the subsequent death of the optionee, then by the executors or administrators of
the Optionee's estate or by any person or persons who shall have acquired the
Option directly from the Optionee by bequest or inheritance, and this Option, to
the extent not exercised, shall in all events terminate upon the expiration of
such thirty (30) day period, or, if earlier, ten (10) years from the date
hereof.
2.1.5 EXERCISE UPON DEATH OR DISABILITY. It the Optionee
shall cease to be employed by the Company or a Parent or Subsidiary by reason of
the Optionee's death or disability, this Option, to the extent not then
exercisable in accordance with its terms, shall terminate and be without further
effect. To the extent this Option is exercisable on the date of death or
disability, it may be exercised at any time within twelve (12) months after the
date of death or disability by the Optionee in case of disability, or in case of
the death of the Optionee, then by the executors or administrators of the
Optionee's estate or by any person or persons who shall have acquired the Option
directly from the Optionee by bequest or inheritance, and this Option, to the
extent not exercised, shall in all events terminate upon the expiration of such
twelve (12) month period or, if earlier, ten (10) years from the date hereof.
2.1.6 ACCELERATION OF EXERCISE DATE. In its sole
discretion, the Board of Directors may accelerate the date or dates on which
this Option may be exercised in whole or in part.
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2.2 METHOD OF EXERCISE. This Option may be exercised as follows:
2.2.1 NOTICE OF EXERCISE. The Optionee shall deliver
written notice to the Company specifying the number of Shares as to which the
Option is being exercised.
2.2.2 PAYMENT OF PURCHASE PRICE. At the time of any
exercise the purchase price of the shares as to which this Option is being
exercised shall be paid to the Company in cash or good check, or it approved by
the Board of Directors, by the delivery of Shares previously owned by the
Employee, duly endorsed for transfer to the Company with a fair market value (as
determined by the Hoard of Directors) On the date of delivery equal to the
aggregate purchase price of the Shares with respect to which the Option is being
exercised, or by the delivery of a recourse promissory note bearing interest at
such rate, or on such other terms and in form and with security satisfactory to
the Company, or any Combination of the foregoing approved by the Board of
Directors, in its sole discretion. Notation of any partial exercise shall be
made by the Company on Schedule I hereto.
2.2.3 RESTRICTIONS ON TRANSFER RIGHT OF REPURCHASE;
INVESTMENT REPRESENTATION. Prior to the issuance of any shares upon the
exercise of all or any part of this Option, the Company may require the person
exercising the Option to execute, become a party to, and subject such shares to
restrictions in accordance with the terms of a Stockholders' Agreement dated as
of August 20, 1997 among the Company and all or substantially all the parsons
who are stockholders owning shares of Common Stock of the Company as of the date
of this Option, as such agreement may be amended and/or restated and in effect
at the time of each exercise of this Option. If the Company so requires, the
certificate or certificates evidencing the shares issued upon the exercise of
all or any part of this Option shall be legended in accordance with said
agreement.
2.3 NONTRANSFERABILITY. This Option shall not be transferable
except by will or by the laws of descent and distribution. During the lifetime
of the Optionee, this Option shall be exercisable only by the Optionee.
2.4 ADJUSTMENTS. In the event of any change in the Stock of the
Company by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or any
similar change affecting the Stock, then in any such event the number and kind
of shares subject to this option and their purchase price per share may be
adjusted pursuant to Section 5.12 of the Plan, in such manner as the Board of
Directors may in its sole discretion deem equitable. Any adjustment so made
shall be final and binding upon the Optionee.
2.5 NO RIGHTS AS STOCKHOLDER. The Optionee shall have no rights
as a stockholder with respect to any shares of Stock subject to this Option
prior to the date of issuance to the Optionee of a certificate or certificates
for such shares.
2.6 COMPLIANCE WITH LAW AND REGULATIONS. This Option and the
obligation of the Company to sell and deliver shares hereunder shall be subject
to all applicable federal and state laws, rules and regulations and to such
approvals by any government or regulatory agency
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as may be required. The Company shall not be required to issue or deliver
any certificates for shares of Stock if the Company determines that such
issue or delivery would (a) require any registration or qualification of such
shares under any federal or state law, or any rule or regulation of any
government body which the Company shall, in its sole discretion, determine to
be applicable; (b) require the commencement of the filing by the company of
periodic reports pursuant to the Securities Exchange Act of 1934, or (c)
violate any law or governmental regulation, if at any time the Board of
Directors in its discretion determines that the listing, registration of
qualification of the shares subject to this Option upon any securities
exchange or under any law or regulation, or the consent or approval of any
government regulatory body is necessary or desirable as a condition of, or in
connection with, the issue or purchase of shares hereunder, this Option may
not he exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Board of Directors.
2.7 WITHHOLDING TAXES. Whenever under this Option shares are to
be issued or cash is to be paid, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy federal, state
and local withholding tax requirements prior to the delivery of any certificate
or certificates for such shares or payment of such cash.
2.8 MODIFICATION; EXTENSION AND RENEWAL. Subject to the terms
and conditions and within the limitations of the Plan, the Board of Directors
may modify, extend or renew c-his Option, or accept the surrender hereof (to the
extent not theretofore exercised) and authorize the granting of a new Option or
Options in substitution therefor (to the extent not theretofore exercised).
Notwithstanding the foregoing, no modification of this Option shall, without the
consent of the Optionee, alter or impair any rights or obligations under any
Option theretofore granted under the Plan.
2.9 TERMINATION. The Company hereby reserves the right to
terminate this Option in connection with any Change in Control for a payment in
cash equal to the difference between the Exercise Price for the shares of Stock
subject to the Option and the Change in Control Price of such Stock.
2.10 PARACHUTE PAYMENTS. In the event that the aggregate present
value of the payments to the Employee under this Agreements and any other plan,
program, or arrangement maintained by the Company or a Subsidiary, constitutes
an "excess parachute payment" (within the meaning of Section 260G(b)(1) of the
Code) and the excise tax on such payment would cause the net parachute payments
(after taking into account federal, state and local income and excise taxes) to
which the Employee otherwise would be entitled to be less than what the Employee
would have netted (after taking into account federal, state and local income
taxes) had the present value of the Employee's total parachute payments equaled
One Dollar ($1.00) less than three (3) times the Employee's "base amount"
(within the meaning of Code Section 280(G)(b)(3)(A)), the Employee's total
"parachute payments" (within the meaning of Code Section 280G(b)(2)(A)) shall be
reduced (by the minimum possible amount) so that their aggregate present value
equals One Dollar ($1.00) less than three (2) times such base amount. For
purposes of this calculation, it shall be assumed that the Employee's tax rate
will be the maximum marginal federal, State and
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local income tax rate on earned income, with such maximum federal rate to be
computed with regard to Code Section 1(g), if applicable. In the event that
the Employee and the Company are unable to agree as to the amount of the
reduction described above, if any, the Employee shall select a law firm or
accounting firm from among those regularly consulted (during the twelve (12)
month period immediately prior to the change in control that resulted in the
characterization of the payments as parachute payments) by the Company
regarding federal income tax or employee benefit matters, and such law firm
or accounting firm shall determine the amount of much reduction and such
determination shall be final and binding upon the Employee and the Company.
3. REPRESENTATIONS AND OBLIGATIONS OF OPTIONEE.
In consideration of the grant of this Option, the Optionee hereby
represents and agrees as follows:
3.1 OPTIONEE BOUND BY PLAN. Optionee hereby acknowledges receipt
of a copy of the Plan and agrees to be bound by all the terms and provisions
thereof. Any term used herein with the first letter of such term capitalized
shall have the same meaning as in the Plan.
3.2 INVESTMENT REPRESENTATION. Optionee hereby represents that
any shares purchased pursuant to this Option will be acquired for the Optionee's
own account for investment and not with a view to, or for c-he offer or sale in
connection with, the distribution of any such shares.
3.3 BEST EFFORTS. Optionee agrees to use his or her best effort
for the benefit of the Company during his or her employment or other
relationship with the Company.
3.4 RESTRICTIONS. The Optionee agrees that any shares of Stock
acquired pursuant to exercise of this option shall be subject 'to rights of
repurchase and other restrictions as contemplated by Section 2.2.3 of this
Agreement.
3.5 NO RIGHTS TO CONTINUED EMPLOYMENT. The Optionee acknowledges
that neither any of the terms and provisions of the Plan or this Agreement nor
the grant of this option to the Optionee shall be construed to give to the
Options. any rights to continued employment with the Company or a Parent or
Subsidiary thereof, or to give to the Optionee any rights whatsoever in
connection with such employment, except as expressly provided in the Plan or
this Agreement. Except as may otherwise be provided in a written agreement
between the Optionee and the Company or a Parent or Subsidiary, the Optionee is
an employee at will, and each party to the employment relation has a right to
terminate such employment at any time and for any reason, or for no reason at
all.
4. NOTICES.
Notices delivered pursuant to this Agreement shall be in writing,
and shall be deemed to have been duly given when (a) delivered by hand; (b) sent
by facsimile (with receipt confirmed), provided that a copy is promptly
thereafter mailed by first-class prepaid certified
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mail, return receipt requested; (c) received by the addressee, if sent with
delivery receipt requested by Express Mail, Federal Express, other express
delivery service or first-class prepaid certified mail, in each case to the
appropriate addresses and facsimile numbers set forth below, or to such other
address(es) or facsimile number(s) as a party may designate as to itself by
notice to the other party.
(a) It to the Company:
Burke Industries, Inc.
2250 South Tenth Street
San Jose, CA 95112
Facsimile: (408) 280-0699
Attention: Mr. Rocco C. Genovese
with a copy sent by any of the foregoing methods
simultaneously to:
George A. Sawyer
c/o J.F. Lehman & Company
2001 Jefferson Davis Highway, Suite 507
Arlington, VA 22202
Facsimiles (703) 418-5099
(b) If to the Optionee;
To the latest home address as shown on the Company's
personnel records
subject to the right of either party to designate at any time hereafter in
writing some other address.
5. COUNTERPARTS.
This Agreement has been executed in two counterparts each of which
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, Burke Industries, Inc. has caused this Agreement to be
executed by its President or a Senior Vice President or a Vice President and
Optionee has executed this Agreement, both as of the day and year first above
written.
BURKE INDUSTRIES, INC.
By:/s/ Rocco C. Genovese
-------------------------------
OPTIONES
/s/ David E. Worthington
-------------------------------
Dave E. Worthington
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