Document:

EXHIBIT 10.41

                               SECURITY AGREEMENT

         SECURITY  AGREEMENT,  dated as of November 9, 2006,  between (a) QUAKER
FABRIC CORPORATION OF FALL RIVER, a Massachusetts  corporation (the "Borrower"),
(b) QUAKER TEXTILE CORPORATION,  a Massachusetts corporation ("Quaker Textile"),
QUAKER FABRIC MEXICO, S.A. DE C.V., a Mexican corporation ("Quaker Mexico"), and
QUAKER FABRIC CORPORATION,  a Delaware  corporation (the "Parent",  and together
with Quaker Textile and Quaker Mexico,  the "Guarantors") (the Borrower and each
of the  Guarantors  being  sometimes  referred  to  herein  as a  "Company"  and
collectively,  as the  "Companies"),  and  (c) GB  MERCHANT  PARTNERS,  LLC,  as
administrative  agent (hereinafter,  the "Administrative  Agent") for itself and
the other lending institutions  (hereinafter,  collectively the "Lenders") which
are or may become  parties to a Term Loan  Agreement of even date  herewith (the
"Credit  Agreement"),  among the Borrowers,  the Lenders and the  Administrative
Agent.

         WHEREAS,  it is a condition  precedent to the Lenders' making any loans
or otherwise  extending  credit to the Borrower under the Credit  Agreement that
each Company execute and deliver to the Administrative Agent, for the benefit of
the Lenders and the Administrative  Agent, a security agreement in substantially
the form hereof; and

         WHEREAS,  each Company wishes to grant a security  interest in favor of
the Administrative  Agent, for the benefit of the Lenders and the Administrative
Agent, as herein provided; and

         WHEREAS,  pursuant to the terms of that  certain  Amended and  Restated
Revolving  Credit  Agreement  dated as of even date  herewith (as amended and in
effect from time to time, the "Revolving  Credit  Agreement" and,  together with
all amendments, documents, instruments and agreements executed pursuant thereto,
collectively,  the "Revolving Credit Documents"), by and among the Borrower, the
Parent,  and Bank of America,  N.A.,  as  administrative  agent (the  "Revolving
Credit  Agent") for itself and other lending  institutions  which are, or may in
the future become, parties thereto (collectively,  the "Revolving Lenders"), the
Revolving  Lenders  have  extended  loans to the  Borrower,  and the Borrower is
obligated to the  Revolving  Credit Agent and the  Revolving  Lenders  under the
Revolving Credit Documents,  which obligations are secured by the collateral set
forth herein; and

         WHEREAS,  the  Administrative  Agent,  the Revolving  Credit Agent, the
Borrower and the Parent are parties to that certain  Intercreditor  Agreement of
even  date  herewith  (as  amended  and  in  effect  from  time  to  time,   the
"Intercreditor Agreement"),  setting forth the relative priorities of liens held
by the Revolving  Credit Agent for the benefit of the Revolving  Lenders and the
Administrative  Agent  for  the  benefit  of the  Lenders  with  respect  to the
collateral referred to therein,  including,  without limitation,  the collateral
described  herein,  securing the  respective  obligations  of the Parent and the
Borrower.
<PAGE>

         NOW,  THEREFORE,  in consideration of the promises contained herein and
for other good and valuable consideration,  the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

         1. DEFINITIONS.  All capitalized terms used herein without  definitions
shall have the respective  meanings  provided  therefor in the Credit Agreement.
The term "State", as used herein,  means the Commonwealth of Massachusetts.  All
terms defined in the Uniform  Commercial Code of the State and used herein shall
have the same definitions  herein as specified  therein.  However,  if a term is
defined in Article 9 of the  Uniform  Commercial  Code of the State  differently
than in another Article of the Uniform  Commercial  Code of the State,  the term
has the meaning  specified in Article 9. The term "electronic  document" applies
in the event that the 2003 revisions to Article 7, with amendments to Article 9,
of the  Uniform  Commercial  Code,  in  substantially  the form  approved by the
American Law Institute and the National  Conference of  Commissioners on Uniform
State Laws, are now or hereafter adopted and become effective in the State or in
any other relevant jurisdiction.

         2.  GRANT OF  SECURITY  INTEREST.  Each  Company  hereby  grants to the
Administrative  Agent,  for the benefit of the  Lenders  and the  Administrative
Agent, to secure the payment and performance in full of all of the  Obligations,
a continuing first priority  security  interest in and so pledges and assigns to
the Administrative  Agent, for the benefit of the Lenders and the Administrative
Agent,  the following  properties,  assets and rights of such Company,  wherever
located,  whether now owned or hereafter  acquired or arising,  and all proceeds
and products thereof,  subject solely to the Liens of the Revolving Credit Agent
under the Revolving Credit Documents (all of the same being  hereinafter  called
the  "Collateral"):  all personal and fixture  property of every kind and nature
including  without   limitation  all  goods  (including   inventory,   equipment
(including rolling stock) and any accessions  thereto),  instruments  (including
promissory notes),  documents including,  if applicable,  electronic  documents,
accounts (including health care insurance  receivables),  chattel paper (whether
tangible or electronic),  deposit accounts,  letter-of-credit rights (whether or
not the letter of credit is  evidenced  by a  writing),  software,  intellectual
property  rights,  commercial tort claims,  securities and all other  investment
property, cash and cash equivalents,  supporting obligations, any other contract
rights or rights to the payment of money,  insurance  claims and  proceeds,  all
general  intangibles  (including  all  payment  intangibles),  and all books and
records relating to the foregoing.  The  Administrative  Agent acknowledges that
the attachment of its security interest in any commercial tort claim as original
collateral is subject to each Company's compliance with Section 4.7.

         3.  AUTHORIZATION  TO FILE  FINANCING  STATEMENTS.  Each Company hereby
irrevocably  authorizes the Administrative  Agent, its counsel or representative
at any time and from time to time to file in any  filing  office in any  Uniform
Commercial Code  jurisdiction  any initial  financing  statements and amendments
thereto  that (a) indicate  the  Collateral  (i) as all assets of the Company or
words of similar effect, regardless of whether any particular asset comprised in
the  Collateral  falls  within the scope of Article 9 of the Uniform  Commercial
Code of the State or such  other  jurisdiction,  or (ii) as being of an equal or
lesser  scope or with  greater  detail,  and (b) contain  any other  information
required by part 5 of Article 9 of the Uniform  Commercial  Code of the State or
such other  jurisdiction for the sufficiency or filing office  acceptance of any
financing  statement  or  amendment,  including  (i) whether  such Company is an
organization,  the type of organization  and any  organizational  identification
number  issued to such  Company and,  (ii) in the case of a financing  statement
filed as a fixture filing or indicating  Collateral as extracted  collateral,  a
sufficient  description of real property to which the Collateral  relates.  Each
Company  agrees to furnish  any such  information  to the  Administrative  Agent
promptly upon  request.  Each Company also  ratifies its  authorization  for the
Administrative  Agent to have filed in any Uniform  Commercial Code jurisdiction
any like initial  financing  statements or amendments  thereto if filed prior to
the date hereof, with all costs and expenses associated with any such filings to
be at the Companies' expense.

                                      -2-
<PAGE>

         4. OTHER  ACTIONS.  Further to ensure the  attachment,  perfection  and
first priority of, and the ability of the Administrative  Agent to enforce,  the
Administrative Agent's security interest in the Collateral, each Company agrees,
in each case at such Company's own expense,  to take the following  actions with
respect to the following  Collateral  and without  limitation on such  Company's
other obligations contained in this Agreement:

                  4.1.  PROMISSORY  NOTES AND  TANGIBLE  CHATTEL  PAPER.  If any
         Company  shall,  now or at any  time  hereafter,  hold or  acquire  any
         promissory notes or tangible chattel paper (excluding  promissory notes
         in  favor  of   employees  of  any  Company  not   exceeding   $300,000
         individually  or  $500,000  in  the  aggregate),   such  Company  shall
         forthwith  endorse,  assign and deliver the same to the  Administrative
         Agent,  accompanied by such  instruments of transfer or assignment duly
         executed  in blank as the  Administrative  Agent  may from time to time
         specify.

                  4.2.  DEPOSIT  ACCOUNTS.  For each  deposit  account that each
         Company,  now or at any time  hereafter,  opens or  maintains  with any
         depositary bank after the obligations of the Companies to the Revolving
         Credit Agent and Revolving  Lenders arising under the Revolving  Credit
         Documents have been  satisfied,  each such Company shall deliver to the
         Administrative  Agent  an  Agency  Account  Agreement  in  favor of the
         Administrative  Agent,  in  form  and  substance  satisfactory  to  the
         Administrative Agent, executed by such depositary bank; provided,  that
         any  Company  may  maintain  such  accounts  that are not subject to an
         Agency Account Agreement in favor of the  Administrative  Agent so long
         as the  aggregate  balance  maintained  in all such  accounts  does not
         exceed  $750,000.  The provisions of this paragraph  shall not apply to
         (i) a  deposit  account  for  which  the  Administrative  Agent  is the
         depositary  bank and is in  automatic  control  and  (ii)  any  deposit
         accounts specially and exclusively used for payroll,  payroll taxes and
         other  employee  wage and  benefit  payments to or for the benefit of a
         Company's salaried employees.

                                      -3-
<PAGE>

                  4.3. INVESTMENT PROPERTY.  If any Company shall, now or at any
         time  hereafter,  hold or acquire  any  certificated  securities,  such
         Company  shall  forthwith  endorse,  assign and deliver the same to the
         Administrative  Agent,  accompanied by such  instruments of transfer or
         assignment duly executed in blank as the Administrative  Agent may from
         time to time specify.  If any securities  now or hereafter  acquired by
         any Company are  uncertificated  and are issued to such  Company or its
         nominee directly by the issuer thereof,  such Company shall immediately
         notify the  Administrative  Agent  thereof  and, at the  Administrative
         Agent's  request  and  option,  pursuant  to an  agreement  in form and
         substance  satisfactory to the Administrative  Agent,  either (a) cause
         the issuer to agree to comply without  further  consent of such Company
         or such nominee,  at any time with instructions from the Administrative
         Agent as to such  securities,  or (b)  arrange  for the  Administrative
         Agent to  become  the  registered  owner of the  securities;  provided,
         however,   that   if   any   securities,    whether   certificated   or
         uncertificated,  or other investment property now or hereafter acquired
         by any  Company  are held by such  Company  or its  nominee  through  a
         securities intermediary or commodity  intermediary,  such Company shall
         immediately  notify  the  Administrative  Agent  thereof  and,  at  the
         Administrative Agent's request and option,  pursuant to an agreement in
         form and substance satisfactory to the Administrative Agent, either (i)
         cause such  securities  intermediary  or (as the case may be) commodity
         intermediary  to agree to comply,  in each case without further consent
         of such Company or such nominee, at any time with entitlement orders or
         other  instructions  from the  Administrative  Agent to such securities
         intermediary as to such securities or other investment property, or (as
         the case may be) to apply  any  value  distributed  on  account  of any
         commodity  contract  as directed  by the  Administrative  Agent to such
         commodity  intermediary,  or (ii) in the case of  financial  assets  or
         other  investment  property  held  through a  securities  intermediary,
         arrange for the  Administrative  Agent to become the entitlement holder
         with  respect to such  investment  property,  with such  Company  being
         permitted,  only  with the  consent  of the  Administrative  Agent,  to
         exercise  rights to withdraw  or  otherwise  deal with such  investment
         property.  The  provisions  of this  paragraph  shall  not apply to any
         financial  assets  credited  to a  securities  account  for  which  the
         Administrative Agent is the securities intermediary.

                  4.4.  COLLATERAL  IN  THE  POSSESSION  OF  A  BAILEE.  If  any
         Collateral  is, now or at any time  hereafter,  in the  possession of a
         bailee  (excluding  Collateral in the  possession of dyers and contract
         manufacturers  in  the  ordinary  course  of  the  Companies'  business
         consistent  with  past  practices  that  is  designated  as  ineligible
         inventory  on  the  most  recent  Borrowing  Base  Certificate   and/or
         Collateral  Update  Certificate),  the applicable  Company or Companies
         shall  promptly  notify the  Administrative  Agent  thereof and, at the
         Administrative  Agent's  request and option,  such Company or Companies
         shall promptly obtain an  acknowledgement  from the bailee, in form and
         substance  satisfactory to the  Administrative  Agent,  that the bailee
         holds such Collateral for the benefit of the  Administrative  Agent and
         such  bailee's  agreement to comply,  without  further  consent of such
         Company  or   Companies,   at  any  time  with   instructions   of  the
         Administrative Agent as to such Collateral.

                                      -4-
<PAGE>

                  4.5. ELECTRONIC CHATTEL PAPER AND TRANSFERABLE RECORDS. If any
         Company, now or at any time hereafter, holds or acquires an interest in
         any  electronic   chattel  paper,   any  electronic   document  or  any
         "transferable  record,"  as that term is defined in Section  201 of the
         federal  Electronic  Signatures in Global and National Commerce Act, or
         in Section 16 of the Uniform  Electronic  Transactions Act as in effect
         in any relevant  jurisdiction,  such Company shall promptly  notify the
         Administrative  Agent  thereof  and,  at the  request and option of the
         Administrative  Agent,  shall  take such  action as the  Administrative
         Agent  may  reasonably  request  to  vest in the  Administrative  Agent
         control,  under  Section  9-105 of the Uniform  Commercial  Code of the
         State or any other relevant  jurisdiction,  of such electronic  chattel
         paper,  control,  under Section 7-106 of the Uniform Commercial Code of
         the  State  or any  other  relevant  jurisdiction,  of such  electronic
         document  or  control,  under  Section  201 of the  federal  Electronic
         Signatures in Global and National  Commerce Act or, as the case may be,
         Section 16 of the Uniform Electronic  Transactions Act, as so in effect
         in such  jurisdiction,  of such transferable  record. The provisions of
         this Section 4.5 relating to electronic  documents and "control"  under
         UCC Section 7-106 apply in the event that the 2003 revisions to Article
         7, with  amendments  to Article 9, of the Uniform  Commercial  Code, in
         substantially  the form  approved by the American Law Institute and the
         National  Conference of Commissioners on Uniform State Laws, are now or
         hereafter  adopted  and become  effective  in the State or in any other
         relevant jurisdiction.

                  4.6. LETTER-OF-CREDIT RIGHTS. If any Company is, now or at any
         time hereafter, a beneficiary under a letter of credit (excluding trade
         letters of credit) with a face amount equal to or greater than $500,000
         individually,  or $1,500,000 in the aggregate with all other letters of
         credit under which such Company is beneficiary,  now or hereafter, such
         Company shall promptly notify the Administrative  Agent thereof and, at
         the request and option of the Administrative Agent, such Company shall,
         pursuant to an  agreement  in form and  substance  satisfactory  to the
         Administrative  Agent,  either  (a)  arrange  for  the  issuer  and any
         confirmer or other nominated person of such letter of credit to consent
         to an  assignment  to the  Administrative  Agent of the proceeds of the
         letter of credit or (b) arrange for the Administrative  Agent to become
         the  transferee   beneficiary  of  the  letter  of  credit,   with  the
         Administrative  Agent agreeing,  in each case, that the proceeds of the
         letter of credit are to be applied as provided in the Credit Agreement.

                  4.7.  COMMERCIAL TORT CLAIMS.  If any Company shall, now or at
         any time  hereafter,  hold or acquire a  commercial  tort  claim,  such
         Company shall immediately notify the Administrative  Agent in a writing
         signed by such  Company  of the  particulars  thereof  and grant to the
         Administrative   Agent,   for  the  benefit  of  the  Lenders  and  the
         Administrative  Agent, in such writing a security  interest therein and
         in the proceeds  thereof,  all upon the terms of this  Agreement,  with
         such  writing  to  be  in  form  and  substance   satisfactory  to  the
         Administrative Agent.

                                      -5-
<PAGE>

                  4.8. OTHER ACTIONS AS TO ANY AND ALL COLLATERAL.  Each Company
         further agrees, upon the request of the Administrative Agent and at the
         Administrative Agent's option, to take any and all other actions as the
         Administrative  Agent may  determine  to be necessary or useful for the
         attachment,  perfection  and first  priority of, and the ability of the
         Administrative  Agent to enforce,  the Administrative  Agent's security
         interest  in  any  and  all  of  the  Collateral,   including,  without
         limitation,  (a) executing,  delivering and, where appropriate,  filing
         financing  statements and amendments relating thereto under the Uniform
         Commercial Code of any relevant  jurisdiction,  to the extent,  if any,
         that such Company's signature thereon is required therefor, (b) causing
         the  Administrative  Agent's  name to be noted as secured  party on any
         certificate  of title for a titled good if such notation is a condition
         to   attachment,   perfection   or  priority  of,  or  ability  of  the
         Administrative  Agent to enforce,  the Administrative  Agent's security
         interest in such  Collateral,  (c) complying  with any provision of any
         statute, regulation or treaty of the United States as to any Collateral
         if  compliance  with  such  provision  is a  condition  to  attachment,
         perfection  or priority of, or ability of the  Administrative  Agent to
         enforce,   the   Administrative   Agent's  security  interest  in  such
         Collateral,  (d) obtaining  governmental and other third party waivers,
         consents  and  approvals,  in form and  substance  satisfactory  to the
         Administrative Agent, including, without limitation, any consent of any
         licensor, lessor or other person obligated on Collateral, (e) obtaining
         waivers  from   mortgagees   and   landlords  in  form  and   substance
         satisfactory  to the  Administrative  Agent and (f) taking all  actions
         under any earlier versions of the Uniform  Commercial Code or under any
         other law, as reasonably  determined by the Administrative  Agent to be
         applicable   in  any  relevant   Uniform   Commercial   Code  or  other
         jurisdiction, including any foreign jurisdiction, in each such case, at
         the Companies' expense.

         5.  RELATION TO OTHER  COLLATERAL  DOCUMENTS.  The  provisions  of this
Agreement supplement the provisions of any real estate mortgage or deed of trust
granted by the  Companies to the  Administrative  Agent,  for the benefit of the
Lenders  and  the  Administrative  Agent,  and  which  secures  the  payment  or
performance of any of the Obligations. Nothing contained in any such real estate
mortgage or deed of trust shall  derogate  from any of the rights or remedies of
the Administrative  Agent or any of the Lenders hereunder.  In addition,  to the
provisions of this Agreement  being so read and construed with any such mortgage
or deed of trust,  the provisions of this Agreement  shall be read and construed
with the other Security Documents referred to below in the manner so indicated.

                                      -6-
<PAGE>

                  5.1. STOCK PLEDGE AGREEMENT.  Concurrently herewith certain of
         the Companies are executing and delivering to the Administrative Agent,
         for the benefit of the Lenders and the  Administrative  Agent,  a stock
         pledge  agreement  pursuant  to which  each  Company  party  thereto is
         pledging to the  Administrative  Agent,  for the benefit of the Lenders
         and the  Administrative  Agent,  all of its shares of capital  stock in
         certain of its  Subsidiaries.  Such  pledges  shall be  governed by the
         terms of such pledge agreement and not by the terms of this Agreement.

                  5.2. PATENT AND TRADEMARK  ASSIGNMENTS.  Concurrently herewith
         certain  of  the  Companies   are  executing  and   delivering  to  the
         Administrative   Agent,   for  the  benefit  of  the  Lenders  and  the
         Administrative  Agent,  a Patent  Collateral  Assignment  and  Security
         Agreement  (the  "Patent   Assignment")  and  a  Trademark   Collateral
         Assignment and Pledge Agreement (the "Trademark  Assignment")  pursuant
         to which such Companies are assigning to the Administrative  Agent, for
         the  benefit  of the  Lenders  and the  Administrative  Agent,  certain
         Collateral  consisting  of patents  and patent  rights and  trademarks,
         service marks and trademark and service mark rights,  together with the
         goodwill  appurtenant  thereto. The provisions of the Patent Assignment
         and the Trademark Assignment are supplemental to the provisions of this
         Agreement,  and  nothing  contained  in the  Patent  Assignment  or the
         Trademark  Assignment shall derogate from any of the rights or remedies
         of the Administrative  Agent or any of the Lenders  hereunder.  Neither
         the delivery of, nor anything  contained  in, the Patent  Assignment or
         the  Trademark  Assignment  shall be deemed to prevent or postpone  the
         time of  attachment  or  perfection  of any  security  interest in such
         Collateral  created  hereby.5.3.  COPYRIGHT  MEMORANDUM.   Concurrently
         herewith  certain of the Companies are executing and  delivering to the
         Administrative   Agent,   for  the  benefit  of  the  Lenders  and  the
         Administrative  Agent,  for  recording in the United  States  Copyright
         Office (the  "Copyright  Office"),  a  Memorandum  of Grant of Security
         Interest in  Copyrights.  Each Company  represents  and warrants to the
         Lenders and the  Administrative  Agent that such Memorandum  identifies
         all now  existing  material  copyrights  and other rights in and to all
         material  copyrightable  works  of  the  Companies,  identified,  where
         applicable,  by title,  author  and/or  Copyright  Office  registration
         number and date.

         6.  REPRESENTATIONS  AND WARRANTIES  CONCERNING  EACH  COMPANY'S  LEGAL
STATUS.  Each of the Companies has  previously  delivered to the  Administrative
Agent a certificate signed by the Company and entitled "Perfection  Certificate"
(the  "Perfection  Certificate").  Each Company  represents  and warrants to the
Lenders and the Administrative  Agent as follows: (a) each Company's exact legal
name is that indicated on its Perfection  Certificate  and on the signature page
hereof,  (b) the Company is an organization of the type, and is organized in the
jurisdiction,  set  forth  in its  Perfection  Certificate,  (c) its  Perfection
Certificate  accurately sets forth the Company's  organizational  identification
number or  accurately  states  that such  Company has none,  (d) its  Perfection
Certificate  accurately  sets forth such Company's place of business or, if more
than one, its chief executive office, as well as such Company's mailing address,
if different,  (e) all other information set forth on its Perfection Certificate
pertaining  to such  Company is accurate  and complete and (f) there has been no
change  in any of such  information  since  the  date on  which  its  Perfection
Certificate was signed by such Company.

                                      -7-
<PAGE>

         7.  COVENANTS  CONCERNING  EACH  COMPANY'S  LEGAL STATUS.  Each Company
covenants with the Lenders and the Administrative  Agent as follows: (a) without
providing at least thirty (30) days prior written  notice to the  Administrative
Agent,  such Company will not change its name, its place of business or, if more
than one,  chief  executive  office,  or its mailing  address or  organizational
identification  number  if it has  one,  (b) if such  Company  does  not have an
organizational  identification  number and later  obtains one, such Company will
forthwith notify the Administrative Agent of such organizational  identification
number,  and (c)  such  Company  will  not  change  its  type  of  organization,
jurisdiction of organization or other legal structure.

         8.  REPRESENTATIONS  AND WARRANTIES  CONCERNING  COLLATERAL,  ETC. Each
Company  further  represents and warrants to the Lenders and the  Administrative
Agent as follows: (a) such Company is the owner of the Collateral, free from any
right or claim of any  person  or any  adverse  lien,  except  for the  security
interest  created by this  Agreement  and other  Liens  permitted  by the Credit
Agreement, (b) none of the Collateral constitutes,  or is the proceeds of, "farm
products" as defined in Section  9-102(a)(34) of the Uniform  Commercial Code of
the State, (c) except as disclosed to the Administrative Agent in writing,  none
of the account debtors or other persons  obligated on any of the Collateral is a
governmental  authority covered by the Federal  Assignment of Claims Act or like
federal, state or local statute or rule in respect of such Collateral,  (d) such
Company  holds no  commercial  tort claim except as indicated on its  Perfection
Certificate or claims arising after the date on which notice is given,  (e) such
Company has at all times operated its business in compliance with all applicable
provisions  of the federal Fair Labor  Standards  Act, as amended,  and with all
applicable  provisions  of  federal,  state and local  statutes  and  ordinances
dealing with the control,  shipment,  storage or disposal of hazardous materials
or substances, (f) all other information set forth on its Perfection Certificate
pertaining to the Collateral is accurate and complete, and (g) there has been no
change  in any of such  information  since  the  date on  which  its  Perfection
Certificate was signed by such Company.

         9. COVENANTS CONCERNING COLLATERAL, ETC. Each Company further covenants
with the Lenders and the Administrative Agent as follows: (a) the Collateral, to
the extent not delivered to the  Administrative  Agent  pursuant to Section 4 or
the  Revolving  Credit  Agent  pursuant  to  the  terms  of the  Revolving  Loan
Documents,  will be kept at those locations listed on its Perfection Certificate
and such  Company will not remove the  Collateral  from such  locations  without
providing at least 30 days prior written notice to the Administrative Agent, (b)
except for the security  interest  herein granted and Liens permitted by Section
8.3 of the Credit Agreement, the Companies shall be the owners of the Collateral
free from any right or claim of any other person or any lien,  security interest
or other encumbrance,  and such Company shall defend the same against all claims
and  demands  of all  Persons  at any time  claiming  the same or any  interests
therein  adverse to the  Administrative  Agent or any of the  Lenders,  (c) such
Company  shall not pledge,  mortgage or create,  or suffer to exist any right of
any person in or claim by any person to the  Collateral,  or any lien,  security
interest or other  encumbrance  in the  Collateral  in favor of any  person,  or
become bound (as provided in Section 9 203(d) of the Uniform  Commercial Code of
the  State or any  other  relevant  jurisdiction  or  otherwise)  by a  security
agreement in favor of any person as secured party, other than the Administrative
Agent except for Liens permitted by the Credit Agreement,  (d) such Company will
keep the  Collateral in good order and repair  (ordinary wear and tear excepted)
and  will  not use the  same in  violation  of law or any  policy  of  insurance
thereon,  (e) as provided in the Credit Agreement,  such Company will permit the
Administrative  Agent,  or  its  designee,  to  inspect  the  Collateral  at any
reasonable time,  wherever located,  (f) such Company will pay promptly when due
all taxes,  assessments,  governmental charges and levies upon the Collateral or
incurred in connection  with the use or operation of the  Collateral or incurred
in connection  with this  Agreement,  (g) such Company will continue to operate,
its business in compliance  with all  applicable  provisions of the federal Fair
Labor Standards Act, as amended, and with all applicable  provisions of federal,
state and local  statutes and  ordinances  dealing  with the control,  shipment,
storage or disposal of hazardous materials or substances,  (h) such Company will
not sell or otherwise  dispose,  or offer to sell or otherwise  dispose,  of the
Collateral  or any  interest  therein  except  for  sales or other  dispositions
expressly  permitted under the Credit  Agreement,  and (i) such Company will not
file any amendment to or  termination of any Uniform  Commercial  Code financing
statement naming such Company as debtor and the Administrative  Agent as secured
party.

                                      -8-
<PAGE>

         10.  INSURANCE.

                  10.1.  MAINTENANCE  OF  INSURANCE.  Each Company will maintain
         with financially sound and reputable insurers insurance with respect to
         its properties and business  against such casualties and  contingencies
         as shall be in accordance with general practices of businesses  engaged
         in similar activities in similar geographic areas. Such insurance shall
         be in such  minimum  amounts  that  such  Company  will not be deemed a
         co-insurer  under applicable  insurance laws,  regulations and policies
         and otherwise shall be in such amounts,  contain such terms, be in such
         forms and be for such periods as may be reasonably  satisfactory to the
         Administrative Agent. In addition,  all such insurance shall be payable
         to the  Administrative  Agent as loss payee under a "standard"  or "New
         York"  loss  payee  clause  for  the  benefit  of the  Lenders  and the
         Administrative Agent. Without limiting the foregoing,  the Company will
         (a) keep all of its physical property insured with casualty or physical
         hazard  insurance  on an "all risks"  basis,  with broad form flood and
         earthquake  coverages and electronic data processing  coverage,  with a
         full  replacement  cost endorsement and an "agreed amount" clause in an
         amount equal to 100% of the full replacement cost of such property, (b)
         maintain all such workers'  compensation or similar insurance as may be
         required  by law and (c)  maintain,  in  amounts  and with  deductibles
         consistent  with those  generally  maintained by businesses  engaged in
         similar  activities  in similar  geographic  areas and  otherwise  in a
         manner  consistent  with its past practices,  general public  liability
         insurance  against  claims of bodily injury,  death or property  damage
         occurring,  on, in or about the  properties  of the  Company;  business
         interruption insurance; and product liability insurance.

                                      -9-
<PAGE>

                  10.2.  INSURANCE  PROCEEDS.   The  proceeds  of  any  casualty
         insurance  in respect  of any  casualty  loss of any of the  Collateral
         shall, subject to the rights, if any, of other parties with an interest
         having priority in the property covered thereby, be applied pursuant to
         the terms of the Credit Agreement.

                  10.3.  CONTINUATION  OF  INSURANCE.  All policies of insurance
         shall provide for at least thirty (30) days prior written  cancellation
         notice to the  Administrative  Agent.  In the event of  failure  by any
         Company to provide  and  maintain  insurance  as herein  provided,  the
         Administrative  Agent may, at its option,  provide such  insurance  and
         charge the amount thereof to the Companies.  Each Company shall furnish
         the  Administrative  Agent with  certificates of insurance and policies
         evidencing compliance with the foregoing insurance provision.

         11.  COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.

                  11.1.  EXPENSES  INCURRED  BY  ADMINISTRATIVE  AGENT.  In  the
         Administrative   Agent's  discretion,   the  Administrative  Agent  may
         discharge taxes and other encumbrances  (other than Permitted Liens) at
         any time levied or placed on any of the Collateral, maintain any of the
         Collateral, make necessary repairs thereto and pay any necessary filing
         fees or insurance  premiums,  in each case if the Companies  fail to do
         so. Each Company agrees to reimburse the Administrative Agent on demand
         for all  expenditures so made. The  Administrative  Agent shall have no
         obligation to any Company to make any such expenditures,  nor shall the
         making thereof be construed as a waiver or cure of any Default or Event
         of Default.

                  11.2.  ADMINISTRATIVE AGENT'S OBLIGATIONS AND DUTIES. Anything
         herein to the  contrary  notwithstanding,  each  Company  shall  remain
         obligated and liable under each contract or agreement  comprised in the
         Collateral  to be observed or  performed  by such  Company  thereunder.
         Neither  the  Administrative  Agent  nor  any  Lender  shall  have  any
         obligation or liability  under any such contract or agreement by reason
         of  or  arising   out  of  this   Agreement   or  the  receipt  by  the
         Administrative  Agent or any Lender of any  payment  relating to any of
         the  Collateral,  nor shall the  Administrative  Agent or any Lender be
         obligated  in any  manner  to  perform  any of the  obligations  of any
         Company under or pursuant to any such  contract or  agreement,  to make
         inquiry as to the nature or sufficiency of any payment  received by the
         Administrative  Agent or any Lender in respect of the  Collateral or as
         to the  sufficiency  of any  performance  by any  party  under any such
         contract or agreement, to present or file any claim, to take any action
         to enforce  any  performance  or to collect  the payment of any amounts
         which may have been  assigned to the  Administrative  Agent or to which
         the  Administrative  Agent or any Lender may be entitled at any time or
         times.  The  Administrative  Agent's  sole  duty  with  respect  to the
         custody,  safe keeping and physical  preservation  of the Collateral in
         its possession,  under Section 9-207 of the Uniform  Commercial Code of
         the State or  otherwise,  shall be to deal with such  Collateral in the
         same manner as the Administrative Agent deals with similar property for
         its own account.

                                      -10-
<PAGE>

         12. SECURITIES AND DEPOSITS.  The Administrative  Agent may at any time
following  and during the  continuance  of an Event of  Default,  at its option,
transfer  to itself  or any  nominee  any  securities  constituting  Collateral,
receive  any income  thereon and hold such income as  additional  Collateral  or
apply  it to the  Obligations.  Whether  or not any  Obligations  are  due,  the
Administrative  Agent may,  following and during the  continuance of an Event of
Default, demand, sue for, collect, or make any settlement or compromise which it
deems  desirable with respect to the  Collateral.  Regardless of the adequacy of
Collateral or any other security for the Obligations, any deposits or other sums
at any time  credited by or due from the  Administrative  Agent or any Lender to
any  Company  may at any  time  be  applied  to or set  off  against  any of the
Obligations.

         13.  NOTIFICATION  TO ACCOUNT  DEBTORS AND OTHER  PERSONS  OBLIGATED ON
COLLATERAL. Each Company shall, following and during the continuance of an Event
of  Default,  at the  request  and option of the  Administrative  Agent,  notify
account  debtors and other  persons  obligated on any of the  Collateral  of the
security  interest of the  Administrative  Agent in any account,  chattel paper,
general  intangible,  instrument or other Collateral and that payment thereof is
to be made directly to the Administrative Agent or to any financial  institution
designated  by the  Administrative  Agent as the  Administrative  Agent's  agent
therefor,  and following and during the continuance of an Event of Default,  the
Administrative Agent may itself,  without notice to or demand upon such Company,
so notify account debtors and other persons  obligated on Collateral.  After the
making of such a request or the giving of any such  notification,  such  Company
shall hold any  proceeds of  collection  of  accounts,  chattel  paper,  general
intangibles,  instruments  and other  Collateral  received  by such  Company  as
trustee  for the  Administrative  Agent,  for the benefit of the Lenders and the
Administrative  Agent,  without  commingling  the same with other  funds of such
Company  and  shall  turn  the  same  over to the  Administrative  Agent  in the
identical  form   received,   together  with  any  necessary   endorsements   or
assignments.  The Administrative Agent shall apply the proceeds of collection of
accounts,  chattel paper, general intangibles,  instruments and other Collateral
received by the  Administrative  Agent to the Obligations in accordance with the
Credit Agreement,  such proceeds to be immediately  credited after final payment
in cash or other immediately available funds of the items giving rise to them.

         14.  POWER OF ATTORNEY.

                  14.1.  APPOINTMENT AND POWERS OF  ADMINISTRATIVE  AGENT.  Each
         Company hereby irrevocably  constitutes and appoints the Administrative
         Agent and any officer or agent thereof, with, subject to the provisions
         of applicable law, full power of  substitution,  as its true and lawful
         attorneys-in-fact  with full  irrevocable  power and  authority  in the
         place and stead of such  Company or in the  Administrative  Agent's own
         name, for the purpose of carrying out the terms of this  Agreement,  to
         take  any  and  all  appropriate  action  and to  execute  any  and all
         documents and instruments that may be necessary or useful to accomplish
         the purposes of this Agreement and,  without limiting the generality of
         the  foregoing,  hereby gives said  attorneys  the power and right,  on
         behalf of such Company, without notice to or assent by such Company, to
         do the following:

                                      -11-
<PAGE>

                           (a) upon the occurrence and during the continuance of
                  an Event of Default, generally to sell, transfer, pledge, make
                  any agreement with respect to or otherwise  dispose of or deal
                  with any of the  Collateral  in such  manner as is  consistent
                  with the  Uniform  Commercial  Code of the  State or any other
                  relevant  jurisdiction  and as fully and  completely as though
                  the  Administrative  Agent were the absolute owner thereof for
                  all purposes,  and to do, at such  Company's  expense,  at any
                  time,  or from  time to time,  all acts and  things  which the
                  Administrative  Agent  deems  necessary  or useful to protect,
                  preserve or realize upon the Collateral and the Administrative
                  Agent's  security  interest  therein,  in order to effect  the
                  intent of this Agreement, all no less fully and effectively as
                  such Company might do, including,  without limitation, (i) the
                  filing  and   prosecuting   of   registration   and   transfer
                  applications  with  the  appropriate  federal,  state or local
                  agencies or authorities with respect to trademarks, copyrights
                  and patentable  inventions  and  processes,  (ii) upon written
                  notice to such  Company,  the  exercise of voting  rights with
                  respect to voting  securities,  which rights may be exercised,
                  if the Administrative  Agent so elects, with a view to causing
                  the liquidation of assets of the issuer of any such securities
                  and (iii) the execution, delivery and recording, in connection
                  with any sale or other  disposition of any Collateral,  of the
                  endorsements,  assignments or other  instruments of conveyance
                  or transfer with respect to such Collateral; and

                           (b)  whether  or not an Event of  Default  shall have
                  occurred and be continuing,  to the extent that such Company's
                  authorization  given in Section 3 is not  sufficient,  to file
                  such financing statements with respect hereto, with or without
                  such Company's signature,  or a photocopy of this Agreement in
                  substitution for a financing statement,  as the Administrative
                  Agent may deem  appropriate  and to execute in such  Company's
                  name such  financing  statements  and  amendments  thereto and
                  continuation  statements  which  may  require  such  Company's
                  signature.

                                      -12-
<PAGE>

                  14.2.  RATIFICATION BY THE COMPANIES.  To the extent permitted
         by law,  each Company  hereby  ratifies all that said  attorneys  shall
         lawfully  do or  cause  to be done by  virtue  hereof.  This  power  of
         attorney is a power coupled with an interest and is irrevocable.

                  14.3. NO DUTY ON ADMINISTRATIVE AGENT. The powers conferred on
         the Administrative  Agent hereunder are solely to protect the interests
         of the Administrative Agent and the Lenders in the Collateral and shall
         not impose any duty upon the Administrative  Agent to exercise any such
         powers.  The  Administrative  Agent shall be  accountable  only for the
         amounts  that it actually  receives as a result of the exercise of such
         powers, and neither it nor any of its officers, directors, employees or
         agents  shall be  responsible  to any Company for any act or failure to
         act,  except for the  Administrative  Agent's own gross  negligence  or
         willful misconduct.

         15. RIGHTS AND REMEDIES. If an Event of Default shall have occurred and
be continuing,  the Administrative  Agent, without any other notice to or demand
upon the Companies,  shall have in any jurisdiction in which enforcement  hereof
is sought, in addition to all other rights and remedies, the rights and remedies
of a secured party under the Uniform  Commercial  Code of the State or any other
relevant  jurisdiction and any additional rights and remedies as may be provided
to a secured party at law or in equity in any  jurisdiction in which  Collateral
is located,  including,  without limitation, the right to take possession of the
Collateral,  and for that  purpose the  Administrative  Agent may, so far as any
Company  can give  authority  therefor,  enter  upon any  premises  on which the
Collateral  may be situated and remove the same  therefrom.  The  Administrative
Agent may in its discretion  require each Company to assemble all or any part of
the Collateral at such location or locations within the  jurisdiction(s) of such
Company's  principal  office(s) or at such other locations as the Administrative
Agent may reasonably designate. Unless the Collateral is perishable or threatens
to decline  speedily in value or is of a type  customarily  sold on a recognized
market,  the  Administrative  Agent shall give to the  Companies at least twenty
(20) days  prior  written  notice of the time and  place of any  public  sale of
Collateral  or of the time after  which any private  sale or any other  intended
disposition  is to be made.  Each Company hereby  acknowledges  that twenty (20)
days prior written notice of such sale or sales shall be reasonable  notice.  In
addition,  each Company waives any and all rights that it may have to a judicial
hearing in  advance  of the  enforcement  of any of the  Administrative  Agent's
rights  and  remedies  hereunder,   including,  without  limitation,  its  right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights and remedies with respect thereto.

         16.  STANDARDS FOR EXERCISING  RIGHTS AND REMEDIES.  To the extent that
applicable law imposes duties on the  Administrative  Agent to exercise remedies
in a commercially  reasonable manner, each Company  acknowledges and agrees that
it is not commercially  unreasonable for the Administrative Agent (a) to fail to
incur expenses  reasonably  deemed  significant by the  Administrative  Agent to
prepare Collateral for disposition or otherwise to fail to complete raw material
or  work  in  process  into  finished  goods  or  other  finished  products  for
disposition, (b) to fail to obtain third party consents for access to Collateral
to be  disposed  of, or to obtain or, if not  required  by other law, to fail to
obtain governmental or third party consents for the collection or disposition of
Collateral  to be collected  or disposed of, (c) to fail to exercise  collection
remedies against account debtors or other persons  obligated on Collateral or to
fail to  remove  Liens  on or any  adverse  claims  against  Collateral,  (d) to
exercise collection remedies against account debtors and other persons obligated
on  Collateral  directly or through  the use of  collection  agencies  and other
collection  specialists,  (e) to advertise  dispositions  of Collateral  through
publications or media of general  circulation,  whether or not the Collateral is
of a specialized  nature,  (f) to contact other  persons,  whether or not in the
same business as such Company,  for  expressions of interest in acquiring all or
any portion of the Collateral,  (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral,  whether or not the Collateral is of
a specialized  nature,  (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types  included in the  Collateral
or that have the  reasonable  capability  of doing so, or that match  buyers and
sellers of assets,  (i) to dispose of assets in  wholesale  rather  than  retail
markets,  (j) to disclaim disposition  warranties,  (k) to purchase insurance or
credit  enhancements to insure the  Administrative  Agent against risks of loss,
collection or  disposition  of  Collateral  or to provide to the  Administrative
Agent a guaranteed  return from the collection or disposition of Collateral,  or
(l) to the extent deemed appropriate by the Administrative  Agent, to obtain the
services of brokers, investment bankers,  consultants and other professionals to
assist the  Administrative  Agent in the collection or disposition of any of the
Collateral.  Each Company acknowledges that the purpose of this Section 16 is to
provide  non-exhaustive   indications  of  what  actions  or  omissions  by  the
Administrative  Agent would fulfill the Administrative  Agent's duties under the
Uniform  Commercial Code of the State or any other relevant  jurisdiction in the
Administrative  Agent's  exercise of remedies  against the  Collateral  and that
other  actions or omissions by the  Administrative  Agent shall not be deemed to
fail to fulfill  such duties  solely on account of not being  indicated  in this
Section 16. Without  limitation  upon the foregoing,  nothing  contained in this
Section 16 shall be  construed  to grant any rights to any  Company or to impose
any  duties on the  Administrative  Agent  that  would not have been  granted or
imposed by this  Agreement or by  applicable  law in the absence of this Section
16.

                                      -13-
<PAGE>

         17. NO WAIVER BY ADMINISTRATIVE  AGENT, ETC. The  Administrative  Agent
shall not be deemed to have waived any of its rights and  remedies in respect of
the  Obligations  or the  Collateral  unless such waiver shall be in writing and
signed by the Administrative  Agent with the consent of the Required Lenders. No
delay or  omission on the part of the  Administrative  Agent in  exercising  any
right or remedy  shall  operate as a waiver of such right or remedy or any other
right or remedy. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion. All rights and remedies
of the  Administrative  Agent with respect to the Obligations or the Collateral,
whether  evidenced  hereby  or by any  other  instrument  or  papers,  shall  be
cumulative  and may be  exercised  singularly,  alternatively,  successively  or
concurrently  at such time or at such times as the  Administrative  Agent  deems
expedient.

         18.  SURETYSHIP  WAIVERS BY THE COMPANIES.  Each Company waives demand,
notice  (other than notices  expressly  provided for herein or in any other Loan
Document),  protest,  notice of  acceptance of this  Agreement,  notice of loans
made, credit extended, Collateral received or delivered or other action taken in
reliance  hereon and all other  demands  and  notices of any  description.  With
respect to both the Obligations and the Collateral,  each Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral,  to the addition or release of any party or person  primarily
or  secondarily  liable,  to the acceptance of partial  payment  thereon and the
settlement,  compromising or adjusting of any thereof, all in such manner and at
such  time  or  times  as the  Administrative  Agent  may  deem  advisable.  The
Administrative  Agent shall have no duty as to the  collection  or protection of
the Collateral or any income therefrom, the preservation of rights against prior
parties,  or the preservation of any rights  pertaining  thereto beyond the safe
custody  thereof as set forth in Section 11.2.  Each Company  further waives any
and all other suretyship defenses.

                                      -14-
<PAGE>

         19. MARSHALLING.  Neither the Administrative Agent nor any Lender shall
be required to marshal any present or future collateral  security (including but
not  limited to the  Collateral)  for,  or other  assurances  of payment of, the
Obligations  or any of them or to resort to such  collateral  security  or other
assurances  of  payment  in any  particular  order,  and all of the  rights  and
remedies  of  the  Administrative  Agent  or  any  Lender  hereunder  and of the
Administrative  Agent or any Lender in respect of such  collateral  security and
other  assurances of payment  shall be  cumulative  and in addition to all other
rights and remedies, however existing or arising. To the extent that it lawfully
may, each Company  hereby agrees that it will not invoke any law relating to the
marshalling of collateral  which might cause delay in or impede the  enforcement
of the Administrative  Agent's rights and remedies under this Agreement or under
any other  instrument  creating or evidencing  any of the  Obligations  or under
which any of the  Obligations is outstanding or by which any of the  Obligations
is secured or payment thereof is otherwise  assured,  and, to the extent that it
lawfully may, each Company  hereby  irrevocably  waives the benefits of all such
laws.

         20. PROCEEDS OF DISPOSITIONS;  EXPENSES.  Each Company shall pay to the
Administrative  Agent  on  demand  any and all  expenses,  including  reasonable
attorneys' fees and disbursements,  incurred or paid by the Administrative Agent
in protecting,  preserving  or, after and during the  continuance of an Event of
Default,  enforcing the  Administrative  Agent's rights and remedies under or in
respect of any of the Obligations or any of the Collateral.  After deducting all
of said  expenses,  the residue of any proceeds of  collection  or sale or other
disposition of Collateral  shall,  to the extent  actually  received in cash, be
applied to the payment of the  Obligations in accordance  with the provisions of
the  Credit  Agreement,  proper  allowance  and  provision  being  made  for any
Obligations not then due. Upon the final payment and satisfaction in full of all
of  the  Obligations  and  after  making  any  payments   required  by  Sections
9-608(a)(1)(C)  or 9-615(a)(3) of the Uniform  Commercial Code of the State, any
excess shall be returned to the  Companies.  In the absence of final payment and
satisfaction in full of all of the Obligations, each Company shall remain liable
for any deficiency.

                                      -15-
<PAGE>

         21.  OVERDUE  AMOUNTS.  Until paid,  all amounts due and payable by the
Companies  hereunder  shall be a debt secured by the  Collateral and shall bear,
whether before or after judgment, interest at the Default Rate.

         22. GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE  WITH, THE LAWS OF THE STATE.  Each Company agrees that any action or
claim arising out of any dispute in connection with this  Agreement,  any rights
or  obligations  hereunder or the  performance  or enforcement of such rights or
obligations  may be  brought  in the  courts of the State or any  federal  court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service  of process in any such suit being made upon such  Company by mail at
the address specified in Section 19 of the Credit Agreement. Each Company hereby
waives any objection  that it may now or hereafter have to the venue of any such
suit or any such court or that such suit is brought in an inconvenient court.

         23.  SUBMISSION  TO  JURISDICTION;  WAIVER OF JURY  TRIAL.  EACH OF THE
PARTIES HERETO  IRREVOCABLY  SUBMITS TO THE  NON-EXCLUSIVE  JURISDICTION  OF ANY
UNITED STATES FEDERAL OR  MASSACHUSETTS  STATE COURT SITTING IN MASSACHUSETTS IN
ANY ACTION OR PROCEEDING  ARISING OUT OF OR RELATING TO THIS  AGREEMENT AND EACH
OF THE PARTIES  HERETO HEREBY  IRREVOCABLY  AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. NONE OF
THE  PARTIES  HERETO  SHALL  SEEK  A JURY  TRIAL  IN  ANY  LAWSUIT,  PROCEEDING,
COUNTERCLAIM  OR OTHER  LITIGATION  PROCEDURE  BASED UPON OR  ARISING  OUT OF OR
OTHERWISE  RELATED  TO THIS  AGREEMENT  AND EACH OF THE  PARTIES  HERETO  HEREBY
WAIVES,  TO THE FULLEST  EXTENT  PERMITTED BY LAW, ANY AND ALL RIGHT TO ANY SUCH
JURY  TRIAL AND ANY  RIGHT  EACH MAY HAVE TO ASSERT  THE  DOCTRINE  OF FORUM NON
CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY SUCH PROCEEDING IS BROUGHT IN
ACCORDANCE  WITH THIS  Section 23.  Except as  prohibited  by law,  each Company
waives  any  right  which  it may have to claim  or  recover  in any  litigation
referred  to in the  preceding  sentence  any  special,  exemplary,  punitive or
consequential  damages or any damages  other than,  or in  addition  to,  actual
damages.  Each Company (a) certifies that none of the Administrative  Agent, any
Lender or any representative,  agent or attorney of the Administrative  Agent or
any Lender has  represented,  expressly or  otherwise,  that the  Administrative
Agent or any Lender would not, in the event of  litigation,  seek to enforce the
foregoing  waivers  or  other  waivers  contained  in  this  Agreement  and  (b)
acknowledges  that,  in entering  into the Credit  Agreement  and the other Loan
Documents  to which  the  Administrative  Agent or any  Lender  is a party,  the
Administrative  Agent and the Lenders are relying upon, among other things,  the
waivers and certifications contained in this Section 23.

                                      -16-
<PAGE>

         24. AMENDMENTS TO AGREEMENT AND  DOCUMENTATION.  This Agreement and the
provisions hereof may be amended, modified or waived only by a writing signed by
the Administrative Agent and each of the Companies.

         25.   COUNTERPARTS.   This   Agreement   may  be  executed  in  several
counterparts,  each of which shall be deemed an original  but all of which shall
constitute one agreement, and shall constitute a binding agreement when executed
by each of the parties hereto.

         26. NOTICES. All written communications provided for hereunder shall be
sent in accordance with the provisions of Section 19 of the Credit Agreement.

         27.  MISCELLANEOUS.  The headings of each section of this Agreement are
for convenience only and shall not define or limit the provisions thereof.  This
Agreement and all rights and  obligations  hereunder  shall be binding upon each
Company and its  successors  and assigns,  and shall inure to the benefit of the
Administrative  Agent, the Lenders and their respective  successors and assigns.
If any  term  of  this  Agreement  shall  be  held  to be  invalid,  illegal  or
unenforceable,  the  validity  of all  other  terms  hereof  shall  in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid,  illegal or unenforceable term had not been included herein.  Each
Company acknowledges receipt of a copy of this Agreement.

         28.  INTERCREDITOR MATTERS.

         Notwithstanding  anything to the contrary  contained herein, the rights
and remedies of the Administrative Agent and the Lenders, and the obligations of
the Companies as set forth herein are subject to the terms and conditions of the
Intercreditor Agreement.  Without limiting the foregoing, to the extent that any
Company  is  required  to  deliver,  endorse,  pay  over  or  otherwise  provide
possession  or  control  over any of the  collateral  set  forth  herein  to the
Administrative Agent or Lenders hereunder,  such obligations shall be subject to
the  rights  of the  Revolving  Credit  Agent  and  Revolving  Lenders  to  such
collateral,   subject  to  in  the   Intercreditor   Agreement.   Further,   any
representation, warranty or covenant by the Companies in this Agreement that the
Collateral is not and shall not be subject to any liens,  encumbrances  or other
restrictions,  shall  specifically  be  qualified by the liens and rights of the
Revolving Credit Agent for the benefit of the Revolving  Lenders with respect to
the collateral  pursuant to the Revolving  Credit  Documents and as set forth in
the Intercreditor  Agreement.  The limitations and  qualifications  set forth in
this paragraph are effective  solely to recognize the rights and remedies of the
Revolving  Credit Agent and Revolving  Lenders and to qualify the obligations of
the Companies and shall not otherwise  impair the pledge and security  interests
granted by the Companies to the Administrative Agent pursuant to this Agreement.
The parties acknowledge that to the extent that the obligations of the Companies
to the Revolving Credit Agent and Revolving  Lenders arising under the Revolving
Credit Documents have been indefeasibly  satisfied in full and such parties have
no further obligations to make loans or advances to the Borrower thereunder, the
limitations  and  qualifications  set  forth  in this  paragraph  shall be of no
further force or effect and the Companies  covenant to take all such actions set
forth herein and necessary to give effect to the provisions of this Agreement.

                                      -17-
<PAGE>

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

                     (Signature Page to Security Agreement)

         IN WITNESS  WHEREOF,  intending to be legally  bound,  each Company has
caused this Agreement to be duly executed as of the date first above written.

         QUAKER FABRIC CORPORATION OF FALL
         RIVER
         QUAKER FABRIC CORPORATION
         QUAKER TEXTILE CORPORATION
         QUAKER FABRIC MEXICO, S.A. DE C.V.

         By:  /s/  Paul J. Kelly
            -------------------------------------------------------------
               Name:      Paul J. Kelly
               Title:     Vice President Finance

<PAGE>

Accepted:

GB MERCHANT PARTNERS, LLC,
as Administrative Agent

By: _____________________________________________
       Name:
       Title:

<PAGE>

                          CERTIFICATE OF ACKNOWLEDGMENT

COMMONWEALTH OR STATE OF ______________________________________________)
_________                                                              )  ss.
COUNTY OF _____________________________________________________________)

         On this ___ day of November,  2006,  before me, the undersigned  notary
public,  personally  appeared Paul J. Kelly,  proved to me through  satisfactory
evidence of identification, which were _____________________________,  to be the
person whose name is signed on the preceding  document,  and  acknowledged to me
that he signed it voluntarily  for its stated purpose as Vice President  Finance
of Quaker Fabric  Corporation,  Quaker Fabric Corporation of Fall River,  Quaker
Textile Corporation, and Quaker Fabric Mexico, S.A. de C.V.

                              ------------------------------
                              (official signature and seal of notary)

                              My commission expires:EXHIBIT 10.42

                                    GUARANTY

         GUARANTY,  dated as of November 9, 2006, by QUAKER TEXTILE CORPORATION,
a Massachusetts  corporation  ("Quaker Textile"),  QUAKER FABRIC MEXICO, S.A. DE
C.V. ("Quaker Mexico"), a Mexican corporation,  and QUAKER FABRIC CORPORATION, a
Delaware corporation (the "Parent",  and together with Quaker Textile and Quaker
Mexico,  the  "Guarantors"),   in  favor  of  GB  MERCHANT  PARTNERS,   LLC,  as
administrative  agent (hereinafter,  the "Administrative  Agent") for itself and
the other lending institutions  (hereinafter,  collectively the "Lenders") which
are or may become  parties to the Term Loan Agreement of even date herewith (the
"Credit  Agreement"),  among  Quaker  Fabric  Corporation  of  Fall  River  (the
"Company"), the Parent, the Lenders, and the Administrative Agent.

         WHEREAS,  the  Company  and the  Guarantors  are  members of a group of
related  corporations,  the success of any one of which is  dependent in part on
the success of the other members of such group;

         WHEREAS,  each  Guarantor  expects  to receive  substantial  direct and
indirect  benefits  from the  extensions of credit to the Company by the Lenders
pursuant to the Credit Agreement (which benefits are hereby acknowledged);

         WHEREAS,  it is a condition  precedent to the Lenders' making any loans
or otherwise extending credit to the Company under the Credit Agreement that the
Guarantors execute and deliver to the  Administrative  Agent, for the benefit of
the Lenders and the Administrative  Agent, a guaranty  substantially in the form
hereof; and

         WHEREAS, each Guarantor wishes to guaranty the Company's obligations to
the  Lenders  and the  Administrative  Agent  under or in  respect of the Credit
Agreement as provided herein;

         NOW,  THEREFORE,  each Guarantor hereby agrees with the Lenders and the
Administrative Agent as follows:

         1. DEFINITIONS.  The term "Obligations" and all other capitalized terms
used herein  without  definition  shall have the  respective  meanings  provided
therefor in the Credit Agreement.

         2. GUARANTY OF PAYMENT AND  PERFORMANCE.  Each Guarantor hereby jointly
and severally  unconditionally  guarantees to the Lenders and the Administrative
Agent the full and punctual  payment when due  (whether at stated  maturity,  by
required pre-payment, by acceleration or otherwise), as well as the performance,
of all of the Obligations, including all such which would become due but for the
operation  of the  automatic  stay  pursuant  to Section  362(a) of the  Federal
Bankruptcy  Code and the  operation of Section  502(b) and 506(b) of the Federal
Bankruptcy  Code.  This Guaranty is an absolute,  unconditional  and  continuing
guaranty  of  the  full  and  punctual  payment  and  performance  of all of the
Obligations  and not of their  collectibility  only and is in no way conditioned
upon any requirement that the  Administrative  Agent or any Lender first attempt
to collect any of the  Obligations  from the Company or resort to any collateral
security or other means of obtaining payment.  Should the Company default in the
payment  or  performance  of any  of the  Obligations,  the  obligations  of the
Guarantors  hereunder with respect to such  Obligations  in default shall,  upon
demand by the  Administrative  Agent,  become immediately due and payable to the
Administrative  Agent,  for the benefit of the  Lenders  and the  Administrative
Agent, without demand or notice of any nature, all of which are expressly waived
by each Guarantor.  Payments by the Guarantors  hereunder may be required by the
Administrative Agent on any number of occasions.  All payments by each Guarantor
hereunder  shall be made to the  Administrative  Agent, in the manner and at the
place of payment specified therefor in the Credit Agreement,  for the account of
the Lenders and the Administrative Agent.
<PAGE>

         3. GUARANTOR'S  AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. Each Guarantor
further  jointly and severally  agrees,  as the  principal  obligor and not as a
guarantor only, to pay to the  Administrative  Agent,  on demand,  all costs and
expenses  (including court costs and legal expenses) incurred or expended by the
Administrative  Agent or any Lender in  connection  with the  Obligations,  this
Guaranty  and  the  enforcement  thereof,  together  with  interest  on  amounts
recoverable  under this  Section y3 from the time when such  amounts  become due
until  payment,  whether before or after  judgment,  at the rate of interest for
overdue  principal  set forth in the  Credit  Agreement,  provided  that if such
interest  exceeds the maximum amount  permitted to be paid under applicable law,
then such interest shall be reduced to such maximum permitted amount.

         4. WAIVERS BY GUARANTOR; LENDERS' FREEDOM TO ACT. Each Guarantor agrees
that the  Obligations  will be paid and performed  strictly in  accordance  with
their  respective  terms,  regardless  of any law,  regulation  or order  now or
hereafter  in  effect  in any  jurisdiction,  and  applicable  to  the  Company,
affecting  any of such  terms or the rights of the  Administrative  Agent or any
Lender with  respect  thereto.  Each  Guarantor  waives  promptness,  diligence,
presentment,  demand, protest,  notice of acceptance,  notice of any Obligations
incurred and all other notices of any kind,  all defenses which may be available
by virtue of any  valuation,  stay,  moratorium  law or other similar law now or
hereafter  in effect,  any right to  require  the  marshalling  of assets of the
Company or any other entity or other person primarily or secondarily liable with
respect  to any of the  Obligations,  and  all  suretyship  defenses  generally.
Without  limiting the generality of the foregoing,  each Guarantor agrees to the
provisions  of any  instrument  evidencing,  securing or  otherwise  executed in
connection with any Obligation and agrees that the obligations of each Guarantor
hereunder shall not be released or discharged, in whole or in part, or otherwise
affected by (i) the failure of the Administrative  Agent or any Lender to assert
any claim or demand or to enforce any right or remedy against the Company or any
other entity or other person primarily or secondarily liable with respect to any
of the Obligations; (ii) any extensions, compromise, refinancing,  consolidation
or renewals of any Obligation;  (iii) any change in the time, place or manner of
payment  of any of the  Obligations  or any  rescissions,  waivers,  compromise,
refinancing,  consolidation  or other  amendments or modifications of any of the
terms or provisions of the Credit Agreement, the Notes, the other Loan Documents
or any other agreement evidencing,  securing or otherwise executed in connection
with any of the Obligations;  (iv) the addition,  substitution or release of any
entity or other person primarily or secondarily  liable for any Obligation;  (v)
the adequacy of any rights which the Administrative Agent or any Lender may have
against any collateral  security or other means of obtaining repayment of any of
the  Obligations;  (vi) the  impairment  of any  collateral  securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights  which  the  Administrative  Agent  or any  Lender  might  have  in  such
collateral security or the substitution,  exchange,  surrender, release, loss or
destruction of any such collateral security;  or (vii) any other act or omission
which  might  in any  manner  or to  any  extent  vary  the  risk  of any of the
Guarantors  or  otherwise  operate  as a  release  or  discharge  of  any of the
Guarantors,  all of which may be done without notice to the  Guarantors.  To the
fullest extent  permitted by law, each Guarantor hereby expressly waives any and
all  rights  or  defenses   arising  by  reason  of  (A)  any  "one  action"  or
"anti-deficiency"  law which would otherwise prevent the Administrative Agent or
any Lender from bringing any action,  including  any claim for a deficiency,  or
exercising any other right or remedy  (including any right of set-off),  against
any of the  Guarantors  before  or  after  the  Administrative  Agent's  or such
Lender's   commencement  or  completion  of  any  foreclosure  action,   whether
judicially,  by  exercise  of power of sale or  otherwise,  or (B) any other law
which in any other way would  otherwise  require any election of remedies by the
Administrative Agent or any Lender.
<PAGE>

         5.  UNENFORCEABILITY  OF OBLIGATIONS AGAINST COMPANY. If for any reason
the Company has no legal existence or is under no legal  obligation to discharge
any of the Obligations,  or if any of the Obligations have become  irrecoverable
from  the  Company  by  reason  of  the  Company's  insolvency,   bankruptcy  or
reorganization  or by  other  operation  of law or for any  other  reason,  this
Guaranty shall  nevertheless  be binding on each Guarantor to the same extent as
if such  Guarantor  at all  times  had been the  principal  obligor  on all such
Obligations.  In the event that  acceleration  of the time for payment of any of
the Obligations is stayed upon the insolvency,  bankruptcy or  reorganization of
the Company,  or for any other  reason,  all such amounts  otherwise  subject to
acceleration under the terms of the Credit Agreement,  the Notes, the other Loan
Documents or any other agreement  evidencing,  securing or otherwise executed in
connection  with any  Obligation  shall be  immediately  due and payable by each
Guarantor.

         6. SUBROGATION; SUBORDINATION.

                  6.1. WAIVER OF RIGHTS AGAINST COMPANY. Until the final payment
         and performance in full in cash of all of the Obligations,  none of the
         Guarantors shall exercise and each hereby waives any rights against the
         Company arising as a result of payment by such Guarantor hereunder,  by
         way  of  subrogation,   reimbursement,   restitution,  contribution  or
         otherwise,  and will  not  prove  any  claim  in  competition  with the
         Administrative  Agent or any Lender in respect of any payment hereunder
         in any bankruptcy,  insolvency or reorganization case or proceedings of
         any nature; none of the Guarantors will claim any setoff, recoupment or
         counterclaim  against the Company in respect of any  liability  of such
         Guarantor to the Company in respect of any payment hereunder;  and each
         Guarantor  waives any  benefit of and any right to  participate  in any
         collateral  security which may be held by the  Administrative  Agent or
         any Lender.
<PAGE>

                  6.2.  SUBORDINATION.  The  payment  of any  amounts  due  with
         respect to any indebtedness of the Company for money borrowed or credit
         received  now or  hereafter  owed to any of the  Guarantors  is  hereby
         subordinated  to the  prior  payment  in  full  in  cash  of all of the
         Obligations.  Each Guarantor  agrees that,  after the occurrence of any
         default in the payment or performance of any of the  Obligations,  such
         Guarantor will not demand,  sue for or otherwise attempt to collect any
         such  indebtedness  of the Company to such  Guarantor  until all of the
         Obligations  shall have been paid in full in cash. If,  notwithstanding
         the foregoing sentence, any Guarantor shall collect, enforce or receive
         any amounts in respect of such  indebtedness  while any Obligations are
         still  outstanding,  such  amounts  shall be  collected,  enforced  and
         received  by  such  Guarantor  as  trustee  for  the  Lenders  and  the
         Administrative Agent and be paid over to the Administrative  Agent, for
         the benefit of the Lenders and the Administrative  Agent, on account of
         the Obligations.

                  6.3. PROVISIONS  SUPPLEMENTAL.  The provisions of this Section
         y6 shall be  supplemental  to and not in  derogation  of any rights and
         remedies of the Lenders and the Administrative Agent under any separate
         subordination  agreement which the Administrative Agent may at any time
         and from time to time enter into with any  Guarantor for the benefit of
         the Lenders and the Administrative Agent.

         7.   SECURITY;   SETOFF.   Each   Guarantor   grants  to  each  of  the
Administrative  Agent and the  Lenders,  as security  for the full and  punctual
payment and  performance of all of such  Guarantor's  obligations  hereunder,  a
continuing  lien on and security  interest in all  securities or other  property
belonging to such Guarantor now or hereafter held by the Administrative Agent or
such Lender and in all deposits (general or special, time or demand, provisional
or final) and other sums  credited  by or due from the  Administrative  Agent or
such  Lender to such  Guarantor  or subject  to  withdrawal  by such  Guarantor.
Regardless  of the  adequacy  of any  collateral  security  or  other  means  of
obtaining payment of any of the Obligations,  if any Event of Default shall have
occurred and be continuing,  each of the Administrative Agent and the Lenders is
hereby  authorized  at any time and from  time to time,  without  notice  to any
Guarantor (any such notice being expressly  waived by each Guarantor) and to the
fullest  extent  permitted by law, to set off and apply such  deposits and other
sums against the obligations of each Guarantor  under this Guaranty,  whether or
not the  Administrative  Agent or such Lender  shall have made any demand  under
this Guaranty and although such obligations may be contingent or unmatured.
<PAGE>

         8. FURTHER ASSURANCES.  Each Guarantor agrees that it will from time to
time, at the request of the Administrative Agent, do all such things and execute
all such  documents  as the  Administrative  Agent  may  consider  necessary  or
desirable  to give full effect to this  Guaranty and to perfect and preserve the
rights and powers of the Lenders and the  Administrative  Agent hereunder.  Each
Guarantor  acknowledges  and confirms that such Guarantor itself has established
its own adequate means of obtaining  from the Company on a continuing  basis all
information desired by such Guarantor  concerning the financial condition of the
Company  and  that  such  Guarantor  will  look  to the  Company  and not to the
Administrative  Agent  or any  Lender  in  order  for  such  Guarantor  to  keep
adequately informed of changes in the Company's financial condition.

         9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
and  effect  until  the  Administrative  Agent is given  written  notice  of any
Guarantor's   intention  to  discontinue  this  Guaranty,   notwithstanding  any
intermediate or temporary  payment or settlement of the whole or any part of the
Obligations.  No such notice shall be effective unless received and acknowledged
by an officer of the  Administrative  Agent at the address of the Administrative
Agent for  notices  set forth in  Section 19 of the  Credit  Agreement.  No such
notice  shall  affect  any  rights  of the  Administrative  Agent or any  Lender
hereunder,  including without  limitation the rights set forth in Sections 4 and
6, with respect to any  Obligations  incurred or accrued prior to the receipt of
such notice or any Obligations  incurred or accrued  pursuant to any contract or
commitment in existence  prior to such receipt.  This Guaranty shall continue to
be effective or be reinstated,  notwithstanding  any such notice, if at any time
any payment made or value  received with respect to any  Obligation is rescinded
or must otherwise be returned by the Administrative Agent or any Lender upon the
insolvency,  bankruptcy or reorganization of the Company,  or otherwise,  all as
though such payment had not been made or value received.

         10.  SUCCESSORS  AND ASSIGNS.  This Guaranty shall be binding upon each
Guarantor, its respective successors and assigns, and shall inure to the benefit
of the  Administrative  Agent and the Lenders and their  respective  successors,
transferees  and assigns.  Without  limiting  the  generality  of the  foregoing
sentence, each Lender may assign or otherwise transfer the Credit Agreement, the
Notes,  the  other  Loan  Documents  or any other  agreement  or note held by it
evidencing,  securing or otherwise  executed in connection with the Obligations,
or sell  participations  in any interest  therein,  to any other entity or other
person,  and such other entity or other person shall thereupon become vested, to
the extent set forth in the agreement  evidencing such  assignment,  transfer or
participation,  with all the rights in respect  thereof  granted to such  Lender
herein, all in accordance with Section 18 of the Credit Agreement.  No Guarantor
may assign any of its obligations hereunder.

         11. AMENDMENTS AND WAIVERS.  No amendment or waiver of any provision of
this Guaranty nor consent to any departure by any Guarantor  therefrom  shall be
effective  unless the same shall be in writing and signed by the  Administrative
Agent with the consent of the  Required  Lenders.  No failure on the part of the
Administrative Agent or any Lender to exercise, and no delay in exercising,  any
right  hereunder  shall  operate  as a waiver  thereof;  nor shall any single or
partial  exercise of any right hereunder  preclude any other or further exercise
thereof or the exercise of any other right.
<PAGE>

         12. NOTICES. All notices and other communications  called for hereunder
shall be made in writing and, unless  otherwise  specifically  provided  herein,
shall be deemed to have been duly made or given when delivered by hand or mailed
first class,  postage prepaid, or, in the case of telegraphic or telexed notice,
when transmitted, answer back received, addressed as follows: if to a Guarantor,
at  the  address  set  forth  beneath  its  signature  hereto,  and  if  to  the
Administrative Agent, at the address for notices to the Administrative Agent set
forth in Section 19 of the Credit Agreement,  or at such address as either party
may designate in writing to the other.

         13. GOVERNING LAW;  CONSENT TO JURISDICTION.  THIS GUARANTY IS INTENDED
TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF  MASSACHUSETTS.  Each Guarantor
agrees that any suit for the  enforcement of this Guaranty may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the  nonexclusive  jurisdiction  of such court and to service of
process in any such suit being made upon such  Guarantor  by mail at the address
specified by reference in Section 12. Each Guarantor hereby waives any objection
that it may now or  hereafter  have to the  venue of any  such  suit or any such
court or that such suit was brought in an inconvenient court.

         14. WAIVER OF JURY TRIAL.  EACH GUARANTOR  HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH  RESPECT TO ANY ACTION OR CLAIM  ARISING  OUT OF ANY  DISPUTE IN
CONNECTION  WITH THIS  GUARANTY,  ANY  RIGHTS OR  OBLIGATIONS  HEREUNDER  OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR  OBLIGATIONS.  Except as prohibited by law,
each Guarantor  hereby waives any right which it may have to claim or recover in
any  litigation  referred to in the preceding  sentence any special,  exemplary,
punitive or consequential  damages or any damages other than, or in addition to,
actual  damages.  Each Guarantor (i) certifies  that neither the  Administrative
Agent  or  any  Lender  nor  any  representative,   agent  or  attorney  of  the
Administrative Agent or any Lender has represented, expressly or otherwise, that
the  Administrative  Agent or any Lender would not, in the event of  litigation,
seek to enforce the foregoing  waivers and (ii)  acknowledges  that, in entering
into  the  Credit   Agreement  and  the  other  Loan   Documents  to  which  the
Administrative  Agent or any Lender is a party, the Administrative Agent and the
Lenders are relying  upon,  among other things,  the waivers and  certifications
contained in this Section 14.

         15.  MISCELLANEOUS.  This Guaranty  constitutes the entire agreement of
each  Guarantor  with  respect to the matters set forth  herein.  The rights and
remedies  herein  provided  are  cumulative  and not  exclusive  of any remedies
provided by law or any other  agreement,  and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations.  The
invalidity  or  unenforceability  of any one or more  sections of this  Guaranty
shall not affect the validity or  enforceability  of its  remaining  provisions.
Captions are for the ease of reference  only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be  equally  applicable  to the  singular  and  plural  forms of the terms
defined.
<PAGE>

         16. CONTRIBUTION. To the extent any Guarantor makes a payment hereunder
in excess of the aggregate  amount of the benefit  received by such Guarantor in
respect of the  extensions  of credit under the Credit  Agreement  (the "Benefit
Amount"), then such Guarantor, after the payment in full, in cash, of all of the
Obligations,  shall be entitled to recover from each other Guarantor such excess
payment,  pro rata, in accordance  with the ratio of the Benefit Amount received
by each  such  other  Guarantor  to the total  Benefit  Amount  received  by all
Guarantors,  and the right to such  recovery  shall be deemed to be an asset and
property  of such  Guarantor  so  funding;  provided,  that all such  rights  to
recovery shall be  subordinated  and junior in right of payment to the final and
undefeasible payment in full in cash of all of the Obligations.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

                          (Signature Page to Guaranty)

         IN WITNESS  WHEREOF,  each  Guarantor  has caused  this  Guaranty to be
executed and delivered as of the date first above written.

                 QUAKER FABRIC CORPORATION
                 QUAKER TEXTILE CORPORATION

                 By:  /s/ Paul J. Kelly
                    ---------------------------------------------------------
                       Name:      Paul J. Kelly
                       Title:     Vice President Finance

                 Address:     941 Grinnell Street, Fall River, MA 02721

                 Telex:  ____________________________________________________

                 QUAKER FABRIC MEXICO, S.A. DE C.V.

                 By:  /s/ Paul J. Kelly
                    ---------------------------------------------------------
                       Name:      Paul J. Kelly
                       Title:     Vice President Finance

                 Address:     Avenida Urbina #41, Naucalpan de Juarez
                              Estado de Mexico, 53489

                 Telex:  ____________________________________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]