AMENDMENT NUMBER ONE
TO THE
QUAKER FABRIC CORPORATION
DEFERRED COMPENSATION PLAN
WHEREAS, Quaker Fabric Corporation (the "Corporation") maintains
Quaker Fabric Corporation Deferred Compensation Plan, effective as of July 16,
1992 (the "Plan");
WHEREAS, the Corporation may amend the Plan by action of its board
of directors (the "Board"); and
WHEREAS, the Board deems it advisable to amend the Plan.
NOW, THEREFORE, pursuant to Article IX of the Plan, the Plan is
hereby amended, as follows:
1. Section 4.1 of the Plan is hereby amended by adding the following
language to the end thereof:
"Notwithstanding the foregoing, upon the occurrence of a Change in
Control (as defined in Exhibit A), the Participant shall receive
from the Corporation the Supplemental Retirement Benefit in the form
of a single lump sum payment in an amount equal to the credit
balance of the Retirement Account on the date of the Change in
Control divided by a decimal equal to one minus the Corporation's
marginal tax rate for the year preceding the year of the Change in
Control; such marginal rate to be set by the Board immediately prior
to the Change in Control. Such single lump sum shall be paid on the
Change in Control or as soon as practicable thereafter, but no later
than ten (10) days from the date of the Change in Control."
2. Section 4.2 of the Plan is hereby amended in its entirety to read as
follows:
"Payment on Termination of the Participant's Employment Before
Meeting Age or Service Requirements. If the Participant's
Termination of Employment occurs before the Participant has
completed five (5) years of Plan Participation or before attaining
age 55, the Participant shall receive from the Corporation the
Supplemental Retirement Benefit in the form of a single lump sum
payment in an amount equal to the credit balance of the Retirement
Account on the date of his or her Termination of Employment
multiplied by the applicable percentage set forth in Appendix B.
Notwithstanding the foregoing, upon the occurrence of a Change in
Control, the Participant shall receive from the Corporation the
Supplemental
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Retirement Benefit in the form of a single lump sum payment in an
amount equal to the credit balance of the Retirement Account on the
date of the Change in Control, multiplied by the applicable
percentage set forth in Appendix B, which product shall then be
divided by a decimal equal to one minus the Corporation's marginal
tax rate for the year preceding the year of the Change in Control;
such marginal rate to be set by the Board immediately prior to the
Change in Control. Such single lump sum shall be paid on the Change
in Control or as soon as practicable thereafter, but no later than
ten (10) days from the date of the Change in Control."
3. The first paragraph of Section 4.3 of the Plan is hereby amended by
adding the following language to the end thereof:
"Notwithstanding the foregoing, upon the occurrence of a Change in
Control, the Beneficiary(ies) shall receive from the Corporation the
Survivor's Benefit in the form of a single lump sum payment in an
amount equal to the credit balance of the Participant's Retirement
Account on the date of the Change in Control divided by a decimal
equal to one minus the Corporation's marginal tax rate for the year
preceding the year of the Change in Control; such marginal rate to
be set by the Board immediately prior to the Change in Control. Such
single lump sum shall be paid on the Change in Control or as soon as
practicable thereafter, but no later than ten (10) days from the
date of the Change in Control."
4. The last paragraph of Section 4.3 of the Plan is hereby amended in its
entirety to read as follows:
"Notwithstanding the foregoing, the Corporation shall have the
option, in the sole discretion of the Board, to pay to the
Participant's Beneficiary(ies) the Survivor's Benefit in the form of
a single lump sum payment equal to the credit balance of the
Participant's Retirement Account on the last day of the month in
which is included the date of the Participant's death, divided by a
decimal equal to one minus the Corporation's marginal tax rate for
the year of the Participant's death; such marginal rate to be
estimated by the Board."
5. Section 5.1 of the Plan is hereby amended in its entirety to read as
follows:
"Benefits on Disability. If the Participant's Termination of
Employment is on account of Disability (as defined herein), then the
Participant will not be entitled to receive any benefits under this
Agreement on account of such Disability, except as expressly
provided herein. The Participant's Retirement Account will, however,
continue to be credited with contributions pursuant to Section 3.2
(assuming that his base salary had continued unchanged from the rate
of base salary being paid to him at the time of his disability) and
interest credits pursuant to Section 3.3, as if there had not been a
Termination of the Participant's Employment until the earlier of the
following: (i) the Participant's attainment of
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age 55 and completion of five (5) years of Plan Participation
(taking into account each year that the Company credits
contributions hereunder as an additional year of Plan
Participation); (ii) the Participant's death; or (iii) the
occurrence of a Change in Control (each of (i), (ii) and (iii) being
a "Disability Payment Event"). Upon the occurrence of a Disability
Payment Event, the Participant shall be entitled to those benefits
under Article IV to which the Participant would have been entitled
if the Termination of Employment had occurred on the date of the
Disability Payment Event. Disability shall mean the Participant's
disability pursuant to the Company's Long-term Disability Plan (the
"LTD Plan"), provided that the Participant is eligible for, and
receiving benefits under, the LTD Plan."
6. Article VI is hereby amended by adding the following new Section 6.2 to
the end thereof:
"6.2 Change in Control. In the event that a Change in Control shall
occur prior to the Participant's or Beneficiary's (as applicable)
receipt of all amounts payable under this Plan, any amounts due or
remaining to be paid under the Plan shall be paid to such
Participant or, if applicable, to or among such Beneficiary or
Beneficiaries in a single lump sum payment in an amount equal to any
remaining amount of the credit balance of the Retirement Account on
the date of the Change in Control divided by a decimal equal to one
minus the Corporation's marginal tax rate for the year preceding the
year of the Change in Control; such marginal rate to be set by the
Board immediately prior to the Change in Control. Such single lump
sum shall be paid on the Change in Control or as soon as practicable
thereafter, but no later than ten (10) days from the date of the
Change in Control."
IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed this ________ day of December, 1999.
QUAKER FABRIC CORPORATION
By: ________________________________________
Title: _____________________________________
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EXHIBIT A
A "Change in Control" shall mean the occurrence of any of the
following:
(i) any person (as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and as used in Sections
13(d) and 14(d) thereof), excluding the Company, any subsidiary of the Company,
any employee benefit plan sponsored or maintained by the Company or its
subsidiaries (including any trustee of any such plan acting in his capacity as
trustee), and Nortex Holdings, Inc, Larry A. Liebenow (or his estate,
beneficiaries or heirs) and any Affiliate (as such term is defined in Rule 12b-2
of the Exchange Act) of Larry A. Liebenow, becoming the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of securities of the Company
representing twenty-five percent (25%) of the total combined voting power of the
Company's then outstanding securities;
(ii) the merger, consolidation or other business combination of the
Company (a "Transaction"), other than a Transaction involving only the Company
and one or more of its subsidiaries, or a Transaction immediately following
which the stockholders of the Company immediately prior to the Transaction
continue to have a majority of the voting power in the resulting entity and no
person other than Nortex Holdings, Inc., Larry A. Liebenow (or his estate,
beneficiaries or heirs) or any Affiliate of Larry A. Liebenow is the beneficial
owner of securities of the resulting entity representing more than twenty-five
percent (25%) of the voting power in the resulting entity;
(iii) during any period of two (2) consecutive years beginning on or
after the date hereof, the persons who were members of the Board immediately
before the beginning of such period (the "Incumbent Directors") ceasing (for any
reason other than death) to constitute at least a majority of the Board or the
board of directors of any successor to the Company, provided that, any director
who was not a director as of the date hereof shall be deemed to be an Incumbent
Director if such director was elected to the board of directors by, or on the
recommendation of or with the approval of, at least a majority of the directors
who then qualified as Incumbent Directors either actually or by prior operation
of the foregoing unless such election, recommendation or approval occurs as a
result of an actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or any
successor provision) or other actual or threatened solicitation of proxies or
contests by or on behalf of a person other than a member of the Board; or
(iv) the approval by the stockholders of the Company of an agreement
for the sale of all or substantially all of the Company's assets other than the
sale of all or substantially all of the assets of the Company to Nortex
Holdings, Inc., or Larry Liebenow (or his estate, beneficiaries or heirs) or to
a person or persons who beneficially own, directly or indirectly, at least fifty
percent (50%) or more of the combined voting power of the outstanding voting
securities of the Company or Nortex Holdings, Inc. at the time of such sale.
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