Document:

<PAGE>
                                                                  EXHIBIT 10.35

                        RECEIVABLES PURCHASE TERMINATION
                           AND REASSIGNMENT AGREEMENT

         THIS RECEIVABLES PURCHASE TERMINATION AND REASSIGNMENT AGREEMENT (this
"Agreement") is made and entered into as of August 30, 2002, among
MANUFACTURERS AND TRADERS TRUST COMPANY, not individually but solely as trustee
(the "Trustee") for the AVONDALE RECEIVABLES MASTER TRUST (the "Trust"),
AVONDALE RECEIVABLES COMPANY (the "Receivables Subsidiary"), AVONDALE MILLS,
INC. ("Avondale Mills" or the "Originator"), FALCON ASSET SECURITIZATION
CORPORATION ("FALCON"), as the "Purchaser" under the "Certificate Purchase
Agreement" (as defined below) and BANK ONE, N.A. (formerly known as The First
National Bank of Chicago) as the "Support Bank" and as "Agent" under the
Certificate Purchase Agreement.

                               STATEMENT OF FACTS

                  I.       Pursuant to that certain Receivables Purchase
Agreement, dated as of April 29, 1996 (as amended, restated, supplemented or
otherwise modified from time to time, the "Receivables Purchase Agreement"),
between the Receivables Subsidiary and the Originator, the Receivables
Subsidiary has purchased from time to time from the Originator certain
receivables and related assets resulting from the sale of goods or the
provision of services to customers of the Originator.

                  II.      Pursuant to that certain Avondale Receivables Master
Trust Pooling and Servicing Agreement, dated as of April 29, 1996 (as amended,
restated, supplemented or otherwise modified from time to time, the "Pooling
Agreement"), among the Receivables Subsidiary, Avondale Mills, as servicer
thereunder (the "Servicer") and the Trustee, the Receivables Subsidiary has
transferred the "Transferred Assets" (as defined therein) to the Trustee.

                  III.     Pursuant to that certain Amended and Restated
Certificate Purchase Agreement (Series 1996-1), dated as of November 21, 1997
(as amended, restated, supplemented or otherwise modified from time to time,
the "Certificate Purchase Agreement"), among the Receivables Subsidiary, the
Servicer, FALCON, the Support Bank and the Agent, FALCON, and the Support Bank
purchased certain fractional undivided interests in the Trust and the
Transferred Assets, which interests are evidenced by the Series 1996-1
Certificates (the "Certificates" and, together with the Transferred Assets, the
"Overall Receivables Assets"), issued pursuant to the Amended and Restated
Series 1996-1 Supplement to the Pooling Agreement dated as of November 21, 1997
(the "Series Supplement"), among the Receivables Subsidiary, the Servicer and
the Trustee.

                  IV.      The parties hereto desire to terminate the
Receivables Purchase Agreement, the Pooling Agreement, the Certificate Purchase
Agreement, each Transaction

                                      -1-
<PAGE>
Document and each other agreement, instrument, certificate and document
executed or furnished in connection therewith (including without limitation,
each Buyer Note and each agreement relating to any lockbox account, collection
account or blocked account into which any collections on or proceeds of any
Transferred Assets are deposited) (collectively, the "Transaction Agreements")
and to provide for (a) the release of all interests (including, without
limitation, each security interest, if any) held by each of FALCON, the Support
Bank and the Agent in the Overall Receivables Assets and the reconveyance of
such Overall Receivables Assets to the Receivables Subsidiary, (b) the release
of all interests (including, without limitation, each security interest) held
by the Trustee in the Transferred Assets and the reconveyance of such
Transferred Assets to the Receivables Subsidiary and (c) the release of all
interests (including, without limitation, each security interest) held by the
Receivables Subsidiary in the Transferred Assets and the reconveyance of such
Transferred Assets to the Originator, all in accordance with and subject to the
terms and conditions of this Agreement.

                  V.       The parties hereto hereby acknowledge that the
Originator plans to sell or otherwise convey some or all of the Transferred
Assets to Avondale Funding, LLC ("Funding") on or after the date hereof
pursuant to one or more receivables sale agreements, that Funding plans to
convey some or all of such property to Redwood Receivables Corporation
("Redwood") pursuant to a receivables purchase and sale agreement and that
General Electric Capital Corporation ("GECC") from time to time acts as an
administrative agent for Redwood.

                               STATEMENT OF TERMS

                  NOW, THEREFORE, in consideration of the mutual covenants
herein set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:

                  1.       Definitions. Unless otherwise expressly defined
herein, all capitalized terms used herein shall have the respective meanings
given such terms (a) in the Certificate Purchase Agreement, (b) if not defined
in the foregoing, in the Pooling Agreement, (c) if not defined in the
foregoing, in the Receivables Purchase Agreement, or (d) if not defined in the
foregoing, in the other Transaction Agreements.

                  2.       Release of Interests by the Agent, FALCON and the
Support Bank. (a) The total obligations due to the Agent, the Support Bank and
FALCON, if paid to the Agent on or before 3:00 p.m. (New York City time) on
August 30, 2002 (the "Expected Payoff Date"), will be $64,569,534.30 (the
"Payoff Amount"), which amounts include all outstanding principal, accrued
interest, fees, expenses, costs, liquidated damages and other amounts, if any,
which are due and payable by the Receivables Subsidiary, the Trust, the
Trustee, the Originator, the Servicer and each Affiliate of the Receivables
Subsidiary, the Trust, the Trustee, the Originator and the Servicer
(collectively, the "Receivables Seller Parties") to the Agent, the Support Bank
and FALCON pursuant to the Transaction Agreements, which amount will also
include, without limitation, all costs and expenses incurred by the Agent, the
Support Bank and FALCON in connection with the negotiation and execution of
this Agreement and the transactions contemplated herein. If the payment of the
Payoff Amount does not occur before 3:00 p.m.

                                      -2-
<PAGE>
(New York City time) on the Expected Payoff Date, (i) the Originator will
designate a new date for payment of the Payoff Amount, (ii) the Agent will, no
later than 5:00 p.m. on the Business Day immediately before such new payoff
date, recalculate the Payoff Amount by written notice to the other parties
hereto to reflect additional accrued and unpaid interest (calculated at the
Corporate Base Rate as described in the Series Supplement), plus fees and
expenses and (iii) such recalculation shall, absent timely objection from the
Originator, be conclusive evidence of such Payoff Amount.

                  (b)      Payment of the Payoff Amount shall be made by and on
behalf of the Receivables Seller Parties by way of a wire transfer of
immediately available funds to the following account (the "Termination Payment
Account"):

                           Bank Name:        Manufactures and Traders Trust
                                             Company
                           City and State:   Buffalo, New York

                           ABA Routing No.:  022000046
                           Account Number:   185621133
                           Reference:        Attention: Trust Division/CC880

The Trustee will withdraw an amount equal to the Payoff Amount from the
Termination Payment Account and distribute such amount to the Agent (on behalf
of itself, FALCON and the Support Bank) by wire transfer of immediately
available funds to be made to the same account to which the Trustee currently
wires payments of interest and principal on the Certificates.

                  (c)      Subject to the terms and conditions of this
Agreement and in consideration of the payment in full of the Payoff Amount in
immediately available funds, the Agent, on behalf of itself, the Support Bank
and Falcon, hereby (i) acknowledges and agrees that payment of the Payoff
Amount will constitute payment in full of all obligations of the Receivables
Seller Parties under the Transaction Agreements and that, upon payment of the
Payoff Amount as described above, the Transaction Documents will automatically
terminate and that none of the Receivables Seller Parties or any guarantor or
obligor of any such Person shall have any further obligation or liability to
the Agent, FALCON or the Support Bank under the Transaction Agreements, except
for indemnities and such other obligations that by the express terms of the
Transaction Agreements survive the termination thereof, (ii) represents and
warrants that FALCON has not assigned to any other Person any of its rights as
the "Purchaser" under the Certificate Purchase Agreement and that Bank One has
not assigned to any other Person any of its rights as the "Support Bank" under
the Certificate Purchase Agreement and (iii) represents and warrants that the
interests being reconveyed hereunder by the Agent, the Support Bank and FALCON
are in each case reconveyed free and clear of any lien or security interest
created by the Agent, the Support Bank or Falcon. The Agent, for itself and on
behalf of FALCON and the Support Bank, further agrees that, concurrently with
its receipt of the Payoff Amount in immediately available funds, all security
interests and liens, if any, that each Receivables Seller Party or any
guarantor or obligor of the obligations under the Transaction Agreements have
granted to the Agent, FALCON and the Support Bank with respect to the
transactions contemplated by the Transaction Agreements, whether or not
specifically referred to herein, shall be automatically released. FALCON and
the Support Bank hereby expressly acknowledge and agree that payment of the

                                      -3-
<PAGE>
Payoff Amount to the Agent as described above will constitute payment in full
of all obligations of the Receivables Seller Parties to FALCON and the Support
Bank under the Transaction Agreements, except for indemnities and such other
obligations that by the express terms of the Transaction Agreements survive the
termination thereof, and that, upon such payment, FALCON and the Support Bank
will look solely to the Agent for receipt of any portion of the Payoff Amount
owed to them and none of the Receivables Seller Parties or any guarantor or
obligor of any such Person shall have any further obligation or liability to
FALCON or the Support Bank under the Transaction Agreements, except for
indemnities and such other obligations that by the express terms of the
Transaction Agreements survive the termination thereof.

                  (d)      Immediately upon the payment of the Payoff Amount in
immediately available funds as described above, the Agent, on behalf of itself,
FALCON and the Support Bank, and the Trustee each hereby authorizes each
Receivables Seller Party, Funding, Redwood and GECC to file and record
termination statements with respect to each financing statement in favor of the
Trustee, the Agent, FALCON and the Support Bank described on Schedule I and
such other financing statements which evidence the liens and security interests
granted in connection with the transactions contemplated by the Transaction
Documents and may be of record in favor of the Trustee, the Agent, FALCON and
the Support Bank; the Agent will deliver (or cause to be delivered) to the
Trustee the originals of each Certificate for surrender and cancellation; and
the Agent will deliver, at the expense of the Receivables Seller Parties but in
no event at the expense of the Trustee, the Agent, Falcon or the Support Bank,
such other termination statements or documents as any Receivables Seller Party
may reasonably request in connection with the Trustee's, Agent's, FALCON's and
the Support Bank's above-described release of the security interests and liens
granted to the Trustee, the Agent, FALCON or the Support Bank pursuant to the
Transaction Agreements.

                  3.       Reconveyance by the Trust. (a) Subject to the terms
and conditions of this Agreement, the Receivables Subsidiary will, concurrently
with the payment of the Payoff Amount to the Termination Payment Account in
immediately available funds as described above, be automatically deemed without
the need for any further action to have contributed an amount equal to the
Payoff Amount (the "Contribution") to the Trust and, the Trust, upon receipt of
such Contribution, hereby assigns, transfers, and conveys to the Receivables
Subsidiary, in consideration of the Receivables Subsidiary's interests in the
Trust, without recourse, except as specifically set forth herein, and the
Receivables Subsidiary hereby accepts and receives, all of the Trustee's and
the Trust's rights, titles and interests in and to the Transferred Assets
transferred by the Receivables Subsidiary to the Trustee (on behalf of the
Trust) pursuant to the Pooling Agreement.

                  (b)      The Trust, without recourse, except as specifically
set forth herein, hereby (i) represents and warrants that the Series 1996-1
Certificates were the only "Certificates" issued by the Trust, (ii) agrees that
upon receipt by the Trust of the Contribution by the Receivables Subsidiary,
all of the Transaction Agreements shall automatically terminate and that
neither the Receivables Subsidiary nor any Affiliate of the Receivables
Subsidiary nor any guarantor or obligor of any such Person shall have any
further obligation or liability to the Trust under the Transaction Agreements,
except for indemnities and such other obligations that by the express

                                      -4-
<PAGE>
terms of the Transaction Agreements survive the termination thereof and (iii)
represents and warrants that the Trustee has not granted any lien or security
interest in any of the Transferred Assets to any Person other than through the
issuance of Certificates to the Agent, FALCON and the Support Bank. The
Servicer hereby represents and warrants that (i) except as set forth herein,
the Trust has no liens against or security interests in the capital stock or
other equity interests in the Receivables Subsidiary or any Affiliate of the
Receivables Subsidiary or their respective personal or real property securing
the obligations of the Receivables Subsidiary or any Affiliate of the
Receivables Subsidiary to the Trust under the Transaction Agreements, (ii) the
UCC filings described on Schedule I hereto describe all of the UCC filings
filed in connection with the transactions contemplated by the Transaction
Documents against the Receivables Subsidiary and each Affiliate of the
Receivables Subsidiary in favor of the Trust with respect to the transactions
contemplated by the Transaction Agreements and (iii) other than as set forth on
Schedule I, no filing in connection with the transactions contemplated by the
Transaction Documents has been made with respect to any obligation of the
Receivables Subsidiary or any Affiliate of the Receivables Subsidiary under any
of the Transaction Agreements or with respect to any collateral or security
therefor. The Trust further agrees that, concurrently with its receipt of the
Contribution from the Receivables Subsidiary as provided in Section 3(a) above,
all security interests and liens that the Receivables Subsidiary or any
Affiliate of the Receivables Subsidiary or any guarantor or obligor of the
obligations under the Transaction Agreements have granted to the Trust, whether
or not specifically referred to herein, shall be automatically released.

                  (c)      Upon receipt of the Contribution and concurrently
with the reconveyance of the Transferred Assets as described in Section 3(a)
above, the Trust hereby authorizes the Receivables Subsidiary, the Originator,
Funding, Redwood and GECC to file and record termination statements with
respect to each financing statement described on Schedule I and such other
financing statements as may be of record with respect to the Receivables
Subsidiary or any other Receivables Seller Party in favor of the Trust, and the
above-mentioned release documents; and the Trustee, on behalf of the Trust,
will execute such other termination statements or documents as the Receivables
Subsidiary, the Originator, Funding, Redwood or GECC may reasonably request in
connection with the Trust's above-described release of the security interests
and liens granted to the Trust pursuant to the Transaction Agreements; provided
that such other documents shall be prepared by the requesting party at the
expense of the Receivables Seller Parties and in no event at the expense of the
Trustee, the Agent, Falcon or the Support Bank.

                  4.       Reconveyance by the Receivables Subsidiary. (a)
Subject to the terms and conditions of this Agreement, and in consideration of
the Originator's payment of the Payoff Amount to the Trustee on behalf of the
Receivables Subsidiary, concurrently with and upon the reconveyance of the
Transferred Assets to the Receivables Subsidiary as described in Section 3
above, the Receivables Subsidiary hereby sells, assigns, transfers, and conveys
to the Originator, without recourse, except as specifically set forth herein,
and the Originator hereby accepts, purchases and receives, all of the
Receivables Subsidiary's rights, titles and interests in and to the Transferred
Assets (collectively, the "Reconveyed Property") transferred by the Originator
to Receivables Subsidiary pursuant to the Receivables Purchase Agreement. The
Originator and the Receivables Subsidiary intend, concurrently with and upon
the reconveyance of the Reconveyed Property, to merge the Receivables
Subsidiary with and into the Originator.

                                      -5-
<PAGE>
                  (b)      The Receivables Subsidiary, without recourse, except
as specifically set forth herein, hereby (i) represents and warrants that
except as set forth herein, the Receivables Subsidiary has no liens against or
security interests in the capital stock or other equity interests in the
Originator or any Affiliate of the Originator or their respective personal or
real property securing the obligations of the Originator or any Affiliate of
the Originator to the Receivables Subsidiary under the Transaction Agreements,
(ii) agrees that payment of the Payoff Amount to the Trustee in immediately
available funds as described above shall be deemed payment to the Receivables
Subsidiary and that, upon such receipt, all of the Transaction Agreements shall
automatically terminate and that neither the Originator nor any Affiliate of
the Originator nor any guarantor or obligor of any such Person shall have any
further obligation or liability to the Receivables Subsidiary under the
Transaction Agreements, except for indemnities and such other obligations that
by the express terms of the Transaction Agreements survive the termination
thereof, (iii) represents and warrants that the UCC filings described on
Schedule I hereto describe all of the UCC filings filed in connection with the
transactions contemplated by the Transaction Documents against the Originator
and each Affiliate of the Originator in favor of the Receivables Subsidiary
with respect to the transactions contemplated by the Transaction Agreements,
(iv) represents and warrants that the Receivables Subsidiary has not granted
any lien or security interest in any of the Transferred Assets to any Person
other than the Trust, and (v) represents and warrants that other than as set
forth on Schedule I, no filing in connection with the transactions contemplated
by the Transaction Documents has been made with respect to any obligation of
the Originator or any Affiliate of the Originator under any of the Transaction
Agreements or with respect to any collateral or security therefor. The
Receivables Subsidiary further agrees that, concurrently with its receipt from
the Originator of the Payoff Amount as described above, all security interests
and liens that the Originator or any Affiliate of the Originator or any
guarantor or obligor of the obligations under the Transaction Agreements have
granted to the Receivables Subsidiary, whether or not specifically referred to
herein, shall be automatically released.

                  (c)      Upon payment of the Payoff Amount as described
above, the Receivables Subsidiary hereby authorizes the Originator, Funding,
Redwood and GECC to file and record termination statements with respect to each
financing statement described on Schedule I and such other financing statements
as may be of record with respect to the Originator in favor of the Receivables
Subsidiary, and the above-mentioned release documents; and the Receivables
Subsidiary will deliver (or cause to be delivered) such other termination
statements or documents as the Originator, Funding, Redwood or GECC may
reasonably request in connection with the Receivables Subsidiary's
above-described release of the security interests and liens granted to the
Receivables Subsidiary pursuant to the Transaction Agreements.

                  5.       Termination of Transaction Agreements. Upon the
effectiveness of this Agreement as set forth in Section 6, the Transaction
Agreements shall terminate and all obligations and security interests of the
parties thereunder (including without limitation any and all obligations
thereunder to purchase, sell, service or administer any receivables,
Transferred Assets, collections, lock-box accounts or related assets and all
security interests, if any, of the Receivables Seller Parties, the Agent,
FALCON and the Support Bank thereunder) shall

                                      -6-
<PAGE>
terminate, except for indemnities and such other obligations that by the
express terms of the Transaction Agreements survive the termination thereof.
The parties hereto acknowledge and agree that all of the releases and
reconveyances described in paragraphs 2 through 4 shall occur simultaneously
and automatically upon payment of the Payoff Amount to the Agent as described
in Section 2(b) above and that, unless such Payoff Amount is paid in accordance
with such Section so as to make this Agreement effective, none of such releases
and reconveyances shall be deemed to have occurred.

                  6.       Effectiveness of this Agreement. This Agreement
shall be effective as of this date upon the satisfaction of all of the
following conditions precedent:

                           (a)      One or more counterparts of this Agreement
shall have been executed and delivered by each of the Trustee (on behalf of the
Trust), the Receivables Subsidiary, the Originator, the Agent, FALCON and the
Support Bank; and

                           (b)      The Agent (on behalf of itself, FALCON and
the Support Bank) shall have received payment of the Payoff Amount in
accordance with Section 2(b) above.

                  7.       Further Assurances. Each of the Trust, the
Receivables Subsidiary, the Originator, the Agent, FALCON and the Support Bank
hereby agrees to execute and deliver such Uniform Commercial Code termination
statements, lockbox account, collection account and blocked account transfers
or instructions, and such other documents as the Trust, the Receivables
Subsidiary or the Originator may reasonably request from time to time in order
to more fully effectuate the transactions contemplated by this Agreement;
provided, however, that any and all such termination statements, lockbox
account, collection account and blocked account transfers or instructions, and
other documents shall be prepared by the requesting party and all such
preparation and/or recordation shall be at the expense of the Receivables
Seller Parties, as applicable, and in no event at the expense of the Trustee,
the Agent, Falcon or the Support Bank.

                  8.       Representations and Warranties. Each of the parties
hereto represents and warrants that it has the full corporate or other power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and that this Agreement has been duly and validly
executed and delivered by it (and assuming the due and valid execution and
delivery hereof by all other parties hereto) constitutes a legal, valid and
binding obligation of such party enforceable against it in accordance with its
terms, except as the enforceability hereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws of general application
relating to or affecting the enforcement of creditors' rights or by general
principles of equity.

                  9.       Funding Party. The Trustee and the Receivables
Seller Parties each hereby acknowledges and agrees that each of Funding,
Redwood and GECC, as a party responsible for funding the Payoff Amount and an
assignee of the Originator with respect to its interests in the Reconveyed
Assets, is funding such Payoff Amount in reliance on the representations made
by such parties and the releases contemplated herein.

                                      -7-
<PAGE>
                  10.      GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF
CONFLICTS) OF THE STATE OF NEW YORK.

                  11.      Miscellaneous. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns. This Agreement may be executed in any number of several
counterparts, and each such counterpart shall constitute an original and all
such counterparts together shall constitute one and the same instrument. The
delivery of an executed counterpart hereof by facsimile shall constitute
delivery of an executed counterpart hereof.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -8-
<PAGE>
                  IN WITNESS, each of the parties hereto, by their respective
duly authorized signatories, has executed and delivered this Agreement as of
the date first above written.

                                    AVONDALE RECEIVABLES MASTER TRUST,
                                    as Trust

                                    By: MANUFACTURERS AND TRADERS TRUST
                                    COMPANY, not in its individual capacity but
                                    solely as Trustee on behalf of the Trust

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

                                    AVONDALE RECEIVABLES COMPANY,
                                    as Receivables Subsidiary

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

                                    AVONDALE MILLS, INC., as Originator

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

          RECEIVABLES PURCHASE TERMINATION AND REASSIGNMENT AGREEMENT
                          DATED AS OF AUGUST 30, 2002

<PAGE>
                                    FALCON ASSET SECURITIZATION
                                    CORPORATION, as Purchaser

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

                                    BANK ONE, N.A., as Agent and as Support
                                    Bank

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

          RECEIVABLES PURCHASE TERMINATION AND REASSIGNMENT AGREEMENT
                          DATED AS OF AUGUST 30, 2002
<PAGE>
                                   SCHEDULE I

                            UCC Financing Statements

Debtor:

Name:     Avondale Mills, Inc.
Address:  506 South Broad Street, Monroe, Georgia  30655

<TABLE>
<CAPTION>
Jurisdiction                             Filing Number                          Filing Date

<S>                                      <C>                                    <C>
SOS Alabama                              B96-18887                              05/01/96
Tift County, Georgia                     137-1994-001487                        07/15/96
Clerk, Superior Court, Walton County,    147-1996-517                           05/02/96
Georgia
Clerk, Superior Court, Walton County,    147-1997-1702                          11/24/97
Georgia
Clerk, Superior Court, Walton County,    147-2001-419                           04/19/01
Georgia
SOS North Carolina                       1335266                                05/01/96
SOS North Carolina                       1518837                                11/24/97
SOS South Carolina                       960501-135332A                         05/01/96
SOS South Carolina                       971124-163340C                         11/24/97
SOS South Carolina                       010419-102244A                         04/19/01
</TABLE>

Debtor:

Name:
Address:

<TABLE>
<CAPTION>
Jurisdiction                             Filing Number                          Filing Date
<S>                                      <C>                                    <C>

</TABLE>

<PAGE>
                      ACCOUNT AGREEMENT TERMINATION LETTER

                                August 30, 2002

Wachovia Bank, National Association     Avondale Mills, Inc.
191 Peachtree Street, NE                506 South Broad Street
Atlanta, Georgia  30303                 Monroe, Georgia  30655

Avondale Funding, LLC                   Redwood Receivables Corporation
133 Marshall Street                     c/o General Electric Capital Corporation
Graniteville, South Carolina 29829      3001 Summer Street, 2nd Floor
                                        Stamford, Connecticut  06927

General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927

Re:      Certain Accounts involving Avondale Mills, Inc., Avondale Receivables
         Company and Avondale Receivables Master Trust

To Whom It May Concern:

            Reference is hereby made to that certain Receivables Purchase
Termination and Reassignment Agreement dated as of August 30, 2002 (the
"Termination Agreement") among Avondale Receivables Master Trust (the "Trust"),
Avondale Receivables Company, Avondale Mills, Inc., Falcon Asset Securitization
Corporation and Bank One, N.A., in its roles as "Agent" and "Support Bank".

         Pursuant to the terms of the Termination Agreement, each of the
undersigned hereby gives you written notice that it has released all right,
title and interest, all liens on and security interests, if any, in and all
rights to control or direct the disposition of each of the accounts listed on
Schedule A attached hereto and all funds that are or may in the future be on
deposit in each such account.

<PAGE>
         This letter may be executed in any number of several counterparts, and
each such counterpart shall constitute an original and all such counterparts
together shall constitute one and the same letter. The delivery of an executed
counterpart hereof by facsimile shall constitute delivery of an executed
counterpart hereof.

                                    Very Truly Yours,

                                    AVONDALE RECEIVABLES MASTER TRUST,
                                    as Trust

                                    By: MANUFACTURERS AND TRADERS TRUST
                                    COMPANY, not in its individual capacity but
                                    solely as Trustee on behalf of the Trust

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

                                    AVONDALE RECEIVABLES COMPANY,
                                    as Receivables Subsidiary

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

                      Account Agreement Termination Letter
                          dated as of August 30, 2002
<PAGE>
                                   SCHEDULE A

               LOCKBOXES, LOCKBOX ACCOUNTS AND COLLECTION ACCOUNT

<TABLE>
<CAPTION>
CONCENTRATION
ACCOUNT:                   NAME:                              BANK:

<S>                        <C>                                <C>
13-022-948                 Avondale Mills, Inc.               Wachovia Bank National Association
                                                              (f/k/a Wachovia Bank, N.A.)
                                                              191 Peachtree Street, N.E.
                                                              Atlanta, GA  30303
</TABLE>

<TABLE>
<CAPTION>
                           LOCKBOX
LOCKBOX:                   ACCOUNT:          NAME:                      BANK:

<S>                        <C>               <C>                        <C>
Avondale Mills, Inc.       101307            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 101307                              Fabric Division            (f/k/a Wachovia Bank, N.A.)
Atlanta, GA 30392-1307                       (Atlanta)                  191 Peachtree Street, N.E.
                                                                        Atlanta, GA 30303
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       101264            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 101264                              Trucking Division          (f/k/a Wachovia Bank, N.A.)
Atlanta, GA 30392-1264                       (Atlanta)                  P.O. Box 4148
                                                                        Atlanta, GA 30302-1448
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       101436            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 101436                              Yarn Division              (f/k/a Wachovia Bank, N.A.)
Atlanta, GA 30392-1436                       (Atlanta)                  P.O. Box 4148
                                                                        Atlanta, GA 30302-1448
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       951280            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 951280                              Graniteville Fabrics       (f/k/a Wachovia Bank of Texas)
Dallas, TX  75395-1280                       (Dallas)                   1010 W. Mockingbird Lane, Suite 100
                                                                        Dallas, TX 75247
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       75431             Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 75431                               Graniteville Fabrics       (f/k/a Wachovia Bank of North
Charlotte, NC  28275-5431                    (Charlotte)                Carolina)
                                                                        Attention:  Lockbox 75431
                                                                        10301 David Taylor Drive
                                                                        Charlotte, NC  28262-2334
                                                                        (Flows into Act. 13-022-948)
</TABLE>

<PAGE>

                            PAYMENT DIRECTION LETTER

                                August 30, 2002

General Electric Capital Corporation
201 High Ridge Road
Stamford, Connecticut 06927

                  Re:      Avondale Funding, LLC and Avondale Mills, Inc.

Ladies and Gentlemen:

                  Pursuant to that certain Receivables Purchase Termination and
Reassignment Agreement, dated as of August 30, 2002 (the "Termination
Agreement") among Avondale Receivables Master Trust (the "Trust"), Avondale
Receivables Company (the "Receivables Subsidiary"), Avondale Mills, Inc.,
Falcon Asset Securitization Corporation ("FALCON") and Bank One, N.A., in its
roles as "Agent" and "Support Bank", (i) each of the Agent, FALCON and the
Support Bank have agreed to release all interests, security interests and liens
that each such entity has in the "Overall Receivables Assets" (as such term is
defined in the Termination Agreement) in consideration for the receipt of the
"Payoff Amount" (as such term is described in the Termination Agreement) from
the Trust, (ii) the Trust has agreed to assign, transfer and convey all of the
Trust's right, title and interest in and to the "Transferred Assets" (as such
term is defined in the Termination Agreement) to the Receivables Subsidiary and
the Receivables Subsidiary has agreed to such assignment, transfer and
conveyance and to make the "Contribution" (as such term is defined in the
Termination Agreement) to the Trust and (iii) the Receivables Subsidiary has
agreed to sell, assign, transfer and convey all of the Receivables Subsidiary's
right, title and interests to the "Transferred Assets" to the Originator in
consideration for the payment of the Payoff Amount and Contribution by the
Originator and the Originator has agreed to such sale, assignment, transfer and
conveyance.

                  Pursuant to that certain Receivables Sale and Contribution
Agreement, dated as of August 30, 2002 (the "Sale Agreement"), among Avondale
Mills, Inc. (the "Originator"), Avondale Incorporated and Avondale Funding, LLC
("Funding"), the Originator has agreed to sell, contribute and otherwise assign
certain accounts receivable and other related assets to Funding.

                  Pursuant to that certain Receivables Purchase and Servicing
Agreement, dated as of August 30, 2002 (the "Purchase Agreement"), among
Funding, Avondale Mills, Inc. (the "Servicer"), Redwood Receivables Corporation
(the "Conduit Purchaser") and General Electric Capital Corporation, as
committed purchaser (the "Committed Purchaser") and as administrative agent
(the "Administrative Agent"), Funding has agreed to sell interests to the
Conduit Purchaser and the Committed Purchaser in the accounts receivable and
related assets acquired by Funding

<PAGE>
under the Sale Agreement and certain other assets. All capitalized terms not
otherwise defined herein shall have the meanings assigned to them in the
Purchase Agreement.

Directions:
__________

                  The Trust hereby directs the Receivables Subsidiary to
deposit the amount of the Contribution in the following account (the
"Termination Payment Account") :

                  Bank Name:        Manufactures and Traders Trust Company
                  City and State:   Buffalo, New York
                  ABA Routing No.:  022000046
                  Account Number:   185621133
                  Reference:        Attention: Trust Division/CC880
                  Amount:           $64,569,534.30

The Trustee will withdraw an amount equal to the Payoff Amount from the
Termination Payment Account and distribute such amount to the Agent (on behalf
of itself, FALCON and the Support Bank) to fulfill the Trust's obligations to
pay the Payoff Amount to the Agent pursuant to the terms of the Termination
Agreement. Such distribution shall be by wire transfer of immediately available
funds to be made to the same account to which the Trustee currently wires
payments of interest and principal on the Certificates.

                  The Receivables Subsidiary hereby directs the Originator to
deposit the amount of the Contribution into the Termination Payment Account.
The Receivables Subsidiary intends that the payment described in this paragraph
fulfill the directions to the Receivables Subsidiary provided by the Trust in
the immediately preceding paragraph.

                  The Originator hereby directs Funding to pay a portion of the
initial "Sale Price" (as such term is defined in the Sale Agreement) equal to
the amount of the Contribution into the Termination Payment Account as partial
payment of the Sale Price. The remainder of the Sale Price shall be paid
pursuant to instructions given to Funding by the Originator apart from this
Payment Direction Letter. The Originator intends that the payment described in
this paragraph fulfill the directions to the Originator provided by the
Receivables Subsidiary in the immediately preceding paragraph.

                  Funding hereby directs the Administrative Agent (on behalf of
the Conduit Purchaser and the Committed Purchaser) to pay (a) a portion of the
initial "Capital Investment" (as such term is defined in the Purchase
Agreement) to be made by the Conduit Purchaser and/or the Committed Purchaser
under the Purchase Agreement equal to the amount of the Contribution into the
Termination Payment Account and (b) the remainder of the initial Capital
Investment into the "Collection Account" (as such term is defined in the
Purchase Agreement). Funding intends that the payment described in clause (a)
of this paragraph fulfill the directions to Funding provided by the Originator
in the immediately preceding paragraph.

                  This Payment Direction Letter may be executed in any number
of separate counterparts, each of which shall collectively and separately
constitute one agreement. THIS PAYMENT DIRECTION LETTER SHALL BE GOVERNED BY
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK.

                            [signature pages follow]
<PAGE>
         IN WITNESS WHEREOF, the parties have caused this Payment Direction
Letter to be executed by their respective officers thereunto duly authorized as
of the date first above written.

                                    AVONDALE RECEIVABLES MASTER TRUST,
                                    as Trust

                                    By: MANUFACTURERS AND TRADERS TRUST
                                    COMPANY, not in its individual capacity but
                                    solely as Trustee on behalf of the Trust

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

                                    AVONDALE RECEIVABLES COMPANY,

                                    as Receivables Subsidiary

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

                                    AVONDALE MILLS, INC., as Originator

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

                                    AVONDALE FUNDING, LLC, as Funding

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

Acknowledged and Agreed to as
of the date first written above:

GENERAL ELECTRIC CAPITAL CORPORATION

------------------------
By:  Craig Winslow
Title:  Duly Authorized Signatory

                            Payment Direction Letter
                          dated as of August 30, 2002<PAGE>
                                                                  EXHIBIT 10.36

                           BLOCKED ACCOUNT AGREEMENT

                  THIS BLOCKED ACCOUNT AGREEMENT ("AGREEMENT") is made and
entered into as of this 30th day of August, 2002, by and among WACHOVIA BANK,
NATIONAL ASSOCIATION, a national banking association ("BANK"), AVONDALE MILLS,
INC., an Alabama corporation (the "ORIGINATOR"), AVONDALE FUNDING, LLC, a
Delaware limited liability company (the "COMPANY") and GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, together with any successors and assigns,
in its capacity as administrative agent (the "ADMINISTRATIVE AGENT") for the
"Purchasers" under the "Purchase Agreement (as defined below). Capitalized
terms used herein without being defined herein shall have the meanings given to
such terms in the Purchase Agreement.

                  A.       Pursuant to one or more agreements between the
Originator and Bank (the "LOCKBOX AGREEMENTS"), the Originator has established
the post office lockboxes with Bank identified on Schedule I attached hereto
(collectively, the "LOCKBOXES") through which cash, checks, money orders and
other items of value of the Originator and the Company are processed by Bank
for deposit in the respective accounts established by the Originator with Bank
and identified on Schedule I attached hereto (the "LOCKBOX ACCOUNTS") and the
account identified on Schedule I established by the Originator into which all
amounts on deposit in the Lockbox Accounts are deposited (the "CONCENTRATION
ACCOUNT" and together with the Lockboxes and the Lockbox Accounts, the "BLOCKED
ACCOUNTS").

                  B.       All previous transactions involving the Lockboxes,
the Lockbox Accounts and the Concentration Account have been terminated and all
control and dominion over the Blocked Accounts has been returned to the
Originator.

                  D.       Pursuant to that certain Sale and Contribution
Agreement dated as of August 30, 2002 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "SALE AGREEMENT")
among the Originator, Avondale Incorporated and the Company, the Originator has
agreed to sell certain of its receivables and related assets, including the
Blocked Accounts, to the Company.

                  E.       Pursuant to that certain Receivables Purchase and
Servicing Agreement dated as of August 30, 2002 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the "PURCHASE
AGREEMENT") among the Company, the Originator, acting as Servicer thereunder,
the financial institutions party thereto as "Purchasers" from time to time, and
General Electric Capital Corporation, in its role as "Administrative Agent" for
the Purchasers, the Company has granted, assigned, conveyed, pledged,
hypothecated and transferred to the Administrative Agent, for the benefit of
itself and the Purchasers a Lien upon and security interest in all of its
right, title and interest in, to and under, but none of its obligations arising
from, such Blocked Accounts, as described below.

<PAGE>
                  F.       Wachovia Bank, National Association is the successor
by merger to each of Wachovia Bank of Texas, Wachovia Bank of North Carolina
and Wachovia Bank of Georgia, N.A.

                  G.       The parties hereto desire to enter into this
Agreement in order to set forth their relative rights and duties with respect
to the Blocked Accounts and all funds on deposit therein from time to time.

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:

                  1.       Effectiveness; Conflict. This Agreement shall take
effect immediately upon its execution by all parties hereto and shall supersede
each blocked account agreement or similar agreement in effect with respect to
any Blocked Account. In the event of any conflict between any Lockbox Agreement
or any other agreement between the Bank and the Company, the Originator or any
Affiliate of the Originator, the terms of this Agreement will prevail.

                  2.       The Blocked Accounts. Each party hereto hereby
agrees that each Blocked Account is a "deposit account" within the meaning of
Article 9 of the Uniform Commercial Code. Bank has not agreed with any Person
(other than the Persons party hereto and other than pursuant to agreements that
have been previously terminated) and will not agree with any Person (other than
the Administrative Agent) to comply with instructions or other directions
concerning any Blocked Account or the disposition of any Receipts in any
Blocked Account without the prior written consent of the Administrative Agent.

                  3.       Confirmation of Transfer. The Originator hereby
confirms to the Bank that it has transferred all of its right, title and
interest in and to the Blocked Accounts to the Company.

                  4.       Security Interest; Agency. As collateral security
for Company's obligations to the Purchasers, the Administrative Agent and
certain other Persons under the Purchase Agreement and the other Related
Documents, the Company hereby grants to the Administrative Agent (for the
benefit of the Purchasers and itself) a present and continuing security
interest in (a) each Blocked Account, (b) all contract rights, claims and
privileges in respect of each Blocked Account, and (c) all cash, monies,
checks, money orders, instruments and other items of value of Company or the
Originator now or hereafter paid, deposited, credited, held (whether for
collection, provisionally or otherwise) or otherwise in the possession or under
the control of, or in transit to, Bank or any agent, bailee or custodian
thereof (collectively, "RECEIPTS"), and all proceeds of the foregoing, and the
Bank acknowledges that this Agreement constitutes notice, in accordance with
the Uniform Commercial Code, of the Administrative Agent's security interest in
such collateral and does hereby consent thereto. The Administrative Agent
hereby appoints Bank as the Administrative Agent's bailee and
pledgee-in-possession for the Blocked Accounts and all Receipts, and Bank
hereby accepts such appointment and agrees to be bound by the terms of this
Agreement. Company hereby agrees to such appointment and further agrees that
Bank, on behalf of Administrative Agent, shall be entitled to exercise, upon
the written instructions of Administrative Agent, any and all rights which
Administrative Agent may have under the Purchase Agreement, the other Related
Documents or under applicable law with respect to the Blocked Accounts, all
Receipts and all other collateral described in this Section 4.

                                       2
<PAGE>
                  5.       Control of Blocked Account. The Blocked Accounts
shall be under the sole dominion and control of the Administrative Agent, for
the benefit of the Collateral Agent, the Purchasers and itself, and Bank agrees
to comply with instructions originated by the Administrative Agent without
further consent by the Company or any other Person and neither the Company nor
any other Person shall have any control over the use of, or any right to
withdraw any amount from, any Blocked Account except as set forth in Sections
8, 9 and 10 below. Until the Bank receives a "Notice of Direction" (as
described below), the Administrative Agent hereby authorizes the Bank to
continue to accept instructions from the Company for the withdrawal, transfer
or payment of funds from the Blocked Accounts and to maintain the Blocked
Accounts in the name of "Avondale Funding, LLC". Once the Bank has received a
written notice in the form attached hereto as Exhibit A (any such notice, a
"NOTICE OF DIRECTION"), (i) the name of the holder of the Blocked Accounts
shall be changed to "General Electric Capital Corporation, as Administrative
Agent" (or such other name as specified by the Administrative Agent), (ii)
neither the Company nor any other Person (other than the Administrative Agent)
shall have any right to exercise any authority of any kind with respect to any
Blocked Account or any Receipts, (iii) the Bank shall determine, on each
business day, the balance of all collected funds on deposit in each Lockbox and
Lockbox Account and transfer all funds to the Concentration Account, (iv) the
Bank shall determine, on each business day, the balance of all funds on deposit
in the Concentration Account and automatically initiate a federal funds wire
transfer of all such funds not later than 11:30 a.m. (New York Time) on such
business day to the account designated below, or to such other account as may
be designated in writing from time to time by Administrative Agent (the
"COLLECTION ACCOUNT"):

                           Deutsche Bank Trust Company Americas
                           (formerly known as Bankers Trust Company)
                           New York, New York
                           ABA No. 021001033
                           Account Name:  Redwood Main Collection Account
                           Account No. 00386310
                           Reference:  Avondale Funding, LLC # 33991

and (v) the Bank shall comply with such other instructions regarding the
Blocked Accounts as directed by the Administrative Agent.

                  6.       Procedures for Blocked Account. Bank shall follow
the following procedures with respect to each Blocked Account:

                           Apply and credit for deposit to the Blocked Account
all Receipts from time to time tendered by or on behalf of Company for deposit

therein, including without limitation all wire transfers and other payments
directed to the Blocked Account.

                  7.       Statements and Other Information. Upon the request
of the Administrative Agent, Bank shall send to Administrative Agent copies of
all returned and dishonored Receipts promptly upon Bank's receipt thereof, and
upon Administrative Agent's request Bank shall provide Administrative Agent
with copies of the regular monthly bank statements provided to

                                       3
<PAGE>
Company and such other information relating to the Blocked Account as shall
reasonably be requested by Administrative Agent. Bank shall also deliver a copy
of all notices and statements required to be sent to Company pursuant to any
agreement governing or related to the Blocked Account to Administrative Agent
at such times as provided therein.

                  8.       Fees. Company agrees to pay on demand all usual and
customary service charges, transfer fees and account maintenance fees
(collectively, "FEES") of Bank in connection with the Blocked Account. In the
event that Company fails to timely make a payment to Bank of any Fees, Bank may
thereafter exercise its right of set-off against the Blocked Accounts for such
Fees. The Administrative Agent shall not have any responsibility or liability
for the payment of any Fees.

                  9.       Uncollected Funds. If any Receipts deposited in any
Blocked Account are returned unpaid or otherwise dishonored, Bank shall have
the right to (a) charge any and all such returned or dishonored items, and
exercise its right of set-off in respect thereof, against such Blocked Account,
provided that the Bank shall be limited in its exercise of set-off, chargeback
or recoupment to Permitted Depository Rights, or (b) demand reimbursement
therefor directly from Company. "PERMITTED DEPOSITORY RIGHTS" shall mean the
exercise by the Bank of any right in the nature of set-off, chargeback or the
like to rights with respect to (i) items deposited in the applicable Blocked
Account and returned unpaid or dishonored (whether for insufficient funds or
any other reason) and without regard to the timeliness of any such return, (ii)
overdrafts of the applicable Blocked Account or (iii) claims of breach of the
Uniform Commercial Code's transfer or presentment warranties made against the
Bank in connection with items deposited to the applicable Blocked Account.

                  10.      Set-off. Bank hereby agrees that Bank will not
exercise or claim any right of set-off or banker's lien against Blocked Account
or any Receipts on deposit therein, and Bank hereby further waives any such
right or lien which it may have against any Receipts deposited in the Blocked
Account, except to the extent expressly set forth in Sections 8 and 9 above.

                  11.      Exculpation of Bank; Indemnification by Company. The
Bank shall be entitled to rely conclusively upon any Notice of Direction or any
other notice or instruction it receives from the Administrative Agent and the
Bank shall have no obligation to investigate or verify the genuineness or
correctness of any such notice or instruction. Company and Administrative Agent
agree that Bank shall have no liability to either of them for any loss or
damage that either or both may claim to have suffered or incurred, either
directly or indirectly, by reason of this Agreement or any transaction or
service contemplated by the provisions hereof, unless occasioned by the gross
negligence or willful misconduct of Bank. In no event shall Bank be liable for
losses or delays resulting from computer malfunction, interruption of
communication facilities, labor difficulties or other causes beyond Bank's
reasonable control or for indirect, special or consequential damages. Company
agrees to indemnify Bank and hold it harmless from and against any and all
claims, other than those ultimately determined to be caused by the gross
negligence or willful misconduct of Bank, and from and against any damages,
penalties, judgments, liabilities, losses or expenses (including reasonable
attorney's fees and disbursements) incurred as a result of the assertion of any
claim, by any person or entity, arising out of, or otherwise related to, any
transaction conducted or service provided by Bank through the use of any
account at Bank pursuant to the procedures provided for or contemplated by this
Agreement.

                                       4
<PAGE>
                  12.      Termination. This Agreement may be terminated by
Company only upon delivery to Bank of a written notification thereof jointly
executed by Company and Administrative Agent. This Agreement may be terminated
by Administrative Agent at any time, with or without cause, upon its delivery
of written notice thereof to each of Company and Bank. This Agreement may be
terminated by Bank at any time on not less than 60 days prior written notice
delivered to each of Company and Administrative Agent. Upon delivery or receipt
of such notice of termination to or by Bank, Bank will: (a) immediately
transmit to the Collection Account (i) all funds, if any, then on deposit in,
or otherwise to the credit of, each Blocked Account, and (ii) upon receipt, all
funds received after such notice for deposit in, or otherwise to the credit of,
the Blocked Account; and (b) deliver directly to Administrative Agent all
Receipts consisting of checks, money orders, drafts and other instruments or
items of value, whether then in the possession of Bank or received by Bank
after such notice, without depositing such Receipts in the Blocked Account or
any other account. The provisions of Sections 3, 4, 5 and 10 shall survive
termination of this Agreement unless and until specifically released by
Administrative Agent in writing. The provisions of Section 16(f) shall survive
the termination of this Agreement. All rights of Bank under Sections 8, 9 and
11 shall survive any termination of this Agreement.

                  13.      Irrevocable Agreements. Company acknowledges that
the agreements made by it and the authorizations granted by it in Sections 3,
4, and 5 hereof are irrevocable and that the authorizations granted in Sections
3, 4 and 5 hereof are powers coupled with an interest.

                  14.      Representations, Warranties and Covenants of Bank.
Bank hereby makes the following representations, warranties and covenants:

                  (a)      This Agreement constitutes its duly authorized,
legal, valid, binding and enforceable obligation.

                  (b)      The performance of its obligations under this
Agreement and the consummation of the transactions contemplated herein will not
(1) constitute or result in a breach of its certificate or articles of
incorporation or by-laws, or the provision of any material contract to which it
is a party or by which it is bound or (2) result in the violation of any law,
regulation, judgment, decree or governmental order applicable to it.

                  (c)      all approvals and authorizations required to permit
the execution, delivery, performance and consummation of this Agreement and the
transactions contemplated hereunder have been obtained.

                  (d)      The Blocked Accounts will be maintained in the
manner set forth herein until the termination of this Agreement in accordance
with its terms.

                  (e)      The Bank will not change the name or account number
of any Blocked Account without the prior written consent of the Administrative
Agent.

                  (f)      Except for agreements which have been previously
terminated, the Bank has not entered into any other agreement with the Company,
the Originator, any Affiliate of the Originator or any other Person purporting
to limit the obligation of the Bank to comply with

                                       5
<PAGE>
instructions set forth in Section 5 hereof. Except for the claims and interests
of the Bank, the Administrative Agent and the Company in the Blocked Accounts,
Bank does not know of any claim to or interest in any Blocked Account. If any
Person asserts any lien, encumbrance or adverse claim (including any writ,
garnishment, judgment, warrant of attachment, execution or similar process)
against any Blocked Account, Bank will promptly notify the Administrative Agent
of the same.

                  15.      Notices. All notices, requests or other
communications given to Company, Administrative Agent or Bank shall be given in
writing (including by facsimile) at the address specified below:

         Administrative Agent:      General Electric Capital Corporation
                                    201 High Ridge Road
                                    Stamford, Connecticut 06927
                                    Attention: Account Manager/Avondale
                                               Funding, LLC
                                    Facsimile: (203) 316-7821

                  with copies to:

                                    General Electric Capital Corporation
                                    201 High Ridge Road
                                    Stamford, Connecticut 06927
                                    Attention: Corporate Counsel/Avondale
                                               Funding, LLC
                                    Facsimile: (203) 316-7889

         Bank:                      Wachovia Corporate Services, Inc.
                                    191 Peachtree Street, NE
                                    MC:  GA8009
                                    Atlanta, Georgia  30303
                                    Attention: Germaine A. Jenkins
                                               Banking Officer, Account Manager
                                    Facsimile: (404) 332-6898

         with a copy to:            Wachovia Bank, National Association
                                    NC0760, 5th Floor
                                    301 South College Street
                                    Charlotte, NC  28288-0760
                                    Attention: Roger W. Pelz
                                               Managing Director
                                    Facsimile: (704) 374-6319

         Company:                   Avondale Funding, LLC
                                    133 Marshall Street
                                    Graniteville, South Carolina  29829
                                    Attention: S. Felker
                                    Facsimile: 803-663-2399

                                       6
<PAGE>
Any party may change its address for notices hereunder by notice to each other
party hereunder given in accordance with this Section 15. Each notice, request
or other communication shall be effective (a) if given by facsimile, when such
facsimile is transmitted to the facsimile number specified in this Section 15
and confirmation of receipt is made by the appropriate party, (b) if given by
overnight courier, 24 hours after such communication is deposited with the
overnight courier for delivery, addressed as aforesaid, or (c) if given by any
other means, when delivered at the address specified in this Section 15.

                  16.      Miscellaneous.

                           (a)      This Agreement may be amended only by a
written instrument executed by each of Administrative Agent, Bank and Company
acting by their respective duly authorized representatives.

                           (b)      This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns, but neither Company nor Bank shall be entitled to
assign or delegate any of its rights or duties hereunder without first
obtaining the express prior written consent of Administrative Agent.

                           (c)      This Agreement may be executed in any
number of several counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument. The
delivery of an executed counterpart hereof by facsimile shall constitute
delivery of an executed counterpart hereof.

                           (d)      THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE
GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT GIVING EFFECT TO ITS CONFLICTS OF
LAW RULES).

                           (e)      TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING DIRECTLY OR INDIRECTLY OUT OF
THIS AGREEMENT.

                           (f)      Bank hereby covenants and agrees that,
prior to the date that is one year and one day after the termination of the
Purchase Agreement in accordance with its terms, it will not institute, or join
any other Person in instituting, against the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States or any state of the
United States. This Section 16(f) shall survive the termination of this
Agreement.

                           (g)      This Agreement and the instructions and
notices required or permitted to be executed and delivered hereunder set forth
the entire agreement of the parties hereto with respect to the subject matter
hereof and supercede any prior agreement and contemporaneous oral agreements of
the parties concerning its subject matter.

                  17.      Administrative Agent. The Administrative Agent shall
have the right hereunder to make demands, to give notices, to exercise or
refrain from exercising any rights or

                                       7
<PAGE>
remedies, and to take or refrain from taking other actions in accordance with,
and subject to the terms and conditions of this Agreement. Pursuant to the
terms of the Purchase Agreement, the Administrative Agent may resign and a
successor Administrative Agent may be appointed. Upon the acceptance of any
appointment as an Administrative Agent by a successor Administrative Agent,
that Administrative Agent shall thereupon succeed to and become vested with all
of the rights, powers, privileges and duties of the former Administrative Agent
under this Agreement and the former Administrative Agent shall thereupon be
discharged from its duties and obligations under this Agreement.

      [Remainder of page intentionally blank; next page is signature page]

                                       8
<PAGE>
                  IN WITNESS WHEREOF, each of the parties has executed and
delivered this Blocked Account Agreement as of the day and year first above set
forth.

                                    WACHOVIA BANK, NATIONAL ASSOCIATION, both
                                    individually and as successor by merger to
                                    each of Wachovia Bank of Texas, Wachovia
                                    Bank of North Carolina and Wachovia Bank of
                                    Georgia, N.A.

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

                                    AVONDALE MILLS, INC.

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

                                    AVONDALE FUNDING, LLC

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

                                    GENERAL ELECTRIC CAPITAL
                                    CORPORATION, AS ADMINISTRATIVE AGENT

                                    By:
                                       ----------------------------------------
                                    Name:
                                    Title: Duly Authorized Signatory

                           Blocked Account Agreement
                        dated as of _____________, 2002
<PAGE>
                                   SCHEDULE I

               LOCKBOXES, LOCKBOX ACCOUNTS AND COLLECTION ACCOUNT

<TABLE>
<CAPTION>
CONCENTRATION
ACCOUNT:                   NAME:                      BANK:
-------                    ----                       ----

<S>                        <C>                        <C>
13-022-948                 Avondale Mills, Inc.       Wachovia Bank National Association
                                                      (f/k/a Wachovia Bank, N.A.)
                                                      191 Peachtree Street, N.E.
                                                      Atlanta, GA 30303
</TABLE>

<TABLE>
<CAPTION>
                           LOCKBOX
LOCKBOX:                   ACCOUNT:          NAME:                      BANK:
-------                    -------           ----                       ----

<S>                        <C>               <C>                        <C>
Avondale Mills, Inc.       101307            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 101307                              Fabric Division            (f/k/a Wachovia Bank, N.A.)
Atlanta, GA 30392-1307                       (Atlanta)                  191 Peachtree Street, N.E.
                                                                        Atlanta, GA 30303
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       101264            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 101264                              Trucking Division          (f/k/a Wachovia Bank, N.A.)
Atlanta, GA 30392-1264                       (Atlanta)                  P.O. Box 4148
                                                                        Atlanta, GA 30302-1448
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       101436            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 101436                              Yarn Division              (f/k/a Wachovia Bank, N.A.)
Atlanta, GA 30392-1436                       (Atlanta)                  P.O. Box 4148
                                                                        Atlanta, GA 30302-1448
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       951280            Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 951280                              Graniteville Fabrics       (f/k/a Wachovia Bank of Texas)
Dallas, TX  75395-1280                       (Dallas)                   1010 W. Mockingbird Lane, Suite 100
                                                                        Dallas, TX 75247
                                                                        (Flows into Act. 13-022-948)

Avondale Mills, Inc.       75431             Avondale Mills, Inc.       Wachovia Bank, National Association
P.O. Box 75431                               Graniteville Fabrics       (f/k/a Wachovia Bank of North
Charlotte, NC  28275-5431                    (Charlotte)                Carolina)
                                                                        Attention:  Lockbox 75431
                                                                        10301 David Taylor Drive
                                                                        Charlotte, NC  28262-2334
                                                                        (Flows into Act. 13-022-948)
</TABLE>

<PAGE>
                                   EXHIBIT A

                          FORM OF NOTICE OF DIRECTION

[Date]

[Bank Name]
[address]
[address]
Attention: ________________
Facsimile: (___) ___-____

Dear Sir or Madam:

         Reference is made to that certain Blocked Account Agreement dated
[__________], among your financial institution, certain other parties, Avondale
Funding, LLC and General Electric Capital Corporation, in its role as
Administrative Agent (as amended, restated, supplemented or otherwise modified
from time to time, the "Blocked Account Agreement"). Capitalized terms used
herein and not defined herein shall have the meanings assigned to such terms in
the Blocked Account Agreement.

         This letter constitutes the giving of a "Notice of Direction" by
Administrative Agent to you under the Blocked Account Agreement and you are
hereby instructed to transfer all funds now or hereafter on deposit in the
Account to the Collection Account in accordance with Section 5 of the Blocked
Account Agreement.

                                    Very truly yours,

                                    GENERAL ELECTRIC CAPITAL
                                    CORPORATION, AS ADMINISTRATIVE AGENT

                                    By:
                                       ----------------------------------------
                                    Name:
                                    Title:  Duly Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}]]