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                                                                     Exhibit 4.3

                            QUAKER FABRIC CORPORATION




                          EMPLOYEE STOCK PURCHASE PLAN


                            EFFECTIVE OCTOBER 1, 1997
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                            QUAKER FABRIC CORPORATION


                          EMPLOYEE STOCK PURCHASE PLAN

                            EFFECTIVE OCTOBER 1, 1997


                                Table of Contents


Section                                            Title                                              Page
- -------                                            -----                                              ----
                                                                                                   
1.       Administration..................................................................................1

2.       Eligibility.....................................................................................3

3.       Participation...................................................................................3

4.       Deductions......................................................................................4

5.       Deduction Changes and Plan Withdrawals..........................................................4

6.       Purchase of Shares..............................................................................6

7.       Dividends.......................................................................................6

8.       Stock...........................................................................................7

9.       Issuance of Certificates........................................................................7

10.      Registration of Certificates....................................................................7

11.      Rights as a Stockholder.........................................................................7

12.      Retirement, Death, Disability, Section 16 Applicability, Leave of Absence or Other
         Termination of Employment.......................................................................7

13.      Withholding.....................................................................................9



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Section                                            Title                                              Page
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14.      Rights Not Transferable.........................................................................9

15.      Designation of Beneficiary.....................................................................10

16.      Application of Funds...........................................................................10

17.      Adjustment in Case of Changes Affecting Common Stock...........................................10

18.      Amendment of the Plan..........................................................................10

19.      Termination of the Plan........................................................................10

20.      Governmental Regulations.......................................................................11

21.      Plan Share Purchases...........................................................................11

22.      No Employment Rights...........................................................................11

23.      Notices........................................................................................11

24.      Severability of Provisions.....................................................................11

25.      Headings and Captions..........................................................................12

26.      Approval of Board..............................................................................12

27.      Controlling Law................................................................................12



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                            QUAKER FABRIC CORPORATION



                          EMPLOYEE STOCK PURCHASE PLAN


                            EFFECTIVE OCTOBER 1, 1997


        The purpose of the Quaker Fabric Corporation Employee Stock Purchase
        Plan (the "Plan") is to encourage and facilitate employee stock
        ownership by providing a continuing opportunity to purchase the common
        stock, par value $.01, (the "Common Stock") of Quaker Fabric Corporation
        (the "Company") at a discount through payroll deductions. The Plan is
        not intended to be qualified under Section 423 of the Internal Revenue
        Code of 1986, as amended (the "Code").

1.      ADMINISTRATION

        (a)    The Plan shall be administered by the Compensation Committee of
               the Board of Directors of the Company (the "Board") or such other
               committee consisting of directors or other persons as may be
               appointed by the Board (the "Committee").

        (b)    The Committee shall have full authority to interpret the Plan; to
               establish, amend, and rescind rules for carrying out the Plan; to
               administer the Plan; and to make all other determinations and to
               take such steps in connection with the Plan as the Committee, in
               its sole discretion, deems necessary or desirable for
               administering the Plan.

        (c)    The Committee may designate other employees of the Company and
               professional advisors to assist the Committee in the
               administration of the Plan and may grant authority to such other
               employees to execute agreements or other documents on behalf of
               the Committee.

        (d)    The Committee may employ such legal counsel, consultants,
               brokers and agents as it may deem desirable for the
               administration of the Plan and may rely upon any opinion
               received from any such counsel or consultant and any
               computation received from any such consultant, broker or
               agent. The Committee, its members and any person designated
               pursuant to paragraph (c) above shall not be liable for any
               action or determination made in good faith with respect to the
               Plan. The Company or an Affiliate (as defined in section 2),
               as the case may be, shall, to the fullest extent permitted by
               law
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               and the certificate of incorporation and bylaws of the Company or
               an Affiliate and, to the extent not covered by insurance,
               indemnify each director, officer or employee of the Company or an
               Affiliate (including the heirs, executors, administrators and
               other personal representatives of such person) and each member of
               the Committee against all expenses, costs, liabilities and losses
               (including attorneys' fees, judgments, fines, excise taxes or
               penalties, and amounts paid or to be paid in settlement) actually
               and reasonably incurred by such person in connection with any
               threatened, pending or actual suit, action or proceeding (whether
               civil, criminal, administrative or investigative in nature or
               otherwise) in which such person may be involved by reason of the
               fact that he or she is or was serving this Plan in any capacity
               at the request of the Company, except in instances where any such
               person engages in willful neglect or fraud. Such right of
               indemnification shall include the right to be paid by the Company
               for expenses incurred or reasonably anticipated to be incurred in
               defending any such suit, action or proceeding in advance of its
               disposition; provided, however, that the payment of expenses in
               advance of the settlement or final disposition of a suit, action
               or proceeding, shall be made only upon delivery to the Company of
               an undertaking by or on behalf of such person to repay all
               amounts so advanced if it is ultimately determined that such
               person is not entitled to be indemnified hereunder. Such
               indemnification shall be in addition to any rights of
               indemnification the person may have as a director, officer or
               employee or under the certificate of incorporation or the bylaws
               of the Company or an Affiliate. Expenses incurred by the
               Committee or the Board in the engagement of any such counsel,
               consultant or agent shall be paid by the Company.

        (e)    Except with respect to brokerage fees and commissions charged for
               the sale of shares of Common Stock and any fees charged for
               certificates of shares of Common Stock, all other costs, fees and
               expenses involved in administering the Plan as provided herein,
               or incident thereto, including without limitation, brokerage fees
               and commissions charged for the purchase of shares of Common
               Stock, shall be borne by the Company. Employees shall be fully
               responsible for (i) any brokerage fees and commissions charged
               for the sale of shares of Common Stock (ii) any fees for
               certificates of shares of Common Stock and (iii) any taxes owed
               by them as a result of participation in the Plan, including
               without limitation, taxes owed on the discount given hereunder.

        (f)    All determinations by the Committee with respect to the
               administration of the Plan shall be in the sole discretion of the
               Committee based on this Plan document and other relevant
               documents, and all such determinations shall be final and binding
               upon all interested parties, including the employee, the


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               employee's executor, administrator or other personal
               representative or designated beneficiary, and the Company.

        (g)    The Committee shall designate an agent (the "Agent") to
               administer the Plan, purchase and sell shares of Common Stock in
               accordance with the Plan, keep records, send statements of
               account to employees and to perform other duties relating to the
               Plan, as the Committee may request from time to time.

2.      ELIGIBILITY

        All regular employees (as defined in accordance with the Company's or
        Affiliate's policies) of the Company or of any Affiliate designated by
        the Board to participate in the Plan, who are employed within the United
        States shall be eligible to participate in the Plan after completing 90
        days of continuous service with the Company or an Affiliate in
        accordance with the terms hereof and such rules as may be prescribed
        from time to time ("Eligible Employees"). Temporary employees, seasonal
        employees, employees employed by the Company or an Affiliate outside of
        the United States, independent contractors (even if such persons are
        retroactively reclassified by the Internal Revenue Service as common law
        employees for the period during which the Company or Affiliate treated
        the individuals as independent contractors), persons subject to Section
        16 of the Securities Exchange Act of 1934 (the "Exchange Act"), and
        employees whose employment is governed by the terms of a collective
        bargaining agreement between employee representatives (within the
        meaning of Code Section 7701(a)(46)) and the Company or an Affiliate
        (except to the extent that the collective bargaining agreement expressly
        provides for the inclusion of such employees) are not eligible to
        participate in the Plan. "Affiliate" shall mean a subsidiary corporation
        as defined under Code Section 424(f).

3.      PARTICIPATION

        An Eligible Employee may participate in the Plan by completing and
        forwarding payroll deduction authorization form to the Company's Human
        Resources Department. The form shall authorize a payroll deduction from
        the Eligible Employee's compensation each payroll period, which shall
        become effective on the payroll date coincident with or next following
        the first Entry Date following the ten (10) day period (or such other
        time period as the Human Resources Department may from time to time set)
        after the Human Resources Department receives the form from the Eligible
        Employee. Notwithstanding the foregoing, any employee who is an Eligible
        Employee on the Effective Date and who elects to participate in the Plan
        commencing on the Effective Date, may participate in the Plan as soon as
        practicable without regard to the specified Entry Date. "Entry

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        Date" shall mean January 1, April 1, July 1 and October 1 of each
        calendar year or the next business day following such date.

4.      DEDUCTIONS

        The Company shall maintain payroll deduction accounts for all Eligible
        Employees who participate in the Plan. An Eligible Employee may
        authorize a payroll deduction in a designated percentage (in whole
        percentages) of the Eligible Employee's Compensation that he or she
        receives each payroll period or in a designated dollar amount (in
        increments of ten dollars ($10)), up to a maximum of the lesser of ten
        percent (10%) of Compensation or ten thousand dollars ($10,000) per
        year. To the extent that an Eligible Employee does not participate
        during a full calendar year, the foregoing annual maximum limitations
        shall be prorated by multiplying the limit by a fraction, the numerator
        of which is the number of complete payroll periods that the Eligible
        Employee participates in the Plan and the denominator of which is the
        total number of payroll periods in the calendar year. Amounts deducted
        shall equal at least one percent (1%) of Compensation for each complete
        payroll period. In no event shall interest be credited to Eligible
        Employees' accounts.

        "Compensation" means all cash wages paid to an Eligible Employee by the
        Company or an Affiliate, including salary, overtime, commissions,
        bonuses, incentive compensation, and other lump sum payments.
        Compensation shall include amounts contributed by salary reduction to a
        plan subject to Section 125 or 401(k) of the Code. Compensation shall
        not include any imputed income or contributions by the Company or an
        Affiliate to, or benefits paid under, any stock option plan (whether by
        grant or exercise of an option or sale of Common Stock relating
        thereto), any pension, profit-sharing, fringe benefit, group insurance
        or other employee welfare plan heretofore or hereafter adopted or any
        deferred compensation arrangement or amounts paid or accrued as
        severance pay.

5.      DEDUCTION CHANGES AND PLAN WITHDRAWALS

        (a)    Change of Election. An Eligible Employee may increase or decrease
               his or her payroll deduction, effective as of the payroll date
               coincident with or next following the Entry Date, by timely
               filing a new payroll deduction authorization form with the Human
               Resources Department at least ten (10) days (or such other period
               of time as the Human Resources Department may from time to time
               prescribe) prior to such Entry Date.

        (b)    Hardship Withdrawals. In the event an Eligible Employee makes a
               hardship withdrawal of employee deferral (401(k)) contributions
               under any plan maintained by the Company or an Affiliate which is
               qualified under

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               Section 401(a) of the Code that contains a Section 401(k) feature
               (the "Company 401(k) Plan"), such Eligible Employee's payroll
               deductions and the purchase of shares of Common Stock shall be
               suspended until the first payroll period coincident with or
               following the Entry Date commencing after the twelve (12) month
               period after such hardship withdrawal. If an Eligible Employee
               who elects a hardship withdrawal under the Company's 401(k) Plan
               has a cash balance accumulated in his or her account at the time
               of withdrawal that has not already been applied to purchase
               shares of Common Stock, such cash balance shall be returned to
               the employee as soon as administratively practicable.

        (c)    Voluntary Suspension. An Eligible Employee may at any time upon
               ten (10) days' notice to the Human Resources Department (or such
               other period of time as the Human Resources Department may from
               time to time prescribe), and for any reason, suspend
               participation in the Plan, which shall become effective on the
               first payroll date coincident with or next following the ten (10)
               day period (or such other period of time as the Human Resources
               Department may from time to time prescribe). Any cash balance
               accumulated in his or her account that has not already been
               applied to purchase shares shall be returned to the Eligible
               Employee as soon as administratively feasible. An Eligible
               Employee who suspends participation may thereafter begin
               participation again on any Entry Date following the date of
               suspension, provided that the Eligible Employee notifies the
               Company's Human Resources Department no later than the tenth
               (10th) day prior to the Entry Date (or such other time period as
               the Human Resources Department may from time to time set).

        (d)    Automatic Suspension. An Eligible Employee's participation in the
               Plan with regard to future payroll deductions shall be
               automatically suspended upon any of the following events:

                    (i)  the employee is no longer an Eligible Employee;

                   (ii)  the employee becomes Disabled;

                  (iii)  the employee is on a Leave of Absence;

                   (iv)  the employee elects to receive a hardship withdrawal as
                         described in Section 5(b) above;

                    (v)  the employee retires;

                   (vi)  the employee dies;

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                  (vii)  the employee terminates employment for any other
                         reason; or

                 (viii)  the employee (or any other person whose stock would be
                         attributed to such employee pursuant to Section 424(d)
                         of the Code) would own stock and/or hold outstanding
                         options to purchase stock possessing five percent (5%)
                         or more of the total combined voting power or value of
                         all classes of stock of the Company or an Affiliate or
                         a parent corporation, as defined under Section 424(e)
                         of the Code.

        "Disability" or "Disabled" shall mean a permanent and total disability
        as defined under Section 22(e)(3) of the Code. A "Leave of Absence"
        shall be determined by the usual policies of the Company or Affiliate
        and shall not include vacation time.

6.      PURCHASE OF SHARES

        Amounts credited to an Eligible Employee's account as of the last
        trading day of each calendar quarter shall be applied to purchase fully
        paid and non-assessable whole and/or fractional shares of Common Stock
        for the account of that Eligible Employee at a purchase price equal to
        eighty-five percent (85%) of Fair Market Value as of the day of
        purchase. The purchase shall occur on the first Entry following the
        calendar quarter in which payroll deductions were credited to an
        Eligible Employee's account. Notwithstanding the foregoing, the Board of
        Directors of the Company, in its sole discretion, may set the purchase
        price at an amount that exceeds eighty-five percent (85%) of the Fair
        Market Value as of the day of purchase. If all or any portion of the
        shares cannot reasonably be purchased on the first Entry Date following
        the calendar quarter in which payroll deductions were credited to an
        account in the sole discretion of the Committee because of availability
        or any other reason, such purchase shall be made as soon thereafter as
        feasible. The Eligible Employee's account shall be charged for the
        amount of the purchase, and the ownership of such share or shares shall
        be appropriately evidenced on the books of the Company. "Fair Market
        Value" shall mean the actual purchase price of a share of Common Stock
        on a particular date, net of commissions.

7.      DIVIDENDS

        Cash dividends, if any, on shares of Common Stock acquired through the
        Plan for which certificates have not been issued to the Eligible
        Employee will be automatically paid by check directly to the Eligible
        Employee by the Company's transfer agent. Cash dividends on shares of
        Common Stock acquired through the Plan for which certificates have been
        issued will not be administered by the Plan.

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8.      STOCK

        The maximum number of shares of Common Stock which shall be available or
        reserved for sale under the Plan shall be 100,000. Purchases of Common
        Stock under the Plan shall be made by the Agent on the open market, or
        in the sole discretion of the Committee, may be made by the Company's
        delivery of treasury shares or newly-issued and authorized shares to the
        Plan, upon such terms as the Committee may approve.

9.      ISSUANCE OF CERTIFICATES

        Certificates for whole shares of Common Stock shall not be issued to
        Eligible Employees unless and until requested. A fee fixed by the Agent
        may be charged for certificates of shares of Common Stock and for the
        replacement of lost certificates. Certificates for a fractional share
        shall not be issued under any circumstance. If an Eligible Employee
        requests certificates for whole shares of Common Stock, any fractional
        share of Common Stock shall remain in the Eligible Employee's account
        during his or her employment, unless he or she requests cash in lieu of
        the fractional share.

10.     REGISTRATION OF CERTIFICATES

        If an Eligible Employee requests a certificate, certificates may be
        registered only in the name of the Eligible Employee.

11.     RIGHTS AS A STOCKHOLDER

        None of the rights or privileges of a stockholder of the Company shall
        exist with respect to shares of Common Stock purchased under the Plan
        unless and until such shares shall have been appropriately evidenced on
        the books of the Company.

12.     RETIREMENT, DEATH, DISABILITY, SECTION 16 APPLICABILITY, LEAVE OF
        ABSENCE OR OTHER TERMINATION OF EMPLOYMENT

        (a)    Termination of Employment of Application of Section 16 of the
               Exchange Act (Other Than Disability or Leave of Absence Prior to
               Termination of Employment). Subject to such notice requirements
               as the Committee may from time to time prescribe, in the event of
               an Eligible Employee's retirement, death, or other termination of
               employment or in the event an Eligible Employee becomes subject
               to the requirements of Section 16 of the Exchange Act: (i) no
               further payroll deductions shall be taken from any payroll checks
               paid to such Eligible Employee on or after his or her

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               retirement, death or other termination of employment or date upon
               which he or she became subject to the requirements of Section 16
               of the Exchange Act; (ii) no further shares of Common Stock shall
               be purchased for the account of the Eligible Employee; (iii) any
               cash balance accumulated in the Eligible Employee's account shall
               be paid to the Eligible Employee or, in the event of the Eligible
               Employee's death, to the Eligible Employee's estate; and (iv) any
               dividends paid on shares of Common Stock on or after such
               Eligible Employee's retirement, death, other termination of
               employment or date upon which he or she became subject to the
               requirements of Section 16 of the Exchange Act shall be
               distributed to such Eligible Employee as a cash dividend. Nothing
               in this paragraph shall be deemed to prevent an Eligible Employee
               who becomes ineligible due to retirement, other termination of
               employment or applicability of Section 16 of the Exchange Act
               from becoming eligible again under Section 2.


        (b)    Disability or Leave of Absence Prior to Termination of
               Employment. Subject to such notice requirements as the Committee
               may from time to time prescribe, in the event of an Eligible
               Employee's Disability or Leave of Absence, payroll deductions
               shall only be taken from pay that is due and owing to the
               Eligible Employee. To the extent that any cash balance has
               accumulated in the Eligible Employee's account, such balance
               shall be used to purchase shares of Common Stock on the first
               Entry Date following the calendar quarter in which payroll
               deductions were credited to the account, or such other day as the
               Committee determines. With respect to an Eligible Employee who
               becomes ineligible to participate due to a Disability or Leave of
               Absence, shares of Common Stock held in such Eligible Employee's
               accounts shall continue to be held in the Eligible Employee's
               account unless he or she elects otherwise under paragraph (c)
               below. In the event that such employee's Disability or Leave of
               Absence ends and such employee returns to work as an Eligible
               Employee, payroll deductions shall resume automatically in
               accordance with his or her most recent authorization form in
               effect prior to the Disability or Leave of Absence, unless he or
               she elects otherwise. Paragraph (a) above shall apply to any
               termination of employment following an Eligible Employee's
               Disability or Leave of Absence.

        (c)    Treatment of Common Stock Upon Termination of Employment. With
               respect to Eligible Employees who are not persons subject to
               Section 16 of the Exchange Act, such Eligible Employees shall
               elect one (or a combination) of the following alternatives upon
               termination of employment (other than Disability or Leave of
               Absence):


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                    (i)  the Eligible Employee may request the Agent to sell all
                         or a portion of shares of Common Stock for which
                         certificates have not been issued to him or her and
                         receive cash for such shares, subject to any brokerage
                         fees or commissions; or

                   (ii)  receive certificates, without charge, for all or a
                         portion of the whole shares of Common Stock and cash in
                         lieu of any fractional shares of Common Stock.

               If such Eligible Employee does not make an election regarding the
               treatment of his or her shares within the time period prescribed
               by the Committee, such Eligible Employee shall automatically
               receive certificates, without charge, for all whole shares of
               Common Stock and cash in lieu of any fractional shares of Common
               Stock.


               An Eligible Employee who becomes ineligible to participate due to
               Disability or Leave of Absence may elect one (or a combination)
               of the above alternatives at any time on or after his or her
               Disability or Leave of Absence.

        (d)    Treatment of Common Stock Upon Application of Section 16 of the
               Exchange Act or Section 5(vii) of the Plan. If an Eligible
               Employee becomes subject to Section 16 of the Exchange Act or
               Section 5(d)(vii) of the Plan, the employee shall receive, at
               such time he or she becomes subject to Section 16 of the Exchange
               Act or Section 5(d)(vii) of the Plan, certificates, without
               charge, for all of the whole shares of Common Stock and cash in
               lieu of any fractional shares of Common Stock.

13.     WITHHOLDING

        The Company shall have the right to make such provisions as it deems
        necessary or appropriate to satisfy any obligations to withhold federal,
        state or local income or other taxes incurred by reason of the issuance
        of shares of Common Stock pursuant to the Plan.

14.     RIGHTS NOT TRANSFERABLE

        Rights under the Plan are not transferable by an Eligible Employee other
        than by will or the laws of descent and distribution, and are
        exercisable during the Eligible Employee's lifetime only by the Eligible
        Employee or his or her guardian or legal representative.


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15.     DESIGNATION OF BENEFICIARY

        An Eligible Employee participating in the Plan may file, on forms
        supplied by and delivered to the Company, a written designation of a
        beneficiary who is to receive any shares of Common Stock and cash
        remaining in such Eligible Employee's account under the Plan in the
        event of Eligible Employee's death. Such designation of beneficiary may
        be changed by the Eligible Employee at any time by written notice. If an
        Eligible Employee participating in the Plan is married on the date of
        death and no beneficiary had been designated by the Eligible Employee
        prior to the Eligible Employee's death, the Eligible Employee's spouse
        will be presumed to be his beneficiary. If an Eligible Employee
        participating in the Plan is not married on the date of death and no
        beneficiary had been designated by the Eligible Employee prior to the
        Eligible Employee's death, the Eligible Employee's beneficiary shall be
        Eligible Employee's estate.

16.     APPLICATION OF FUNDS

        All funds received or held by the Company under the Plan may be used for
        any corporate purpose.

17.     ADJUSTMENT IN CASE OF CHANGES AFFECTING COMMON STOCK

        In the event of any change affecting Common Stock, such as stock splits
        or stock dividends, such adjustment shall be made as may be deemed
        equitable by the Board to give proper effect to such event and as
        required by applicable law.

18.     AMENDMENT OF THE PLAN

        The Board may at any time, or from time to time, amend the Plan in any
        respect.

19.     TERMINATION OF THE PLAN

        The Plan and all rights of employees under the Plan shall terminate at
        any time at the discretion of the Board. Upon termination of the Plan,
        (a) certificates for whole shares of Common Stock held in an Eligible
        Employee's account under the Plan shall be issued, without charge; (b) a
        cash payment shall be made in lieu of any fractional shares of Common
        Stock; and (c) all cash balances accumulated in the accounts of Eligible
        Employees shall be promptly refunded.

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20.     GOVERNMENTAL REGULATIONS

        The Company's obligation to sell and deliver Common Stock under the Plan
        is subject to all applicable laws and regulations, including the receipt
        of any approval of any governmental authority or stock exchange required
        in connection with the authorization, issuance, or sale of such shares
        of Common Stock.

21.     PLAN SHARE PURCHASES

        Purchases of outstanding shares of Common Stock may be made pursuant to
        and on behalf of the Plan, upon such terms as the Committee may approve,
        for delivery under the Plan. Shares delivered under the Plan may also be
        treasury shares or newly issued shares.

22.     NO EMPLOYMENT RIGHTS

        The establishment and operation of this Plan shall not confer any legal
        rights upon any employee or other person for a continuation of
        employment, nor shall it interfere with the rights of the Company or an
        Affiliate to discharge any employee and to treat him or her without
        regard to the effect which that treatment might have upon him or her as
        an Eligible Employee or potential Eligible Employee under the Plan.

23.     NOTICES

        Each Eligible Employee shall be responsible for furnishing the Agent and
        the Human Resources Department with the current and proper address for
        the mailing of notices and the delivery of other information. Any notice
        required or permitted to be given shall be deemed given if directed to
        the person to whom addressed at such address and mailed by regular
        United States mail, first-class and prepaid. If any item mailed to such
        address is returned as undeliverable to the addressee, mailing will be
        suspended until the Eligible Employee furnishes the proper address.


24.     SEVERABILITY OF PROVISIONS

        If any provision of the Plan shall be held invalid or unenforceable,
        such invalidity or unenforceability shall not affect any other
        provisions hereof, and the Plan shall be construed and enforced as if
        such provisions had not been included.

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25.     HEADINGS AND CAPTIONS

        The headings and captions herein are provided for reference and
        convenience only, shall not be considered part of the Plan, and shall
        not be employed in the construction of the Plan.

26.     APPROVAL OF BOARD

        The Plan shall not be effective unless and until approved by the Board.

27.     CONTROLLING LAW

        This Plan shall be construed and enforced according to the laws of the
        State of Delaware (without giving effect to conflict of law rules).


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