QUAKER FABRIC CORP /DE/
EXHIBIT 10.12
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<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10-12.txt
<DESCRIPTION>EXHIBIT 10.12
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                                                                   EXHIBIT 10.12

                           USE AND OCCUPANCY AGREEMENT


         THIS USE AND OCCUPANCY AGREEMENT (the "Agreement") is dated as of
________________ ____, 2004 by and between QUAKER FABRIC CORPORATION OF FALL
RIVER, a Massachusetts company having an address of 941 Grinnell Street, Fall
River, Massachusetts 02721 ("Licensor"), and JOAN FABRICS CORPORATION, a
Delaware corporation having an address of 100 Vesper Executive Park, Tyngsboro,
Massachusetts 01879 ("Licensee", which term shall include any affiliate of
Licensee, including but not limited to MAIN STREET TEXTILES, L.P.).



                                    RECITALS

         WHEREAS, Licensor is the holder of the leasehold estate in the premises
(the "Property") described in the Lease between Charles McAnsin Associates, a
Limited Partnership ("Landlord") and Licensor dated _______________ ___, 2004
(the "Lease");


         WHEREAS, Licensor and Landlord have agreed in the Lease that Licensee
may occupy portions of the Property on the terms set forth in Section 8 of the
Lease and as set forth below.

                                    AGREEMENT


         NOW, THEREFORE, in consideration of Ten Dollars ($10.00), and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and agreed, Licensor and Licensee hereby agree as follows:


1. License. Licensor hereby grants to Licensee the privilege to use portions of
the Property for the purposes described in Section 8 of the Lease, together with
the privilege to have a right of access thereto through the Property, and the
privilege to use the loading docks, common areas and parking areas of the
Property, in common with Licensor in accordance with the terms and conditions of
this Agreement (the "Licensed Premises"). Licensor and Licensee agree to work
cooperatively to coordinate their activities in any areas jointly used by them
for their respective activities during the term of this Agreement.

2. Term. The term of this Agreement shall commence on the date hereof and shall
terminate on the earlier to occur of (a) December 31, 2005, or (b) [five (5)
days] after the date upon which Licensee has delivered to Licensor written
notice that Licensee has vacated the Licensed Premises and delivered possession
thereof to Licensor in the condition required hereby. At the time of such
termination, Licensee shall remove its possessions from the Licensed Premises
and shall leave the same broom-clean and in the condition required under Article
8 of the Lease.


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3. Use. Licensee shall use the Licensed Premises for the removal and/or sale
and/or marketing of textile equipment belonging to Licensee and its affiliates.
Licensee shall not make or permit or suffer to be made any use of the Licensed
Premises or any part thereof (i) which would violate any of the covenants,
agreements, terms, provisions and conditions of this License; (ii) which is in
violation of law, ordinance or government regulations; (iii) which may
invalidate or increase the premium of any policy of insurance carried on the
Premises or covering Licensor's operations; or (iv) which would materially
impair Licensor's use of the remainder of the Property.

4. Payment. In accordance with the Lease, there is no license fee due from
Licensee to Licensor under this Use and Occupancy Agreement.

5. Assignment and Subletting. No assignment of this Agreement or sublicensing of
the Licensed Premises or any part thereof shall be made by Licensee. Neither all
nor any part of Licensee's interest in the Licensed Premises granted hereunder
may be encumbered, assigned, or transferred, in whole or in part, either by any
act of Licensee or by operation of law. Licensee shall not permit or suffer the
Licensed Premises to be used by anyone other than the employees, agents and
affiliates of Licensee and riggers and prospective purchasers of equipment.

6. Licensor not Liable. All personal property of Licensee in the Licensed
Premises shall be at the sole risk and hazard of Licensee and if the whole or
any part thereof shall be lost, destroyed or damaged by fire, theft or
otherwise, no part of said loss or damage is to be charged to or borne by
Licensor, and Licensee agrees to defend and hold Licensor harmless from and
against any and all liabilities, obligations, penalties, claims, costs, charges
and expenses, including, but not limited to, reasonable attorneys' fees, based
upon or arising out of the foregoing. In no event shall any stockholder,
officer, director, partner, member, employee or agent of Licensor have any
liability hereunder, and Licensee shall not seek personal recourse against any
such parties or their personal assets.

7. Indemnification. Licensee shall defend, indemnify and save harmless Licensor
and Licensor's partners, agents and employees from and against any and all
liabilities, obligations, damages, penalties, claims, costs, charges and
expenses, including, but not limited to, reasonable attorneys' fees, which may
be incurred by Licensor by reason of, or arising directly or indirectly from,
out of, or in connection with, any negligent or wrongful act or wrongful
omission of Licensee, its agents, employees, contractors or invitees in or about
the Licensed Premises, or any failure on the part of Licensee to perform or
comply with any of the terms, conditions or provisions of this License,
including, without limitation, Licensee's failure to yield up and surrender the
License Premises in broom-clean condition and in the same condition as exists on
the date hereof at the end of the term.

8. Insurance. Each of Licensor and Licensee shall maintain commercial general
liability insurance in commercially reasonable amounts with reputable insurers
licensed to do business in the Commonwealth of Massachusetts with respect to the
Licensed Premises. Licensee shall maintain property insurance with respect to
its personal property in the Licensed Premises, each of which policies shall be
in commercially reasonable amounts with reputable insurers licensed to do
business in the Commonwealth of Massachusetts. Any insurance carried by either
party with


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respect to the Property or property therein or occurrences thereon shall include
a clause or endorsement denying to the insurer rights of subrogation against the
other party to the extent rights have been waived by the insured before
occurrence of injury or loss. Each party, notwithstanding any provisions of this
Agreement to the contrary, hereby waives any rights of recovery against the
other for injury or loss due to hazards covered by such insurance to the extent
of the indemnification received thereunder.

9. Notices. Any notice under this License must be in writing and shall be
delivered in accordance with Section __ of the Lease.

10. Access. Licensor shall have access to the Licensed Premises, provided that
any such access shall not materially interfere with Licensee's business
activities in the Licensed Premises (except in the case of emergency).

11. Miscellaneous. This instrument embodies the entire agreement between the
parties relative to the subject matter hereof, and shall not be modified,
changed, or altered in any respect, except in writing. This Agreement shall be
construed and enforced in all respects in accordance with the laws of the
Commonwealth of Massachusetts. Licensee recognizes that the occupancy hereby
allowed is permissive only and that no tenancy or lease is created hereby.

                                       LICENSOR:

                                       QUAKER FABRIC CORPORATION OF FALL RIVER


                                       By: ___________/s/______________________
                                           Larry A. Liebenow, President

                                       LICENSEE:

                                       JOAN FABRICS CORPORATION


                                       By: ___________/s/______________________
                                           Elkin McCallum
                                           Chairman and Chief Executive Officer


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