Document:

EMPLOYMENT AGREEMENT
                              --------------------

                  THIS EMPLOYMENT AGREEMENT ("Agreement") is made and shall be
effective as of December 4, 2006 between TEMECULA VALLEY BANK, a California
state-chartered bank ("Bank") and DONALD A. PITCHER ("Executive").

                                  R E C I T A L
                                  - - - - - - -

                  Bank desires that Executive continue to be employed as
Executive Vice President/Chief Financial Officer of Bank and Executive desires
to continue to be so employed pursuant to this Agreement, subject to its terms
and conditions.

                  NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
parties agree as follows:

1.   TERM OF EMPLOYMENT.

     1.1. Term. Executive has been employed by Bank since 1996 without a written
employment  agreement  and he and  Bank  wish  to  continue  the  employment  of
Executive  with Bank,  for the period  ("Term")  commencing  on the date of this
Agreement  ("Commencement  Date"),  and  terminating  on such date and upon such
terms as provided for in Section 4 hereof.

2.   DUTIES OF EXECUTIVE.

     2.1.  Duties.   Executive  shall  perform  the  duties  of  Executive  Vice
President/Chief Financial Officer of Bank, as assigned by Bank's Chief Executive
Officer,  subject to the powers by law vested in the Board of  Directors of Bank
and in Bank's Shareholder. During the Term, Executive shall perform the services
herein  contemplated  to be  performed by  Executive  with due care  faithfully,
diligently,  to the  best of  Executive's  ability  and in  compliance  with all
applicable laws and Bank's Articles of Incorporation and Bylaws.

     2.2.  Exclusivity.  Executive shall devote substantially all of Executive's
productive time,  ability and attention to the business of Bank during the Term.
Executive  shall not directly or  indirectly  render any services of a business,
commercial or professional  nature to any other person,  firm or corporation for
compensation without prior consent evidenced by a resolution duly adopted by the
Board of Directors of Bank, or the Executive Committee thereof.  Notwithstanding
the  foregoing,  Executive may (i) make  investments  of a passive nature in any
business or venture;  and (ii) serve in any  capacity  in civic,  charitable  or
social organizations, provided, however, that such investments or services shall
not be in competition, directly or indirectly, in any manner with Bank.

3.   COMPENSATION AND BENEFITS.

     3.1. Salary. For Executive's  services hereunder,  Bank shall pay, or cause
to be paid, as annual gross base salary,  to Executive  $170,000 during the Term
("Base  Salary"),  beginning  with  the  Commencement  Date,  payable  in  equal
installments  in accordance with Bank's normal payroll periods as in effect from
time to time. The Executive  Compensation  Committee  shall , from time to time,
and at least once each  calendar  year,  consider and  recommend to the Board of
Directors for its consideration the grant of such additional  "merit" increases,
if any, in, the Base Salary as are determined in accordance with the policies of
the Bank..

     3.2. Bonus.  For each year within the Term,  Executive shall be entitled to
an annual Incentive Bonus, as considered by the Executive Compensation Committee

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and  reviewed and  approved by the Board of  Directors  in  accordance  with the
policies of the Bank and if the Threshold  Test is met. The Threshold Test shall
be deemed to have been met if the latest report of supervisory activity relative
to Bank issued by the Bank's  principal bank  regulators rate Bank operations no
less than satisfactory.

     3.3.  Vacation.  Executive shall be entitled to vacation leave each year of
the Term in accordance with Bank policy. Executive shall be entitled to vacation
pay in lieu of vacation, in accordance with Bank policy.

     3.4. Equipment.  Bank shall provide for Executive's use an automobile,  the
selection  of which  shall be  within  the  discretion  of the  Chief  Executive
Officer.  Bank  shall  pay all the  expenses  (including,  but not  limited  to,
maintenance,  fuel,  insurance,  registration) related to such automobile during
the  Term.  Bank  shall  also  provide  Executive  with  a  cellular  phone  for
Executive's  reasonable  use in the  performance of his duties  hereunder.  Bank
shall pay all  reasonable  expenses in connection  with the business use of such
cellular phone.

     3.5. Group Medical and Other  Benefits.  Bank shall provide for Executive's
participation  in the medical and other benefit plans offered to other similarly
titled employees of Bank.

     3.6.  Sick Leave.  Executive  shall be entitled to sick leave in accordance
with Bank's  personnel  policy.  Accrued sick leave may not be carried over from
prior periods and Executive shall not be entitled to be paid in lieu thereof.

     3.7. Salary  Continuation  Agreement.  Executive's salary continuation plan
that  provides  for  payments  of  $80,000  per year for 15 years at age 65 (the
"Minimum  Amount") shall  continue to be maintained by the Bank for  Executive's
benefit,  or any  other  plan so long as:  (a) such  other  plan or  arrangement
provides for payments according to the salary  continuation  payment schedule of
Executive's  currently in effect salary  continuation  plan document,  as agreed
upon by Bank  and  Executive;  and (b) so long  as any  such  plan  document  or
arrangement meets or exceeds the Minimum Amount.

4.   TERMINATION.

     4.1.  Termination With Cause.  Except as otherwise  provided  herein,  this
Agreement  may be terminated by Bank, at Bank's option with notice to Executive,
upon the occurrence of any of the following events:

          (a) A material  breach by  Executive  of any of the  express  terms or
          provisions of this Agreement;

          (b) Executive is charged with illegal  activity or pleads guilty to or
          nolo contendere to, illegal activity;

          (c)  Executive  has committed any illegal or dishonest act which would
          cause  termination of coverage under Bank's Bankers Blanket Bond as to
          Executive or termination of coverage as to Bank as a whole;

          (d)  Executive  fails to perform  or  neglects  Executive's  duties or
          commits an act of malfeasance or misfeasance in connection therewith;

          (e)  Executive  becomes  permanently  disabled,  as determined in good
          faith by the Board of Directors;

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          (f)  Any  bank  regulatory   agency  having   jurisdiction,   requests
          Executive's  dismissal or removal,  issues a notice of  suspension  or
          removal, finally removes, or suspends Executive from office;

          (g) Any supervisory or regulatory  authority having jurisdiction takes
          possession of the property and business of Bank; or

          (h) The death of the Executive.

     4.2.  Termination  Without  Cause.  During the Term,  subject to provisions
specifically  intended to survive termination,  this Agreement may be terminated
by either party without cause upon written notice to the other.

     4.3. Compensation Upon Termination. If Executive's employment is terminated
by Bank pursuant to Section 4.1 above, or by Executive  pursuant to Section 4.2,
Executive  shall then only be entitled  to receive  his Base Salary  through the
effective date of such termination.  If Executive's  employment is terminated by
Bank  pursuant to Section  4.2 or within six months  before or after a Change of
Control, as defined in Section 4.4, subject to any limitations on payments under
applicable  federal or state law, Executive shall be entitled to the same amount
as if the  termination  had been  pursuant to Section 4.1 plus:  (i) medical and
dental  benefits for twelve months after  termination;  such  benefits  shall be
comparable to the benefits Executive enjoyed on the date of termination and (ii)
an amount  equal to the amount of the annual  bonus most  recently  received  by
Executive  ("Bonus  Amount");  and (iii) a  "Severance  Amount"  equal to twelve
months of Base Salary (as in effect immediately prior to termination). The Bonus
Amount and the Severance  Amount shall be payable over twelve  months,  in equal
installments, in accordance with the Bank's normal payroll practices.

     4.4.  Vesting  of  Options  Upon  Change  of  Control.  Executive's  option
agreements  covering  Company  stock  options to be issued to him,  from time to
time, shall provide that in the event of a Change of Control (as defined below),
all options shall vest  immediately  prior to any Change of Control.  "Change of
Control" means:  (a) more than 50% of the Company's  voting stock is transferred
to a person or entity that is not, prior to the transaction, a Bank "Affiliate,"
as that term is defined in 12 U.S.C. Section 371c or (b) a merger, consolidation
or other  transaction  or series of  transactions  pursuant  to which  Company's
shareholders  prior to such  transaction or series of transactions own less than
50% of the voting control of the resulting entity after such transaction.

5.   GENERAL PROVISIONS.

     5.1. Ownership of Books and Records; Confidentiality.

          (a) All records or copies  thereof of the accounts of  customers,  and
          any other records and books relating in any manner  whatsoever to Bank
          customers,  and all other files, books and records and other materials
          owned  by Bank or used by it in  connection  with the  conduct  of its
          business,  whether  prepared by Executive or otherwise coming into his
          possession,  shall be the exclusive property of Bank regardless of who
          actually  prepared the  original  material,  book or record.  All such
          books  and  records  and other  materials,  together  with all  copies
          thereof,  shall be  immediately  returned to Bank by  Executive on any
          termination of his employment; and

          (b)  During  the  Term,  Executive  will  have  access  to and  become
          acquainted with what Executive and Bank acknowledge are trade secrets,
          to wit,  knowledge or data concerning  Bank,  including its operations
          and business, and the identity of Bank customers,  including knowledge
          of their financial condition,  their financial needs, as well as their
          methods of doing  business.  Executive  shall not  disclose any of the
          aforesaid  trade secrets,  directly or indirectly,  or use them in any

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          way,  either during the Term or thereafter,  except as required in the
          course  of  Executive's  employment  with  Bank.  Executive  shall not
          solicit any Bank  employee  or Bank  customer to become an employee or
          customer  of  another  institution  until  six  months  following  his
          termination of employment.

     5.2. Assignment and Modification. This Agreement, and the rights and duties
hereunder, may not be assigned by Executive.

     5.3.  Notices.  All notices  required or  permitted  hereunder  shall be in
writing and shall be  delivered  in person,  sent by courier,  by  facsimile  or
certified or registered  mail,  return  receipt  requested,  postage  prepaid as
follows:

                To Bank:                Temecula Valley Bank
                                        27710 Jefferson Avenue, Suite A100
                                        Temecula, California  92590
                                        Attn: Stephen H. Wacknitz, President /
                                          Chief Executive Officer
                                        Facsimile:        (951) 694-9194

                With a copy to:         Stephanie E. Allen, Esq.
                                        McAndrews, Allen & Matson
                                        1100 South Coast Highway
                                        Suite 308
                                        Laguna Beach, CA  92651
                                        Facsimile:        (949) 497-0291

                To Executive:           Donald A. Pitcher
                                        1828 Queens Way
                                        Vista, CA  92084

or to such other party or address as either of the parties may designate in a
written notice served upon the other party in the manner provided herein. All
notices required or permitted hereunder shall be deemed duly given and received
on the date received if delivered in person, by courier or by facsimile, or on
the third day next succeeding the date of mailing if sent by certified or
registered mail, postage prepaid.

     5.4.  Successors.  This Agreement shall be binding upon, and shall inure to
the benefit of, the successors and assigns of the parties.

     5.5.  Entire   Agreement.   Except  as  provided  herein,   this  Agreement
constitutes   the  entire   agreement   between  the  parties,   and  all  prior
negotiations,  representations,  or agreements between the parties, whether oral
or written, are merged into this Agreement.  This Agreement may only be modified
by an agreement in writing executed by both of the parties hereto.

     5.6.  Governing Law. This Agreement  shall be construed in accordance  with
the laws of the State of California.

     5.7. Executed  Counterparts.  This Agreement may be executed in one or more
counterparts, all of which together shall constitute a single agreement and each
of which shall be an original for all purposes.

     5.8.  Section  Headings.  The various  section  headings  are  inserted for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement or any section hereof.

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<PAGE>

     5.9. Calendar Days/Close of Business.  Unless the context so requires,  all
periods  terminating on a given day,  period of days or date shall  terminate on
the close of business on that day or date and  references  to "days" shall refer
to calendar days.

     5.10.  Severability.  In the event that any of the provisions,  or portions
thereof,  of this Agreement are held to be unenforceable or invalid by any court
of competent  jurisdiction,  the validity and  enforceability  of the  remaining
provisions or portions hereof, shall not be affected thereby.

     5.11. Attorneys' Fees. In the event that any party shall bring an action or
arbitration in connection with the performance, breach or interpretation hereof,
then the  prevailing  party in such action as  determined  by the court or other
body having  jurisdiction  shall be entitled to recover from the losing party in
such action, as determined by the court or other body having  jurisdiction,  all
reasonable costs and expenses of litigation or arbitration, including reasonable
attorneys' fees, court costs,  costs of investigation and other costs reasonably
related  to  such  proceeding,  in  such  amounts  as may be  determined  in the
discretion of the court or other body having jurisdiction.

     5.12. Rules of Construction.  The parties hereby agree that the normal rule
of construction, which requires the court to resolve any ambiguities against the
drafting party,  shall not apply in interpreting this Agreement.  This Agreement
has been  reviewed  by each  party  and  counsel  for each  party  and  shall be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of all parties hereto.  Each
provision of this Agreement shall be interpreted in a manner to be effective and
valid under  applicable  law, but if any provision  shall be prohibited or ruled
invalid under applicable law, the validity,  legality and  enforceability of the
remaining provisions shall not, except as otherwise required by law, be affected
or impaired as a result of such prohibition or ruling.

     5.13. Compliance with Section 409A of the Internal Revenue Code ("Code").

          (a) Short-Term Deferral  Exemption.  This Agreement is not intended to
          provide for any  deferral of  compensation  subject to Section 409A of
          the Code and,  accordingly,  the  benefits  provided  pursuant to this
          Agreement are intended to be paid not later than the later of: (i) the
          fifteenth day of the third month following  Executive's  first taxable
          year in which such benefit is no longer subject to a substantial  risk
          of forfeiture, and (ii) the fifteenth day of the third month following
          the first  taxable year of the Bank in which such benefit is no longer
          subject  to  a  substantial  risk  of  forfeiture,  as  determined  in
          accordance with Section 409A of the Code and any Treasury  Regulations
          and other guidance issued  thereunder.  The date determined under this
          subsection is referred to as the "Short-Term Deferral Date."

          (b) Compliance with Code Section 409A. Notwithstanding anything to the
          contrary herein,  in the event that any benefits  provided pursuant to
          this  Agreement  are  not  actually  or  constructively   received  by
          Executive on or before the  Short-Term  Deferral  Date,  to the extent
          such benefit  constitutes a deferral of  compensation  subject to Code
          Section 409A,  then: (i) subject to clause (ii), such benefit shall be
          paid upon  Executive's  separation  from service,  in accordance  with
          Section 4.3,  with respect to the Bank and its  affiliates  within the
          meaning  of  Section  409A of the  Code,  and (ii) if  Executive  is a
          "specified  employee," as defined in Section  409A(a)(2)(B)(i)  of the
          Code, with respect to the Bank and its  affiliates,  the first payment
          of such benefit  shall be paid upon the date which is six months after
          the  date  of  Executive's  "separation  from  service"  and  continue
          thereafter for 11 months in accordance  with the provisions of Section
          4.3. In the event that any benefit  provided for in this  Agreement is
          subject to this subsection, such benefit shall be paid on the sixtieth
          day and thereafter  following the payment date  determined  under this
          subsection.

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<PAGE>

          (c)  Reformation  to Comply with Code Section 409A. To the extent that
          this  Agreement  or any  payment  under this  Agreement  is subject to
          Section 409A of the Code,  the parties  intend that the  provisions of
          this   Agreement  meet  the   applicable   requirements   of  Sections
          409A(a)(2),  (3) and (4) of the Code and the transitional relief under
          Section  409A  of  the  Code  (including,   without  limitation,   the
          requirements  of the  transitional  relief  under  A-19(c) of Internal
          Revenue  Service  Notice  2005-1 and the  Proposed  Regulations  under
          Section  409A  of  the  Code)  and  agree  that,  to the  extent  such
          applicable requirements are not met, this Agreement shall be reformed,
          with  the  written  consent  of  the  parties,  to  comply  with  such
          requirements.

       IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.

       Bank:                            TEMECULA VALLEY BANK

                                        By:/s/ Stephen H. Wacknitz
                                           -------------------------------------
                                           Stephen H. Wacknitz
                                           President and Chief Executive Officer

       Executive:                       /s/ Donald A. Pitcher
                                        ----------------------------------------
                                        Donald A. Pitcher
                                        EVP/Chief Financial Officer

                                       6Exhibit 10.45

                     AMENDMENT NO 1. TO TERM LOAN AGREEMENT

     This Amendment No. 1 to Term Loan  Agreement  dated as of November 29, 2006
(this  "Amendment")  is entered into among  Quaker  Fabric  Corporation  of Fall
River, a Massachusetts corporation (the "Borrower"),  Quaker Fabric Corporation,
a Delaware corporation (the "Parent",  and, collectively with the Borrower,  the
"Credit  Parties"),  1903 Debt Fund, LP, Bernard National Loan Investors,  Ltd.,
and Bernard Global Loan Investors,  Ltd. (collectively,  the "Lenders"),  and GB
Merchant   Partners,   LLC,  as  administrative   agent  for  the  Lenders  (the
"Administrative  Agent").  Capitalized  terms used herein but not defined herein
shall have the meanings provided in the Credit Agreement referred to below.

                              W I T N E S S E T H:

     WHEREAS,  the Credit Parties, the Lenders, and the Administrative Agent are
parties to that  certain  Term Loan  Agreement  dated as of November 9, 2006 (as
amended,  restated,  supplemented  or otherwise  modified from time to time, the
"Credit Agreement"); and

     WHEREAS,  the Credit Parties, the Lenders and the Administrative Agent have
agreed,  on the  terms  and  conditions  set  forth  herein,  to  amend  certain
provisions of the Credit Agreement.

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

     SECTION 1.  Amendment.  Subject to the  conditions  precedent  set forth in
Section 2 hereof,  the Credit  Agreement is hereby  amended by deleting  Section
8.5.2.  in its entirety,  and inserting the following new Section 8.5.2.  in its
stead:

     "8.5.2 Disposition of Assets.

          (a) Neither the Parent nor the  Borrower  will,  or will permit any of
     their  Subsidiaries  to,  become  a party  to or  agree  to or  effect  any
     disposition of any assets, other than:

          (i) the sale of inventory,  the licensing of intellectual property and
     the disposition of obsolete assets,  in each case in the ordinary course of
     business consistent with past practices,

          (ii) sales of Real  Property,  as  contemplated  by the Business Plan;
     provided,  that (x) the Adjusted  Net  Proceeds  received on account of any
     Real  Property  Sale is  greater  than or equal to the  amount  of  Minimum
     Proceeds for the applicable  parcel of Real Property,  or if less than such
     amount,   the  Borrower   receives  the  prior   written   consent  of  the
     Administrative  Agent for such sale,  and (y) all of the Net Proceeds  from
     such Real Property Sale are applied,  contemporaneously  upon receipt, as a
     mandatory prepayment of the Term Loans in accordance with Sections 3.1.3(a)
     and 3.1.7;

<PAGE>

          (iii) sales of machinery and equipment;  provided, that (x) all of the
     Net Proceeds from such Equipment Sale are applied,  contemporaneously  upon
     receipt,  as a mandatory  prepayment of the Term Loans in  accordance  with
     Sections  3.1.4(b)  and  3.1.7,  and  (y) in the  case of  Equipment  Sales
     generating  Net Proceeds in excess of $75,000 in the case of any individual
     Equipment Sale or $250,000 in the aggregate for all such Equipment Sales in
     any Fiscal Year, (A) prior to  consummating  any such  Equipment  Sale, the
     Borrower,  the Parent or such  Subsidiary  shall have  solicited  offers to
     purchase the applicable assets from at least two (2) nationally  recognized
     dealers of the subject  assets and shall have  provided the  Administrative
     Agent with copies of any offers or bids so received, (B) not less than 100%
     of the  aggregate  consideration  attributable  to any  item  of  Equipment
     constituting  part of such  Equipment  Sale is payable by the  purchaser of
     such Equipment in cash prior to or  contemporaneously  with the delivery of
     such item of Equipment,  (C) 100% of the aggregate consideration payable by
     the purchaser  under such  Equipment Sale is payable within sixty (60) days
     after the date of execution of the  applicable  agreement  relating to such
     Equipment  Sale,  and (D) the  aggregate  purchase  price for the Equipment
     subject to such  Equipment  Sale is equal to or greater than 70% of the Net
     Orderly Liquidation Value of all such Equipment.

          (b) In connection with any disposition of assets  permitted under this
     Section 8.5.2.,  each of the Lenders hereby  authorizes the  Administrative
     Agent to execute and deliver any collateral  releases  necessary to release
     its  Liens on such  assets;  provided,  that in the  case of any  Mortgaged
     Property, the Lenders hereby authorizes the Administrative Agent to release
     its Lien on any parcel of Mortgaged  Property upon consummation of any Real
     Property Sale yielding  Adjusted Net Proceeds  equal to or greater than the
     Minimum  Proceeds  for such parcel of  Mortgaged  Property  (or such lesser
     amount to which the Administrative Agent shall have consented)."

     SECTION 2. Condition Precedent;  Effective Date. The Administrative  Agent,
the  Lenders  and the Credit  Parties  agree that this  Amendment  shall  become
effective upon the satisfaction of the following conditions  precedent,  each in
form and substance satisfactory to the Administrative Agent:

     (i) the execution  hereof by the Credit Parties,  the Required  Lenders and
the Administrative Agent; and

     (ii) the execution  and delivery of a consent  under the  Revolving  Credit
Agreement.

     SECTION 3.  Borrower  Representations  and  Warranties.  Each Credit  Party
hereby  represents and warrants that (a) this Amendment  constitutes  its legal,
valid  and  binding  obligation,   enforceable  against  such  Credit  Party  in
accordance with the terms hereof, (b) after giving effect to this Amendment, (i)
the representations and warranties contained in the Credit Agreement are correct
in all material respects as though made on and as of the date of this Amendment,
and (ii) no Default or Event of Default has occurred and is continuing.

                                       2
<PAGE>

     SECTION 4. Reference to and Effect on the Credit Agreement.

     4.1 Upon the effectiveness of this Amendment,  each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein", or words of like
import  shall mean and be a  reference  to the  Credit  Agreement,  as  modified
hereby,  and each  reference  to the  Credit  Agreement  in any other  document,
instrument or agreement  executed and/or delivered in connection with the Credit
Agreement  shall mean and be a reference  to the Credit  Agreement,  as modified
hereby.

     4.2  Except as  specifically  set forth in  Section  1 hereof,  the  Credit
Agreement and all other  documents,  instruments and agreements  executed and/or
delivered in connection  therewith shall remain in full force and effect and are
hereby ratified and confirmed.

     4.3 The execution,  delivery and  effectiveness of this Amendment shall not
operate or be construed as a waiver or forbearance  with respect to any Defaults
or Events of  Default  under the  Credit  Agreement  which may now or  hereafter
exist,  or the waiver of any  right,  power or remedy  which the  Administrative
Agent and the Lenders may have with respect  thereto under the Credit  Agreement
or applicable  law. The Lenders  hereby reserve any and all rights which may now
or hereafter exist in favor of the Lenders under the Credit Agreement.

     SECTION 5.  Consent and  Acknowledgment.  Pursuant to the terms of a letter
agreement  dated  November 15, 2006,  between  International  Textile  Machinery
Sales,  Inc.  ("International")  and the  Borrower  (the  "International  Letter
Agreement"),  the  Borrower has agreed to sell and  International  has agreed to
purchase certain Equipment of the Borrower (the "International Equipment Sale").
The  Administrative  Agent and the Lenders hereby  consent to the  International
Equipment Sale on the terms set forth in the International Letter Agreement, and
agree that the  Administrative  Agent shall  release its liens on the  Equipment
sold  as  part  of  the  International   Equipment  Sale;  provided,   that  the
Administrative Agent shall only release its liens on specific items of Equipment
delivered  to  International  as and to the extent the Borrower has received the
applicable  purchase price  attributable to such items of Equipment  pursuant to
the International  Letter Agreement.  The  Administrative  Agent and the Lenders
acknowledge  that the first Equipment  Appraisal Report required to be delivered
to the Administrative  Agent pursuant to Sections  3.1.4(a)(i) and 7.15.2 of the
Credit Agreement shall be delivered in April, 2007;  provided that the foregoing
shall not limit the right of the  Administrative  Agent to  request  or  require
appraisals of the Equipment on a more  frequent  basis upon the  occurrence of a
Default or Event of Default.

     SECTION 6. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and  delivered  shall be deemed to be an original
and  all of  which  taken  together  shall  constitute  but  one  and  the  same
instrument.

     SECTION 7. Governing Law. This Amendment shall be governed by and construed
in  accordance  with the  internal  laws (as  opposed to the  conflicts  of laws
provisions) of the Commonwealth of Massachusetts.

                                       3
<PAGE>

     SECTION 8. Section Titles.  The section titles  contained in this Amendment
are and shall be without  substance,  meaning or content of any kind  whatsoever
and are not a part of the agreement between the parties hereto.

                            (Signature pages follow)

                                       4
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment No. 1
Term Loan Agreement to be duly executed and delivered as of the date first above
written.

                                               QUAKER FABRIC CORPORATION OF FALL
                                               RIVER

                                               By: /s/ Paul J. Kelly
                                                  ------------------------------
                                               Name:   Paul J. Kelly
                                               Title:  Chief Financial Officer
                                                       and Vice President
                                                       Finance

                                               QUAKER FABRIC CORPORATION

                                               By: /s/ Paul J. Kelly
                                                  ------------------------------
                                               Name:   Paul J. Kelly
                                               Title:  Chief Financial Officer
                                                       and Vice President
                                                       Finance
<PAGE>

                                               GB MERCHANT PARTNERS, LLC,
                                               as Administrative Agent

                                               By: /s/ Alan Goldstein
                                                  ------------------------------
                                               Name:   Alan Goldstein
                                               Title:  Chief Financial Officer
                                                       and Manager

                                               1903 DEBT FUND, LP

                                               By: /s/ Alan Goldstein
                                                  ------------------------------
                                               Name:   Alan Goldstein
                                               Title:  Manager

                                               BERNARD NATIONAL LOAN INVESTORS,
                                               LTD.

                                               By: Bernard Capital Funding, LLC
                                                   Its Investment Advisor

                                               By: /s/ Daniel B. Zwirn
                                                  ------------------------------
                                               Name:   Daniel B. Zwirn
                                               Title:  Managing Partner

                                               BERNARD GLOBAL LOAN INVESTORS,
                                               LTD.

                                               By: Bernard Capital Funding, LLC
                                                   Its Investment Advisor

                                               By: /s/ W. Ginsberg
                                                  ------------------------------
                                               Name:   W. Ginsberg
                                               Title:  Director

                                       2

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