Document:

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                                                                    EXHIBIT 4.16

                                TRUSTEE AGREEMENT

      This TRUSTEE AGREEMENT (this "Trustee Agreement") is dated as of the 26th
day of August, 2004, between AVONDALE MILLS, INC., an Alabama corporation (the
"Company"), AVONDALE INCORPORATED, a Georgia corporation, and WACHOVIA BANK
NATIONAL ASSOCATION, a national banking association (the "Trustee"), as Trustee.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to such terms in the form of Floating Rate Senior Note of the Company attached
hereto as Exhibit A.

      WHEREAS, the Company has issued $32,702,500.00 principal amount of its
Floating Rate Senior Notes due July 1, 2012 (together with additional Floating
Rate Senior Notes that may from time to time be added to this agreement, the
"New Notes") pursuant to Exchange Agreements dated as of August 26, 2004 (the
"Exchange Agreement"); and

      WHEREAS, the Company wishes to engage the Trustee to act, and the Trustee
is willing to act, as Trustee, Registrar and Paying Agent with respect to the
New Notes;

      NOW THEREFORE, for valuable consideration, the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:

      Section 1 Paying Agency.

      (a) There is hereby created a Payment Fund with the Trustee into which the
Company shall deposit from time to time amounts necessary to fund its
obligations under the New Notes.

      (b) On or prior to each due date of the principal and interest on the New
Notes, the Company shall deposit with the Trustee a sum sufficient to pay such
principal and interest when so becoming due.

      (c) On or prior to each due date of the principal and interest on the New
Notes, the Company will also provide the Trustee with a calculation of amounts
owing per $1,000 principal amount of New Notes and an instruction as to the date
payment is to be made on the Notes. On such date for payment of amounts owing on
the New Notes, the Trustee will wire the appropriate payments to the holders of
Notes, as shown on the register as of the corresponding record date.

      (d) The Trustee shall not be obligated to make any payment hereunder
unless (i) on or prior to the date and time of such payment, sufficient funds
have been deposited into the Payment Fund and (ii) any indemnification then due
and payable to the Trustee by the Company has been paid.

      Section 2 Registrar.

      (a) On the date hereof, the Company has delivered to the Trustee, a
register of the New Notes subject to this Trustee Agreement.

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      (b) The Trustee hereby agrees that it will hereafter keep a register of
the New Notes and of their transfer and exchange.

      (c) The Trustee acknowledges that, in addition to the New Notes made
subject to this Trustee Agreement on the date hereof, additional Floating Rate
Senior Notes of the Company are currently outstanding or may be issued by the
Company from time to time, and the Company may, from time to time, inform the
Trustee as to additional New Notes that are to be added to the register of New
Notes and become subject to the terms of this Trustee Agreement.

      (d) The Trustee shall retain copies of all letters, notices and other
written communications received from the holders of the New Notes. The Company
shall have the right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time upon the giving of
reasonable written notice to the Trustee.

      (e) The Company shall promptly deliver to the Trustee copies of any
notices or waivers received by the Company from any holder of the New Notes that
(a) were issued prior to August __, 2004 and (b) are not included in the
register of the New Notes.

      Section 3 Defaults and Remedies. An "Event of Default" occurs if:

      (a) the Company defaults in any payment of interest on the New Notes when
the same becomes due and payable, and such default continues for a period of 30
days;

      (b) the Company (i) defaults in the payment of the principal of the New
Notes when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon required repurchase, upon declaration or otherwise or
(ii) fails to redeem or purchase the New Notes when required pursuant to the
terms hereof;

      (c) the Company or the Guarantor fails to comply with Section 4 of the New
Notes;

      (d) the Company fails to comply with Section 3 of the New Notes and such
failure continues for 30 days after the notice specified below;

      (e) the Company or the Guarantor fails to comply with any of its
agreements set forth in the New Notes (other than those referred to in clause
(a), (b), (c) or (d) above) and such failure continues for 60 days after the
notice specified below;

      (f) Indebtedness of the Company, the Guarantor or any Significant
Subsidiary is not paid within any applicable grace period after final maturity
or is accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10,000,000 or its
foreign currency equivalent;

      (g) the Company, the Guarantor or any Significant Subsidiary pursuant to
or within the meaning of any Bankruptcy Law:

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                  (1) commences a voluntary case;

                  (2) consents to the entry of an order for relief against it in
            an involuntary case;

                  (3) consents to the appointment of a Custodian of it or for
            any substantial part of its property; or

                  (4) makes a general assignment for the benefit of its
            creditors; or

                  (5) takes any comparable action under any foreign laws
            relating to insolvency;

            (h) a court of competent jurisdiction enters an order or decree
      under any Bankruptcy Law that:

                  (1) is for relief against the Company, the Guarantor or any
            Significant Subsidiary in an involuntary case;

                  (2) appoints a Custodian of the Company, the Guarantor or any
            Significant Subsidiary or for any substantial part of its property;

                  (3) orders the winding up or liquidation of the Company, the
            Guarantor or any Significant Subsidiary; or

                  (4) any similar relief is granted under any foreign laws and
            the order or decree remains unstayed and in effect for 60 days;

            (i)   any judgment or decree for the payment of money in excess of
      $10,000,000 or its foreign currency equivalent at the time is entered
      against the Company, the Guarantor or any Significant Subsidiary, remains
      outstanding for a period of 60 days following the entry of such judgment
      or decree and is not discharged, waived or the execution thereof stayed
      within 10 days after the notice specified below; or

            (j)   the Guaranty ceases to be in full force and effect (other than
      in accordance with the terms of the Guaranty) or the Guarantor denies or
      disaffirms its obligations under the Guaranty.

      The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.

      The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.

      A Default under clauses (d), (e) or (i) is not an Event of Default until
the Trustee or holders of at least 25% in principal amount of the outstanding
New Notes at the time of such Default notify the Company of the Default and the
Company does not cure such Default within the time specified after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default."

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      The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Event of Default under clause (f) or (j) and any event which with the giving
of notice or the lapse of time would become an Event of Default under clause
(d), (e) or (i), its status and what action the Company is taking or proposes to
take with respect thereto.

            Section 4 Acceleration, Waivers of Past Defaults, Waiver of Stay or
Extension Laws, Right to Receive Payment.

            (a) Acceleration. If an Event of Default occurs and is continuing
      (other than an Event of Default specified in Section 11(g) or (h) of the
      New Notes with respect to the Company or the Guarantor), the Trustee by
      written notice to the Company, or the holders of at least 25% in principal
      amount of the New Notes by written notice to the Company and the Trustee,
      may declare the principal of and accrued but unpaid interest on the New
      Notes to be due and payable. Upon such a declaration, such principal and
      interest shall be due and payable immediately. If an Event of Default
      specified in Section 11(g) or (h) with respect to the Company or the
      Guarantor occurs, all principal of and interest on the New Notes shall
      ipso facto become and be immediately due and payable without any
      declaration or other act on the part of the holder. The holders of a
      majority in principal amount of the New Notes may by notice to the Company
      rescind an acceleration and its consequences if the rescission would not
      conflict with any judgment or decree and if all existing Events of Default
      have been cured or waived except nonpayment of principal or interest that
      has become due solely because of acceleration. No such rescission shall
      affect any subsequent Default or impair any right consequent thereto.

            (b) Waiver of Past Defaults. The holders of a majority in principal
      amount of the New Notes by notice to the Company may waive an existing
      Default and its consequences except (i) a Default in the payment of the
      principal of or interest on a New Note or (ii) a Default in respect of a
      provision that under Section 10(b) of the New Notes cannot be amended
      without the consent of each holder of New Notes affected. A Default in
      respect of a provision that requires the consent of 75% of the outstanding
      aggregate principal amount of the New Notes to any amendment may only be
      waived by the holders of 75% of the outstanding aggregate principal amount
      of the New Notes. When a Default is waived, it is deemed cured, but no
      such waiver shall extend to any subsequent or other Default or impair any
      consequent right.

            (c) Right to Receive Payment. Notwithstanding any other provision of
      the New Notes, the right of a holder of the New Notes to receive payment
      of principal of and interest on the New Notes, on or after the respective
      due dates expressed in the New Notes, or to bring suit for the enforcement
      of any such payment on or after such respective dates, shall not be
      impaired or affected without the consent of the holder

            (d) Waiver of Stay or Extension Laws. The Company (to the extent it
      may lawfully do so) shall not at any time insist upon, or plead, or in any
      manner whatsoever claim or take the benefit or advantage of, any stay or
      extension law wherever enacted, now or at any time hereafter in force,
      which may affect the covenants or the performance under the New Notes; and
      the Company (to the extent that it may lawfully do so) hereby

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      expressly waives all benefit or advantage of any such law, and shall not
      hinder, delay or impede the execution of any power granted to a holder by
      the New Notes, but shall suffer and permit the execution of every such
      power as though no such law had been enacted.

            (e) When New Notes Disregarded; Registered Securities. In
      determining whether the holders of the required principal amount of New
      Notes have concurred in any direction, waiver or consent, New Notes owned
      by the Company or by any Person directly or indirectly controlling or
      controlled by or under direct or indirect common control with the Company
      shall be disregarded and deemed not to be outstanding. Also, subject to
      the foregoing, only New Notes outstanding at the time shall be considered
      in any such determination. For all purposes for the New Notes, any New
      Notes sold pursuant to a Registration Rights Agreement shall be considered
      the same class or series as the New Notes.

            Section 5 Control by Majority.

      The holders of a majority in principal amount of the New Notes may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee or of exercising any trust or power conferred on the Trustee.
However, the Trustee may refuse to follow any direction that conflicts with law
or the New Notes or that the Trustee determines is unduly prejudicial to the
rights of other holders of the New Notes or would involve the Trustee in
personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.

            Section 6 Limitation on Suits. A holder of New Notes may not pursue
any remedy with respect to the New Notes unless:

            (a) the holder gives to the Trustee written notice stating that an
      Event of Default is continuing;

            (b) the holders of at least 25% in principal amount of the New Notes
      make a written request to the Trustee to pursue the remedy;

            (c) such holder or holders offer to the Trustee reasonable security
      or indemnity against any loss, liability or expense;

            (d) the Trustee does not comply with the request within 60 days
      after receipt of the request and the offer of security or indemnity; and

            (e) the holders of a majority in principal amount of the New Notes
      do not give the Trustee a direction inconsistent with the request during
      such 60-day period.

      A holder of New Notes may not use its Note to prejudice the rights of
another holder of New Notes or to obtain a preference or priority over another
holder of New Notes.

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            Section 7 Rights of Holders to Receive Payment.

      The right of a holder of New Notes to receive payment of principal of and
interest on the New Notes, on or after the respective due dates expressed in the
New Notes, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the holder.

            Section 8 Collection Suit by Trustee.

      If an Event of Default specified in Section 11(a) or 11(b) of the New
Notes occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount then
due and owing (together with interest on any unpaid interest to the extent
lawful) and the amounts provided for in Section 31 of the New Notes and Section
17 of this Trustee Agreement.

            Section 9 Trustee May File Proofs of Claim.

      The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and the
holders of the New Notes allowed in any judicial proceedings relative to the
Company, its creditors or its property and, unless prohibited by law or
applicable regulations, may vote on behalf of the holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each holder to
make payments to the Trustee and, in the event that the Trustee shall consent to
the making of such payments directly to the holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel, and any other amounts due
the Trustee under this Trustee Agreement.

            Section 10 Priorities.

            (a) If the Trustee collects any money or property following an Event
      of Default, it shall pay out the money or property in the following order:

      FIRST: to the Trustee for amounts due under the Trustee Agreement or the
New Notes;

      SECOND: to holders of Senior Indebtedness of the Company, including the
holders of the New Notes for amounts due and unpaid on the New Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the New Notes for principal and
interest, respectively;

      THIRD: to holders of all Senior Subordinated Indebtedness; and

      FOURTH: to the Company.

            (b) The Trustee may fix a record date and payment date for any
      payment to holders of New Notes pursuant to this Section. At least 15 days
      before such record date,

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      the Company shall mail to each holder of New Notes and the Trustee a
      notice that states the record date, the payment date and amount to be
      paid.

            Section 11 Undertaking for Costs.

      In any suit for the enforcement of any right or remedy under the New Notes
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a holder pursuant to Section 7 or
a suit by holders of more than 10% in principal amount of the New Notes.

            Section 12 Duties of Trustee.

            (a) If an Event of Default has occurred and is continuing, the
      Trustee shall exercise the rights and powers set forth in the Note and the
      Trustee Agreement and use the same degree of care and skill in their
      exercise as a prudent Person would exercise or use under the circumstances
      in the conduct of such Person's own affairs.

            (b) Except during the continuance of an Event of Default:

                  (i) the Trustee undertakes to perform such duties and only
            such duties as are specifically set forth in the Note and the
            Trustee Agreement and no implied covenants or obligations shall be
            read into this Trustee Agreement against the Trustee; and

                  (ii) in the absence of bad faith on its part, the Trustee may
            conclusively rely, as to the truth of the statements and the
            correctness of the opinions expressed therein, upon certificates or
            opinions furnished to the Trustee and conforming to the requirements
            set forth in the Indenture. However, the Trustee shall examine the
            certificates and opinions to determine whether or not they conform
            to the requirements of the Indenture (but need not confirm or
            investigate the accuracy of mathematical calculations or other facts
            stated therein).

            (c) The Trustee may not be relieved from liability for its own
      negligent action, its own negligent failure to act or its own willful
      misconduct, except that:

                  (i) this paragraph does not limit the effect of paragraph (b)
            of this Section;

                  (ii)     the Trustee shall not be liable for any error of
            judgment made in good faith by a Trust Officer unless it is proved
            that the Trustee was negligent in ascertaining the pertinent facts;
            and

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                  (iii) the Trustee shall not be liable with respect to any
            action it takes or omits to take in good faith in accordance with a
            direction received by it pursuant to Section 5.

            (d) Every provision of the New Notes that in any way relates to the
      Trustee is subject to paragraphs (a), (b) and (c) of this Section 12.

            (e) The Trustee shall not be liable for interest on any money
      received by it except as the Trustee may agree in writing with the
      Company.

            (f) Money held in trust by the Trustee need not be segregated from
      other funds except to the extent required by law.

            (g) No provision of this Trustee Agreement shall require the Trustee
      to expend or risk its own funds or otherwise incur financial liability in
      the performance of any of its duties hereunder or in the exercise of any
      of its rights or powers, if it shall have reasonable grounds to believe
      that repayment of such funds or adequate indemnity against such risk or
      liability is not reasonably assured to it.

            (h) Every provision of this Trustee Agreement relating to the
      conduct or affecting the liability of or affording protection to the
      Trustee shall be subject to the provisions of this Section 12.

            Section 13 Rights of Trustee.

            (a) The Trustee may rely on any document believed by it to be
      genuine and to have been signed or presented by the proper person. The
      Trustee need not investigate any fact or matter stated in the document.

            (b) Before the Trustee acts or refrains from acting, it may require
      an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
      be liable for any action it takes or omits to take in good faith in
      reliance on the Officers' Certificate or Opinion of Counsel.

            (c) The Trustee may act through agents and shall not be responsible
      for the misconduct or negligence of any agent appointed with due care.

            (d) The Trustee shall not be liable for any action it takes or omits
      to take in good faith which it believes to be authorized or within its
      rights or powers; provided, however, that the Trustee's conduct does not
      constitute willful misconduct or negligence.

            (e) The Trustee may consult with counsel of its selection, and the
      advice or opinion of counsel with respect to legal matters relating to the
      New Notes and the Trustee Agreement shall be full and complete
      authorization and protection from liability in respect to any action
      taken, omitted or suffered by it hereunder in good faith and in accordance
      with the advice or opinion of such counsel.

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            (f) Any request or direction of the Company mentioned herein shall
      be sufficiently evidenced by an Officers' Certificate and any resolution
      of the Board of Directors may be sufficiently evidenced by a Board
      Resolution.

            (g) The Trustee shall be under no obligation to exercise any of the
      rights or powers vested in it by the New Notes at the request or direction
      of any of the holders of the New Notes, unless such holders of the New
      Notes shall have offered to the Trustee reasonable security or indemnity
      against the costs, expenses and liabilities which might be incurred by it
      in compliance with such request or direction.

            Section 14 Individual Rights of Trustee.

      The Trustee in its individual or any other capacity may become the owner
or pledgee of New Notes and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee. Any
Trustee, Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Trustee must comply with Sections 20 and 21.

            Section 15 Trustee's Disclaimer.

      The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of the New Notes, and it shall not be responsible for
any statement of the Company in the New Notes or in any document issued in
connection with the sale of the New Notes.

            Section 16 Notice of Defaults.

      If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to the holder notice of the Default within 90 days after
it occurs. Except in the case of a Default in payment of principal of or
interest on the New Notes (including payments pursuant to the mandatory
redemption provisions of the New Notes), the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interests of the New Notes.

            Section 17 Compensation and Indemnity.

            (a) The Company shall pay to the Trustee from time to time
      compensation for its services as the Company and the Trustee shall from
      time to time agree in writing. The Trustee's compensation shall not be
      limited by any law on compensation of a trustee of an express trust. The
      Company shall reimburse the Trustee upon request for all reasonable
      out-of-pocket expenses incurred or made by it, including costs of
      collection, in addition to the compensation for its services. Such
      expenses shall include the reasonable compensation and expenses,
      disbursements and advances of the Trustee's agents and counsel. The
      Company shall indemnify the Trustee against any and all loss, liability or
      expense (including reasonable attorneys' fees) incurred by it in
      connection with the administration of this trust and the performance of
      its duties hereunder. The Trustee shall notify the Company promptly of any
      claim for which it may seek indemnity. Failure by the Trustee to so notify
      the Company shall not relieve the Company of its obligations hereunder.
      The Company shall defend the claim and the

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      Trustee may have separate counsel and the Company shall pay the reasonable
      fees and expenses of such counsel. The Company need not reimburse any
      expense or indemnify against any loss, liability or expense incurred by
      the Trustee through the Trustee's own willful misconduct, negligence or
      bad faith.

            (b) To secure the Company's payment obligations in this Section, the
      Trustee shall have a lien prior to the New Notes on all money or property
      held or collected by the Trustee other than money or property held in
      trust to pay principal of and interest on particular New Notes.

            (c) The Company's payment obligations pursuant to this Section shall
      survive the discharge of the New Notes. When the Trustee incurs expenses
      after the occurrence of a Default specified in Section 11(g) or (h) of the
      New Notes with respect to the Company, the expenses are intended to
      constitute expenses of administration under any Bankruptcy Law.

            Section 18 Replacement of Trustee.

            (a) The Trustee may resign at any time by so notifying the Company.
      The holders of a majority in principal amount of the New Notes may remove
      the Trustee by so notifying the Trustee and may appoint a successor
      Trustee. The Company shall remove the Trustee if:

                  (i) the Trustee fails to comply with Section 20;

                  (ii) the Trustee is adjudged bankrupt or insolvent;

                  (iii) a receiver or other public officer takes charge of the
            Trustee or its property; or

                  (iv) the Trustee otherwise becomes incapable of acting.

            (b) If the Trustee resigns, is removed by the Company or by the
holders of a majority in principal amount of the New Notes and such holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.

            (c) A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Note. The successor Trustee shall mail a notice of its succession to
the holders of the New Notes.

            (d) If a successor Trustee does not take office within 30 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the holders
of 10% in principal amount of the New Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

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            (e) If the Trustee fails to comply with Section 20, any holder of
New Notes may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.

            Section 19 Successor Trustee by Merger.

            (a) If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets to,
another corporation or banking association, the resulting, surviving or
transferee corporation or banking association without any further act shall be
the successor Trustee.

            Section 20 Eligibility; Disqualification.

      The Trustee shall at all times satisfy the requirements of TIA Section
310(a). The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.

            Section 21 Preferential Collection of Claims Against Company.

      The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.

            Section 22 Consent to Jurisdiction and Service.

      The Company hereby absolutely and irrevocably consents and submits to the
jurisdiction of the courts in the State of Georgia and of any Federal court
located in said State in connection with any actions or proceedings brought
against the Company (or any of them) by the Trustee arising out of or relating
to this Trustee Agreement. In any such action or proceeding, the Company each
hereby absolutely and irrevocably (i) waives any objection to jurisdiction or
venue, (ii) waives personal service of any summons, complaint, declaration or
other process, and (iii) agrees that the service thereof may be made by
certified or registered first-class mail directed to such party, as the case may
be, at their respective addresses in accordance with Section 8 hereof.

            Section 23 Waiver of Jury Trial.

      THE PAYING AGENT AND THE COMPANY HEREBY WAIVE A TRIAL BY JURY OF ANY AND
ALL ISSUES ARISING IN ANY ACTION OR PROCEEDING BETWEEN THEM OR THEIR SUCCESSORS
OR ASSIGNS, UNDER OR IN CONNECTION WITH THIS TRUSTEE AGREEMENT OR ANY OF ITS
PROVISIONS OR ANY NEGOTIATIONS IN CONNECTION HEREWITH.

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            Section 24 Force Majeure.

      The Trustee shall not be responsible for delays or failures in performance
resulting from acts beyond its control. Such acts shall include but not be
limited to acts of God, strikes, lockouts, riots, acts of war, epidemics,
governmental regulations superimposed after the fact, fire, communication line
failures, computer viruses, power failures, earthquakes or other disasters.

            Section 25 Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first-class mail addressed as follows:

                  if to the Company:

                  Avondale Mills, Inc.
                  506 South Broad Street
                  Monroe, Georgia  30655
                  Attn:  Chief Financial Officer

                  if to the Trustee, Registrar or Paying Agent:

                  Wachovia Bank, National Association
                  191 Peachtree Street, 23rd Floor
                  Atlanta, Georgia  30303
                  Attn: Corporate Trust Department

      The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.

            Section 26 Miscellaneous.

                  (i) Binding Effect; Successors. This Trustee Agreement shall
            be binding upon the respective parties hereto and their successors
            and assigns.

                  (ii) Modifications. This Trustee Agreement may not be altered
            or modified without the express written consent of the parties
            hereto. No course of conduct shall constitute a waiver of any of the
            terms and conditions of this Trustee Agreement, unless such waiver
            is specified in writing, and then only to the extent so specified. A
            waiver of any of the terms and conditions of this Trustee Agreement
            on one occasion shall not constitute a waiver of the other terms of
            this Trustee Agreement, or of such terms and conditions on any other
            occasion. Notwithstanding any other provision hereof, consent to an
            alteration or modification of this Trustee Agreement may not be
            signed by means of an e-mail address.

                  (iii) Governing Law. THIS TRUSTEE AGREEMENT SHALL BE GOVERNED
            BY AND CONSTRUED IN ACCORDANCE WITH THE

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            INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO APPLICABLE
            PROVISIONS OF CONFLICTS OF LAW TO THE EXTENT THAT APPLICATION OF THE
            LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

                  (iv) Severability. Any provision of this Trustee Agreement
            which may be determined by competent authority to be prohibited or
            unenforceable in any jurisdiction shall, as to such jurisdiction, be
            ineffective to the extent of such prohibition or unenforceability
            without invalidating the remaining provisions hereof, and any such
            prohibition or unenforceability in any jurisdiction shall not
            invalidate or render unenforceable such provision in any other
            jurisdiction. It is expressly understood, however, that the parties
            hereto intend each and every provision of this Trustee Agreement to
            be valid and enforceable and hereby knowingly waive all rights to
            object to any provision of this Trustee Agreement.

                  (v) Counterparts. This Trustee Agreement may be executed in
            several counterparts, each of which shall be deemed an original, but
            all of which together shall constitute one and the same instrument.

                                      -13-
<PAGE>

      IN WITNESS WHEREOF, each of the parties has caused this Trustee Agreement
to be duly executed and delivered in its name and on its behalf as of the 26th
day of August, 2004.

                                       AVONDALE MILLS, INC.

                                       By:_________________________________
                                          Name:
                                          Title:

                                       AVONDALE INCORPORATED

                                       By:_________________________________
                                          Name:
                                          Title

                                      -14-
<PAGE>

                                       WACHOVIA BANK, NATIONAL
                                       ASSOCIATION, as Trustee

                                       By:_________________________________
                                          Name:
                                          Title:

                                      -15-
<PAGE>

                                    EXHIBIT A

                                FORM OF NEW NOTE<PAGE>

                                                               EXHIBIT 10.51

                 CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT

            This CONSENT AND AMENDMENT NO. 2 TO CREDIT AGREEMENT (the
"AMENDMENT") is dated as of May 26, 2004, by and among AVONDALE MILLS, INC., an
Alabama corporation, as the Borrower (in such capacity, the "BORROWER") and as a
Credit Party; AVONDALE MILLS GRANITEVILLE FABRICS, INC., a Delaware corporation,
as a Credit Party (together with Avondale Mills, Inc., the "CREDIT PARTIES" and
each a "CREDIT PARTY"), AVONDALE INCORPORATED, a Georgia corporation
("HOLDINGS") and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation,
as the sole Lender (in such capacity, the "LENDER") and as agent (in such
capacity, the "AGENT"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to such terms in Annex A to the Credit
Agreement referred to below.

                                    RECITALS

            WHEREAS, the Borrower, the Credit Parties, the Lender and the Agent
are parties to a Credit Agreement dated as of November 7, 2003 (as amended,
restated, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT");

            WHEREAS, the Borrower has notified the Agent and the Lender that it
will enter into a certain Exchange Agreement dated as of the date hereof in the
form of Exhibit A attached hereto pursuant to which the Borrower will issue
floating rate notes due July 1, 2012 in an aggregate principal amount of
$2,600,000 (the "New Notes") in favor of Cohanzick Management, L.L.C. in
exchange for the retirement of an aggregate principal amount of $4,000,000 of
the Subordinated Notes (the "Note Exchange");

            WHEREAS, the Borrower, Holdings and the Credit Parties have
requested that the Lender and the Agent consent to any violation of Section 6.2,
Section 6.13 or 6.16 of the Credit Agreement that may arise solely as a result
of the Note Exchange or the Issuance of the New Notes;

            WHEREAS, the Lender and the Agent have agreed to grant such consent
on the terms and conditions set forth herein; and

            WHEREAS, the parties hereto have also agreed, on the terms and
conditions set forth below, to amend the Credit Agreement.

            NOW, THEREFORE, in consideration of the continued performance by
Borrower and each Credit Party of their respective promises and obligations
under the Credit Agreement and the other Loan Documents, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Credit Parties, Holdings, the Lender, and the
Agent hereby agree as follows:

<PAGE>

            1.    Consent. Effective as of the date hereof and subject to the
satisfaction of the conditions precedent set forth in Section 3 below, each of
the Lender and the Agent hereby consent to any violation of Section 6.2, Section
6.13 or 6.16 of the Credit Agreement that may arise solely as a result of the
Note Exchange or the Issuance of the New Notes.

            2.    Amendment to Credit Agreement. Effective as of the date hereof
and subject to the satisfaction of the conditions precedent set forth in Section
3 below, the Credit Agreement is hereby amended as follows:

            (a)   Annex D to the Credit Agreement is hereby amended to delete
the definition of "Subordinated Debt" in its entirety and to substitute the
following therefor:

            "'Subordinated Debt' means the Subordinated Notes, the May 2004
      Floating Rate Notes and any other Indebtedness of any Credit Party
      subordinated to the Obligations in a manner and form satisfactory to Agent
      and Lenders in their sole discretion, as to right and time of payment and
      as to any other rights and remedies thereunder."

            (b)   Annex D to the Credit Agreement is hereby amended to add the
following defined term in the appropriate alphabetical location:

            "'May 2004 Floating Rate Notes' means those certain floating rate
      notes due July 1, 2012 issued by Borrower in an aggregate original
      principal amount of $2,600,000."

            (c)   Schedule 6.3 to the Credit Agreement is hereby amended and
restated in its entirety as Exhibit B attached hereto.

            3.    Effectiveness of this Amendment; Conditions Precedent. The
provisions of Paragraphs 1 and 2 of this Amendment shall be deemed to have
become effective as of the date of this Amendment, but such effectiveness shall
be expressly conditioned upon the Agent's receipt of a faxed counterpart of this
Amendment executed and delivered by duly authorized officers of the Borrower,
the Credit Parties, Holdings and the Lender.

            4.    Miscellaneous.

            (a)   Headings. The various headings of this Amendment are inserted
for convenience of reference only and shall not affect the meaning or
interpretation of this Amendment or any provisions hereof.

            (b)   Counterparts. This Amendment may be executed by the parties
hereto in several counterparts, each of which shall be deemed to be an original
and all of which together shall be deemed to be one and the same instrument.
Delivery of an executed counterpart of a signature page to this Amendment by
facsimile transmission shall be effective as delivery of a manually executed
counterpart thereof.

            (c)   Interpretation. No provision of this Amendment shall be
construed against or interpreted to the disadvantage of any party hereto by any
court or other governmental or

                                        2
<PAGE>

judicial authority by reason of such party's having or being deemed to have
structured, drafted or dictated such provision.

            (d)   Reaffirmation, Ratification and Acknowledgment; Reservation.
Each of the Borrower, the Credit Parties and Holdings hereby (a) ratifies and
reaffirms all of its payment and performance obligations, contingent or
otherwise, and each grant of security interests and liens in favor of the Agent
on behalf of the Lender, under each Loan Document to which it is a party, (b)
agrees and acknowledges that such ratification and reaffirmation is not a
condition to the continued effectiveness of such Loan Documents, and (c) agrees
that neither such ratification and reaffirmation, nor the Agent's, or the
Lender's solicitation of such ratification and reaffirmation, constitutes a
course of dealing giving rise to any obligation or condition requiring a similar
or any other ratification or reaffirmation from the Borrower, Holdings or such
Credit Party with respect to any subsequent modifications to the Credit
Agreement or the other Loan Documents. The Credit Agreement is in all respects
ratified and confirmed. Each of the Loan Documents shall remain in full force
and effect and are hereby ratified and confirmed. Except as set forth in Section
1 above, neither the execution, delivery nor effectiveness of this Amendment
shall operate as a waiver of any right, power or remedy of the Agent or the
Lender, or of any Default or Event of Default (whether or not known to the Agent
or the Lender), under any of the Loan Documents, all of which rights, powers and
remedies, with respect to any such Default or Event of Default or otherwise, are
hereby expressly reserved by the Agent and the Lender. This Amendment shall
constitute a Loan Document for purposes of the Credit Agreement.

            (e)   Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF GEORGIA.

            (f)   Effect. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Amendment," "hereunder," "hereof" or
words of like import shall mean and be a reference to the Credit Agreement as
amended hereby and each reference in the other Loan Documents to the Credit
Agreement, "thereunder," "thereof," or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby. Except as expressly
provided in this Amendment, all of the terms, conditions and provisions of the
Credit Agreement and the other Loan Documents shall remain the same. Each of the
Borrower, the Credit Parties and Holdings hereby represents and warrants to the
Lender and the Agent that all authorizations, consents and approvals of such
Person's board of directors and shareholders, and all other Persons, necessary
to permit such Person to execute and deliver this Amendment and to perform its
obligations hereunder and under the Credit Agreement as amended hereby, and to
permit the Lender and the Agent to enforce such obligations, have been obtained.

            (g)   No Novation or Waiver. Except as specifically set forth in
this Amendment the execution, delivery and effectiveness of this Amendment shall
not (a) limit, impair, constitute a waiver by, or otherwise affect any right,
power or remedy of, the Agent or the Lender under the Credit Agreement or any
other Loan Document, (b) constitute a waiver of any provision in the Credit
Agreement or in any of the other Loan Documents or of any Default or Event of
Default that may have occurred and be continuing, or (c) alter, modify, amend or
in any way affect any of the terms, conditions, obligations, covenants or
agreements contained in

                                        3
<PAGE>

the Credit Agreement or in any of the other Loan Documents, all of
which are ratified and affirmed in all respects and shall continue in full force
and effect.

            (h) Agent's Expenses. The Borrower hereby agrees to promptly
reimburse the Agent for all of the reasonable out-of-pocket expenses, including,
without limitation, attorneys' and paralegals' fees, it has heretofore or
hereafter incurred or incurs in connection with the preparation, negotiation and
execution of this Amendment.

                                     ******

                                        4
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.

                                       GENERAL ELECTRIC CAPITAL
                                       CORPORATION, as Agent and the sole Lender

                                      By: ______________________________________
                                      Name: Curtis J. Correa
                                      Title: Duly Authorized Signatory

                                      AVONDALE MILLS, INC., as the Borrower and
                                      as a Credit Party

                                      By: ______________________________________
                                      Name: Jack R. Altherr, Jr.
                                      Title: Vice Chairman and Chief
                                      Financial Officer

                                      AVONDALE MILLS GRANITEVILLE FABRICS,
                                      INC., as a Credit Party

                                      By: ______________________________________
                                      Name: Jack R. Altherr, Jr.
                                      Title: Vice Chairman and Chief
                                      Financial Officer

                                      AVONDALE INCORPORATED

                                      By: ______________________________________
                                            Name: Jack R. Altherr, Jr.
                                            Title: Vice Chairman and Chief
                                            Financial Officer

        Signature Page to Consent and Amendment No. 2 to Credit Agreement

<PAGE>

                                    EXHIBIT A

                               Exchange Agreement

                                   (attached)

<PAGE>

                                    EXHIBIT B

                        Amended and Restated Schedule 6.3

                                   (attached)

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