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Exhibit 4.3
QUAKER FABRIC CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE OCTOBER 1, 1997
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QUAKER FABRIC CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE OCTOBER 1, 1997
Table of Contents
Section Title Page
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1. Administration..................................................................................1
2. Eligibility.....................................................................................3
3. Participation...................................................................................3
4. Deductions......................................................................................4
5. Deduction Changes and Plan Withdrawals..........................................................4
6. Purchase of Shares..............................................................................6
7. Dividends.......................................................................................6
8. Stock...........................................................................................7
9. Issuance of Certificates........................................................................7
10. Registration of Certificates....................................................................7
11. Rights as a Stockholder.........................................................................7
12. Retirement, Death, Disability, Section 16 Applicability, Leave of Absence or Other
Termination of Employment.......................................................................7
13. Withholding.....................................................................................9
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Section Title Page
- ------- ----- ----
14. Rights Not Transferable.........................................................................9
15. Designation of Beneficiary.....................................................................10
16. Application of Funds...........................................................................10
17. Adjustment in Case of Changes Affecting Common Stock...........................................10
18. Amendment of the Plan..........................................................................10
19. Termination of the Plan........................................................................10
20. Governmental Regulations.......................................................................11
21. Plan Share Purchases...........................................................................11
22. No Employment Rights...........................................................................11
23. Notices........................................................................................11
24. Severability of Provisions.....................................................................11
25. Headings and Captions..........................................................................12
26. Approval of Board..............................................................................12
27. Controlling Law................................................................................12
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QUAKER FABRIC CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
EFFECTIVE OCTOBER 1, 1997
The purpose of the Quaker Fabric Corporation Employee Stock Purchase
Plan (the "Plan") is to encourage and facilitate employee stock
ownership by providing a continuing opportunity to purchase the common
stock, par value $.01, (the "Common Stock") of Quaker Fabric Corporation
(the "Company") at a discount through payroll deductions. The Plan is
not intended to be qualified under Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code").
1. ADMINISTRATION
(a) The Plan shall be administered by the Compensation Committee of
the Board of Directors of the Company (the "Board") or such other
committee consisting of directors or other persons as may be
appointed by the Board (the "Committee").
(b) The Committee shall have full authority to interpret the Plan; to
establish, amend, and rescind rules for carrying out the Plan; to
administer the Plan; and to make all other determinations and to
take such steps in connection with the Plan as the Committee, in
its sole discretion, deems necessary or desirable for
administering the Plan.
(c) The Committee may designate other employees of the Company and
professional advisors to assist the Committee in the
administration of the Plan and may grant authority to such other
employees to execute agreements or other documents on behalf of
the Committee.
(d) The Committee may employ such legal counsel, consultants,
brokers and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion
received from any such counsel or consultant and any
computation received from any such consultant, broker or
agent. The Committee, its members and any person designated
pursuant to paragraph (c) above shall not be liable for any
action or determination made in good faith with respect to the
Plan. The Company or an Affiliate (as defined in section 2),
as the case may be, shall, to the fullest extent permitted by
law
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and the certificate of incorporation and bylaws of the Company or
an Affiliate and, to the extent not covered by insurance,
indemnify each director, officer or employee of the Company or an
Affiliate (including the heirs, executors, administrators and
other personal representatives of such person) and each member of
the Committee against all expenses, costs, liabilities and losses
(including attorneys' fees, judgments, fines, excise taxes or
penalties, and amounts paid or to be paid in settlement) actually
and reasonably incurred by such person in connection with any
threatened, pending or actual suit, action or proceeding (whether
civil, criminal, administrative or investigative in nature or
otherwise) in which such person may be involved by reason of the
fact that he or she is or was serving this Plan in any capacity
at the request of the Company, except in instances where any such
person engages in willful neglect or fraud. Such right of
indemnification shall include the right to be paid by the Company
for expenses incurred or reasonably anticipated to be incurred in
defending any such suit, action or proceeding in advance of its
disposition; provided, however, that the payment of expenses in
advance of the settlement or final disposition of a suit, action
or proceeding, shall be made only upon delivery to the Company of
an undertaking by or on behalf of such person to repay all
amounts so advanced if it is ultimately determined that such
person is not entitled to be indemnified hereunder. Such
indemnification shall be in addition to any rights of
indemnification the person may have as a director, officer or
employee or under the certificate of incorporation or the bylaws
of the Company or an Affiliate. Expenses incurred by the
Committee or the Board in the engagement of any such counsel,
consultant or agent shall be paid by the Company.
(e) Except with respect to brokerage fees and commissions charged for
the sale of shares of Common Stock and any fees charged for
certificates of shares of Common Stock, all other costs, fees and
expenses involved in administering the Plan as provided herein,
or incident thereto, including without limitation, brokerage fees
and commissions charged for the purchase of shares of Common
Stock, shall be borne by the Company. Employees shall be fully
responsible for (i) any brokerage fees and commissions charged
for the sale of shares of Common Stock (ii) any fees for
certificates of shares of Common Stock and (iii) any taxes owed
by them as a result of participation in the Plan, including
without limitation, taxes owed on the discount given hereunder.
(f) All determinations by the Committee with respect to the
administration of the Plan shall be in the sole discretion of the
Committee based on this Plan document and other relevant
documents, and all such determinations shall be final and binding
upon all interested parties, including the employee, the
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employee's executor, administrator or other personal
representative or designated beneficiary, and the Company.
(g) The Committee shall designate an agent (the "Agent") to
administer the Plan, purchase and sell shares of Common Stock in
accordance with the Plan, keep records, send statements of
account to employees and to perform other duties relating to the
Plan, as the Committee may request from time to time.
2. ELIGIBILITY
All regular employees (as defined in accordance with the Company's or
Affiliate's policies) of the Company or of any Affiliate designated by
the Board to participate in the Plan, who are employed within the United
States shall be eligible to participate in the Plan after completing 90
days of continuous service with the Company or an Affiliate in
accordance with the terms hereof and such rules as may be prescribed
from time to time ("Eligible Employees"). Temporary employees, seasonal
employees, employees employed by the Company or an Affiliate outside of
the United States, independent contractors (even if such persons are
retroactively reclassified by the Internal Revenue Service as common law
employees for the period during which the Company or Affiliate treated
the individuals as independent contractors), persons subject to Section
16 of the Securities Exchange Act of 1934 (the "Exchange Act"), and
employees whose employment is governed by the terms of a collective
bargaining agreement between employee representatives (within the
meaning of Code Section 7701(a)(46)) and the Company or an Affiliate
(except to the extent that the collective bargaining agreement expressly
provides for the inclusion of such employees) are not eligible to
participate in the Plan. "Affiliate" shall mean a subsidiary corporation
as defined under Code Section 424(f).
3. PARTICIPATION
An Eligible Employee may participate in the Plan by completing and
forwarding payroll deduction authorization form to the Company's Human
Resources Department. The form shall authorize a payroll deduction from
the Eligible Employee's compensation each payroll period, which shall
become effective on the payroll date coincident with or next following
the first Entry Date following the ten (10) day period (or such other
time period as the Human Resources Department may from time to time set)
after the Human Resources Department receives the form from the Eligible
Employee. Notwithstanding the foregoing, any employee who is an Eligible
Employee on the Effective Date and who elects to participate in the Plan
commencing on the Effective Date, may participate in the Plan as soon as
practicable without regard to the specified Entry Date. "Entry
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Date" shall mean January 1, April 1, July 1 and October 1 of each
calendar year or the next business day following such date.
4. DEDUCTIONS
The Company shall maintain payroll deduction accounts for all Eligible
Employees who participate in the Plan. An Eligible Employee may
authorize a payroll deduction in a designated percentage (in whole
percentages) of the Eligible Employee's Compensation that he or she
receives each payroll period or in a designated dollar amount (in
increments of ten dollars ($10)), up to a maximum of the lesser of ten
percent (10%) of Compensation or ten thousand dollars ($10,000) per
year. To the extent that an Eligible Employee does not participate
during a full calendar year, the foregoing annual maximum limitations
shall be prorated by multiplying the limit by a fraction, the numerator
of which is the number of complete payroll periods that the Eligible
Employee participates in the Plan and the denominator of which is the
total number of payroll periods in the calendar year. Amounts deducted
shall equal at least one percent (1%) of Compensation for each complete
payroll period. In no event shall interest be credited to Eligible
Employees' accounts.
"Compensation" means all cash wages paid to an Eligible Employee by the
Company or an Affiliate, including salary, overtime, commissions,
bonuses, incentive compensation, and other lump sum payments.
Compensation shall include amounts contributed by salary reduction to a
plan subject to Section 125 or 401(k) of the Code. Compensation shall
not include any imputed income or contributions by the Company or an
Affiliate to, or benefits paid under, any stock option plan (whether by
grant or exercise of an option or sale of Common Stock relating
thereto), any pension, profit-sharing, fringe benefit, group insurance
or other employee welfare plan heretofore or hereafter adopted or any
deferred compensation arrangement or amounts paid or accrued as
severance pay.
5. DEDUCTION CHANGES AND PLAN WITHDRAWALS
(a) Change of Election. An Eligible Employee may increase or decrease
his or her payroll deduction, effective as of the payroll date
coincident with or next following the Entry Date, by timely
filing a new payroll deduction authorization form with the Human
Resources Department at least ten (10) days (or such other period
of time as the Human Resources Department may from time to time
prescribe) prior to such Entry Date.
(b) Hardship Withdrawals. In the event an Eligible Employee makes a
hardship withdrawal of employee deferral (401(k)) contributions
under any plan maintained by the Company or an Affiliate which is
qualified under
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Section 401(a) of the Code that contains a Section 401(k) feature
(the "Company 401(k) Plan"), such Eligible Employee's payroll
deductions and the purchase of shares of Common Stock shall be
suspended until the first payroll period coincident with or
following the Entry Date commencing after the twelve (12) month
period after such hardship withdrawal. If an Eligible Employee
who elects a hardship withdrawal under the Company's 401(k) Plan
has a cash balance accumulated in his or her account at the time
of withdrawal that has not already been applied to purchase
shares of Common Stock, such cash balance shall be returned to
the employee as soon as administratively practicable.
(c) Voluntary Suspension. An Eligible Employee may at any time upon
ten (10) days' notice to the Human Resources Department (or such
other period of time as the Human Resources Department may from
time to time prescribe), and for any reason, suspend
participation in the Plan, which shall become effective on the
first payroll date coincident with or next following the ten (10)
day period (or such other period of time as the Human Resources
Department may from time to time prescribe). Any cash balance
accumulated in his or her account that has not already been
applied to purchase shares shall be returned to the Eligible
Employee as soon as administratively feasible. An Eligible
Employee who suspends participation may thereafter begin
participation again on any Entry Date following the date of
suspension, provided that the Eligible Employee notifies the
Company's Human Resources Department no later than the tenth
(10th) day prior to the Entry Date (or such other time period as
the Human Resources Department may from time to time set).
(d) Automatic Suspension. An Eligible Employee's participation in the
Plan with regard to future payroll deductions shall be
automatically suspended upon any of the following events:
(i) the employee is no longer an Eligible Employee;
(ii) the employee becomes Disabled;
(iii) the employee is on a Leave of Absence;
(iv) the employee elects to receive a hardship withdrawal as
described in Section 5(b) above;
(v) the employee retires;
(vi) the employee dies;
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(vii) the employee terminates employment for any other
reason; or
(viii) the employee (or any other person whose stock would be
attributed to such employee pursuant to Section 424(d)
of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%)
or more of the total combined voting power or value of
all classes of stock of the Company or an Affiliate or
a parent corporation, as defined under Section 424(e)
of the Code.
"Disability" or "Disabled" shall mean a permanent and total disability
as defined under Section 22(e)(3) of the Code. A "Leave of Absence"
shall be determined by the usual policies of the Company or Affiliate
and shall not include vacation time.
6. PURCHASE OF SHARES
Amounts credited to an Eligible Employee's account as of the last
trading day of each calendar quarter shall be applied to purchase fully
paid and non-assessable whole and/or fractional shares of Common Stock
for the account of that Eligible Employee at a purchase price equal to
eighty-five percent (85%) of Fair Market Value as of the day of
purchase. The purchase shall occur on the first Entry following the
calendar quarter in which payroll deductions were credited to an
Eligible Employee's account. Notwithstanding the foregoing, the Board of
Directors of the Company, in its sole discretion, may set the purchase
price at an amount that exceeds eighty-five percent (85%) of the Fair
Market Value as of the day of purchase. If all or any portion of the
shares cannot reasonably be purchased on the first Entry Date following
the calendar quarter in which payroll deductions were credited to an
account in the sole discretion of the Committee because of availability
or any other reason, such purchase shall be made as soon thereafter as
feasible. The Eligible Employee's account shall be charged for the
amount of the purchase, and the ownership of such share or shares shall
be appropriately evidenced on the books of the Company. "Fair Market
Value" shall mean the actual purchase price of a share of Common Stock
on a particular date, net of commissions.
7. DIVIDENDS
Cash dividends, if any, on shares of Common Stock acquired through the
Plan for which certificates have not been issued to the Eligible
Employee will be automatically paid by check directly to the Eligible
Employee by the Company's transfer agent. Cash dividends on shares of
Common Stock acquired through the Plan for which certificates have been
issued will not be administered by the Plan.
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8. STOCK
The maximum number of shares of Common Stock which shall be available or
reserved for sale under the Plan shall be 100,000. Purchases of Common
Stock under the Plan shall be made by the Agent on the open market, or
in the sole discretion of the Committee, may be made by the Company's
delivery of treasury shares or newly-issued and authorized shares to the
Plan, upon such terms as the Committee may approve.
9. ISSUANCE OF CERTIFICATES
Certificates for whole shares of Common Stock shall not be issued to
Eligible Employees unless and until requested. A fee fixed by the Agent
may be charged for certificates of shares of Common Stock and for the
replacement of lost certificates. Certificates for a fractional share
shall not be issued under any circumstance. If an Eligible Employee
requests certificates for whole shares of Common Stock, any fractional
share of Common Stock shall remain in the Eligible Employee's account
during his or her employment, unless he or she requests cash in lieu of
the fractional share.
10. REGISTRATION OF CERTIFICATES
If an Eligible Employee requests a certificate, certificates may be
registered only in the name of the Eligible Employee.
11. RIGHTS AS A STOCKHOLDER
None of the rights or privileges of a stockholder of the Company shall
exist with respect to shares of Common Stock purchased under the Plan
unless and until such shares shall have been appropriately evidenced on
the books of the Company.
12. RETIREMENT, DEATH, DISABILITY, SECTION 16 APPLICABILITY, LEAVE OF
ABSENCE OR OTHER TERMINATION OF EMPLOYMENT
(a) Termination of Employment of Application of Section 16 of the
Exchange Act (Other Than Disability or Leave of Absence Prior to
Termination of Employment). Subject to such notice requirements
as the Committee may from time to time prescribe, in the event of
an Eligible Employee's retirement, death, or other termination of
employment or in the event an Eligible Employee becomes subject
to the requirements of Section 16 of the Exchange Act: (i) no
further payroll deductions shall be taken from any payroll checks
paid to such Eligible Employee on or after his or her
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retirement, death or other termination of employment or date upon
which he or she became subject to the requirements of Section 16
of the Exchange Act; (ii) no further shares of Common Stock shall
be purchased for the account of the Eligible Employee; (iii) any
cash balance accumulated in the Eligible Employee's account shall
be paid to the Eligible Employee or, in the event of the Eligible
Employee's death, to the Eligible Employee's estate; and (iv) any
dividends paid on shares of Common Stock on or after such
Eligible Employee's retirement, death, other termination of
employment or date upon which he or she became subject to the
requirements of Section 16 of the Exchange Act shall be
distributed to such Eligible Employee as a cash dividend. Nothing
in this paragraph shall be deemed to prevent an Eligible Employee
who becomes ineligible due to retirement, other termination of
employment or applicability of Section 16 of the Exchange Act
from becoming eligible again under Section 2.
(b) Disability or Leave of Absence Prior to Termination of
Employment. Subject to such notice requirements as the Committee
may from time to time prescribe, in the event of an Eligible
Employee's Disability or Leave of Absence, payroll deductions
shall only be taken from pay that is due and owing to the
Eligible Employee. To the extent that any cash balance has
accumulated in the Eligible Employee's account, such balance
shall be used to purchase shares of Common Stock on the first
Entry Date following the calendar quarter in which payroll
deductions were credited to the account, or such other day as the
Committee determines. With respect to an Eligible Employee who
becomes ineligible to participate due to a Disability or Leave of
Absence, shares of Common Stock held in such Eligible Employee's
accounts shall continue to be held in the Eligible Employee's
account unless he or she elects otherwise under paragraph (c)
below. In the event that such employee's Disability or Leave of
Absence ends and such employee returns to work as an Eligible
Employee, payroll deductions shall resume automatically in
accordance with his or her most recent authorization form in
effect prior to the Disability or Leave of Absence, unless he or
she elects otherwise. Paragraph (a) above shall apply to any
termination of employment following an Eligible Employee's
Disability or Leave of Absence.
(c) Treatment of Common Stock Upon Termination of Employment. With
respect to Eligible Employees who are not persons subject to
Section 16 of the Exchange Act, such Eligible Employees shall
elect one (or a combination) of the following alternatives upon
termination of employment (other than Disability or Leave of
Absence):
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(i) the Eligible Employee may request the Agent to sell all
or a portion of shares of Common Stock for which
certificates have not been issued to him or her and
receive cash for such shares, subject to any brokerage
fees or commissions; or
(ii) receive certificates, without charge, for all or a
portion of the whole shares of Common Stock and cash in
lieu of any fractional shares of Common Stock.
If such Eligible Employee does not make an election regarding the
treatment of his or her shares within the time period prescribed
by the Committee, such Eligible Employee shall automatically
receive certificates, without charge, for all whole shares of
Common Stock and cash in lieu of any fractional shares of Common
Stock.
An Eligible Employee who becomes ineligible to participate due to
Disability or Leave of Absence may elect one (or a combination)
of the above alternatives at any time on or after his or her
Disability or Leave of Absence.
(d) Treatment of Common Stock Upon Application of Section 16 of the
Exchange Act or Section 5(vii) of the Plan. If an Eligible
Employee becomes subject to Section 16 of the Exchange Act or
Section 5(d)(vii) of the Plan, the employee shall receive, at
such time he or she becomes subject to Section 16 of the Exchange
Act or Section 5(d)(vii) of the Plan, certificates, without
charge, for all of the whole shares of Common Stock and cash in
lieu of any fractional shares of Common Stock.
13. WITHHOLDING
The Company shall have the right to make such provisions as it deems
necessary or appropriate to satisfy any obligations to withhold federal,
state or local income or other taxes incurred by reason of the issuance
of shares of Common Stock pursuant to the Plan.
14. RIGHTS NOT TRANSFERABLE
Rights under the Plan are not transferable by an Eligible Employee other
than by will or the laws of descent and distribution, and are
exercisable during the Eligible Employee's lifetime only by the Eligible
Employee or his or her guardian or legal representative.
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15. DESIGNATION OF BENEFICIARY
An Eligible Employee participating in the Plan may file, on forms
supplied by and delivered to the Company, a written designation of a
beneficiary who is to receive any shares of Common Stock and cash
remaining in such Eligible Employee's account under the Plan in the
event of Eligible Employee's death. Such designation of beneficiary may
be changed by the Eligible Employee at any time by written notice. If an
Eligible Employee participating in the Plan is married on the date of
death and no beneficiary had been designated by the Eligible Employee
prior to the Eligible Employee's death, the Eligible Employee's spouse
will be presumed to be his beneficiary. If an Eligible Employee
participating in the Plan is not married on the date of death and no
beneficiary had been designated by the Eligible Employee prior to the
Eligible Employee's death, the Eligible Employee's beneficiary shall be
Eligible Employee's estate.
16. APPLICATION OF FUNDS
All funds received or held by the Company under the Plan may be used for
any corporate purpose.
17. ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK
In the event of any change affecting Common Stock, such as stock splits
or stock dividends, such adjustment shall be made as may be deemed
equitable by the Board to give proper effect to such event and as
required by applicable law.
18. AMENDMENT OF THE PLAN
The Board may at any time, or from time to time, amend the Plan in any
respect.
19. TERMINATION OF THE PLAN
The Plan and all rights of employees under the Plan shall terminate at
any time at the discretion of the Board. Upon termination of the Plan,
(a) certificates for whole shares of Common Stock held in an Eligible
Employee's account under the Plan shall be issued, without charge; (b) a
cash payment shall be made in lieu of any fractional shares of Common
Stock; and (c) all cash balances accumulated in the accounts of Eligible
Employees shall be promptly refunded.
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20. GOVERNMENTAL REGULATIONS
The Company's obligation to sell and deliver Common Stock under the Plan
is subject to all applicable laws and regulations, including the receipt
of any approval of any governmental authority or stock exchange required
in connection with the authorization, issuance, or sale of such shares
of Common Stock.
21. PLAN SHARE PURCHASES
Purchases of outstanding shares of Common Stock may be made pursuant to
and on behalf of the Plan, upon such terms as the Committee may approve,
for delivery under the Plan. Shares delivered under the Plan may also be
treasury shares or newly issued shares.
22. NO EMPLOYMENT RIGHTS
The establishment and operation of this Plan shall not confer any legal
rights upon any employee or other person for a continuation of
employment, nor shall it interfere with the rights of the Company or an
Affiliate to discharge any employee and to treat him or her without
regard to the effect which that treatment might have upon him or her as
an Eligible Employee or potential Eligible Employee under the Plan.
23. NOTICES
Each Eligible Employee shall be responsible for furnishing the Agent and
the Human Resources Department with the current and proper address for
the mailing of notices and the delivery of other information. Any notice
required or permitted to be given shall be deemed given if directed to
the person to whom addressed at such address and mailed by regular
United States mail, first-class and prepaid. If any item mailed to such
address is returned as undeliverable to the addressee, mailing will be
suspended until the Eligible Employee furnishes the proper address.
24. SEVERABILITY OF PROVISIONS
If any provision of the Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other
provisions hereof, and the Plan shall be construed and enforced as if
such provisions had not been included.
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25. HEADINGS AND CAPTIONS
The headings and captions herein are provided for reference and
convenience only, shall not be considered part of the Plan, and shall
not be employed in the construction of the Plan.
26. APPROVAL OF BOARD
The Plan shall not be effective unless and until approved by the Board.
27. CONTROLLING LAW
This Plan shall be construed and enforced according to the laws of the
State of Delaware (without giving effect to conflict of law rules).
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