Document:

<PAGE>
                                                                   EXHIBIT 10.28

                 THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
                                CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(this "Third Amendment") is dated as of March 1, 2002 among AVONDALE MILLS, INC.
(the "Borrower"), the BANKS listed on the signature pages hereof (collectively,
the "Banks"), and WACHOVIA BANK, N.A. as Agent (the "Agent");

                              W I T N E S S E T H :

         WHEREAS, the Borrower, the Agent and the Banks executed and delivered
that certain Second Amended and Restated Credit Agreement, dated as of September
28, 2000, as amended by First Amendment to Second Amended and Restated Credit
Agreement dated as of August 30, 2001 and Second Amendment to Second Amended and
Restated Credit Agreement dated as of February 6, 2002 (as so amended, the
"Credit Agreement");

         WHEREAS, the Borrower has requested and the Agent and the Banks have
agreed to certain amendments to the Credit Agreement, subject to the terms and
conditions hereof;

         NOW, THEREFORE, for and in consideration of the above premises and
other good and valuable consideration, the receipt and sufficiency of which
hereby is acknowledged by the parties hereto, the Borrower, the Agent and the
Banks hereby covenant and agree as follows:

         1.       Definitions. Unless otherwise specifically defined herein,
each term used herein which is defined in the Credit Agreement shall have the
meaning assigned to such term in the Credit Agreement. Each reference to
"hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Agreement" and each other similar reference
contained in the Credit Agreement shall from and after the date hereof refer to
the Credit Agreement as amended hereby.

         2.       Amendment to Section 1.01. Section 1.01 of the Credit
Agreement hereby is amended by adding the definition of "Third Amendment
Effective Date" set forth below.

                  "Third Amendment Effective Date" means March 1, 2002.

         3.       Amendment of Section 2.05(a). Section 2.05(a) of the Credit
Agreement hereby is deleted, and the following is substituted therefor:

                  (a)      "Applicable Margin" means, from and after the Third
         Amendment Effective Date (including for Loans outstanding on such
         date): (i) for any Term Loan which is a Base Rate Loan, 1.75%; (ii) for
         any Term Loan which is a Euro-Dollar Loan, 3.75%; (iii) (A) until the
         first Performance Pricing

<PAGE>

         Determination Date, for any Revolver Loan which is a Base Rate Loan,
         1.75%, and for any Revolver Loan which is a Euro-Dollar Loan, 3.75%,
         and (B) thereafter, for any Revolver Loan which is a Base Rate Loan and
         for any Revolver Loan which is a Euro-Dollar Loan, with respect to each
         Performance Pricing Determination Date, the percentage determined as of
         the end of the Fiscal Quarter or Fiscal Year just ended by reference to
         the percentage shown in the following schedule for such type of Loan,
         depending on the level of the Total Debt to Cash Flow Ratio as of the
         end of such Fiscal Quarter or Fiscal Year, as determined pursuant
         hereto; provided, however, that (i) so long as any Term Loans remain
         outstanding, and (ii) at any time (whether or not any Term Loans remain
         outstanding) the maximum Total Debt to Cash Flow Ratio permitted by
         Section 5.06 is equal to or greater than 4.50 to 1.00, the Applicable
         Margin for Revolver Loans shall not go below Level 4 below (but the
         Borrower may voluntarily agree at any time when no Term Loans remain
         outstanding to reduce the maximum Total Debt to Cash Flow Ratio
         permitted by Section 5.06 below 4.50 to 1.0, and in such event this
         proviso shall no longer be effective).

<TABLE>
<CAPTION>
                             LEVEL 1       LEVEL 2        LEVEL 3       LEVEL 4        LEVEL 5       LEVEL 6      LEVEL 7
                           ---------     -----------    -----------   -----------    -----------   -----------   ----------
<S>                        <C>           <C>            <C>           <C>            <C>           <C>           <C>
          Total Debt       <3.00:1.0     => 3.00:1.0    => 3.50:1.0   => 4.00:1.0    => 4.50:1.0   => 4.75:1.0   => 5.0:1.0
           to Cash                            but            but           but            but           but
            Flow                           <3.50:1.0      <4.00:1.0     <4.50:1.0      <4.75:1.0     <5.00:1.0
                           ---------     -----------    -----------   -----------    -----------   -----------   ----------
            Base Rate       0.00%           0.00%          0.00%         0.50%          0.75%         1.25%         1.75%
           Applicable
             Margin
                           ---------     -----------    -----------   -----------    -----------   -----------   ----------
           Euro-Dollar      1.75%           2.125%         2.375%        2.625%         2.875%        3.25%         3.75%
           Applicable
             Margin
                           ---------     -----------    -----------   -----------    -----------   -----------   ----------
</TABLE>

                  In determining interest for purposes of this Section 2.05 and
         fees pursuant to Section 2.06(a) (except for the period from the Third
         Amendment Effective Date until the first Performance Pricing
         Determination Date), the Borrower and the Banks shall refer to the
         Borrower's most recent consolidated quarterly and annual (as the case
         may be) financial statements delivered pursuant to Section 5.01(a) or
         (b), as the case may be. If such financial statements require a change
         in interest pursuant to this Section 2.05 or fees pursuant to Section
         2.06(a), the Borrower shall deliver to the Agent, along with such
         financial statements, a notice to that effect, which notice shall set
         forth in reasonable detail the calculations establishing the required
         change. The date which is 10 Domestic Business Days after receipt by
         the Agent of such financial statements and notice, commencing with the
         financial statements for the third Fiscal Quarter of the 2002 Fiscal
         Year, is the "Performance Pricing Determination Date." Any such
         required change in interest and fees shall become effective on such
         Performance Pricing Determination Date, and shall be in effect until
         the next Performance Pricing Determination Date, provided, however,
         that: (i) for Euro-Dollar Loans, changes in interest shall only be
         effective for Interest Periods commencing on or after the Performance
         Pricing Determination Date; and (ii) no interest or fees shall be
         decreased pursuant to this Section 2.05 or Section 2.06(a) if, on the
         Performance Pricing Determination Date, (A) an Event of Default is in
         existence, or (B) a Default is in existence which on such date is not
         an Event of Default but which becomes an Event of Default; provided,
         however, that if an Event of Default exists on the Performance Pricing
         Determination Date, or a Default exists and subsequently becomes an
         Event of Default, any such decrease shall take effect upon the cure of
         any such Event of Default.

         4.       Amendment of Section 2.06(a). Section 2.06(a) of the Credit
Agreement hereby is deleted, and the following is substituted therefor:

                  (a)      The Borrower shall pay to the Agent for the ratable
         account of each Bank, a commitment fee, which shall accrue from and
         including the Third Amendment Effective Date to but excluding the
         Termination Date and shall be payable on each April 1, July 1, October
         1 and January 1 and on the Termination Date, commencing April 1, 2002,
         for the quarterly period ending immediately prior to such date (except
         that the payment on April 1, 2002 shall be for the period from the
         Third Amendment Effective Date through March 31, 2002 and the Borrower
         also shall pay on such date the commitment fee payable under the Credit
         Agreement for the period from January 1, 2002 through the Third
         Amendment Effective

                                       2
<PAGE>

         Date at the rate provided in the Credit Agreement as in effect prior to
         the Third Amendment Effective Date). The commitment fee shall be
         calculated on the average daily principal amount of such Bank's Unused
         Commitment during such period at the rate per annum (expressed below as
         a decimal) of: (A) until the first Performance Pricing Determination
         Date, 0.625%, and (B) thereafter, with respect to each Performance
         Pricing Determination Date, the percentage determined as of the end of
         the Fiscal Quarter or Fiscal Year just ended by reference to the
         percentage shown in the following schedule, depending on the level of
         the Total Debt to Cash Flow Ratio as of the end of such Fiscal Quarter
         or Fiscal Year, as determined pursuant hereto; provided, however, that
         (i) so long as any Term Loans remain outstanding, and (ii) at any time
         (whether or not any Term Loans remain outstanding) the maximum Total
         Debt to Cash Flow Ratio permitted by Section 5.06 is equal to or
         greater than 4.50 to 1.00, the commitment fee shall not go below Level
         4 below (but the Borrower may voluntarily agree at any time when no
         Term Loans remain outstanding to reduce the maximum Total Debt to Cash
         Flow Ratio permitted by Section 5.06 below 4.50 to 1.0, and in such
         event this proviso shall no longer be effective).

<TABLE>
<CAPTION>
                             LEVEL 1       LEVEL 2        LEVEL 3       LEVEL 4        LEVEL 5       LEVEL 6      LEVEL 7
                            --------    -----------     -----------   -----------    -----------   -----------   ----------
<S>                         <C>         <C>             <C>           <C>            <C>           <C>           <C>
         Total Debt to      3.00:1.0    => 3.00:1.0     => 3.50:1.0   => 4.00:1.0    => 4.50:1.0   => 4.75:1.0   => 5.0:1.0
           Cash Flow                         but             but           but            but           but
                                          <3.50:1.0       <4.00:1.0     <4.50:1.0      <4.75:1.0     <5.00:1.0
                            --------    -----------     -----------   -----------    -----------   -----------   ----------
          Commitment        0.325%         0.375%          0.50%         0.50%          0.50%         0.50%         0.625%
             Fee
                            --------    -----------     -----------   -----------    -----------   -----------   ----------
</TABLE>

         5.       Amendment to Section 5.03. Section 5.03 of the Credit
Agreement hereby is deleted, and the following is substituted therefor:

                  Section 5.03 Fixed Charge Coverage Ratio. The Fixed Charge
         Coverage Ratio, calculated at the end of each Fiscal Quarter, shall not
         be less than the ratio set forth below for such Fiscal Quarter

<TABLE>
<CAPTION>
                FISCAL QUARTER ENDING                       RATIO
                --------------------------------            ---------
<S>                                                         <C>
                November 30, 2001                           1.90:1.00
                --------------------------------            ---------
                March 1, 2002                               1.80:1.00
                --------------------------------            ---------
                May 31, 2002                                2.25:1.00
                --------------------------------            ---------
                August 30, 2002                             2.50:1.00
                --------------------------------            ---------
                November 29, 2002 and thereafter            2.75:1.00
                --------------------------------            ---------
</TABLE>

                                       3
<PAGE>

         6.       Amendment to Section 5.06. Section 5.06 of the Credit
Agreement hereby is deleted, and the following is substituted therefor:

                  Section 5.06 Total Debt to Cash Flow Ratio. The Total Debt to
         Cash Flow Ratio, calculated at the end of each Fiscal Quarter, shall be
         less than the ratio set forth below for such Fiscal Quarter

<TABLE>
<CAPTION>
                FISCAL QUARTER ENDING                       RATIO
                --------------------------------            ---------
<S>                                                         <C>
                November 30, 2001                           5.50:1.00
                --------------------------------            ---------
                March 1, 2002                               5.75:1.00
                --------------------------------            ---------
                May 31, 2002                                4.75:1.00
                --------------------------------            ---------
                August 30, 2002                             4.25:1.00
                --------------------------------            ---------
                November 29, 2002 and thereafter            3.75:1.00
                --------------------------------            ---------
</TABLE>

         7.       Replacement of Exhibit F. Exhibit F to the Credit Agreement
(form of Compliance Certificate) hereby is deleted and Exhibit F attached hereto
is substituted therefor.

         8.       Restatement of Representations and Warranties. The Borrower
hereby restates and renews each and every representation and warranty heretofore
made by it in the Credit Agreement and the other Loan Documents as fully as if
made on the date hereof and with specific reference to this Third Amendment and
all other Loan Documents executed and/or delivered in connection herewith,
except where such representations and warranties expressly refer to a different
date and except for events which have been disclosed in writing to the Banks and
which are described in any of Sections 4.04, 4.06(a), 4.07 (except the first
sentence), 4.14(b) and (c) or 4.15.

         9.       Effect of Amendment. Except as set forth expressly
hereinabove, all terms of the Credit Agreement and the other Loan Documents
shall be and remain in full force and effect, and shall constitute the legal,
valid, binding and enforceable obligations of the Borrower. The amendments
contained herein shall be deemed to have prospective application only, unless
otherwise specifically stated herein.

         10.      Ratification. The Borrower hereby restates, ratifies and
reaffirms each and every term, covenant and condition set forth in the Credit
Agreement and the other Loan Documents, as amended hereby, effective as of the
date hereof.

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

         12.      Section References. Section titles and references used in this
Third Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto
evidenced hereby.

         13.      No Default. To induce the Agent and the Banks to enter into
this Third Amendment and to continue to make advances pursuant to the Credit
Agreement, the Borrower

                                       4
<PAGE>

hereby acknowledges and agrees that, as of the date hereof, and after giving
effect to the terms hereof, there exists (i) no Default or Event of Default and
(ii) no right of offset, defense, counterclaim, claim or objection in favor of
the Borrower arising out of or with respect to any of the Loans or other
obligations of the Borrower owed to the Banks under the Credit Agreement.

         14.      Further Assurances. The Borrower agrees to take such further
actions as the Agent shall reasonably request in connection herewith to evidence
the amendments herein contained.

         15.      Governing Law. This Third Amendment shall be governed by and
construed and interpreted in accordance with, the laws of the State of Georgia.

         16.      Conditions Precedent. This Third Amendment shall become
effective only upon execution and delivery to counsel for the Agent of 6
counterpart signature pages (or 1 faxed signature page, with the 6 originals
transmitted by overnight courier) of this Third Amendment by the Borrower, the
Agent and the Required Banks; and (ii) execution and delivery to counsel for the
Agent of 6 counterparts (or 1 faxed signature page, with the 6 originals
transmitted by overnight courier) of the Consent and Reaffirmation of Guarantors
at the end hereof by each of the Parent and AMGF.

                       [SIGNATURES COMMENCE ON NEXT PAGE]

                                       5
<PAGE>

         IN WITNESS WHEREOF, each of the Borrower, the Agent and the Required
Banks has caused this Third Amendment to be duly executed, under seal, by its
duly authorized officer as of the day and year first above written.

                                            AVONDALE MILLS, INC.
                                                          (SEAL)

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

                                       6
<PAGE>

                                            WACHOVIA BANK, N.A., as
                                            Agent and as a Bank  (SEAL)

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

                                       7
<PAGE>

                                            BANK OF AMERICA, N.A.,
                                            as a Bank    (SEAL)

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

                                       8
<PAGE>

                                            FIRST UNION NATIONAL
                                            BANK, as a Bank  (SEAL)

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

                                       9
<PAGE>

                                            REGIONS BANK, as a Bank
                                                          (SEAL)

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

                                       10
<PAGE>

                                            BRANCH BANKING AND
                                            TRUST COMPANY, as a
                                            Bank         (SEAL)

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

                                       11
<PAGE>

                     CONSENT AND REAFFIRMATION OF GUARANTORS

         Each of the undersigned (i) acknowledges receipt of the foregoing Third
Amendment to Credit Agreement (the "Third Amendment"), (ii) consents to the
execution and delivery of the Third Amendment by the parties thereto and (iii)
reaffirms all of its obligations and covenants under (1), as to the Parent, the
Amended and Restated Guaranty Agreement dated as of April 29, 1996 executed by
it, and (2) as to AMGF, the Limited Guaranty Agreement dated as of August 29,
1997 executed by it, and agrees that none of such obligations and covenants
shall be affected by the execution and delivery of the Third Amendment. This
Consent and Reaffirmation may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same instrument.

AVONDALE INCORPORATED                             AVONDALE MILLS GRANITEVILLE
                                                  FABRICS, INC.
By:                                               By:
   ----------------------------                      --------------------------
   Title:                                            Title:

                                       12
<PAGE>

                                                                       EXHIBIT F

                             COMPLIANCE CERTIFICATE

         Reference is made to the Second Amended and Restated Credit Agreement
dated as of September 28, 2000, as amended by First Amendment to Second Amended
and Restated Credit Agreement dated as of August 30, 2001, Second Amendment to
Second Amended and Restated Credit Agreement dated as of February 6, 2002 and
Third Amendment to Second Amended and Restated Credit Agreement dated as of
March 1, 2002 (as so amended, and as thereafter amended and supplemented and in
effect from time to time, the "Credit Agreement") among Avondale Mills, Inc.,
the Banks from time to time parties thereto, and Wachovia Bank, N.A., as Agent.
Capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement.

         Pursuant to Section 5.01(c) of the Credit Agreement, (i)
____________________, the duly authorized ____________________ of Avondale
Incorporated, hereby certifies to the Agent and the Banks that the information
contained in the Compliance Check List attached hereto is true, accurate and
complete as of _______________, ______, and (ii) ____________________, the duly
authorized ____________________ of Avondale Mills, Inc. hereby (A) certifies to
the Agent and the Banks that to the Knowledge of such officer, no Default is in
existence on and as of the date hereof and (B) restates and reaffirms that to
the Knowledge of such officer, the representations and warranties contained in
Article IV of the Credit Agreement are true on and as of the date hereof as
though restated on and as of this date, except for events which have been
disclosed in writing to the Banks and which are described in any of Sections
4.04, 4.06(a), 4.07 (except the first sentence), 4.14(b) and (c) or 4.15.

         Dated: ____________, 200__.

                                            AVONDALE INCORPORATED

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

                                            AVONDALE MILLS, INC.

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

                                       13
<PAGE>

1.       Fixed Charge Coverage Ratio (Section 5.03)

                  The Fixed Charge Coverage Ratio, calculated at the end of each
         Fiscal Quarter, shall not be less than the ratio set forth below for
         such Fiscal Quarter

<TABLE>
<CAPTION>
                FISCAL QUARTER ENDING                       RATIO
                --------------------------------            ---------
<S>                                                         <C>
                November 30, 2001                           1.90:1.00
                --------------------------------            ---------
                March 1, 2002                               1.80:1.00
                --------------------------------            ---------
                May 31, 2002                                2.25:1.00
                --------------------------------            ---------
                August 30, 2002                             2.50:1.00
                --------------------------------            ---------
                November 29, 2002 and thereafter            2.75:1.00
                --------------------------------            ---------
</TABLE>

<TABLE>
<S>                   <C>                                                             <C>

        (a)           Consolidated Net Income - Schedule 1                            $
                                                                                       ----------

        (b)           Net Interest Expense - Schedule 1                               $
                                                                                       ----------

        (c)           income taxes - Schedule 1                                       $
                                                                                       ----------

        (d)           depreciation - Schedule 1                                       $
                                                                                       ----------

        (e)           amortization - Schedule 1                                       $
                                                                                       ----------

        (f)           Dividends - Schedule 1                                          $
                                                                                       ----------

        (g)           LIFO Adjustments -Schedule 1                                    $
                                                                                       ----------

        (h)           non-cash write-offs of obsolete or surplus equipment,           $
                      spare parts or real property Schedule 11                         ----------

        (i)           sum of (a) plus (b) plus (c) plus (d) plus (e) less (f),        $
                      less or plus (g), as applicable, plus (h)                        ----------

        (j)           Current Maturities of Long Term Debt - Schedule 1               $
                                                                                       ----------

        (k)           Net Interest Expense                                            $
                                                                                       ----------

        (l)           sum of (j) plus (k)                                             $
                                                                                       ----------

        Ratio of (i) to (l)
                                                                                       ----------
</TABLE>
-----------------------
1        Not to exceed $10,000,000 during any period of 4 consecutive Fiscal
         Quarters

                                       14
<PAGE>

<TABLE>
<S>                                                                                   <C>
        Requirement                                                                   =>[1.90 to1.0]
                                                                                      =>[1.80 to 1.0]
                                                                                      =>[2.25 to 1.0]
                                                                                      =>[2.50 to 1.0]
                                                                                      =>[2.75 to 1.0]
</TABLE>

2.       Senior Debt to Capitalization Ratio (Section 5.05)

         The Senior Debt to Capitalization Ratio, calculated at the end of each
         Fiscal Quarter, shall be less than 0.50 to 1.0.

<TABLE>
<S>                   <C>                                                             <C>
        (a)           Consolidated Senior Debt - Schedule 2                           $
                                                                                       ----------

        (b)           Consolidated Adjusted Tangible Net Worth - Schedule 3           $
                                                                                       ----------

        (c)           Subordinated Debt                                               $
                                                                                       ----------

        (d)           Sum of (a) plus (b) plus (c)                                    $
                                                                                       ----------

        Ratio of (a) to (d)
                                                                                       ----------

        Requirement                                                                   <0.50 to 1.0
</TABLE>

3.       Total Debt to Cash Flow Ratio (Section 5.06)

                  The Total Debt to Cash Flow Ratio, calculated at the end of
         each Fiscal Quarter, shall be less than the ratio set forth below for
         such Fiscal Quarter

<TABLE>
<CAPTION>
                FISCAL QUARTER ENDING                       RATIO
                --------------------------------            ---------
<S>                                                         <C>
                November 30, 2001                           5.50:1.00
                --------------------------------            ---------
                March 1, 2002                               5.75:1.00
                --------------------------------            ---------
                May 31, 2002                                4.75:1.00
                --------------------------------            ---------
                August 30, 2002                             4.25:1.00
                --------------------------------            ---------
                November 29, 2002 and thereafter            3.75:1.00
                --------------------------------            ---------
</TABLE>

<TABLE>
<S>                   <C>                                                             <C>
        (a)           Consolidated Total Funded Debt - Schedule 2                     $
                                                                                       ----------

        (b)           Consolidated Net Income - Schedule 1                            $
                                                                                       ----------

        (c)           Net Interest Expense - Schedule 1                               $
                                                                                       ----------

        (d)           income taxes - Schedule 1                                       $
                                                                                       ----------
</TABLE>

                                       15
<PAGE>

<TABLE>
<S>                   <C>                                                             <C>
        (e)           Depreciation - Schedule 1                                       $
                                                                                       ----------

        (f)           Amortization - Schedule 1                                       $
                                                                                       ----------

        (g)           LIFO Adjustments - Schedule 1                                   $
                                                                                       ----------

        (h)           non-cash write-offs of obsolete or surplus equipment, spare     $
                      parts or real property Schedule 1(2)                             ----------

        (i)           sum of (b) plus (c) plus (d) plus (e) plus (f) less or plus     $
                      (g), as applicable, plus (h)                                     ----------

        Ratio of (a) to (i)
                                                                                       ----------

        Requirement                                                                   <[5.50 to 1.0]
                                                                                      <[5.75 to 1.0]
                                                                                      <[4.75 to 1.0]
                                                                                      <[4.25 to 1.0]
                                                                                      <[3.75 to 1.0]
</TABLE>

4.       Restricted Payments (Section 5.07)

         The Parent and the Borrower will not make any Restricted Payment,
         except, so long as no Default shall have occurred and be continuing, a
         Restricted Payment may be made if at the time of such Restricted
         Payment and after giving effect thereto: (A) the aggregate amount of
         such Restricted Payment and all other Restricted Payments since the
         beginning of the Restricted Payment Calculation Period would not exceed
         the sum of (x) $20,000,000, plus (y) 50% of Consolidated Net Income
         during the Restricted Payment Calculation Period (treated as one
         accounting period) (or, in case such Consolidated Net Income shall be a
         deficit, minus 100% of such deficit); and (B) the Aggregate Commitment
         exceeds the Working Capital Obligations by at least $10,000,000.

<TABLE>
<S>                   <C>                                                            <C>
        (a)           Cumulative Consolidated Net Income during Restricted Payment    $
                      Calculation Period                                               ----------

        (b)           50% of (a)                                                      $
                                                                                       ----------

        (c)           Sum of (b) and $20,000,000                                      $
                                                                                       ----------

        (d)           Aggregate Restricted Payments made during Restricted Payment    $
                      Calculation Period                                               ----------

        Limitation (d) may not exceed (c)3
</TABLE>
-----------------
2        Not to exceed $10,000,000 during any period of 4 consecutive Fiscal
         Quarters
3        In addition, after giving effect to a Restricted Payment, the Aggregate
         Commitment must exceed the Working Capital Obligations by at least
         $10,000,000

                                       16
<PAGE>

5.       Senior Debt to Cash Flow Ratio (Section 5.08)

                  The Senior Debt to Cash Flow Ratio, calculated at the end of
         each Fiscal Quarter, shall be less than the ratio set forth below for
         such Fiscal Quarter

<TABLE>
<CAPTION>
                FISCAL QUARTER ENDING                       RATIO
                --------------------------------            ---------
<S>                                                         <C>
                November 30, 2001                           3.50:1.00
                --------------------------------            ---------
                March 1, 2002                               3.50:1.00
                --------------------------------            ---------
                May 31, 2002                                2.75:1.00
                --------------------------------            ---------
                August 30, 2002 and thereafter              2.50:1.00
                --------------------------------            ---------
</TABLE>

<TABLE>
<S>                   <C>                                                             <C>
        (a)           Consolidated Senior Debt- Schedule 2                            $
                                                                                       ----------

        (b)           Consolidated Net Income - Schedule 1                            $
                                                                                       ----------

        (c)           Net Interest Expense - Schedule 1                               $
                                                                                       ----------

        (d)           income taxes - Schedule 1                                       $
                                                                                       ----------

        (e)           Depreciation - Schedule 1                                       $
                                                                                       ----------

        (f)           Amortization - Schedule 1                                       $
                                                                                       ----------

        (g)           LIFO Adjustments - Schedule 1                                   $
                                                                                       ----------

        (h)           non-cash write-offs of obsolete or surplus equipment, spare     $
                      parts or real property Schedule 1(4)                             ----------

        (i)           sum of (b) plus (c) plus (d) plus (e) plus (f) less or plus     $
                      (g), as applicable, plus (h)                                     ----------

        Ratio of (a) to (i)
                                                                                       ----------

        Requirement                                                                   <[3.50 to 1.0]
                                                                                      <[2.75 to 1.0]
                                                                                      <[2.50 to 1.0]
</TABLE>

6.       Loans and Advances (Section 5.09)

         Neither the Parent, the Borrower nor any of the Material Subsidiaries
         shall make loans or advances to any Person except, so long as no Event
         of Default is in existence:

                  (A)(i)   loans or advances to employees not exceeding
         $2,000,000 in the aggregate principal amount outstanding at any time,
         in each case made in the ordinary course of business and consistent
         with practices existing on August 25, 1995; (ii) deposits required

-----------------
4        Not to exceed $10,000,000 during any period of 4 consecutive Fiscal
         Quarters

                                       17
<PAGE>

         by government agencies or public utilities; and (iii) loans or advances
         to Wholly Owned Subsidiaries (other than from the Parent to the
         Borrower or as provided in Section 5.09(C)) not exceeding $1,000,000 in
         the aggregate outstanding; provided that after giving effect to the
         making of any loans, advances or deposits permitted by this Section
         5.09(A), the aggregate of all loans and advances permitted in this
         Section 5.09(A) does not exceed $4,000,000;

                  (B)      loans or advances from the Parent to the Borrower or
         from the Borrower to the Parent, or from the Borrower to AMGF (i)
         pursuant to the AMGF/Graniteville Transaction and within the limits
         contained in the definition thereof and (ii) otherwise to fund the
         ongoing working capital needs and capital expenditures of AMGF in the
         ordinary course of business;

                  (C)      loans or advances to the Receivables Subsidiary
         evidenced by a Purchase Money Note; and

                  (D)      other loans or advances (not including any loans and
         advances of the types described in clauses (A), (B) or (C) above) in an
         aggregate amount, together with Investments permitted by clause (viii)
         of Section 5.10, not exceeding the sum of $15,000,000, plus 10% of
         positive Consolidated Adjusted Tangible Net Worth as of the date of
         measurement.

         Calculations with respect to Section 5.09(A):

<TABLE>
<S>                   <C>                                                             <C>
        (a)           loans and advances to employees                                 $
                                                                                       ---------

                      Limitation                                                      $2,000,000

        (b)           deposits required by government agencies or public utilities    $
                                                                                       ---------

        (c)           loans or advances to Wholly Owned Subsidiaries (other than      $
                      stated exceptions))                                              ---------

                      Limitation                                                      $1,000,000

        (d)           sum of (a) plus (b) plus (c)                                    $
                                                                                       ---------

                      Limitation                                                      $4,000,000

        Calculations with respect to Section 5.09(D):

        (e)           loans and advances not permitted by clauses (A), (B) or (C)     $
                                                                                       ---------

        (f)           sum of (a) and amount in paragraph 7(a)                         $
                                                                                       ---------
</TABLE>

                                       18
<PAGE>

<TABLE>
<S>                   <C>                                                             <C>
        (g)           Consolidated Adjusted Tangible Net Worth - Schedule 3           $
                                                                                       ---------

        (g)           10% of (g)                                                      $
                                                                                       ---------

        (h)           Sum of (h) and $15,000,000                                      $
                                                                                       ---------

                      Limitation--(f) may not exceed (i)
</TABLE>

7.       Investments (Section 5.10)

         Neither the Parent, the Borrower nor any of the Consolidated
         Subsidiaries shall make Investments in any Person except as permitted
         by Section 5.09 and except Investments in (i) direct obligations of the
         United States Government maturing within one year, (ii) certificates of
         deposit issued by a commercial bank whose credit is satisfactory to the
         Agent, (iii) commercial paper rated A1 or the equivalent thereof by
         Standard & Poor's Corporation or P1 or the equivalent thereof by
         Moody's Investors Service, Inc. and in either case maturing within 6
         months after the date of acquisition, (iv) tender bonds the payment of
         the principal of and interest on which is fully supported by a letter
         of credit issued by a United States bank whose long-term certificates
         of deposit are rated at least AA or the equivalent thereof by Standard
         & Poor's Corporation and Aa or the equivalent thereof by Moody's
         Investors Service, Inc., (v) Investments by Borrower in the Receivables
         Subsidiary and obligations consisting of Standard Securitization
         Undertakings, (vi) Investments by the Receivables Subsidiary in a
         Special Purpose Vehicle and obligations consisting of Standard
         Securitization Undertakings, (vii) loans and advances permitted by
         Section 5.09, and Investments by the Borrower in AMGF (x) pursuant to
         the AMGF/Graniteville Transaction and within the limits contained in
         the definition thereof and (y) otherwise to fund the ongoing working
         capital needs and capital expenditures of AMGF in the ordinary course
         of business, and (viii) other Investments in an aggregate amount on and
         after the Closing Date, together with Investments permitted by clause
         (D) of Section 5.09, not exceeding the sum of $15,000,000, plus 10% of
         positive Consolidated Adjusted Tangible Net Worth as of the date of
         measurement.

<TABLE>
<S>                   <C>                                                             <C>
        (a)           Other Investments (not permitted by clauses (i) through (vii)   $
                                                                                       ----------

        (b)           Sum of (a) and Paragraph 6(e)                                   $
                                                                                       ----------

        (c)           Consolidated Adjusted Tangible Net Worth - Schedule 3           $
                                                                                       ----------

        (d)           10% of (c)                                                      $
                                                                                       ----------

        (e)           sum of (d) and $15,000,000                                      $
                                                                                       ----------

                      Limitation--(b) may not exceed (e)
</TABLE>

                                       19
<PAGE>

8.       Negative Pledge (Section 5.11)

<TABLE>
<S>      <C>                                                                          <C>
         Amount of Debt secured by Liens not permitted by Sections 5.11(b)            $
         through 5.11(e), inclusive, and (i) Schedule - 4                              ---------

         Limitation                                                                   $3,000,000

         Amount of Debt secured by all Liens (Schedule 4 and Schedule                 $
         5.11 to Credit Agreement)                                                     ---------

         Limitation                                                                   $4,000,000
</TABLE>

9.       List of Consolidated Subsidiaries (Section 5.01(c)(iii)

         -------------------------------
         -------------------------------
         -------------------------------

10.      List of Material Subsidiaries (other than the Borrower), if any, as to
         which there has been a change in excess of $100,000 in the assets,
         liabilities or shareholders' equity thereof since the immediately
         preceding Fiscal Quarter.

         -------------------------------
         -------------------------------
         -------------------------------

                                       20
<PAGE>

                                                                    Schedule - 1

Consolidated Net Income for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------

         Total                              $
                                             ----------
</TABLE>

Net Interest Expense for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
</TABLE>

         Total                              $
                                             ----------

Income Taxes for:
<TABLE>
<S>                                         <C>

      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------

         Total                              $
                                             ----------
</TABLE>

Depreciation for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------

         Total                              $
                                             ----------
</TABLE>

Amortization for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------

         Total                              $
                                             ----------
</TABLE>

                                       21
<PAGE>

LIFO adjustments for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------

         Total                              $
                                             ----------
</TABLE>

Dividends for:
<TABLE>
<S>                                         <C>

      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
</TABLE>

Non-cash write-offs of obsolete or surplus equipment, spare parts or real
property for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
      quarter 200                           $
-----            ---                         ----------
</TABLE>

Current Maturities of Long Term Debt for:

<TABLE>
<S>                                         <C>
      quarter 200                           $
-----            ---                         ----------

         Total                              $
                                             ----------
</TABLE>

                                       22
<PAGE>

                                                                    Schedule - 2

Consolidated Senior Debt and Consolidated Total Funded Debt

<TABLE>
<CAPTION>
                                          INTEREST
                                            RATE                    MATURITY                     TOTAL
                                         ------------               --------                  -----------
<S>                                      <C>                        <C>                       <C>
Secured

                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
     Total Secured                                                                            $
                                                                                               ----------

Unsecured (including Capitalized Leases)

                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
     Total Secured                                                                            $
                                                                                               ----------

Redeemable Preferred Stock               $
                                          ----------
     Total                                                                                    $
                                                                                               ----------

Receivable Securitization Program                                                             $
                                                                                               ----------

Other Consolidated Senior Debt

                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------
                                         $
---------------------------------         ----------

Total Consolidated Senior Debt                                                                $
                                                                                               ----------

Plus Subordinated Debt                                                                        $
                                                                                               ----------

Total Consolidated Total Funded Debt                                                          $
                                                                                               ----------
</TABLE>

                                       23
<PAGE>

                                                                    Schedule - 3

                    Consolidated Adjusted Tangible Net Worth

<TABLE>
<S>                    <C>                                                                    <C>
          (a)          Stockholders' Equity                                                   $
                                                                                               ----------

          (b)          surplus from write-up of assets subsequent to August 25, 1995(5)       $
                                                                                               ----------

          (c)          intangible assets(6)                                                   $
                                                                                               ----------

          (d)          Capital Stock shown as assets(7)                                       $
                                                                                               ----------
                       Consolidated Adjusted Tangible Net Worth (sum of (a) less (b) less
                       (c) less (d))                                                          $
                                                                                               ----------
</TABLE>
-----------------
5        Exclude any write-up in connection with the acquisition of the
         Graniteville Assets
6        Include only to the extent created, incurred or arising on or after the
         Original Closing Date, and exclude capitalized transaction costs
         incurred in connection with the acquisition of the Graniteville Assets
7        Include only to the extent created, incurred or arising on or after the
         Original Closing Date

                                       24
<PAGE>

                                                                    Schedule - 4

                      Liens Securing Debt In The Principal
                       Amount of $50,000 or More which are
                 Not shown on Schedule 5.11 to Credit Agreement

<TABLE>
<CAPTION>
                                                                            Relevant Provision
                                                                            of Section 5.11
Description of Lien                   Amount of Debt Secured                Permitting Same
-------------------                   ----------------------                ------------------
<S>                                   <C>                                   <C>
1.                                    $
    -------------                      -------                              ----------
2.                                    $
    -------------                      -------                              ----------
3.                                    $
    -------------                      -------                              ----------
4.                                    $
    -------------                      -------                              ----------
5.                                    $
    -------------                      -------                              ----------
6.                                    $
    -------------                      -------                              ----------
7.                                    $
    -------------                      -------                              ----------
8.                                    $
    -------------                      -------                              ----------
9.                                    $
    -------------                      -------                              ----------
</TABLE>

                                       25<PAGE>

                                                                     EXHIBIT 4.2

                        GRAY COMMUNICATIONS SYSTEMS, INC.

                    9.25% SENIOR SUBORDINATED NOTES DUE 2011

                          REGISTRATION RIGHTS AGREEMENT

                                                              New York, New York
                                                               December 21, 2001

First Union Securities, Inc.
Banc of America Securities LLC
Allen & Company Incorporated
as Initial Purchasers under the Purchase Agreement

c/o First Union Securities, Inc.
301 South College Street, TW-6
Charlotte, NC 28288-0604

Ladies and Gentlemen:

                  This Registration Rights Agreement (the "Agreement") is dated
as of December 21, 2001, by and among Gray Communications Systems, Inc., a
Georgia corporation (the "Company"), the subsidiaries of the Company listed on
the signature pages hereof (the "Subsidiary Guarantors" and together with the
Company, the "Issuers"), and First Union Securities, Inc., Banc of America
Securities LLC and Allen & Company Incorporated (collectively, the "Initial
Purchasers").

                  This Agreement is being entered into in connection with a
certain note purchase agreement, dated December 14, 2001, by and among the
Company, the Subsidiary Guarantors and the Initial Purchasers (the "Purchase
Agreement"), which provides for the issuance and sale by the Company to the
Initial Purchasers of $180,000,000 aggregate principal amount of the Company's
9.25% Senior Subordinated Notes Due 2011 (the "Notes") and the issuance by the
Subsidiary Guarantors to the Initial Purchasers of guarantees (the "Subsidiary
Guarantees" and together with the Notes, the "Securities"). In order to induce
the Initial Purchasers to enter into the Purchase Agreement, the Issuers have
agreed to provide the registration rights set forth in this Agreement for the
benefit of the Initial Purchasers and their direct and indirect transferees. The
execution and delivery of this Agreement is a condition to the obligation of the
Initial Purchasers to purchase the Securities under the Purchase Agreement. The
parties hereby agree as follows:

                  1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:

                  "Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.

<PAGE>

                  "Affiliate" means, with respect to any specified person, any
other person that, directly or indirectly, is in control of, is controlled by,
or is under common control with, such specified person. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such person whether by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.

                  "Agreement" has the meaning set forth in the preamble hereto.

                  "Business Day" means any day excluding Saturday, Sunday or any
other day which is a legal holiday under the laws of Charlotte, North Carolina
or New York, New York or is a day on which banking institutions therein located
are authorized or required by law or other governmental action to close.

                  "Commission" means the Securities and Exchange Commission.

                  "Company" has the meaning set forth in the preamble hereto.

                  "Consummate" means, with respect to a Registered Exchange
Offer, the occurrence of (a) the filing and effectiveness under the Act of the
Exchange Offer Registration Statement relating to the Exchange Securities to be
issued in the Registered Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Registered
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 2(c)(ii) hereof, (c) the Issuers' acceptance for exchange of
all Original Securities duly tendered and not validly withdrawn pursuant to the
Registered Exchange Offer and (d) the delivery of Exchange Securities by the
Issuers to the registrar under the Indenture in the same aggregate principal
amount as the aggregate principal amount of Original Securities duly tendered
and not validly withdrawn by Holders thereof pursuant to the Registered Exchange
Offer. The term "Consummation" has a meaning correlative to the foregoing.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.

                  "Exchange Offer Registration Period" means the 180 day period
(or longer, if required by applicable law) following the Consummation of the
Registered Exchange Offer, exclusive of any period during which any stop order
shall be in effect suspending the effectiveness of the Exchange Offer
Registration Statement; provided, however, that in the event that all resales of
Exchange Securities (including, subject to the time periods set forth herein,
any resales by Participating Broker-Dealers) covered by such Exchange Offer
Registration Statement have been made, the Exchange Offer Registration Statement
need not thereafter remain continuously effective for such period.

                  "Exchange Offer Registration Statement" means a registration
statement of the Issuers on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

                                       2
<PAGE>

                  "Exchange Securities" means debt securities of the Company
substantially identical in all material respects to the Original Securities
(except that the Liquidated Damages provisions and the transfer restrictions
pertaining to the Original Securities will be modified or eliminated, as
appropriate) and guaranteed by the Subsidiary Guarantors with terms
substantially identical in all material respects to the Subsidiary Guarantees,
to be issued under the Indenture.

                  "Filing Date" has the meaning set forth in Section 2(a)
hereof.

                  "Holder" means any holder from time to time of Securities
(including any of the Initial Purchasers).

                  "Indenture" means the indenture relating to the Original
Securities and the Exchange Securities, dated as of December 15, 2001, by and
among the Company, the Subsidiary Guarantors and Bankers Trust Company, as
trustee, as the same may be amended, supplemented, waived or otherwise modified
from time to time in accordance with the terms thereof.

                  "Initial Purchasers" has the meaning set forth in the preamble
hereto.

                  "Issue Date" means December 21, 2001.

                  "Issuers" has the meaning set forth in the preamble hereto.

                  "Liquidated Damages" has the meaning set forth in Section 4(a)
hereof.

                  "Losses" has the meaning set forth in Section 8(d) hereof.

                  "Majority Holders" means the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.

                  "Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering under a Shelf Registration Statement.

                  "Notes" has the meaning set forth in the preamble hereto.

                  "Original Securities" means each outstanding Security upon
original issuance thereof and at all times subsequent thereto prior to exchange
in a Registered Exchange Offer.

                  "Participating Broker-Dealer" means any Holder (which may
include any of the Initial Purchasers) that is a broker-dealer, electing to
exchange Original Securities acquired for its own account as a result of
market-making activities or other trading activities for Exchange Securities.

                  "Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities covered by such Registration
Statement, and all amendments and supplements to the Prospectus, including
post-effective amendments.

                                       3
<PAGE>

                  "Purchase Agreement" has the meaning set forth in the preamble
hereto.

                  "Registration Default" has the meaning set forth in Section
4(a) hereof.

                  "Registered Exchange Offer" means the proposed offer to the
Holders to issue and deliver to such Holders, in exchange for the Original
Securities, a like principal amount of Exchange Securities.

                  "Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities
pursuant to the provisions of this Agreement, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto, and all
material incorporated by reference therein.

                  "Securities" has the meaning set forth in the preamble hereto.

                  "Shelf Registration" means a registration effected pursuant to
Section 3 hereof.

                  "Shelf Registration Period" has the meaning set forth in
Section 3(c) hereof.

                  "Shelf Registration Statement" means a "shelf" registration
statement of the Issuers pursuant to the provisions of Section 3 hereof, which
covers some or all of the Securities, as applicable, on an appropriate form
under Rule 415 under the Act, or any similar rule that may be adopted by the
Commission, all amendments and supplements to such registration statement,
including post-effective amendments, in each case including the Prospectus
contained therein, all exhibits thereto and all material incorporated by
reference therein.

                  "Subsidiary Guarantees" has the meaning set forth in the
preamble hereto.

                  "Subsidiary Guarantors" has the meaning set forth in the
preamble hereto.

                  "Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.

                  "Trustee" means the trustee with respect to the Original
Securities or Exchange Securities, as applicable, under the Indenture.

                  "Underwriters" means the investment banker or investment
bankers and manager or managers that shall participate in an underwritten
offering under a Shelf Registration Statement.

                  2. Registered Exchange Offer; Resales of Exchange Securities
by Participating Broker-Dealers; Private Exchange. (a) Unless the Registered
Exchange Offer shall not be permissible under applicable laws or Commission
policy (in which case, the provisions of Section 3 hereof shall apply), the
Issuers shall prepare and, not later than 120 days from the Issue Date (or if
such 120th day is not a Business Day, by the first Business Day thereafter),
shall file

                                       4
<PAGE>

with the Commission the Exchange Offer Registration Statement with
respect to the Registered Exchange Offer (the date of such filing hereinafter
referred to as the "Filing Date"). The Issuers shall use their best efforts (i)
to cause the Exchange Offer Registration Statement to be declared effective
under the Act within 210 days from the Issue Date (or if such 210th day is not a
Business Day, by the first Business Day thereafter), and (ii) to Consummate the
Registered Exchange Offer within 30 days from the date the Exchange Offer
Registration Statement becomes effective (or if such 30th day is not a Business
Day, by the first Business Day thereafter).

                  (b) The objective of such Registered Exchange Offer is to
enable each Holder electing to exchange Original Securities for Exchange
Securities (assuming that such Holder (x) is not an "affiliate" of any of the
Issuers within the meaning of the Act, (y) is not a broker-dealer that acquired
the Original Securities in a transaction other than as a part of its
market-making or other trading activities and (z) if such Holder is not a
broker-dealer, acquires the Exchange Securities in the ordinary course of such
Holder's business, is not participating in the distribution of the Exchange
Securities and has no arrangements or intentions with any person to make a
distribution of the Exchange Securities) to resell such Exchange Securities from
and after their receipt without any limitations or restrictions under the Act
and without material restrictions under the securities laws of a substantial
proportion of the several states of the United States. As a condition to its
participation in the Registered Exchange Offer pursuant to the terms of this
Agreement, each Holder shall furnish, upon the request of the Company, prior to
the Consummation, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) as to the matters set forth in clauses (x), (y) and (z)
above and shall otherwise cooperate with the Issuers in the Registered Exchange
Offer.

                  (c) In connection with the Registered Exchange Offer, the
Issuers shall:

                  (i) mail to each Holder a copy of the Prospectus forming part
         of the Exchange Offer Registration Statement, together with an
         appropriate letter of transmittal and related documents;

                  (ii) keep the Registered Exchange Offer open for acceptance
         for not less than 20 Business Days after the date notice thereof is
         mailed to Holders;

                  (iii) utilize the services of a depositary for the Registered
         Exchange Offer with an address in the Borough of Manhattan, The City of
         New York; and

                  (iv) comply in all material respects with all applicable laws
relating to the Registered Exchange Offer.

                  (d) Promptly after the Consummation of the Registered Exchange
Offer, the Issuers shall cause the Trustee to authenticate and deliver to each
Holder Exchange Securities equal in principal amount to the Original Securities
of such Holder so accepted for exchange.

                  (e) The Initial Purchasers and the Issuers acknowledge that,
pursuant to interpretations by the staff of the Commission of Section 5 of the
Act, and in the absence of an applicable exemption therefrom, each Participating
Broker-Dealer is required to deliver a

                                       5
<PAGE>

Prospectus in connection with a sale of any Exchange Securities received by such
Participating Broker-Dealer pursuant to the Registered Exchange Offer in
exchange for Original Securities acquired for its own account as a result of
market-making activities or other trading activities. Accordingly, the Issuers
will allow Participating Broker-Dealers and other persons, if any, with similar
prospectus delivery requirements to use the Prospectus contained in the Exchange
Offer Registration Statement in connection with the resale of Exchange
Securities and shall:

                  (i) include the information set forth in Annex A hereto on the
         cover of the Prospectus forming a part of the Exchange Offer
         Registration Statement, in Annex B hereto in the forepart of the
         Exchange Offer Registration Statement in a section setting forth
         details of the Registered Exchange Offer, in Annex C hereto in the
         underwriting or plan of distribution section of the Prospectus forming
         a part of the Exchange Offer Registration Statement, and in Annex D
         hereto in the letter of transmittal delivered pursuant to the
         Registered Exchange Offer; and

                  (ii) use their best efforts to keep the Exchange Offer
         Registration Statement continuously effective (subject to Section 2(c)
         hereof) under the Act during the Exchange Offer Registration Period for
         delivery of the Prospectus included therein by Participating
         Broker-Dealers in connection with sales of Exchange Securities received
         pursuant to the Registered Exchange Offer, as contemplated by Section
         5(h) below.

                  (f) In the event that any Initial Purchaser determines that it
is not eligible to participate in the Registered Exchange Offer with respect to
the exchange of Original Securities constituting any portion of an unsold
allotment, upon the effectiveness of the Shelf Registration Statement as
contemplated by Section 3 hereof and at the request of such Initial Purchaser,
the Issuers shall issue and deliver to such Initial Purchaser, or to the party
purchasing Original Securities registered under the Shelf Registration Statement
from such Initial Purchaser, in exchange for such Original Securities, a like
principal amount of Exchange Securities to the extent permitted by applicable
law. The Issuers shall use their reasonable best efforts to cause the CUSIP
Service Bureau to issue the same CUSIP number for such Exchange Securities as
for Exchange Securities issued pursuant to the Registered Exchange Offer.

                  3. Shelf Registration. (a) If (i) the Issuers are not
permitted to file the Exchange Offer Registration Statement or to Consummate the
Registered Exchange Offer because the Registered Exchange Offer is not permitted
by applicable law or Commission policy, (ii) for any other reason the Registered
Exchange Offer is not Consummated within 30 days of the date the Exchange Offer
Registration Statement has become effective, (iii) an Initial Purchaser so
requests by notifying the Company, with respect to Original Securities acquired
by it directly from the Issuers, on or prior to the 20th Business Day following
the Consummation of the Registered Exchange Offer, (iv) any Holder notifies the
Company on or prior to the 20th Business Day following the Consummation of the
Registered Exchange Offer that (A) such Holder is not eligible to participate in
the Registered Exchange Offer and such Holder is not an Affiliate of any of the
Issuers, (B) the Exchange Securities such Holder would receive would not be
freely tradable, (C) such Holder is a Participating Broker-Dealer that cannot
publicly resell the Exchange Securities that it acquires in the Registered
Exchange Offer without delivering a Prospectus and the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available for
resales by such holder following the completion of the Registered

                                       6
<PAGE>

Exchange Offer, or (D) the Holder is a broker-dealer and owns Securities it has
not exchanged and that it acquired directly from the Issuers or one of their
respective Affiliates, or (v) in the case where an Initial Purchaser
participates in the Registered Exchange Offer or acquires Exchange Securities
pursuant to Section 2(f) hereof, the Initial Purchaser does not receive freely
tradable Exchange Securities in exchange for Original Securities constituting
any portion of an unsold allotment and such Initial Purchaser notifies the
Company on or prior to the 20th Business Day following the Consummation of the
Registered Exchange Offer (it being understood that, for purposes of this
Section 3, (x) the requirement that the Initial Purchaser deliver a Prospectus
containing the information required by Items 507 and/or 508 of Regulation S-K
under the Act in connection with sales of Exchange Securities acquired in
exchange for such Original Securities shall result in such Exchange Securities
being not "freely tradable" and (y) the requirement that a Participating
Broker-Dealer deliver a Prospectus in connection with sales of Exchange
Securities acquired in the Registered Exchange Offer in exchange for Original
Securities acquired as a result of market-making activities or other trading
activities shall not result in such Exchange Securities being not "freely
tradable"), the provisions set forth in clauses (b), (c) and (d) shall apply:

                  (b) The Issuers shall prepare and file with the Commission a
Shelf Registration Statement prior to the 120th day following the earliest to
occur of (i) the date on which the Issuers determine that they are not permitted
to file the Exchange Offer Registration Statement or to Consummate the
Registered Exchange Offer; (ii) 30 days after the Exchange Offer Registration
Statement has been declared effective if the Registered Exchange Offer has not
been Consummated by such date and (iii) the date notice is given pursuant to
paragraph (a)(iii), (iv) or (v) of this Section (or if such 120th day is not a
Business Day, by the first Business Day thereafter) and shall use their
reasonable efforts to cause the Shelf Registration Statement to be declared
effective by the Commission within 210 days thereafter. With respect to Exchange
Securities received by any of the Initial Purchasers in exchange for Original
Securities constituting any portion of an unsold allotment, the Issuers may, if
permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement containing
the information required by Regulation S-K Items 507 and/or 508, as applicable,
in satisfaction of their obligations under this paragraph (b) with respect
thereto, and any such Exchange Offer Registration Statement, as so amended,
shall be referred to herein as, and governed by the provisions herein applicable
to, a Shelf Registration Statement.

                  (c) The Issuers shall use their best efforts to keep such
Shelf Registration Statement continuously effective (subject to Section 3(d)) in
order to permit the Prospectus forming a part thereof to be usable by Holders
until the earliest of (i) such time as the Securities or Exchange Securities
covered by the Shelf Registration Statement can be sold without any limitations
under clauses (c), (e), (f) and (h) of Rule 144 of the Act, (ii) two years from
the date on which the Shelf Registration Statement was filed and (iii) such date
as of which all the Securities registered under the Shelf Registration Statement
have been sold pursuant thereto (in any such case, such period being called the
"Shelf Registration Period"). The Issuers shall be deemed not to have used their
best efforts to keep the Shelf Registration Statement effective during the
requisite period if they voluntarily take any action that would result in
Holders of Securities covered thereby not being able to offer and sell such
Securities during that period, unless such action is (x) required by applicable
law or (y) pursuant to Section 3(d) hereof, and, in

                                       7
<PAGE>

either case, so long as the Issuers promptly thereafter comply with the
requirements of Section 5(k) hereof, if applicable.

                  (d) No Holder may include any of its Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 Business Days after receipt of a
request therefor, such information as the Company may reasonably request for use
in connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder of Securities as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not misleading.

                  4.       Liquidated Damages.

                  (a) The parties hereto agree that Holders will suffer damages
if the Issuers fail to perform their obligations under Section 2 or Section 3
hereof and that it would not be feasible to ascertain the extent of such
damages. Accordingly, in the event that (i) the applicable Registration
Statement is not filed with the Commission on or prior to the date specified
herein for such filing, (ii) the applicable Registration Statement has not been
declared effective by the Commission on or prior to the date specified herein
for such effectiveness after such obligation arises, (iii) if the Registered
Exchange Offer is required to be Consummated hereunder, the Registered Exchange
Offer has not been Consummated by the Issuers within the time period set forth
in Section 2(a), or (iv) prior to the end of the Exchange Offer Registration
Period or the Shelf Registration Period, as the case may be, the Commission
shall have issued a stop order suspending the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement, as the case
may be, proceedings have been initiated with respect to the Registration
Statement under Section 8(d) or 8(e) of the Act, or the relevant Registration
Statement or related Prospectus for any reason ceases to be usable or available
in connection with resales of Securities registered thereunder (each such event
referred to in clauses (i) through (iv), a "Registration Default"), then damages
("Liquidated Damages") will accrue on the Securities with respect to the first
90-day period immediately following the occurrence of such Registration Default
in an amount equal to $0.05 per week per $1,000 principal amount of Securities
and will increase by an additional $0.05 per week per $1,000 principal amount of
Securities for each subsequent 90-day period until such Registration Default has
been cured, up to an aggregate maximum amount of Liquidated Damages of $0.20 per
week per $1,000 principal amount of Securities for all Registration Defaults.
Following the cure of a Registration Default, the accrual of Liquidated Damages
with respect to such Registration Default will cease and upon the cure of all
Registration Defaults the accrual of all Liquidated Damages will cease.
Notwithstanding the foregoing, if the Registered Exchange Offer has been
Consummated, Liquidated Damages related to a Registration Default for a Shelf
Registration Statement shall not be payable in respect of Securities issued in
the Registered Exchange Offer except to the extent entitled to registration
under such Shelf Registration Statement under clause (iv) above.

                  (b) The Company shall notify the Trustee and paying agent
under the Indenture immediately upon the happening of each and every
Registration Default. The Issuers shall pay the Liquidated Damages due on the
Securities by depositing with the paying agent (which shall not be any of the
Issuers for these purposes) for the Securities, in trust, for the

                                       8
<PAGE>

benefit of the Holders thereof, prior to 11:00 A.M. on the next interest payment
date specified in the Indenture (or such other indenture), sums sufficient to
pay the Liquidated Damages then due. The Liquidated Damages due shall be payable
on each interest payment date specified by the Indenture (or such other
indenture) to the record Holders entitled to receive the interest payment to be
made on such date. Each obligation to pay Liquidated Damages shall be deemed to
accrue from and include the date of the applicable Registration Default.

                  (c) The parties hereto agree that the Liquidated Damages
provided for in this Section 4 constitute a reasonable estimate of the damages
that will be suffered by Holders of Securities by reason of the happening of any
Registration Default.

                  5. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:

                  (a) The Issuers shall furnish to each of the Initial
Purchasers, prior to the filing thereof with the Commission, a copy of any
Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall use their best
efforts to reflect in each such document, when so filed with the Commission,
such comments as each of the Initial Purchasers reasonably may propose.

                  (b)      The Issuers shall ensure that:

                  (i) any Registration Statement and any amendment thereto and
         any Prospectus contained therein and any amendment or supplement
         thereto complies in all material respects with the Act;

                  (ii) any Registration Statement and any amendment thereto does
         not, when it becomes effective, contain an untrue statement of a
         material fact or omit to state a material fact required to be stated
         therein or necessary to make the statements therein not misleading; and

                  (iii) any Prospectus forming part of any Registration
         Statement, including any amendment or supplement to such Prospectus,
         does not include an untrue statement of a material fact or omit to
         state a material fact necessary in order to make the statements
         therein, in light of the circumstances under which they were made, not
         misleading;

provided that no representation or agreement is made hereby with respect to
information with respect to any of the Initial Purchasers, any Underwriter or
any Holder required to be included in any Registration Statement or Prospectus
pursuant to the Act or provided by any of the Initial Purchasers, any Holder or
any Underwriter specifically for inclusion in any Registration Statement or
Prospectus.

                  (c) (1) The Issuers shall advise the Initial Purchasers and,
in the case of a Shelf Registration Statement, the Holders of Securities covered
thereby, and, if requested by any of the Initial Purchasers or any such Holder,
confirm such advice in writing:

                                       9
<PAGE>

                  (i) when a Registration Statement and any amendment thereto
         has been filed with the Commission and when the Registration Statement
         or any post-effective amendment thereto has become effective; and

                  (ii) of any request by the Commission for amendments or
         supplements to the Registration Statement or the Prospectus included
         therein or for additional information.

                  (2) The Issuers shall advise the Initial Purchasers and, in
the case of a Shelf Registration Statement, the Holders of Securities covered
thereby, and, in the case of an Exchange Offer Registration Statement, any
Participating Broker-Dealer that has provided in writing to the Company a
telephone or facsimile number and address for notices, and, if requested by any
of the Initial Purchasers or any such Holder or Participating Broker-Dealer,
confirm such advice in writing:

                  (i) of the issuance by the Commission of any stop order
         suspending the effectiveness of the Registration Statement or the
         initiation of any proceedings for that purpose;

                  (ii) of the receipt by the Issuers of any notification with
         respect to the suspension of the qualification of the Securities
         registered in any Registration Statement for sale in any jurisdiction
         or the initiation or threatening of any proceeding for such purpose;
         and

                  (iii) of the happening of any event that requires the making
         of any changes in the Registration Statement or the Prospectus so that,
         as of such date, the statements therein are not misleading and do not
         omit to state a material fact required to be stated therein or
         necessary to make the statements therein (in the case of the
         Prospectus, in light of the circumstances under which they were made)
         not misleading (which advice shall be accompanied by an instruction to
         suspend the use of the Prospectus until the requisite changes have been
         made).

                  (d) The Issuers shall use their best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time.

                  (e) The Issuers shall furnish to each Holder of Securities
registered under any Shelf Registration Statement, without charge, at least one
copy of such Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and, if the Holder so
requests in writing, all exhibits thereto (including those incorporated by
reference).

                  (f) The Issuers shall, during the Shelf Registration Period,
deliver to each Holder of Securities registered under the Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and any
amendment or supplement thereto as such Holder may reasonably request; and the
Issuers consent to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders in connection with the offering and sale
of the Securities covered by the Prospectus or any amendment or supplement
thereto.

                                       10
<PAGE>

                  (g) The Issuers shall furnish to each Participating
Broker-Dealer that so requests, without charge, at least one copy of the
Exchange Offer Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, any documents incorporated by
reference therein and, if the Participating Broker-Dealer so requests in
writing, all exhibits thereto (including those incorporated by reference).

                  (h) The Issuers shall, during the Exchange Offer Registration
Period and pursuant to the requirements of the Act for the resale of the
Exchange Securities during the period in which a prospectus is required to be
delivered under the Act (including any Commission no-action letters relating to
the Registered Exchange Offer), deliver to each Participating Broker-Dealer,
without charge, as many copies of the Prospectus (including each preliminary
Prospectus) included in the Exchange Offer Registration Statement and any
amendment or supplement thereto as such Participating Broker-Dealer may
reasonably request; and the Issuers consent to the use of the Prospectus or any
amendment or supplement thereto by any such Participating Broker-Dealer in
connection with the offering and sale of the Exchange Securities, as provided in
Section 2(e) hereof.

                  (i) Prior to the Registered Exchange Offer or any other
offering of Securities pursuant to any Registration Statement, the Issuers shall
register or qualify, or cooperate with the Holders of Securities covered thereby
and their respective counsel in connection with the registration or
qualification, of such Securities for offer and sale under the securities or
blue sky laws of such states as any such Holders reasonably request in writing
and do any and all other acts or things necessary or advisable to enable the
offer and sale in such jurisdictions of the Securities covered by such
Registration Statement; provided, however, that no Issuer will be required to
qualify generally to do business in any jurisdiction in which it is not then so
qualified, to file any general consent to service of process or to take any
action which would subject it to general service of process or to taxation in
any such jurisdiction where it is not then so subject.

                  (j) The Issuers shall cooperate with the Holders to facilitate
the timely preparation and delivery of certificates representing Securities to
be sold pursuant to any Registration Statement free of any restrictive legends
and in denominations and registered in such names as Holders may request prior
to sales of Securities pursuant to such Registration Statement.

                  (k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) of this Section 5, the Issuers shall promptly prepare and file a
post-effective amendment to any Registration Statement or an amendment or
supplement to the related Prospectus or any other required document so that, as
thereafter delivered to purchasers of the Securities covered thereby, the
Prospectus will not include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.

                  (l) The Issuers shall use their reasonable best efforts to
cause The Depository Trust Company ("DTC") on the first Business Day following
the effective date of any Registration Statement hereunder or as soon as
possible thereafter to remove (i) from any existing CUSIP number assigned to the
Original Securities or Exchange Securities, as the case may be, any designation
indicating that such Securities are "restricted securities," which efforts

                                       11
<PAGE>

shall include delivery to DTC of a letter executed by the Company substantially
in the form of Annex E hereto and (ii) any other stop or restriction on DTC's
system with respect to the Original Securities or Exchange Securities, as the
case may be. In the event the Issuers are unable to cause DTC to take the
actions described in the immediately preceding sentence, the Issuers shall take
such actions as the Initial Purchasers may reasonably request to provide, as
soon as practicable, a CUSIP number for the Original Securities or Exchange
Securities registered under such Registration Statement and to cause such CUSIP
number to be assigned to the Original Securities or Exchange Securities (or to
the maximum aggregate principal amount of the Securities to which such number
may be assigned).

                  (m) The Issuers shall use their best efforts to comply with
all applicable rules and regulations of the Commission and shall make generally
available to the Holders of Securities as soon as practicable after the
effective date of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Act and Rule 158 promulgated
thereunder.

                  (n) The Issuers shall cause the Indenture to be qualified
under the Trust Indenture Act in a timely manner.

                  (o) The Issuers may require each Holder of Securities to be
sold pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such Securities as may,
from time to time, be reasonably required by the Act, and the obligations of the
Issuers to any Holder hereunder shall be expressly conditioned on the compliance
of such Holder with such request.

                  (p) The Issuers shall, if requested, promptly incorporate in a
Prospectus supplement or post-effective amendment to a Shelf Registration
Statement (i) such information as the Majority Holders provide or, if the
Securities covered thereby are being sold in an underwritten offering, as the
Managing Underwriters and the Majority Holders reasonably agree should be
included therein and provided to the Company in writing for inclusion in the
Shelf Registration Statement or Prospectus, and (ii) such information as a
Holder may provide from time to time to the Company in writing for inclusion in
a Prospectus or any Shelf Registration Statement concerning such Holder and the
distribution of such Holder's Securities covered thereby and, in either case,
shall make all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after being notified in writing of the matters
to be incorporated in such Prospectus supplement or post-effective amendment.

                  (q) In the case of any Shelf Registration Statement, the
Issuers shall enter into such agreements (including underwriting agreements) and
take all other customary and appropriate actions as may be reasonably requested
in order to expedite or facilitate the registration or the disposition of any
Securities covered thereby, and in connection therewith, if an underwriting
agreement is entered into, cause the same to contain indemnification provisions
and procedures no less favorable than those set forth in Section 8 (or such
other provisions and procedures acceptable to the Majority Holders and the
Managing Underwriters, if any, with respect to all parties to be indemnified
pursuant to Section 8).

                  (r) In the case of any Shelf Registration Statement, the
Issuers shall:

                                       12
<PAGE>

                  (i) make reasonably available, upon prior notice, for
         inspection by the Holders of Securities to be registered thereunder,
         any Underwriter participating in any disposition pursuant to such Shelf
         Registration Statement, and any attorney, accountant or other agent
         retained by the Holders or any such Underwriter, all relevant financial
         and other records, pertinent corporate documents and properties of the
         Company and any of its subsidiaries;

                  (ii) cause the officers, directors and employees of the
         Company and its subsidiaries to supply all relevant information
         reasonably requested by the Holders or any such Underwriter, attorney,
         accountant or agent in connection with any such Registration Statement
         as is customary for similar due diligence examinations;

                  (iii) make such representations and warranties to the Holders
         of Securities registered thereunder and the Managing Underwriters, if
         any, in form, substance and scope as are customarily made by the
         Issuers to Managing Underwriters and covering matters including, but
         not limited to, those set forth in the Purchase Agreement;

                  (iv) obtain opinions of counsel to the Issuers and updates
         thereof (which counsel and opinions, in form, scope and substance,
         shall be reasonably satisfactory to the Managing Underwriters, if any
         (it being understood and agreed that for purposes of the foregoing
         clause, the following counsel shall be deemed to be reasonably
         satisfactory: Troutman Sanders LLP, Proskauer Rose LLP and Robert A.
         Beizer, Esq.)) addressed to each selling Holder and the Managing
         Underwriters, if any, covering such matters as are customarily covered
         in opinions requested in underwritten offerings and such other matters
         as may be reasonably requested by such Holders and Managing
         Underwriters;

                  (v) obtain "cold comfort" letters and updates thereof from the
         independent certified public accountants of the Company (and, if
         necessary, any other independent certified public accountants of any
         subsidiary of the Company or of any business acquired by the Company
         for which financial statements and financial data are, or are required
         to be, included in the Registration Statement), addressed to each
         selling Holder of the Securities covered by such Shelf Registration
         Statement (provided such Holder furnishes the accountants with such
         representations as the accountants customarily require in similar
         situations) and the Managing Underwriters, if any, in customary form
         and covering matters of the type customarily covered in "cold comfort"
         letters in connection with primary underwritten offerings;

                  (vi) deliver such documents and certificates as may be
         reasonably requested by the Majority Holders and the Managing
         Underwriters, if any, including those to evidence compliance with
         Section 5(i) and with any customary conditions contained in the
         underwriting agreement or other agreement entered into by the Issuers;
         and

                  (vii) The foregoing actions set forth in this Section 5(r)
         shall be performed at (x) the effectiveness of such Shelf Registration
         Statement and each post-effective amendment thereto and (y) each
         closing under any underwriting or similar agreement as and to the
         extent required thereunder.

                                       13
<PAGE>

                  (s) The Company shall, if and to the extent required under the
Act and/or the Trust Indenture Act and the rules and regulations thereunder in
order to register the Securities covered thereby under the Act and qualify the
Indenture under the Trust Indenture Act, cause each Subsidiary Guarantor to sign
any Registration Statement and take all other action necessary to register the
Subsidiary Guarantees under the applicable Registration Statement.

                  6. Registration Expenses. The Issuers shall bear all fees and
expenses (including the reasonable fees and expenses, if any, of Cadwalader,
Wickersham & Taft, counsel for the Initial Purchasers, incurred in connection
with the Registered Exchange Offer) incurred in connection with the performance
of their obligations under Sections 2, 3, 4 and 5 hereof (other than brokers',
dealers' and underwriters' discounts and commissions and brokers', dealers' and
underwriters' counsel fees) and shall reimburse the Holders for the reasonable
fees and disbursements of one firm or counsel designated by the Majority Holders
to act as counsel for the Holders in connection therewith.

                  7. Rules 144 and 144A. The Issuers shall use their best
efforts to file the reports required to be filed by them under the Act and the
Exchange Act in a timely manner and, if at any time the Issuers are not required
to file such reports, they will, upon the request of any Holder, make publicly
available other information so long as necessary to permit sales of their
Securities pursuant to Rules 144 and 144A. The Issuers covenant that they will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
The Issuers will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Initial Purchasers upon request.
Upon the request of any Holder, the Company shall deliver to such Holder a
written statement as to whether such requirements have been complied with by the
Issuers. Notwithstanding the foregoing, nothing in this Section 7 shall be
deemed to require the Issuers to register any of the Securities pursuant to the
Exchange Act.

                  8.       Indemnification and Contribution.

                  (a) (i) In connection with any Registration Statement, the
Issuers, jointly and severally, agree to indemnify and hold harmless each Holder
of Securities covered thereby, the directors, officers, employees and agents of
each such Holder and each person who controls any such Holder within the meaning
of either the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or Prospectus or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that none of the Issuers will be

                                       14
<PAGE>

liable in any case to the extent that any such loss, claim, damage or liability
arises out of or is based upon (A) any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information relating to the Holder furnished to the
Company by or on behalf of any such Holder specifically for inclusion therein,
(B) use of a Registration Statement or the related Prospectus during a period
when a stop order has been issued in respect of such Registration Statement or
any proceedings for that purpose have been initiated or use of a Prospectus when
use of such Prospectus has been suspended pursuant to Section 5(c) hereof;
provided, further, in each case, that Holders received prior notice of such stop
order, initiation of proceedings or suspension or (C) if the Holder is required
to but does not deliver a Prospectus or the then current Prospectus. This
indemnity agreement will be in addition to any liability which the Issuers may
otherwise have.

                  (ii) The Issuers also agree, jointly and severally, to
         indemnify or contribute to Losses, as provided in Section 8(d), of any
         Managing Underwriters of Securities registered under a Registration
         Statement, their officers and directors and each person who controls
         such Managing Underwriters on substantially the same basis as that of
         the indemnification of the selling Holders provided in this Section
         8(a) and shall, if requested by any Holder, enter into an underwriting
         agreement reflecting such agreement, as provided in Section 5(q)
         hereof.

                  (b) Each Holder of Securities covered by a Registration
Statement severally agrees to indemnify and hold harmless the Issuers, their
respective directors, officers, employees and agents and each person who
controls any of the Issuers within the meaning of either the Act or the Exchange
Act to the same extent as the foregoing indemnity from the Issuers to each such
Holder, but only with reference to written information relating to such Holder
furnished to the Company by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any such Holder
may otherwise have.

                  (c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel (and local counsel) if (i) the use of counsel chosen

                                       15
<PAGE>

by the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action is
given to the indemnifying party or (iv) the indemnifying party shall have
authorized the indemnified party to employ separate counsel at the expense of
the indemnifying party (provided, however, that in the event that such
indemnified party shall, without the prior written consent of the indemnifying
party (which consent shall not be unreasonably withheld), settle or compromise
or consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such claim or action), the indemnifying party
shall not be responsible for such settlement, compromise or judgment); provided
further, that the indemnifying party shall not be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) representing all the indemnified parties under paragraph (a) or
paragraph (b) above. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.

                  (d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason (other than by reason of any exception provided
in such paragraphs) then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Registration Statement which
resulted in such Losses; provided, however, that in no case shall any
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by such Underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Issuers shall be deemed to be equal to
the sum of (x) the aggregate principal amount of the Securities and (y) the
total amount of Liquidated Damages which the Issuers were not required to pay as
a result of registering the Securities covered by the Registration Statement
which resulted in such Losses. Benefits

                                       16
<PAGE>

received by any Holder shall be deemed to be equal to the value of having its
Securities registered under the Act. Benefits received by any Underwriter shall
be deemed to be equal to the total underwriting discounts and commissions, as
set forth on the cover page of the Prospectus forming a part of the Registration
Statement which resulted in such Losses. Relative fault shall be determined by
reference to, among other things, whether any alleged untrue statement or
omission relates to information provided by the indemnifying party, on the one
hand, or by the indemnified party, on the other hand. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls a Holder within the meaning of either
the Act or the Exchange Act and each director, officer, employee and agent of
such Holder shall have the same rights to contribution as such Holder, and each
person who controls any of the Issuers within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of an Issuer
shall have the same rights to contribution as the Issuers, subject in each case
to the applicable terms and conditions of this paragraph (d).

                  (e) The provisions of this Section 8 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder,
the Issuers or any of the officers, directors or controlling persons referred to
in Section 8 hereof, and will survive the sale by a Holder of Securities covered
by a Registration Statement.

                  9.       Miscellaneous.

                  (a) No Inconsistent Agreements. The Issuers have not, as of
the date hereof, entered into nor shall they, on or after the date hereof, enter
into any agreement that is inconsistent with the rights granted to the Holders
herein or otherwise conflicts with the provisions hereof.

                  (b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Issuers have obtained the written
consent of the Majority Holders. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose Securities are being sold
pursuant to a Shelf Registration Statement or whose Securities are being
exchanged pursuant to an Exchange Offer Registration Statement, as the case may
be, and which does not directly or indirectly affect the rights of other
Holders, may be given by a majority of such Holders, determined on the basis of
Securities being sold rather than registered. Notwithstanding any of the
foregoing, no amendment, modification, supplement, waiver or consents to any
departure from the provisions of Section 8 hereof shall be effective as against
any Holder unless consented to in writing by such Holder.

                                       17
<PAGE>

                  (c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:

                  (i)      if to the Initial Purchasers, as follows:

                           First Union Securities, Inc.
                           301 South College Street, TW-6
                           Charlotte, NC 28288-0604
                           Attention:  Corporate Finance Department

                           With a copy to:

                           Cadwalader, Wickersham & Taft
                           100 Maiden Lane
                           New York, NY  10038
                           Attention:  Brian Hoffmann, Esq.

                  (ii) if to any other Holder, at the most current address given
         by such Holder to the Company in accordance with the provisions of this
         Section 9(c), which address initially is, with respect to each Holder,
         the address of such Holder maintained by the registrar under the
         Indenture, with a copy in like manner to the Initial Purchasers; and

                  (iii)    if to the Issuers, as follows:

                           Gray Communications Systems, Inc.
                           4370 Peachtree Road, N.E.
                           Atlanta, Georgia  30319
                           Attention:  James C. Ryan
                           Telecopy:  (404) 261-9607

                           With a copy to:

                           Proskauer Rose LLP
                           1585 Broadway
                           New York, NY 10036

                           Attention: Robert A. Cantone, Esq.

                  All such notices and communications shall be deemed to have
been duly given when received, if delivered by hand or air courier, and when
sent, if sent by first-class mail, telex or telecopier.

                  The Issuers by notice to the others may designate additional
or different addresses for subsequent notices or communications.

                  (d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, including, without the need for an express assignment or any consent by
the Issuers thereto, subsequent Holders. The

                                       18
<PAGE>

Issuers hereby agree to extend the benefits of this Agreement to any Holder and
any such Holder may specifically enforce the provisions of this Agreement as if
an original party hereto.

                  (e) Counterparts. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

                  (f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

                  (G) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE, WITHOUT REGARD TO THE
CONFLICTS OF LAW RULES THEREOF.

                  (h) Obligations of Subsidiaries. Immediately upon the
designation of any subsidiary of the Company as a Subsidiary Guarantor (as
defined in the Indenture), the Company shall cause such subsidiary to become a
party hereto including, without limitation, for purposes of registration
obligations, guarantee of Liquidated Damages and indemnification and
contribution pursuant to Section 8.

                  (i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof, in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties hereto shall be enforceable to the fullest extent permitted by law.

                  (j) Securities Held by the Company, etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of
Securities is required hereunder, Securities held by the Company, any of its
subsidiaries or their respective Affiliates (other than subsequent Holders of
Securities if such subsequent Holders are deemed to be Affiliates solely by
reason of their holdings of such Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.

                                       19
<PAGE>

                  Please confirm that the foregoing correctly sets forth the
agreement by and among the Company, the Subsidiary Guarantors and the Initial
Purchasers.

                                Very truly yours,

                                Gray Communications Systems, INc.

                               By: /s/ James C. Ryan
                                    Name:  James C. Ryan
                                    Title:  V.P. - CFO

                                       20
<PAGE>

                                 THE ALBANY HERALD PUBLISHING COMPANY, INC.
                                 POST-CITIZEN MEDIA, INC.
                                 GRAY COMMUNICATIONS OF INDIANA, INC.
                                 WEAU-TV, INC.
                                 WVLT-TV, INC.
                                 WRDW-TV, INC.
                                 WITN-TV, INC.
                                 GRAY KENTUCKY TELEVISION, INC.
                                 GRAY COMMUNICATIONS OF TEXAS, INC.
                                 GRAY COMMUNICATIONS OF TEXAS-SHERMAN, INC.
                                 GRAY TRANSPORTATION COMPANY, INC.
                                 GRAY REAL ESTATE AND DEVELOPMENT CO.
                                 GRAY FLORIDA HOLDINGS, INC.
                                 KOLN/KGIN, INC.
                                 WEAU LICENSEE CORP.
                                 KOLN/KGIN LICENSE, INC.
                                 WJHG LICENSEE CORP.
                                 WCTV LICENSEE CORP.
                                 WVLT LICENSEE CORP.
                                 WRDW LICENSEE CORP.
                                 WITN LICENSEE CORP.
                                 WKYT LICENSEE CORP.
                                 WYMT LICENSEE CORP.
                                 KWTX-KBTX LICENSEE CORP.
                                 KXII LICENSEE CORP.
                                 GRAY TELEVISION MANAGEMENT, INC.
                                 GRAY MIDAMERICA HOLDINGS, INC.
                                 GRAY PUBLISHING, INC.
                                 GRAY DIGITAL, INC.
                                 KWTX-KBTX LP CORP.
                                 KXII LP CORP.
                                 PORTA-PHONE PAGING LICENSEE CORP.
                                 KXII L.P.
                                 KWTX-KBTX L.P.
                                 LYNQX COMMUNICATIONS, INC.

                                 For each of the above:

                                 By: /s/ James C. Ryan
                                     Name:  James C. Ryan
                                     Title:  V.P. - CFO except for Delaware
                                     Subsidiaries then as Treasurer

                                       21
<PAGE>

The foregoing Agreement is hereby
accepted as of the date first written above

FIRST UNION SECURITIES, INC.
on behalf of the Initial Purchasers

By:   /s/ Jeff Gore
     Name:  Jeff Gore
     Title:  Vice President

                                       22
<PAGE>

                                                                         ANNEX A

                  Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Act. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of Exchange Securities received in exchange for
Securities where such Securities were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Issuers have agreed
that, during the Exchange Offer Registration Period, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. See "Plan of Distribution."

                                       1
<PAGE>

                                                                         ANNEX B

                  Each broker-dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

                                        1

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

                  Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Issuers have agreed that, during the Exchange Offer Registration Period,
they will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
____________, 2002, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.

                  The Issuers will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Act and any profit from any such
resale of Exchange Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Act. The
Letter of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Act.

                  For the Exchange Offer Registration Period, the Issuers will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuers have agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one counsel
for the Holders of the Securities) other than dealers' and brokers' discounts,
commissions and counsel fees) and will indemnify the Holders of the Securities
(including any broker-dealers) against certain liabilities, including
liabilities under the Act.

                  [If applicable, add information required by Regulation S-K
Items 507 and/or 508.]

                                        1

<PAGE>

                                                                         ANNEX D

      [ ]  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
           10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF
           ANY AMENDMENTS OR SUPPLEMENTS THERETO.

                  Name:   ____________________

                  Address:____________________

                          ____________________

                  The undersigned represents that it is not an Affiliate of the
Issuers, that any Exchange Securities to be received by it will be acquired in
the ordinary course of business and that at the time of the commencement of the
Registered Exchange Offer it had no arrangement with any person to participate
in a distribution of the Exchange Securities.

                  In addition, if the undersigned is not a broker-dealer, the
undersigned represents that it is not engaged in, and does not intend to engage
in, a distribution of Exchange Securities. If the undersigned is a broker-dealer
that will receive Exchange Securities for its own account in exchange for
Securities, it represents that the Securities to be exchanged for Exchange
Securities were acquired by it as a result of market-making activities or other
trading activities and acknowledges that it will deliver a prospectus in
connection with any resale of such Exchange Securities; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Act.

                                        1

<PAGE>

                                                                         ANNEX E

                 FORM OF LETTER TO BE PROVIDED BY THE COMPANY TO
                          THE DEPOSITORY TRUST COMPANY

The Depository Trust Company
55 Water Street, 50th Floor

New York, NY 10041

        Re:     9.25% Senior Subordinated Notes Due 2011 (the "Notes") of Gray
                Communications Systems, Inc.

Ladies and Gentlemen:

                  Please be advised that the Securities and Exchange Commission
has declared effective a Registration Statement on Form S-__ under the
Securities Act of 1933, as amended, with regard to all of the Notes referenced
above and the guarantees related thereto (together with the Notes, the
"Securities"). Accordingly, there is no longer any restriction as to whom such
Securities may be sold and any restrictions on the CUSIP designation are no
longer appropriate and may be removed. I understand that upon receipt of this
letter, DTC will remove any stop or restriction on its system with respect to
this issue.

                  As always, please do not hesitate to call if we can be of
further assistance.

                                Very truly yours,

                               Authorized Officer

                                        1

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