Document:

EXHIBIT 10.37

SCHEDULE 1 - LENDERS, COMMITMENT PERCENTAGES, LENDING OFFICES

                        LENDER       REVOLVING LOAN        REVOLVING LOAN
                                       COMMITMENT      COMMITMENT PERCENTAGE

Bank of America, N.A.                $12,500,000.00             50%
One Federal Street
Boston, MA 02110
Attn: Matthew T. O'Keefe

Wells Fargo Foothill, LLC             $6,250,000.00             25%
2450 Colorado Avenue
Suite 3000W
Santa Monica, CA 90404
Attn: Rina Shinoda

Merrill Lynch Capital,
a Division of Merrill Lynch           $6,250,000.00             25%
Business Financial Services Inc.
225 Liberty Street, 5th floor
New York, NY 10281
Attn: James Betz

                        TOTAL:       $25,000,000.00             100%

<PAGE>

SCHEDULE 1.1(A) MORTGAGED PROPERTIES

FEE MORTGAGES
1. 941 Grinnell Street,  Fall River,  Massachusetts  2. 1082 Davol Street,  Fall
River,  Massachusetts  3. 81 Ferry  Street,  Fall River,  Massachusetts  4. 1450
Brayton  Avenue,  Fall River,  Massachusetts  5. 387 Quarry Street,  Fall River,
Massachusetts  6. Godfrey Road,  Verona,  Mississippi  7. Bleachery  Road,  Fall
River, Massachusetts

LEASEHOLD MORTGAGES
1.       81 Commerce Drive, Fall River, Massachusetts

<PAGE>

SCHEDULE 10.20(A) LANDLORD WAIVERS

                                                       None.EXHIBIT 10.38

                 AMENDMENT AND REAFFIRMATION OF LOAN DOCUMENTS

         AMENDMENT AND REAFFIRMATION OF LOAN DOCUMENTS,  dated as of November 9,
2006 (the  "AMENDMENT"),  by and among (a)  QUAKER  FABRIC  CORPORATION  OF FALL
RIVER,  a  Massachusetts  corporation  (the  "BORROWER"),   (b)  QUAKER  TEXTILE
CORPORATION, a Massachusetts corporation,  QUAKER FABRIC MEXICO, S.A. DE C.V., a
Mexican  corporation  and QUAKER  FABRIC  CORPORATION,  a  Delaware  corporation
(collectively,  the "GUARANTORS", and each individually, a "GUARANTOR"), and (c)
BANK OF AMERICA, N.A., as administrative agent (the "ADMINISTRATIVE  AGENT") for
itself and such other  lending  institutions  (the  "LENDERS")  which are or may
become parties to that certain Amended and Restated  Revolving Credit Agreement,
dated as of the November 9, 2006 (as amended, modified, supplemented or restated
and in  effect  from  time to time,  the  "CREDIT  AGREEMENT")  by and among the
Borrower, Quaker Fabric Corporation,  the Lenders, the Administrative Agent, and
Bank  of  America,  N.A.,  as  Issuing  Bank  and  Cash  Management  Bank.  Each
capitalized  term used herein  without  definition  shall have the same  meaning
herein as in the Credit Agreement.

         WHEREAS, the Borrower and Quaker Fabric Corporation,, entered into that
certain  Revolving  Credit and Term Loan Agreement  dated as of May 18, 2005 (as
amended,  the "EXISTING CREDIT  AGREEMENT"),  among the Borrower,  Quaker Fabric
Corporation,   the  lenders  named  therein,  and  Bank  of  America,  N.A.,  as
administrative agent ; and

         WHEREAS, the Borrower,  Quaker Fabric Corporation,  the Lenders and the
Administrative  Agent  have  agreed to amend and  restate  the  Existing  Credit
Agreement in its entirety pursuant to the Credit Agreement; and

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

         WHEREAS,   the   Borrower,   the   Guarantors,   the  Lenders  and  the
Administrative  Agent are  parties  to the Loan  Documents  (as  defined  in the
Existing Credit Agreement); and

         WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement  that the  Borrower  and the  Guarantors  enter  into  this  Amendment
amending and reaffirming the terms of the Loan Documents;

         NOW,  THEREFORE,  in consideration of the foregoing  premises,  and for
other good and valuable consideration,  the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:

         1. CREDIT  AGREEMENT  REFERENCES.  The parties hereto  acknowledge  and
agree that each reference to the Existing Credit Agreement,  however so defined,
in the Loan Documents (other than the Credit  Agreement) from and after the date
hereof shall mean the Existing Credit Agreement as amended and restated pursuant
to the Credit  Agreement and each of the Loan  Documents  (other than the Credit
Agreement)  is hereby  amended by (a)  substituting  a  reference  to the Credit
Agreement as herein  defined in place of each  reference to the Existing  Credit
Agreement (whether referred to by the full name of the Existing Credit Agreement
or by any other name which refers thereto by definition);  and (b)  substituting
for the definition of each capitalized term defined by reference to the Existing
Credit Agreement the definition of such capitalized term set forth in the Credit
Agreement,   including   without   limitation   the   definition   of  the  term
"OBLIGATIONS".
<PAGE>

         2. AMENDMENTS TO SECURITY DOCUMENTS. Each of the Security Documents are
hereby amended by adding the following language at the end of each such Security
Document:  "the representations,  warranties and covenants of parties hereunder,
and the rights and remedies of the Administrative  Agent hereunder,  are subject
to the provisions of the Intercreditor Agreement."

         3. CONTINUED VALIDITY OF LOAN DOCUMENTS. Except as specifically amended
by this  Amendment,  the Loan  Documents  (as  amended  hereby and by the Credit
Agreement)  shall remain in full force and effect,  and each of the Borrower and
the Guarantors listed as signatories  hereto reaffirms the continued validity of
the Loan  Documents (as amended  hereby and by the Credit  Agreement) and agrees
and confirms that the  Obligations  are secured under and in accordance with the
Security  Documents.  Each of the Loan  Documents (as amended  hereby and by the
Credit  Agreement)  and this  Amendment  shall be read and construed as a single
agreement. All references in each of the Loan Documents or any related agreement
or instrument to the Loan Documents  shall  hereafter  refer to each of the Loan
Documents as amended hereby.

         4.  REPRESENTATIONS  AND  WARRANTIES.  Each  of the  Borrower  and  the
Guarantors  represents and warrants that all the  representations and warranties
as set forth in each of the Loan  Documents (as amended hereby and by the Credit
Agreement)  are true and correct in all material  respects on and as of the date
hereof. All such  representations  and warranties are hereby ratified,  affirmed
and incorporated  herein by reference,  with the same force and effect as though
set forth herein in their entirety.

         5.  DEFINITIONS.  Each  capitalized  term used herein without  specific
definition shall have the same meaning herein as in the Credit Agreement.

         6. NO WAIVER.  Nothing  contained  herein shall constitute a waiver of,
impair or otherwise affect any Obligations, any other obligation of the Borrower
or the  Guarantors,  or any  right of the  Administrative  Agent or any  Lenders
consequent thereon.

         7.  COUNTERPARTS.  This  Amendment  may be  executed  in  one  or  more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.

         8. GOVERNING LAW. THIS AMENDMENT 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 (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS
OR CHOICE OF LAWS).

         9. EFFECTIVENESS OF AMENDMENT. This Amendment shall become effective as
of the date hereof upon receipt by the  Administrative  Agent of counterparts of
this Amendment duly executed by each of the Borrower,  the  Guarantors,  and the
Administrative  Agent and the  occurrence  of the Closing  Date under the Credit
Agreement.

                                       2

<PAGE>

         Signature Page to Amendment and Reaffirmation of Loan Documents
BUSDOCS/1591205.4
         IN WITNESS  WHEREOF,  the parties hereto have caused this Amendment and
Reaffirmation of Loan Documents to be executed by their duly authorized officers
as a sealed instrument as of the date first set forth above.

                             QUAKER FABRIC CORPORATION OF FALL RIVER

                             By:_________________________________
                                Name:
                                Title:

                             QUAKER TEXTILE CORPORATION

                             By:_________________________________
                                  Name:
                                  Title:

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

                             By:_________________________________
                                Name:
                                Title:

                             QUAKER FABRIC CORPORATION

                             By:_________________________________
                                Name:
                                Title:

                                       3
<PAGE>

         Signature Page to Amendment and Reaffirmation of Loan Documents
BUSDOCS/1591205.4

                              BANK OF AMERICA, N.A.,

                              By:_________________________________
                                 Name:
                                 Title:

                                       4EXHIBIT 10.39

                        ENVIRONMENTAL INDEMNITY AGREEMENT

         THIS ENVIRONMENTAL  INDEMNITY AGREEMENT (this "AGREEMENT"),  made as of
November 9, 2006,  Quaker  Fabric  Corporation  of Fall River,  a  Massachusetts
corporation  (the  "BORROWER"),  Quaker  Textile  Corporation,  a  Massachusetts
corporation  ("QUAKER  TEXTILE"),  Quaker Fabric Mexico,  S.A. de C.V., a Mexico
corporation  ("QUAKER  MEXICO"),  and  Quaker  Fabric  Corporation,  a  Delaware
corporation  (the "PARENT",  and together with Quaker Textile and Quaker Mexico,
the "GUARANTORS")  (each of the Borrower and Guarantors being sometimes referred
to herein as an "INDEMNITOR" and collectively, as the "INDEMNITORS"), to Bank of
America,  N.A.,  as  Administrative  Agent (as  defined in the Credit  Agreement
referred  to  below)  and the  lenders  from  time to time  party to the  Credit
Agreement  (the  Administrative  Agent  and the  Lenders,  together  with  their
officers, directors, employees,  shareholders,  members, successors and assigns,
the "INDEMNITEES").

                                    RECITALS

         WHEREAS,  Indemnitor  is the owner and/or  lessee of the Real  Property
described on EXHIBIT A attached  hereto,  together with all  improvements  dated
thereon (the "REAL  PROPERTY") and has the exclusive  rights to manage,  control
and operate the Real Property;

         WHEREAS, pursuant to that certain Amended and Restated Revolving Credit
Agreement,  dated as of the date hereof, by and among the Borrower,  the Parent,
the Administrative Agent, and the Lenders (as amended, modified and supplemented
and in effect from time to time, the "CREDIT  AGREEMENT",  all capitalized terms
used herein without  definitions shall have the respective  meanings ascribed to
such  terms in the  Credit  Agreement),  at the  request  of the  Borrower,  the
Indemnitees agreed to make loans (the "REVOLVING LOANS") to the Borrower,  which
Revolving Loans are secured,  in part, by those certain  mortgages,  dated on or
prior to the date hereof,  by the Borrower to the  Indemnitees  encumbering  the
Real Property (as the same may be amended,  modified,  supplemented  or restated
and in effect from time to time, collectively, the "SECURITY INSTRUMENTS") ;

         WHEREAS, the Borrower has disclosed to the Indemnitees the existence of
certain Environmental Conditions at the Real Property; and

         WHEREAS,  the Lenders are unwilling to make Revolving  Loans unless the
Indemnitors   indemnify  the  Indemnitees   against  liabilities  arising  under
Environmental  Laws (as herein  defined),  relating to those  disclosed  and any
undisclosed Environmental Conditions at the Real Property.

         NOW,  THEREFORE,  in consideration of the making of the Revolving Loans
by the Lenders and the covenants, agreements, representations and warranties set
forth in this Agreement and the Credit  Agreement,  the parties hereby covenant,
agree, represent and warrant as follows:

         1. DEFINED TERMS.  Unless the context otherwise  requires,  capitalized
terms used but not  otherwise  defined  herein shall have the meanings  provided
therefore  in the  Credit  Agreement,  and the  following  terms  shall have the
following meanings:
<PAGE>

         "ENVIRONMENTAL   CLAIM"   means  any   notice,   notification,   claim,
administrative, regulatory or judicial action, suit, judgment, demand, decree or
other communication by any Person or Governmental Authority requiring,  alleging
or asserting  liability  with respect to the  Indemnitors  or the Real  Property
pursuant   to   Environmental   Laws,   whether   for   damages,   contribution,
indemnification,  cost recovery, compensation, injunctive relief, investigatory,
assessment,  monitoring, response, remedial or cleanup costs, damages to natural
resources,  real property damage, personal injuries,  fines or penalties arising
out of,  based on or  resulting  from or related to (a) the  presence or alleged
presence,  Use,  Release  or  threatened  Release  of any  Hazardous  Substances
originating,  at or from, migrating to or from or otherwise affecting,  the Real
Property  or  any  part  thereof,  (b)  any  fact,  circumstance,  condition  or
occurrence  forming the basis of any  violation,  or alleged  violation,  of any
Environmental Law by the Indemnitors,  the Real Property or any part thereof, or
(c) any alleged injury or threat of injury to health,  safety or the environment
by the Indemnitors or relating the Real Property or any part thereof.

         "ENVIRONMENTAL   CONDITIONS"  means  any  environmental  condition  (a)
constituting  or which with the passage of time or lack of Remediation  would or
would likely  constitute a violation of  Environmental  Laws,  including but not
limited to the presence of any Hazardous  Substances  requiring reporting and/or
the  performance of response  actions under  Massachusetts  General Laws Chapter
21E, or (b) that  requires  reporting,  investigation,  assessment,  monitoring,
remediation or other response actions or would allow any Governmental  Authority
to record a lien or  encumbrance  in the land  records  with respect to the Real
Property or an Environmental Claim.  Submission to the Massachusetts  Department
of Environmental  Protection of a Class A or B Response Action Outcome Statement
by a Licensed  Site  Professional  (as defined in Mass.  Gen. L. ch. 21E,  ss.2)
pursuant to, and in compliance with, the Massachusetts Contingency Plan (310 CMR
40.0000)  shall  be  deemed  confirmation  that any  Environmental  Condition(s)
addressed in such Response Action Outcome Statement no longer exists.

         "ENVIRONMENTAL LAWS" means any judgment,  decree,  order, law, license,
rule,  permit or  regulation  pertaining  to  environmental  matters,  including
without limitation,  those arising under the Resource  Conservation and Recovery
Act  ("RCRA"),  the  Comprehensive  Environmental  Response,   Compensation  and
Liability  Act of 1980 as  amended  ("CERCLA"),  the  Superfund  Amendments  and
Reauthorization  Act of 1986 ("SARA"),  the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic  Substances  Control  Act, or any other  state,  local,
foreign or common law,  statute,  regulation,  ordinance,  order,  decree or any
other binding  requirement  of any  Governmental  Authority  relating to health,
safety or the environment.
<PAGE>

         "FORECLOSURE DATE" has the meaning provided in SECTION 2(E) hereof.

         "HAZARDOUS  SUBSTANCE"  means any  hazardous  waste,  as  defined by 42
U.S.C. Section 6903(5), any hazardous substances as defined by 42 U.S.C. Section
9601(14),  any pollutant or contaminant as defined by 42 U.S.C. Section 9601(33)
and any toxic  substances,  oil or  hazardous  materials  or other  chemicals or
substances regulated by any Environmental Laws

         "KNOWN  ENVIRONMENTAL  CONDITIONS" has the meaning  provided in SECTION
2(D) hereof.

         "LOSSES" has the meaning provided in SECTION 2(A) hereof.

         "PERSON" means any individual,  corporation, limited liability company,
partnership,  joint venture, estate, trust,  unincorporated  association, or any
other entity, any federal,  state, county or municipal government or any bureau,
department or agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.

         "RELEASE" means any past or present release, spill, emission,  leaking,
pumping,  injecting,  pouring, emptying,  escaping,  dumping, deposit, disposal,
discharge, dispersal, leaching, migration into the indoor or outdoor environment
of  Hazardous  Substances,   including,  without  limitation,  the  movement  of
Hazardous Substances through ambient air, soil, surface water, sediments, ground
water, wetlands, land or subsurface strata.

         "REMEDIATION" means the investigation, assessment, monitoring, removal,
abatement, treatment, risk assessment, institutional controls, deed restrictions
and/or  activity and use  limitations,  containment,  payment of  compliance  or
oversight fees, and all other activities  required under  Environmental  Laws to
respond to an Environmental Condition.

         "USE" means, with respect to any Hazardous  Substance,  the generation,
manufacture,  processing,  distribution,  handling, use, treatment, recycling or
storage  of such  Hazardous  Substances  or  transportation  to or from the Real
Property by any Person of such Hazardous Substances.

         2. INDEMNIFICATION.

                  (a) The  Indemnitors  agree to  indemnify,  reimburse,  defend
(with counsel  reasonably  satisfactory to  Indemnitees),  and hold harmless the
Indemnitees from and against all demands,  claims,  actions or causes of action,
assessments,  losses,  damages,  liabilities,  interest,  reasonable  costs  and
expenses,  including,  without  limitation,   interest,  penalties,   reasonable
attorneys' fees, reasonable disbursements and expenses,  diminution in the value
of  the  Real  Property   (subject  to  subsection  (e)  below)  and  reasonable
consultants' and expert witness fees, disbursements,  fines, penalties, fees and
expenses, including costs of reporting,  investigation,  assessment, monitoring,
remediation or other response  actions  (collectively,  the "LOSSES"),  asserted
against,  resulting  to,  imposed  on, or incurred  by  Indemnitees  directly or
indirectly in connection with any of the following:

                           (i) any events,  circumstances,  or conditions  which
                  relate  to,  form or are  alleged  to form  the  basis  for an
                  Environmental Claim;
<PAGE>

                           (ii)  the  presence,   Use,  Release,  or  threatened
                  Release of Hazardous  Substances  at, on, in,  under,  from or
                  otherwise affecting the Real Property;

                           (iii)  any   violation   or  alleged   violation   of
                  Environmental  Laws by the  Indemnitors or with respect to the
                  Real Property, or any act or omission causing an Environmental
                  Condition;

                           (iv)  the  material  breach  of  any  representation,
                  warranty  or  covenant  set  forth in  Sections  6.19,  7.5.6,
                  7.15.4,  8.9,  and  16 of the  Credit  Agreement  relating  to
                  Environmental Claims; or

                           (v) any  reasonable  costs  and  expenses,  including
                  reasonable  attorneys' fees and disbursements  incurred by any
                  Indemnitee  in (x)  exercising  any  right,  power  or  remedy
                  conferred by this Agreement, or (y) enforcing the Indemnitors'
                  obligations pursuant hereto.

                  (b) The indemnity  provided in this  Agreement is not intended
to be and shall not be  included  in any  exculpation  of the  Indemnitors  from
personal  liability provided in the Credit Agreement or in any of the other Loan
Documents.  Nothing in this Agreement shall be deemed to deprive the Indemnitees
of any  rights  or  remedies  provided  to the  Indemnitees  elsewhere  in  this
Agreement or in the Loan  Documents or otherwise  available to them under law or
at equity.

                  (c) The Indemnitors waive and release the Indemnitees from any
rights or defenses the  Indemnitors  may have under common law or  Environmental
Laws for any  liability  arising from or  resulting  from the  presence,  Use or
Release of Hazardous  Substances,  except with respect to an  Indemnitee  to the
extent  directly  and  solely  caused  by that  Indemnitee's  gross  negligence,
criminal acts, fraud or willful misconduct.

                  (d) Indemnitors acknowledge that Environmental Conditions have
been  identified  at or with respect to certain Real  Properties as set forth on
the Environmental Report (collectively, the "KNOWN ENVIRONMENTAL CONDITIONS").

         In addition to and without limiting any of the Indemnitors' obligations
hereunder,  Indemnitors shall undertake a Remediation of the Known Environmental
Conditions  to the extent  required by  Environmental  Laws.  Submission  to the
Massachusetts  Department of Environmental Protection of a Class A or B Response
Action Outcome  Statement by a Licensed Site  Professional  (as defined in Mass.
Gen. L. ch. 21E,  ss.2) pursuant to, and in compliance  with, the  Massachusetts
Contingency  Plan  (310 CMR  40.0000)  shall  be  deemed  confirmation  that any
Environmental  Condition(s)  addressed in such Response Action Outcome Statement
no longer exists for the purposes of this Section 2(d).
<PAGE>

                  (e) With  respect to any Losses  which are  attributable  to a
diminution in value of the Real Property,  such Losses shall:  (i) be calculated
based  upon  the  value  of the  Real  Property  determined  as of the  date  of
foreclosure of the  applicable  Security  Instrument,  exercise of power of sale
under the Security  Instrument,  or conveyance  in lieu thereof (such date,  the
"Foreclosure Date"), and (ii) in no event be greater than the excess, if any, of
(x) the amount of the unpaid principal balance of the Revolving Loans,  together
with unpaid interest thereon (including  interest accruing at the Default Rate),
fees and prepayment  premiums (if any), and all other costs,  amounts,  fees and
expenses  (including  reasonable  attorney's  fees) due and owing under the Loan
Documents on the  Foreclosure  Date,  over (y) the value of the Real Property on
the Foreclosure Date; PROVIDED, that if an Environmental Claim or Release is not
existing or known on the Foreclosure  Date (but only comes into existence and/or
becomes  known  thereafter),  then  the  value  of  the  Real  Property  on  the
Foreclosure Date shall be deemed to have not been affected by such Environmental
Claim or Release.

         3. PAYMENT.  All payments due to the  Indemnitees  under this Agreement
shall be payable to the  Indemnitees  within ten (10) days after written  demand
therefor, and shall bear interest at the Default Rate from the date such payment
is due until the date of payment.

         4.  GOVERNING  LAW. The parties agree that this Agreement is a contract
under  the  laws  of the  Commonwealth  of  Massachusetts  (excluding  the  laws
applicable  to  conflicts of law or choice of law) and the  obligations  arising
hereunder  shall be governed by, and construed in accordance  with,  the laws of
the Commonwealth of Massachusetts and any applicable law of the United States of
America.

         5. COURT PROCEEDING.  Any legal suit, action or proceeding  against the
Indemnitees or Indemnitors arising out of or relating to this Agreement shall be
instituted in any federal or state court in the  Commonwealth of  Massachusetts,
and the Indemnitors  waive any objection which they may now or hereafter have to
the laying of venue of any such suit, action or proceeding,  and the Indemnitors
hereby  irrevocably  submit to the  jurisdiction  of any such court in any suit,
action or proceeding.

         6.  MODIFICATION,  WAIVER  IN  WRITING.  No  modification,   amendment,
extension,  discharge,  termination or waiver of any provision of this Agreement
or consent to any  departure by the  Indemnitors  therefrom,  shall be effective
unless  the  same  shall  be in a  writing  signed  by the  party  against  whom
enforcement is sought, and shall be effective only in the specific instance, and
for the purpose, for which given. Except as otherwise expressly provided herein,
no notice to or demand on the  Indemnitors  shall entitle the Indemnitors to any
other or future notice or demand in the same, similar or other circumstances.

         7. DELAY NOT A WAIVER. Neither any failure nor any delay on the part of
the  Indemnitees  to  enforce  the  demand  or strict  performance  of any term,
condition,  covenant  or  agreement  or  exercise  any right,  power,  remedy or
privilege hereunder,  shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise,  or the
exercise of any other right, power, remedy or privilege. In particular,  and not
by way of  limitation,  by  accepting  payment  after the due date of any amount
payable under this Agreement, the Indemnitees shall not be deemed to have waived
any right either to require  prompt  payment  when due of all other  amounts due
under this  Agreement,  or to  declare a default  for  failure to effect  prompt
payment of any such other amount.
<PAGE>

         8. NOTICES. All notices,  consents,  approvals and requests required or
permitted  hereunder  shall be given in writing and shall be  effective  for all
purposes if hand delivered or sent by (a) hand delivery, with proof of attempted
delivery,  (b) certified or registered United States mail, postage prepaid,  (c)
expedited  prepaid delivery  service,  either commercial or United States Postal
Service, with proof of attempted delivery, or (d) by telecopier (with answerback
acknowledged) provided that such telecopied notice must also be delivered by one
of the means set forth in (a), (b) or (c) above, addressed

          If to Indemnitees:        Bank of America, N.A.,
                                    as Administrative Agent
                                    1 Federal Street
                                    Boston, MA 02110
                                    Attn:  Matthew T. O'Keefe
                                    Telecopy No.: (617) 654-1167

          If to Indemnitors:        Quaker Fabric Corporation of Fall River
                                    941 Grinnell Street
                                     Fall River, MA 02721
                                    Attn:  Chief Financial Officer
                                    Telecopy No.: (508) 678-2656

         or at such other address and Person as shall be designated from time to
time by any party hereto,  as the case may be, in a written  notice to the other
parties  hereto in the manner  provided for in this SECTION 8. A notice shall be
deemed  to have been  given:  (i) in the case of hand  delivery,  at the time of
delivery;  (ii) in the case of registered or certified  mail,  when delivered or
the first  attempted  delivery on a Business Day; (iii) in the case of expedited
prepaid delivery upon the first attempted delivery on a Business Day; or (iv) in
the case of telecopier,  upon receipt of answerback confirmation,  provided that
such telecopied notice was also delivered as required in this SECTION 8. A party
receiving  a notice  who does not comply  with the  technical  requirements  for
notice  under this SECTION 8 may elect to waive any  deficiencies  and treat the
notice as having been properly given.

         9. TRIAL BY JURY. EACH OF THE INDEMNITORS AND THE  INDEMNITEES,  TO THE
FULLEST EXTENT THAT IT MAY LAWFULLY DO SO, WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING  TO  ENFORCE  OR  DEFEND  ANY  RIGHTS  UNDER  THIS  AGREEMENT  OR ANY
INSTRUMENT,  DOCUMENT OR AGREEMENT  DELIVERED IN CONNECTION  HEREWITH AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
<PAGE>

         10. HEADING. The Section headings in this Agreement are included herein
for  convenience  of  reference  only and  shall not  constitute  a part of this
Agreement for any other purpose.

         11.  ASSIGNMENT.  The  Indemnitees  shall have the right to assign this
Agreement and the  obligations  hereunder to any Person who is from time to time
the  holder  of the  Revolving  Loans,  but not  otherwise.  All  references  to
"Indemnitees" hereunder shall be deemed to include the successors and assigns of
the Indemnitees, including any trustee or servicer.

         12. SEVERABILITY.  Wherever possible,  each provision of this Agreement
shall  be  interpreted  in  such  manner  as to be  effective  and  valid  under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under  applicable law, such provision shall be ineffective to the extent
of such  prohibition or invalidity,  without  invalidating the remainder of such
provision or the remaining provisions of this Agreement.

         13.  HEADING AND RECITALS.  The  information  set forth in the recitals
hereof are hereby  incorporated herein as a part of this Agreement with the same
effect as if set forth in the body hereof.

         14. ESTOPPEL  CERTIFICATES.  Indemnitors  and  Indemnitees  each hereby
agree at any  time,  but not more  than one time each  calendar  year  (unless a
Default or Event of Default exists or is continuing,  in which case, as required
by the  Administrative  Agent in its sole  discretion),  and upon not less  than
thirty (30) days prior written  notice by Indemnitor or  Indemnitees to execute,
acknowledge and deliver to the party specified in such notice,  a statement,  in
writing,  certifying  that this  Agreement is  unmodified  and in full force and
effect (or if there have been modifications,  that the same, as modified,  is in
full force and effect and stating the modifications hereto), and stating whether
or not, to the best knowledge of such certifying party,  there exists any matter
giving rise to a claim under SECTION 2, and, if so, specifying each such matter.

         15.  WAIVER.  Indemnitors  hereby waive each of the  following,  to the
fullest extent allowed by applicable law:

                  (a)  laches  as  a  defense  to  any  action  brought  by  any
Indemnitee against the Indemnitors;

                  (b) any defense based upon:

                           (i) the  unenforceability or invalidity of all or any
                  part of any security or other indemnity for the obligations of
                  the  Indemnitors  hereunder or the lack of any  perfection  or
                  failure of priority of any security for the obligations of the
                  Indemnitors hereunder; or

                           (ii) any act or omission of  Indemnitor  or any other
                  Person that directly or indirectly results in the discharge or
                  release of the Indemnitors or any other Person or any security
                  for the obligations of the Indemnitors  hereunder,  other than
                  the gross  negligence,  willful  misconduct,  criminal acts or
                  fraud of the  Indemnitees,  any deed of trust  trustee  or any
                  other Indemnitee; or

                                       5
<PAGE>

                           (iii)  any  disability  or any other  defense  of any
                  Person  with  respect to its  obligations  hereunder,  whether
                  consensual  or arising by operation of law or any  bankruptcy,
                  insolvency or  debtor-relief  proceeding,  or from any similar
                  cause;

                  (c) any right  (whether now or hereafter  existing) to require
any Indemnitee,  as a condition to the enforcement of this Agreement, to proceed
against  any other  indemnitor,  guarantor  or any other  Person,  or to proceed
against  or  exhaust  any  security  for  the  obligations  of  the  Indemnitors
hereunder;

                  (d)  all  suretyship  defenses  and  rights  of  every  nature
otherwise available under any requirement of law;

                  (e) all  defenses  arising  as a  result  of the  exercise  of
nonjudicial or judicial  remedies against the Indemnitors,  or any other Person,
or any security for the obligations of the Indemnitors hereunder, or arising out
of  any  impairment  of  the   Indemnitors'  or  any  other  Person's  right  of
subrogation,  reimbursement or contribution against the Indemnitors or any other
Person,  or any security for the obligations of the  Indemnitors  hereunder that
may arise from the exercise of any such remedies;

                  (f) without  limiting the  generality  of the foregoing or any
other  provision  hereof,  any and all benefits  under any  requirement  of Law,
except any rights of subrogation  which the Indemnitors may have,  provided that
the  indemnity  provided for  hereunder  shall  neither be  contingent  upon the
existence of any such rights of subrogation or subject to any claims or defenses
whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights including, without limitation, any claims
that such  subrogation  rights  were  abrogated  by any acts of any  Indemnitee,
provided  that the  Indemnitors  agree to postpone any  subrogation  rights with
respect to any Collateral securing the Revolving Loans until the Revolving Loans
shall have been paid in full and the commitments of the Lenders under the Credit
Agreement have been terminated.

         16.  SURVIVAL.  The indemnity  provided in this Agreement shall survive
the  repayment  in full of the  Obligations,  or transfer of title to any of the
Real  Property  to the  Indemnitees  or other  transferee  (to the  extent  such
transferee is not an Affiliate of  Indemnitors),  in  foreclosure  or otherwise.
Notwithstanding  anything contained herein or in any of the other Loan Documents
to the contrary, the Indemnitors will not be liable under this Agreement for any
Environmental  Claims which give rise to liability under SECTION 2(A) where such
event first occurs  following the  effective  date of a transfer of title of any
parcel of Real Property to the  Indemnitees  or other  transferee (to the extent
such  transferee  is  not  an  Affiliate  of  Indemnitors),  in  foreclosure  or
otherwise.

         17. TIME OF THE  ESSENCE.  Time is of the essence  with respect to each
and every  covenant,  agreement  and  obligation of the  Indemnitors  under this
Agreement.

<PAGE>

         18. LIABILITY.

                  (a) The  liability  of the  Indemnitors  under this  Agreement
shall in no way be limited or impaired by (i) any  amendment,  modification,  or
restatement of or supplement to the Loan Documents,  (ii) any extensions of time
for or acceleration  or alteration of payment or performance  required by any of
the Loan  Documents or any waiver of such payment or  performance,  or (iii) the
release  or  substitution  in  whole  or  in  part,  of  any  security  for  the
Obligations;  and in any of such cases,  whether  with or without  notice to the
Indemnitors and with or without consideration.

                  (b)  The   obligations  of  the   Indemnitors   hereunder  are
independent  of the  obligations  of  any  other  Person,  including  any  other
indemnitor,  and  any  Indemnitee  may  enforce  any  of  its  rights  hereunder
independently of any other right or remedy it or any other Indemnitee may at any
time hold with  respect to the  obligations  indemnified  against  hereby or any
other security or other indemnity for such  obligations.  The obligations of the
Indemnitors  set forth herein  constitute  the full recourse  obligations of the
Indemnitors  enforceable  against the  Indemnitors to the full extent of all its
assets and properties,  notwithstanding  any provisions in the Loan Documents to
the contrary.

         19.  COUNTERPARTS.  This  Agreement  may be  executed  in any number of
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.

                       [SIGNATURES ON THE FOLLOWING PAGE]

<PAGE>

                  IN WITNESS WHEREOF,  the parties have caused this Agreement to
be duly executed by their duly authorized representatives, all as of the day and
year first above written.

                             INDEMNITORS:

                             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>

                              ON BEHALF OF THE INDEMNITEES:

                              BANK OF AMERICA, N.A.,
                              As Administrative Agent

                              By:
                                 -----------------------------------------
                              Name:
                              Title:

<PAGE>

                                    EXHIBIT A

                           SCHEDULE OF REAL PROPERTIES

1. 941 Grinnell Street, Fall River, MA
2. 1092 Davol Street, Fall River, MA
3. 81 Ferry Street, Fall River, MA
4. 1450 Brayton Ave, Fall River, MA
5. 387 Quarry Street, Fall River, MA
6. Godfrey Road, Verona, MS
7. 994 Jefferson Street (Bleachery Pond), Fall River, MA
8. 81 Commerce Drive, Fall River, MA

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