STOCK OPTION AGREEMENT
PURSUANT TO THE
QUAKER FABRIC CORPORATION
1997 STOCK OPTION PLAN
AGREEMENT, dated as of October 19, 1998 by and between Quaker
Fabric Corporation (the "Company") and Xxxx X. Xxxxxxx (the "Participant").
Preliminary Statement
The Stock Option Plan Committee (the "Committee") of the Board of
Directors of the Company, pursuant to the Quaker Fabric Corporation 1997 Stock
Option Plan, annexed hereto as Exhibit A (the "Plan"), has authorized this grant
to the Participant, as an Eligible Employee of the Company and/or its Designated
Subsidiaries (as defined in the Plan), of a Non-Qualified Stock Option (the
"Option") to purchase the number of shares of the Company's common stock, par
value $.01 per share (the "Common Stock"), set forth below. The parties hereto
desire to enter into this Agreement in order to set forth the terms of the
Option.
Accordingly, the parties hereto agree as follows:
1. Tax Matters: No part of the Option granted hereby is intended
to qualify as an "incentive stock option" under Section 422 of the Internal
Revenue Code of 1986, as amended.
2. Grant of Option: Subject in all respects to the Plan and the
terms and conditions set forth herein and therein, the Participant is hereby
granted, effective as of the date hereof (the "Grant Date"), the Option to
purchase from the Company up to 50,000 shares of Common Stock, at a purchase
price per share of $4.25.
3. Vesting: (a) The Option is exercisable in installments as
provided below, which shall be cumulative. To the extent that the Option has
become exercisable with respect to an installment, the Option may thereafter be
exercised by the Participant, in whole or in part, at any time or from time to
time prior to the expiration of the Option as provided herein. Twenty percent
(20%) of the Option, subject to the terms and conditions contained herein and in
the Plan, shall vest and become exercisable on each anniversary of the Grant
Date (collectively, the "Vesting Dates"), provided that the Participant remains
continuously employed by the Company and/or its Designated Subsidiaries through
each applicable Vesting Date.
(b) Except as otherwise provided in the Plan,
there shall be no proportionate or partial vesting in the periods prior to
each Vesting Date and all vesting shall occur only on the appropriate
Vesting Dates.
(c) Subject to Section 8.1(b) of the Plan, upon the
occurrence of a Change of Control, the Option shall immediately become fully
vested and exercisable with respect to all shares of Common Stock subject
thereto.
4. Termination: Unless terminated as provided in Section 5 below
or otherwise pursuant to the Plan (including, without limitation, Section 6.3 of
the Plan), the Option shall expire on the tenth anniversary of this Agreement.
5. Restriction on Transfer: Unless otherwise determined by the
Committee, in its sole discretion, the Option granted hereby is not transferable
otherwise than by will or under the applicable laws of descent and distribution
and during the lifetime of the Participant may be exercised only by the
Participant or the Participant's guardian or legal representative. In addition,
the Option shall not be assigned, negotiated, pledged, or hypothecated in any
way (whether by operation of law or otherwise), and the Option shall not be
subject to execution, attachment, or similar process. Upon any attempt to
transfer, assign, negotiate, pledge, or hypothecate the Option, or in the event
of any levy upon the Option by reason of any execution, attachment, or similar
process contrary to the provisions hereof, the Option shall immediately become
null and void.
6. Rights as a Stockholder: The Participant shall not have any
rights as a stockholder with respect to any shares covered by the Option unless
and until the Participant has become the holder of record of the shares, and no
adjustments shall be made for dividends in cash or other property,
distributions, or other rights in respect of any such shares, except as
otherwise specifically provided for in the Plan.
7. Provisions of Plan Control: This Agreement is subject to all
the terms, conditions, and provisions of the Plan, including, without
limitation, the amendment provisions thereof, and to such rules, regulations,
and interpretations relating to the Plan as may be adopted by the Committee and
as may be in effect from time to time. Any capitalized term used but not defined
herein shall have the meaning ascribed to such term in the Plan. The annexed
copy of the Plan is incorporated herein by reference. If and to the extent that
this Agreement conflicts or is inconsistent with the terms, conditions, and
provisions of the Plan, the Plan shall control, and this Agreement shall be
deemed to be modified accordingly.
8. Notices: Any notice or communication given hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person,
or by United States mail, to the appropriate party at the address set forth
below (or such other address as the party shall from time to time specify by
sending notice to the appropriate address set forth below):
If to the Company, to:
Quaker Fabric Corporation
2
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Secretary
If to the Participant, to:
The address indicated after the Participant's signature at
the end of this Agreement.
9. No Obligation to Continue Employment: This Agreement does not
guarantee that the Company or its Designated Subsidiaries will employ the
Participant for any specific time period, nor does it modify in any respect the
Company's or any Designated Subsidiary's right to terminate or modify the
Participant's employment or compensation.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date and year first above written.
QUAKER FABRIC CORPORATION
By: ____________________________
Xxxxx X. Xxxxxxxx
President & Chief Executive
Officer
PARTICIPANT
--------------------------------
Name (print)
--------------------------------
Signature
---------------------------------
Street Address
---------------------------------
City/State/Zip Code
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QUAKER FABRIC CORPORATION
OF FALL RIVER
By:_________________________
Name:
Title:
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:_________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
PRUCO LIFE INSURANCE COMPANY
By:__________________________
Name: Xxxxx X. Xxxxxx
Title: Vice President
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