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Joinder Agreement

This is an actual contract by Burke Flooring Products.

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Sectors: Materials and Construction
Governing Law: Florida, View Florida State Laws
Effective Date: April 21, 1998
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EXECUTION COPY]


AMENDMENT NO. 1
WAIVER
AND
JOINDER AGREEMENT
TO
LOAN AND SECURITY AGREEMENT
Dated as of April 21, 1998


THIS AMENDMENT NO. 1, WAIVER AND JOINDER AGREEMENT entered into as of April 21, 1998 by and between BURKE INDUSTRIES, INC., a California corporation ("Burke"), MERCER PRODUCTS COMPANY, INC., a New Jersey corporation ("Mercer"), and NATIONSBANK, N.A., a national banking association, as the sole Lender under the Loan Agreement (as hereinafter defined) and as agent for the Lenders (the "Agent").


PRELIMINARY STATEMENT


Burke and the Agent are parties to that certain Loan and Security Agreement dated as of August 20, 1997 (the "Loan Agreement"; terms defined therein, unless otherwise defined herein, being used herein as therein defined). In connection with the Acquisition of Mercer by Burke, Burke has requested, among other things, an increase in the amount of the Revolving Credit Facility, the amendment of certain financial and other covenants under the Loan Agreement, a waiver of any Default or Event of Default under the Loan Agreement occurring as a result of the Mercer Transaction (as hereinafter defined) and that Mercer be joined as a party to the Loan Agreement as a Borrowing Subsidiary so that, among other things, the Receivables and Inventory of Mercer will be eligible to be included in the Borrowing Base under the Loan Agreement, and the Agent has agreed to amend the Loan Agreement as hereinafter set forth, upon and subject to the terms and conditions of this Amendment No. 1.


STATEMENT OF AGREEMENT


NOW, THEREFORE, in consideration of the Loan Agreement, the mutual covenants set forth therein and herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:


Section 1. AMENDMENTS TO LOAN AGREEMENT. Subject to the provisions of Section 4 hereof, the Loan Agreement is hereby amended as follows:


(a) by amending the provisions of Section 1.1 DEFINITIONS thereof


(i) by amending clause (i) of the definition COLLATERAL in its entirety to read as follows:


(i) all Real Estate as to which a Mortgage has been recorded,


(ii) by amending the definition REVOLVING CREDIT FACILITY by deleting the figure "$15,000,000" appearing therein and substituting therefor the figure "$25,000,000";


(iii) by amending the definition PERMITTED PURCHASE MONEY DEBT by deleting the figure "$3,000,000" appearing in clause (c) thereof and substituting therefor the figure "$10,000,000";


(iv) by amending the definition LETTER OF CREDIT FACILITY by deleting the figure "$1,000,000" appearing therein and substituting therefor the figure "$3,000,000";


(v) by amending the definition PERMITTED INVESTMENTS by deleting the word "and" appearing at the end of clause (h) thereof, amending clause (i) thereof in its entirety to read as follows:


(i) other Investments that do not exceed $7,500,000 in the
aggregate at any time outstanding; and


and inserting a new clause (j) at the end thereof to read in its entirety as follows:


(j) Investments in connection with the Mercer Transaction.


(vi) by amending the definition SENIOR NOTE INDENTURE by adding immediately before the period at the end thereof the phrase ", as amended by the First Supplemental Indenture."


(vii) by adding the following definitions in appropriate alphabetical order:


AMENDMENT NO. 1 EFFECTIVE DATE means the date on which Amendment No. 1 shall have become effective in accordance with its terms.


AMENDMENT NO. 1 means the Amendment No. 1, Waiver and Joinder Agreement to Loan and Security Agreement executed and delivered by Burke, Mercer, the Agent and the Lender on or before the Amendment No. 1 Effective Date.


CONSENT SOLICITATION STATEMENT means the Burke Industries, Inc. Solicitation of Consents to Indenture Amendments dated March 30, 1998.


FIRST SUPPLEMENTAL INDENTURE means the first supplemental indenture, dated as of April 21, 1998, by and between Burke Industries, Inc., the Subsidiary Guarantors (as defined therein) and United States Trust Company of New York, amending the Senior Notes Indenture.


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MERCER means Mercer Products Company, Inc., a New Jersey corporation, and its successors and assigns.


MERCER ACQUISITION means the Acquisition by Burke of 100% of the issued and outstanding capital stock of Mercer pursuant to the Mercer Acquisition Documents.


MERCER ACQUISITION AGREEMENT means the Stock Purchase Agreement by and among Burke, as purchaser, Sovereign Specialty Chemicals, Inc., as seller, and Mercer, dated as of March 5, 1998 in the form delivered to the Agent on or prior to the Amendment No. 1 Effective Date.


MERCER ACQUISITION DOCUMENTS means the Mercer Acquisition Agreement, and any other agreement, document, certificate or instrument to be delivered in connection with the Mercer Acquisition.


MERCER MORTGAGE means the Florida Mortgage, Security Agreement and Assignment of Leases and Rents, or any replacement, modification or substitution thereof, in form and substance satisfactory to the Agent, executed and delivered by Mercer in favor of the Agent for the benefit of the Lenders, pursuant to which the Mercer Property is mortgaged to the Agent for the benefit of the Lenders.


MERCER PLEDGE AGREEMENT means the Pledge Agreement, in form and substance satisfactory to the Agent, executed and delivered by Burke on or before the Amendment No. 1 Effective Date in favor of the Agent for the benefit of the Lenders, pursuant to which Burke pledges all of the issued and outstanding capital stock of Mercer.


MERCER REAL ESTATE means the Real Estate owned by Mercer located at 37235 State Road 19, Umatilla, Lake County, Florida.


MERCER TRADEMARK ASSIGNMENT means the Assignment for Security-Trademarks, dated on or before the Amendment No. 1 Effective Date, executed by Mercer in form and substance satisfactory the Agent.


MERCER TRANSACTION means and includes, collectively, the transactions contemplated by the Consent Solicitation Statement, the First Supplemental Indenture, the Mercer Acquisition Documents, the New Senior Notes and the New Senior Note Indenture, including the New Equity Issuance.


NEW EQUITY ISSUANCE means the issuance by Burke of 3,000 shares of its Preferred Stock for aggregate consideration in the amount of $3,000,000.


NEW SENIOR NOTES means Burke's Floating Interest Rate Senior Notes due 2007 in the original principal amount of $30,000,000, issued pursuant to the New Senior Note Indenture, and any Exchange Notes (as defined in the New Senior Note Indentures) issued in exchange therefor;


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NEW SENIOR NOTE INDENTURE means the Indenture dated as of April 21, 1998, between Burke and United States Trust Company of New York, Trustee, relating to the New Senior Notes.


(b) by amending the provisions of Article 8 AFFIRMATIVE COVENANTS by inserting a new Section 8.10 MERCER MORTGAGE at the end thereof to read in its entirety as follows:


SECTION 8.10 MERCER MORTGAGE. Upon the occurrence of any Default
or Event of Default, or at any time upon the written request of the Agent
or any Lender, provide each of the following to the Agent:


(a) a replacement Mercer Mortgage duly executed and delivered by
Mercer, in proper form for recording in the state of Florida;


(b) a fully paid mortgagee title insurance policy or, at the
option of the Lender, an unconditional commitment for the issuance thereof
with all requirements and conditions to the issuance of the final policy
deleted or marked satisfied, issued by a title insurance company
satisfactory to the Agent, in an amount equal to not less than the fair
market value of the Real Estate subject to the Mercer Mortgage, insuring
that the Mercer Mortgage creates a valid first lien on, and security title
to, the Mercer Real Estate, with no survey exceptions and no other
exceptions which the Agent shall not have approved in writing;


(c) such materials and information concerning the Mercer
Property as the Agent may require, including, without limitation,
certificates of occupancy covering the Mercer Real Estate, and owner's
affidavits as to such matters relating to the Mercer Real Estate as the
Agent may request;


(d) a report from a qualified engineering firm or other
qualified consultant acceptable to the Agent with respect to an
investigation and assessment of the Mercer Real Estate, which shall be
based on a thorough review of past and present uses, occupants, ownership
and tenancy of the property, adjacent properties or upgradient properties
regarding (A) contact with local, state or federal agencies regarding known
or suspected hazardous material contamination of the property or other
properties in the area; (B) review of aerial photographs; (C) visual site
inspection noting unregulated fills, storage tanks or areas, ground
discoloration or soil odors; and (D) other investigative methods deemed
necessary by the consultant or the Agent to enable the consultant to
deliver a report in a form typically issued in connection with a "Phase 1"
environmental report;


(e) certificates or binders of insurance relating to each of the
policies of insurance required by the Mercer Mortgage, together with
mortgagee clauses satisfactory to the Agent; and


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(f) an amount equal to the recording for and expenses and all
documentary, stamp, intangibles recording and other taxes required to be
paid in connection with the recording of the Mercer Mortgage and such other
documents and instruments as the Agent may reasonably request in connection
with the Mercer Mortgage.


(c) by amending the provisions of Section 10.2 DEBT thereof by (i) amending subsection (c) to read in its entirety as follows, "(c) Debt represented by the Senior Notes and the New Senior Notes and Debt represented by unsecured Guaranties of the Senior Notes and the New Senior Notes," and (ii) by deleting the figure "$10,000,000" appearing in subsection (f) thereof and substituting therefor the figure "$15,000,000".


(d) by amending the provisions of Section 10.4 INVESTMENTS thereof by deleting the figure "$5,000,000" appearing in subsections (i) and (ii) thereof and in each such instance substituting therefor the figure "$7,500,000".


(e) by amending the provisions of Section 10.8 TRANSACTIONS WITH AFFILIATES thereof by deleting the word "and" appearing immediately before the beginning of clause (viii), and inserting immediately before the period at the end thereof the following: ", and (viii) payments to J. F. Lehman & Company of (A) a transaction fee of $500,000 payable on the Amendment No. 1 Effective Date, (B) fees and expenses in connection with the Mercer Transaction and (C) an annual management fee in addition to that permitted under clause (iii) above in an amount not to exceed $250,000.


(f) by amending the provisions of Section 10.12 AMENDME
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