EXHIBIT 10.20


         NEITHER THIS WARRANT, NOR THE SHARES OF COMMON STOCK ISSUABLE UPON THE
         EXERCISE HEREOF, HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE
         SECURITIES ACT OF 1933, AS AMENDED, THE GEORGIA SECURITIES ACT OF 1973
         OR ANY OTHER APPLICABLE SECURITIES LAWS. THIS WARRANT HAS BEEN ISSUED
         OR SOLD, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
         HEREOF WILL BE ISSUED OR SOLD, IF AT ALL, IN RELIANCE UPON EXEMPTIONS
         CONTAINED IN SUCH LAWS FOR TRANSACTIONS NOT INVOLVING ANY PUBLIC
         OFFERING INCLUDING, BUT NOT LIMITED TO, PARAGRAPH (13) OF CODE SECTION
         10-5-9 OF THE GEORGIA SECURITIES ACT OF 1973. THIS WARRANT HAS BEEN
         ACQUIRED, AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE
         HEREOF WILL BE ACQUIRED, IF AT ALL, FOR INVESTMENT AND MAY NOT BE SOLD,
         TRANSFERRED, HYPOTHECATED, PLEDGED OR DISPOSED OF IN ANY MANNER EXCEPT
         IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS OR
         PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH LAWS.

                        GRAY COMMUNICATIONS SYSTEMS, INC.

                                     Warrant

         GRAY COMMUNICATIONS SYSTEMS, INC., a Georgia corporation (the
"Company"), hereby certifies that, for value received, BULL RUN CORPORATION, a
Georgia corporation (together with its registered or authorized assigns, the
"Holder"), is entitled, subject to the terms hereof, to purchase from the
Company upon surrender of this Warrant (this "Warrant") at any time during the
period described in Section 2 hereof, Two Hundred Fifty Thousand (250,000)
shares of Common Stock (as defined below) of the Company (the "Warrant Shares")
(as adjusted from time to time as provided in this Warrant), at the Warrant
Exercise Price (as defined below) per share.

                                   DEFINITIONS

                  SECTION 1. (a) Definitions. The following words and terms as
used in this Warrant shall have the following meanings:

                  "Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.

                  "Business Day" means a day other than a Saturday, a Sunday, a
day on which banking institutions in the State of Georgia are authorized or
obligated by law or required by executive order to be closed, and a day on which
the New York Stock Exchange is closed.

                  "Closing Date" means the date on which the Preferred Stock is
purchased in accordance with the terms of the Preferred Stock Agreement.

                  "Common Stock," when used with reference to stock of the
Company, means all shares now or hereafter authorized of Class A Common Stock,
no par value, of the Company and stock of any other class of the common equity
of the Company into which such shares may hereafter have been changed and other
rights or securities convertible into shares of Class A Common Stock of the
Company.

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                  "Conversion Price" means the price per share for which Common
Stock is issuable upon the conversion or exchange of Convertible Securities,
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance of such Convertible Securities,
plus the minimum aggregate amount of additional consideration payable to the
Company upon the conversion or exchange of such Convertible Securities, by (ii)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities.

                  "Convertible Securities" mean any securities issued by the
Company or an Affiliate which are convertible into or exchangeable for, directly
or indirectly, shares of Common Stock.

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

                  "Expiration Date" means the tenth anniversary of the date 
hereof.

                  "Market Price" of a share of Common Stock on any day means the
average closing price of a share of Common Stock for the twenty (20) consecutive
trading days preceding such day on the principal national securities exchange on
which the shares of Common Stock are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange, the average
of the reported bid and asked prices during such 10 trading day period in the
over-the-counter market as furnished by the National Quotation Bureau, Inc., or,
if such firm is not then engaged in the business of reporting such prices, as
furnished by any similar firm then engaged in such business selected by the
Company, or, if there is no such firm, as furnished by any member of the
National Association of Securities Dealers, Inc. selected by the Company or, if
the shares of Common Stock are not publicly traded, the Market Price for such
day shall be the book value of a share of Common Stock of the Company as
disclosed in the last balance sheet of the Company regularly prepared by the
Company.

                  "Person" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or any agency or political subdivision thereof) or other
entity of any kind.

                  "Preferred Stock Agreement" means that certain Preferred Stock
Exchange and Purchase Agreement dated as of September 24, 1996, between the
Company and the above-named Holder.

                  "Preferred Stock" means the Company's Series B Preferred
Stock, no par value per share, issued to the above-named Holder pursuant to the
Preferred Stock Agreement.

                  "Registrable Securities" means the Warrant Shares and any
securities issued or issuable upon exercise of this Warrant. As to any
particular Registrable Securities, once issued such securities shall cease to be
Registrable Securities when (a) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act and
such securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been distributed to the public pursuant to Rule
144 (or any successor provision) or are saleable pursuant to Rule 144(k) (or any
successor provision) under the Securities Act, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of them shall not require registration or qualification
of them under the Securities Act or any similar state law then in force, or (d)
they shall have ceased to be outstanding.

                  "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Sections 20, 21 and 22 hereof,
including, without limitation, all registration and filing fees, all fees and
expenses of complying with securities or blue sky laws, fees and other expenses

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associated with filings with the National Association of Securities Dealers,
Inc. (including, if required, the reasonable fees and expenses of any "qualified
independent underwriter" and its counsel), all printing expenses, messenger,
telephone, duplication, word processing and delivery expenses incurred by the
Company, the fees and disbursements of counsel for the Company and of its
independent public accountants, the fees and disbursements of counsel retained
by the holders of Registrable Securities, Securities Act liability insurance if
the Company so desires such insurance, rating agency fees and the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, fees and disbursements of all independent
certified public accountants including, without limitation, the expenses of any
special audits made by such accountants required by or incident to such
performance and compliance, but not including such holders' proportionate share
of underwriting discounts and commissions.

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

                  "Strike Price" means the price per share for which Common
Stock is issuable upon the exercise of any rights, options or warrants for the
purchase of Common Stock, determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the grant of such
rights, options or warrants, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of such rights, options
or warrants, by (ii) the total maximum number of shares of Common Stock issuable
upon the exercise of such rights, options or warrants.

                  "Warrant Exercise Price" initially shall be $24 per share.

                  (b)      Other Definitional Provisions.

                           (i) Except as otherwise specified herein, all
references herein (A) to any Person other than the Company shall be deemed to
include such Person's successors and assigns, (B) to the Company shall be deemed
to include the Company's successors and assigns, and (C) to any applicable law
defined or referred to herein shall be deemed references to such applicable law
as the same may have been or may be amended or supplemented from time to time.

                           (ii) When used in this Agreement, the words "herein",
"hereof" and "hereunder", and words of similar import, shall refer to this
Agreement as a whole and not to any provision of this Agreement, and the words
"Section" and "Exhibit" shall refer to Sections of and Exhibits to this
Agreement unless otherwise specified.

                           (iii) Whenever the context so requires, the neuter
gender includes the masculine or feminine, and the singular number includes the
plural, and vice versa.

                  SECTION 2.  Exercise of Warrant.

                  (a) Subject to the terms and conditions hereof, including, but
not limited to, Sections 19 and 33 hereof, this Warrant may be exercised, in
whole or in part, at any time or from time to time during normal business hours
on or after the second anniversary of the date hereof and prior to the close of
business on the Expiration Date. The rights represented by this Warrant may be
exercised by the Holder, in whole or from time to time in part (except that this
Warrant shall not be exercisable as to a fractional share) by (i) delivery of a
written notice of such Holder's election to exercise this Warrant to the
Company's office located at the address set forth in Section 28 hereof, which
notice shall specify the number of Warrant Shares to be purchased, (ii) payment
to the Company of an amount equal to the Warrant Exercise Price multiplied by
the number of Warrant Shares as to

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which the Warrant is being exercised in cash, by certified or official bank
check or the cancellation of all or any of the shares of the Preferred Stock,
(iii) surrender of this Warrant, properly endorsed, at the principal office of
the Company (or at such other agency or office of the Company as the Company may
designate by notice to the Holder), and (iv) if the Warrant Shares issuable upon
the exercise of the rights represented by this Warrant have not been registered
under the Securities Act, delivery to the Company by the Holder of a letter in
the form of Exhibit A hereto; provided, however, that if such Warrant Shares are
to be issued in any name other than that of the registered holder of this
Warrant, such issuance shall be deemed a transfer subject to the provisions of
Section 18. In the event of any exercise of the rights represented by this
Warrant, a certificate or certificates for the Warrant Shares so purchased,
registered in the name of, or as directed by, the Holder, shall be delivered to,
or as directed by, such Holder within a reasonable time after such rights shall
have been so exercised. Unless the rights represented by this Warrant shall have
expired or have been fully exercised, the Company shall issue a new Warrant
identical in all respects to the Warrant exercised except it shall represent
rights to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under the Warrant exercised, less the number of Warrant Shares
with respect to which such Warrant was exercised. The entity in whose name any
certificate for Warrant Shares is issued upon the exercise of this Warrant shall
for all purposes be deemed to have become the holder of record of such Warrant
Shares immediately prior to the close of business on the date on which the
Warrant was surrendered and payment of the amount due in respect of such
exercise and any applicable taxes was made, irrespective of the date of delivery
of such share certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are properly
closed, such person shall be deemed to have become the holder of such Warrant
Shares at the opening of business on the next succeeding date on which the stock
transfer books are open. If this Warrant is not exercised on or prior to the
Expiration Date, this Warrant shall become void and all rights of the Holder
hereunder shall cease.

                  (b) Notwithstanding the provisions of Section 2(a) hereof to
the contrary, this Warrant may be exercised, in whole or in part, at any time or
from time to time during normal business hours on or after the date hereof and
prior to the close of business on the Expiration Date upon the occurrence of any
of the following:

                  (i)      any change in control of the Company by any means
                           whatsoever, including without limitation, by
                           acquisition of securities, merger, consolidation,
                           recapitalization or reorganization of the Company;

                  (ii)     any partial or complete liquidation of the Company;

                  (iii)    any sale or disposition of fifty percent (50%) or
                           more of the assets of the Company;

                  (iv)     any public offering of all or part of any class of
                           securities issued by the Company pursuant to an
                           effective registration statement under the Securities
                           Act, other than a public offering consummated prior
                           to December 31, 1996;

                  (v)      any tender offer for more than twenty percent (20%)
                           of any outstanding class of securities issued by the
                           Company; or

                  (vi)     any sale or other disposition by the Company of
                           capital stock of the Company constituting (on a
                           cumulative basis) more than fifty percent (50%) of
                           the capital stock of the Company then outstanding


                  SECTION 3. Covenants. The Company covenants and agrees that
all securities which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable, free and clear of all taxes, liens, claims and encumbrances. The
Company further covenants and agrees that (i) during the period within which the
rights

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represented by this Warrant may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to provide
for the exercise of the rights then represented by this Warrant and (ii) it
will, at its expense, use its best efforts to cause such shares to be listed
(subject to issuance or notice of issuance) on all stock exchanges, if any, on
which the Common Stock may become listed during such period.

                  SECTION 4. Adjustment of Warrant Exercise Price Upon Stock
Splits, Dividends, Distributions and Combinations. In case the Company shall at
any time subdivide its outstanding shares of Common Stock into a greater number
of shares or issue a stock dividend or make a distribution with respect to
outstanding shares of Common Stock or Convertible Securities payable in Common
Stock or in Convertible Securities which are convertible with no additional
consideration into shares of Common Stock, the Warrant Exercise Price in effect
immediately prior to such subdivision or stock dividend or distribution shall be
proportionately reduced (treating for such purpose any such shares of
Convertible Securities outstanding or payable as being the number of shares of
Common Stock issuable upon their conversion); and conversely, in case the shares
of Common Stock of the Company shall be combined into a smaller number of
shares, the Warrant Exercise Price in effect immediately prior to such
combination shall be proportionately increased.

                  SECTION 5. Reorganization or Reclassification. In case of any
capital reorganization, or of any reclassification of the capital stock of the
Company (other than a change in par value or from par value to no par value or
from no par value to par value or as a result of a split-up or combination), or
any consolidation or merger of the Company with another corporation, or the sale
of all or substantially all of the assets of the Company shall be effected in a
manner by which the holders of Common Stock shall be entitled to securities or
assets with respect to or in exchange for Common Stock, then this Warrant shall,
after such capital reorganization, reclassification of capital stock, merger or
sale of assets, entitle the Holder hereof to purchase the kind and number of
shares of stock or other securities or property of the Company, or of the
corporation resulting from such consolidation to which the Holder hereof would
have been entitled if it had held the Common Stock issuable upon the exercise
hereof immediately prior to such capital reorganization, reclassification of
capital stock, consolidation, merger or sale. The Company shall not effect any
such capital reorganization, reclassification of capital stock, consolidation,
merger or sale unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting therefrom or the corporation
purchasing such assets shall, by written instrument executed and mailed to the
Holder hereof at the last address of such Holder appearing on the books of the
Company, (i) assume the obligation to deliver to such Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase, and (ii) agree to be bound by all the
terms of this Warrant.

                  SECTION 6.  Anti-Dilution Adjustments.

         (a) Issuance of Additional Shares. In case at any time the Company
shall issue or sell any shares of its Common Stock (excluding shares issued upon
the exercise of this Warrant and excluding shares issued in a public offering)
for a consideration per share less than the Market Price on the date of such
issue or sale, the Warrant Exercise Price shall be reduced to the price
determined by multiplying the Warrant Exercise Price in effect immediately prior
to the time of such issue or sale by a fraction, the numerator of which shall be
the sum of (i) the number of shares of Common Stock outstanding immediately
prior to such issue or sale multiplied by the Market Price immediately prior to
such issue or sale plus (ii) the aggregate consideration received by the Company
upon such issue or sale, and the denominator of which shall be the product of
(iii) the total number of shares of Common Stock outstanding immediately after
such issue or sale, multiplied by (iv) the Market Price immediately prior to
such issue or sale.


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         (b) Issuance of Rights, Options or Warrants. In case at any time the
Company shall grant (whether directly or by assumption in a merger or otherwise)
any rights (other than the rights represented by this Warrant), options or
warrants to subscribe for or to purchase shares of Common Stock, whether or not
such rights, options or warrants are immediately exercisable, and the Strike
Price is less than the Market Price as of the date such rights, options or
warrants are granted, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights, options or warrants shall be deemed
to have been issued at the Strike Price. Except as otherwise provided in Section
6(d) below, no adjustments of the Warrant Exercise Price shall be made upon the
actual issuance of the shares of Common Stock underlying such rights, options or
warrants.

         (c) Issuance of Convertible Securities. In case at any time the Company
shall issue any Convertible Securities, whether or not the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
Conversion Price is less than the Market Price as of the date such Convertible
Securities are issued, then the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible Securities shall be
deemed to have been issued at the Conversion Price. Except as otherwise provided
in Section 6(d) below, no adjustments of the Warrant Exercise Price shall be
made upon the actual issuance of the shares of Common Stock underlying such
Convertible Securities.

         (d) Change in Strike Price, Conversion Price or Conversion Rate. If (i)
the Strike Price for any right, option or warrant for the purchase of Common
Stock, (ii) the Conversion Price of any Convertible Security or (iii) the rate
at which any Convertible Securities are convertible into or exchangeable for
Common Stock changes at any time (other than by reason of provisions designed to
protect against dilution), the Warrant Exercise Price in effect at the time such
event occurs shall be readjusted to the Warrant Exercise Price which would have
been in effect at such time had such rights, options, warrants or Convertible
Securities still outstanding provided for such changed Strike Price, Conversion
Price or conversion rate, as the case may be, at the time such rights, options
or warrants were initially granted or such Convertible Securities were initially
issued. Upon the expiration of any such right, option or warrant or the
termination of any such right to convert or exchange such Convertible
Securities, the Warrant Exercise Price then in effect shall be increased to the
Warrant Exercise Price which would have been in effect at the time of such
expiration or termination had such right, option, warrant or Convertible
Security, to the extent outstanding immediately prior to such expiration or
termination, never been granted or issued, and the Common Stock issuable
thereunder shall no longer be deemed to be outstanding.

         (e) Consideration for Stock. In case any shares of Common Stock or
Convertible Securities or any rights, options or warrants to purchase Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by the
Company therefor, without deducting any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or any
rights, options or warrants to purchase Common Stock or Convertible Securities
shall be issued or sold in whole or in part for consideration other than cash,
the amount of such consideration shall be deemed to be the fair value thereof as
determined by the Board of Directors of the Company, without deducting any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith. In the event of any consolidation or
merger of the Company in which the Company is not the surviving corporation or
in the event of any sale of all or substantially all of the assets of the
Company for stock or other securities of any corporation, the Company shall be
deemed to have issued a number of shares of its Common Stock for stock or
securities of the other corporation computed on the basis of the actual exchange
ratio on which the transaction was predicated and for consideration equal to the
fair market value on the date of such transaction of such stock or securities of
the other corporation as determined by the Board of

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Directors of the Company, and if any such calculation results in adjustment of
the Warrant Exercise Price, the determination of the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such merger,
conversion or sale, for purposes of Section 5 shall be made after giving effect
to such adjustment of the Warrant Exercise Price.

         (f) Exceptions. Notwithstanding anything in this Section 6 to the
contrary, the Company shall not be required to make any adjustment of the
Warrant Exercise Price in connection with (i) the issuance of shares of Common
Stock upon exercise of options granted to management employees of the Company
pursuant to a stock option plan and (ii) any acquisition in which all or part of
the purchase price is payable in Common Stock or Convertible Securities and the
Company or an Affiliate of the Company is the surviving corporation.

                  SECTION 7. Record Date. In case the Company shall take a
record of the holders of its Common Stock for the purpose of entitling them (i)
to receive a dividend or other distribution payable in Common Stock or in
Convertible Securities, or (ii) to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

                  SECTION 8. Treasury Shares. The number of shares of Common
Stock outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the sale or other disposition of any such
shares shall be deemed an issuance thereof for the purposes of Section 6.

                  SECTION 9. Certain Events. If any event occurs as to which, in
the opinion of the Board of Directors of the Company, the provisions of Sections
4, 5 or 6 are not strictly applicable or, if strictly applicable, would not
fairly protect the purchase rights of the Holder of this Warrant in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an equitable adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights.

                  SECTION 10. Notice of Adjustment of Warrant Exercise Price.
Upon any adjustment of the Warrant Exercise Price or in the occurrence of any
event which should result in an adjustment to the Warrant Exercise Price, the
Company shall promptly give written notice thereof to the Holder of this
Warrant, which notice shall state the Warrant Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.

                  SECTION 11.  Adjustments.

                  (a) Computation of Adjustments. Upon each computation of an
adjustment in the Warrant Exercise Price, the Warrant Exercise Price shall be
computed to the nearest cent (i.e., fractions of .5 of a cent, or greater, shall
be rounded to the highest cent) and the shares which may be subscribed for and
purchased upon exercise of this Warrant shall be calculated to the nearest whole
share (i.e., fractions of less than one half of a share, or greater, shall be
treated as being a whole share). No such adjustment shall be made, however, if
the change in the Warrant Exercise Price would be less than $.01 per share, but
any such lesser adjustment shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments carried forward,
shall amount to $.01 per share or more.

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                  (b) Adjustment of Number of Shares. Upon each adjustment of
the Warrant Exercise Price as provided above, the registered holder of this
Warrant shall thereafter be entitled to purchase, at the Warrant Exercise Price
resulting from such adjustment, the number of shares (calculated to the nearest
tenth of a share) obtained by multiplying the Warrant Exercise Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Warrant Exercise Price after such adjustment.

                  (c) Certain Prohibited Adjustments. Notwithstanding anything
herein to the contrary, the Company agrees not to enter into any transaction
which would cause an adjustment of the Warrant Exercise Price to less than the
par value of the Common Stock.

                  SECTION 12. Fractional Shares. The Company shall not be
required to issue fractional Warrant Shares upon the exercise of this Warrant.
If the Holder would be entitled upon the exercise of any rights evidenced hereby
to receive a fractional interest in a Warrant Share, the Company shall, upon
such exercise, pay in lieu of such fractional interest an amount in cash equal
to the value of such fractional interest, calculated based upon the Market Price
as of the date this Warrant is exercised.

                  SECTION 13.  Notice of Certain Events.  In case at any time:

                  (a) the Company shall pay any dividend upon, or make any
distribution in respect of, its Common Stock;

                  (b) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;

                  (c) there shall be any capital reorganization, or
reclassification of the capital stock, of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its assets to
another corporation; or

                  (d) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, in any one or more said cases, the Company shall give notice to the Holder
of the date on which (i) the books of the Company shall close or a record shall
be taken for such dividend, distribution or subscription rights, or (ii) such
reorganization, reclassification, consolidation, merger, sale of assets,
involuntary dissolution, liquidation or winding up shall take place, as the case
may be. Such notice shall be given not less than ten (10) days prior to the
record date or the date on which the transfer books of the Company are to be
closed in respect thereto in the case of an action specified in clause (i) and
at least thirty (30) days prior to the action in question in the case of an
action specified in clause (ii). Notices of regular dividends provided by the
Company in accordance with the requirements of the New York Stock Exchange shall
constitute notice to the Holder of such dividends in accordance with this
Section.

                  SECTION 14. No Change in Warrant Terms on Adjustment.
Irrespective of any adjustment in the Warrant Exercise Price or the number of
shares of Common Stock issuable upon exercise hereof, this Warrant, whether
theretofore or thereafter issued or reissued, may continue to express the same
Warrant Exercise Price and number of shares as are stated herein and the Warrant
Exercise Price and such number of shares specified herein shall be deemed to
have been so adjusted.

                  SECTION 15. Taxes. The Company shall pay any tax or taxes
attributable to the issuance of securities issuable upon the exercise of this
Warrant, unless the certificates for such

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securities are to be issued in a name other than that of the Holder hereof. The
Company shall not be required to pay any tax or taxes levied or assessed with
respect to any transfer of this Warrant or any Warrant Shares.

                  SECTION 16. Warrant Holder Not Deemed a Shareholder. No
Holder, as such, of this Warrant shall be entitled to vote or receive dividends
or be deemed a shareholder of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a shareholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance of record to the Holder of this
Warrant of the securities which it is then entitled to receive upon the due
exercise of this Warrant.

                  SECTION 17. No Limitation on Corporate Action. Except as
otherwise specifically set forth herein, no provisions of this Warrant and no
right or option granted or conferred hereunder shall in any way limit, affect or
abridge the exercise by the Company of any of its corporate rights or powers to
recapitalize, amend its Articles of Incorporation, reorganize, consolidate or
merge with or into another corporation, or transfer all or any part of its
property or assets, or the exercise of any other of its corporate rights and
powers.

                  SECTION 18.  Transfer; Restrictive Legends.

                  (a) This Warrant may not be transferred or assigned to any
Person without the express written consent of the Company, which consent shall
not be unreasonably withheld, and without complying with the restrictions
contained in Section 33 of this Warrant, if applicable. The Holder shall
indemnify and hold harmless the Company from any transfer or assignment of this
Warrant in violation of the terms hereof or in violation of applicable law.
Further, this Warrant may be transferred separately from the Preferred Stock.

                  (b) This Warrant is subject to the condition that if at any
time the Board of Directors of the Company determines, in its reasonable
discretion based upon the advice of its securities counsel, that the
registration or qualification of the Registrable Securities is necessary under
any state or federal law as a condition of or in connection with the issuance
and delivery of such securities, the issuance and delivery of such securities
may be withheld unless and until such registration or qualification shall have
been effected. Upon the request of Holder, the Company shall promptly supply to
such Holder all information regarding the Company required to be delivered in
connection with a transfer pursuant to Rule 144 or Rule 144A of the Securities
and Exchange Commission. If a registration statement is not in effect under the
Securities Act or any applicable state securities laws with respect to the
securities, the Board of Directors may require, as a condition of exercise and
as a condition to the issuance and delivery of any such securities, that the
Holder deliver to the Company a letter in the form of Exhibit A hereto, with any
supplemental changes the Board of Directors feels are necessary to comply with
federal and state securities laws. The Company may endorse on certificates
representing such securities such legends referring to the representations and
restrictions contained herein and in such letter, in addition to any other
applicable restrictions on resale as the Company, as it in its discretion shall
deem appropriate.

                  SECTION 19. Vesting. Notwithstanding anything in Section 2 to
the contrary, this Warrant shall be exercisable only with respect to the number
of Warrant Shares which have vested in accordance with the following schedule:

                  (i) on the date hereof, one hundred and fifty thousand
           (150,000) Warrant Shares

                                        9

<PAGE>



         shall automatically vest; and
                  (ii) for so long as any of the Preferred Stock remains
         outstanding, an additional twenty thousand (20,000) Warrant Shares, up
         to an aggregate of one hundred thousand (100,000) Warrant Shares, shall
         vest on each anniversary of the date hereof;

provided, however, that upon the occurrence of an event described in Section
2(b) hereof, any Warrant Shares not then vested shall immediately vest; and
provided further, that upon any adjustment of the number of Warrant Shares the
Holder is entitled to purchase upon the exercise of this Warrant in accordance
with Section 11(b) hereof, all numerical references to Warrant Shares contained
in this Section 19 shall be proportionately adjusted.

                  SECTION 20.  Registration on Request of Holder.

         (a) At any time within the first five (5) years after the date this
Warrant first becomes exercisable, upon the delivery to the Company of a written
request of the Holder and any holder of Registrable Securities, requesting that
the Company effect a registration under the Securities Act, and specifying the
intended method of disposition thereof, the Company will promptly give written
notice of such requested registration to all other holders of Registrable
Securities, and the Company thereupon on one occasion will use its best efforts
to effect, as expeditiously as possible, a registration under the Securities Act
(in accordance with the intended method of disposition specified in the notice
from the Holder and any holder of Registrable Securities) of all of the
Registrable Securities requested to be registered pursuant to this Section 20.
Notwithstanding the foregoing provisions of this Section 20(a), the Company
shall have no obligation to register any Registrable Securities during any
period of time (not to exceed, in the case of (x) or (y), 60 days or, in the
case of (z), 10 Business Days) when (x) the Company is contemplating a public
offering of its securities and in the judgment of the managing underwriter
thereof (or the Company, if such offering is not underwritten) such filing would
have a material adverse effect on the contemplated offering, (y) the Company is
in possession of material information that it deems advisable not to disclose in
a registration statement, or (z) the Company is engaged in any program for the
repurchase of stock of the Company.

         (b) If any requested registration pursuant to this Section 20 is in the
form of an underwritten public offering, the holders of a majority of the
Registrable Securities which are to be registered pursuant to this Section 20
shall have the right to select the manager or co-managers that will administer
the offering, provided that such managers are reasonably satisfactory to the
Company.

         (c) The Company's obligation to register Registrable Securities
pursuant to Section 20(a) shall not be deemed satisfied if the registration
statement does not become effective because of a material adverse change in the
Company. In addition, if such registration statement does become effective and
the method of disposition is an underwritten public offering, such obligation
shall not be deemed satisfied if more than fifty percent (50%) of the
Registrable Securities included in such registration statement are not sold
because of a material adverse change in the Company.

         (d) From the date of receipt of a notice from the Company pursuant to
Section 20(a) until the completion of the period of distribution of the
registration contemplated therein, the Company will not file with the Commission
any other registration statement with respect to its capital stock, whether for
its own account or that of other security holders, provided that the Company
shall not be prohibited from filing any registration statements on Forms S-4 or
S-8 or any other form which is not available for registering capital stock for
sale to the public. The Company shall be entitled to include in any registration
statement referred to in this Section 20 shares of its capital stock to be sold
by the Company for its own account or by other stockholders of the Company
pursuant to other registration rights agreements, provided the registration
statement relates to an underwritten public offering and

                                       10

<PAGE>



in the opinion of the managing underwriter such inclusion would not adversely
affect the marketing of the securities to be sold by the holders of Registrable
Securities.

         (e) Notwithstanding anything to the contrary in this Section 20, the
amount of Registrable Securities to be included in an underwritten public
offering may be reduced if and to the extent the managing underwriter shall be
of the opinion that such inclusion would adversely affect the marketing of the
securities to be sold in such underwritten public offering including the price
at which such securities will be sold. If such a determination is made, (i) the
number of equity securities (as defined in the Exchange Act) to be included by
the Company and the number of equity securities to be included by stockholders
other than the holder of Registrable Securities shall be reduced first; and then
(ii) the number of Registrable Securities to be included by the holders thereof
shall be reduced in a manner consistent with the provisions of Section 20(f)
hereof.

         (f) If a requested registration pursuant to this Section 20 (x)
involves an underwritten public offering and the number of Registrable
Securities requested to be included in such registration exceeds the largest
number of Registrable Securities which can be sold as determined by the managing
underwriter pursuant to Section 20(e) (the "Maximum Offering Size"), or (y) the
number of Registrable Securities requested to be included in such registration
statement exceeds the number of Registrable Securities the Company is obligated
to register under Section 20(a), then the Company will include in such
registration the number of Registrable Securities requested to be included pro
rata in proportion to the percentage of Registrable Securities held by the
holders of Registrable Securities requesting registration; provided, however,
that such holders may decide among themselves a different priority.


                  SECTION 21. Incidental Registration Rights. If the Company at
any time proposes to register any of its equity securities (as defined in the
Exchange Act) under the Securities Act (other than pursuant to a registration
statement on Forms S-4 or S-8, or any successor forms), whether or not for sale
for its own account, and the registration form to be used may be used for the
registration of Registrable Securities, it shall at such time give the Holder
and any holder of Registrable Securities prompt written notice of its intentions
and, upon the written request of any such holder made within twenty (20) days
after the receipt of any such notice (which request shall specify the
Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereof), the Company shall use its best efforts
to effect the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the holders
thereof, to the extent required to permit the disposition (in accordance with
the intended methods thereof as aforesaid) of the Registrable Securities so to
be registered, provided that:

                  (i) if, at any time after giving written notice of its
         intention to register any securities and, prior to the effective date
         of the registration statement filed in connection with such
         registration, the Company shall determine for any reason not to
         register such securities, the Company may, at its election, give
         written notice of such determination to each holder of Registrable
         Securities and, thereupon, shall be relieved of its obligation to
         register any Registrable Securities in connection with such
         registration (but not from its obligation to pay the Registration
         Expenses in connection therewith); and

                  (ii) if such registration shall be in connection with an
         underwritten public offering and the managing underwriters shall advise
         the Company in writing that in their opinion the number of Registrable
         Securities requested to be included in such registration exceeds the
         number of such securities which can be sold in such offering, the
         Company shall include in such registration the number (if any) of
         Registrable Securities so requested to be included which in the opinion
         of such underwriters can be sold and shall not include in such
         registration any

                                       11

<PAGE>



         securities (other than securities being sold by the Company, which
         shall have priority in being included in such registration) so
         requested to be included other than Registrable Securities unless all
         Registrable Securities requested to be so included are included therein
         (and if in the opinion of such underwriters, some but not all of the
         Registrable Securities may be so included, all holders of Registrable
         Securities requested to be included therein shall share pro rata in the
         number of shares of Registrable Securities included in such
         underwritten public offering on the basis of the number of Registrable
         Securities requested to be included therein), except that, in the case
         of a registration initially requested or demanded by a holder or
         holders of securities other than Registrable Securities, the holders of
         the Registrable Securities requested to be included therein and the
         holders of such other securities shall share pro rata (based on the
         number of shares if the requested or demanded registration is to cover
         only Common Stock and, if not, based on the proposed offering price of
         the total number of securities included in such underwritten public
         offering requested to be included therein); and the Company shall so
         provide in any registration agreement hereinafter entered into with
         respect to any of its securities.

                  SECTION 22.  Registration in General.

         (a) Procedures. If and whenever the Company is required to use its best
efforts to effect the registration of any Registrable Securities under the
Securities Act, the Company shall promptly:

                  (i) prepare and file with the Securities and Exchange
         Commission a registration statement with respect to such securities,
         make all required filings with the NASD and use best efforts to cause
         such registration statement to become effective;

                  (ii) prepare and file with the Securities and Exchange
         Commission such amendments and supplements to such registration
         statement and the prospectus used in connection therewith as may be
         necessary to keep such registration statement effective and to comply
         with the provisions of the Securities Act with respect to the
         disposition of all securities covered by such registration statement
         until such time as all of such securities have been disposed of in
         accordance with the intended methods of disposition by the seller or
         sellers thereof set forth in such registration statement, but in no
         event for a period of more than six months after such registration
         statement becomes effective;

                  (iii) furnish to counsel (if any) elected by holders of a
         majority (by number of shares) of the Registrable Securities covered by
         such registration statement copies of all documents proposed to be
         filed with the Securities and Exchange Commission in connection with
         such registration, which documents shall be subject to the review of
         such counsel;

                  (iv) furnish to each seller of such securities such number of
         conformed copies of such registration statement and of each such
         amendment and supplement thereto (in each case including all exhibits,
         except that the Company shall not be obligated to furnish any seller of
         securities with more than two copies of such exhibits), such number of
         copies of the prospectus included in such registration statement
         (including such preliminary prospectus and any summary prospectus), in
         conformity with the requirements of the Securities Act, and such other
         documents, as such seller may reasonably request in order to facilitate
         the disposition of the securities owned by such seller;

                  (v) use its best efforts to register or qualify such
         securities covered by such registration statement under such other
         securities or blue sky laws of such jurisdictions as each seller shall
         request, and do any and all other acts and things which may be
         necessary or advisable to enable such seller to consummate the
         disposition in such jurisdictions of the

                                       12

<PAGE>



         securities owned by such seller, except that the Company shall not for
         any such purpose be required to qualify generally to do business as a
         foreign corporation in any jurisdiction wherein it is not so qualified,
         or to consent to service of process in any such jurisdiction other than
         process served in connection with alleged violations by the Company of
         the securities laws of such jurisdiction;

                  (vi)     furnish to each seller a signed counterpart, 
         addressed to the sellers, of

                           (A) an opinion of counsel for the Company, dated the
                  effective date of the registration statement, and

                           (B) subject to the accountants obtaining the
                  necessary representations as specified in Statement on
                  Auditing Standards No. 72, a "comfort" letter signed by the
                  independent public accountants who have certified the
                  Company's financial statements included in the registration
                  statement,

         covering substantially the same matters with respect to the
         registration statement (and the prospectus included therein) and, in
         the case of such accountants' letter, with respect to changes
         subsequent to the date of such financial statements, as are customarily
         covered in opinions of issuer's counsel and in accountants' letters
         delivered to the underwriters in underwritten public offerings of
         securities;

                  (vii) notify each seller of any securities covered by such
         registration statement, at any time when a prospectus relating thereto
         is required to be delivered under the Securities Act, of the happening
         of any event as a result of which the prospectus included in such
         registration statement, as then in effect, includes an untrue statement
         of a material fact or omits to state any material fact required to be
         stated therein or necessary to make the statements therein not
         misleading in light of the circumstances then existing, and at the
         request of any such seller prepare and furnish to such seller a
         reasonable number of copies of a supplement to or an amendment of such
         prospectus as may be necessary so that, as thereafter delivered to the
         purchasers of such securities, such prospectus shall not include an
         untrue statement of material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements
         therein not misleading in light of the circumstances then existing;

                  (viii) otherwise use its best efforts to comply with all
         applicable rules and regulations of the Securities and Exchange
         Commission, and make available to its security holders, as soon as
         reasonably practicable, an earnings statement covering the period of at
         least twelve months, but not more than eighteen months, beginning with
         the first month after the effective date of the registration statement,
         which earnings statement shall satisfy the provisions of section 11(a)
         of the Securities Act; and

                  (ix) use its best efforts to list such securities on any stock
         market on which the Common Stock is then listed, if such securities are
         not already so listed and if such listing is then permitted under the
         rules of such exchange, and to provide a transfer agent and registrar
         for such Registrable Securities not later than the effective date of
         such registration statement.

The Company may require each seller of any securities as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company may
from time to time reasonably request in writing and as shall be required by law
in connection therewith. Each such holder 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

                                       13

<PAGE>



holder not materially misleading.

         By acquisition of Registrable Securities, each holder of such
Registrable Securities shall be deemed to have agreed that upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 22(b)(vii) hereof, such holder shall promptly discontinue such holder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such holder's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 22(b)(vii)
hereof. If so directed by the Company, each holder of Registrable Securities
shall deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 22(b)(ii) hereof shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each seller of any Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 22(b)(vii) hereof.

         (b)      Indemnification.

                  (i)      Indemnification by the Company.

                  The Company shall indemnify and hold harmless each holder of
         Registrable Securities, each person who controls such holder of
         Registrable Securities within the meaning of either Section 15 of the
         Securities Act or Section 20(a) of the Exchange Act and the officers,
         directors, employees and agents of each such holder and control Person
         (each such Person being sometimes hereinafter referred to as an
         "Indemnified Holder") from and against all losses, claims, damages,
         liabilities, costs (including costs of preparation and attorneys' fees)
         and expenses (including expenses of investigation) arising out of or
         based upon any untrue statement or alleged untrue statement of a
         material fact contained in any registration statement or prospectus or
         in any amendment or supplement thereto or in any preliminary
         prospectus, or arising out of or based upon any omission or alleged
         omission to state therein or necessary to make the statements therein,
         in light of the circumstances under which they were made, not
         misleading, except insofar as such losses, claims, damages, liabilities
         or expenses arise out of or are based upon any such untrue statement or
         omission or allegation thereof based upon information relating to such
         Indemnified Holder and furnished in writing to the Company by such
         Indemnified Holder expressly for use therein. This indemnity shall be
         in addition to any liability which the Company may otherwise have.

                  If any action or proceeding (including any governmental
         investigation or inquiry) shall be brought or asserted against an
         Indemnified Holder in respect of which indemnity may be sought from the
         Company, such Indemnified Holder shall promptly notify the Company in
         writing, and the Company shall, at its expense, assume the defense
         thereof, including the employment of counsel satisfactory to such
         Indemnified Holder and the payment of all expenses. The failure so to
         notify the Company shall not relieve the Company from any obligation or
         liability except to the extent (but only to the extent) that it shall
         finally be determined by a court of competent jurisdiction (which
         determination is not subject to appeal) that the Company has been
         materially prejudiced by such failure. Such Indemnified Holder shall
         have the right to employ separate counsel in any such action and to
         participate in the defense thereof, but the fees and expenses of such
         counsel shall be at the expense of such Indemnified Holder unless (A)
         the Company has agreed to pay such fees and expenses or (B) the Company
         shall have failed promptly to assume the defense of such action or
         proceeding or has failed to employ counsel satisfactory to such
         Indemnified Holder or (C) the named parties to any such

                                       14

<PAGE>



         action or proceeding (including any impleaded parties) include both
         such Indemnified Holder and the Company or an Affiliate of the Company,
         and there may be one or more defenses available to such Indemnified
         Holder which are additional to, or in conflict with, those available to
         the Company or such Affiliate (in which case, if such Indemnified
         Holder notifies the Company in writing that it elects to employ
         separate counsel at the expense of the Company, the Company shall not
         have the right to assume the defense of such action or proceeding on
         behalf of such Indemnified Holder, it being understood, however, that
         the Company shall not, in connection with any one such action or
         proceeding or separate but substantially similar or related actions or
         proceedings in the same jurisdiction arising out of the same general
         allegations or circumstances, be liable for the fees and expenses of
         more than one separate firm of attorneys (together with appropriate
         local counsel) at any time for such Indemnified Holder). The Company
         shall not be liable for any settlement of any such action or proceeding
         effected without its written consent, but if settled with its written
         consent, or if there be a final judgment for the plaintiff in any such
         action or proceeding, the Company agrees to indemnify and hold harmless
         such Indemnified Holders from and against any loss or liability by
         reason of such settlement or judgment. Whether or not such defense is
         assumed by the Company, no Indemnified Holder shall be subject to any
         liability for any settlement made without its consent (but such consent
         shall not be unreasonably withheld). The Company shall not consent to
         entry of any judgment or enter into any settlement that does not
         include as an unconditional term thereof the giving by the claimant or
         plaintiff to each Indemnified Holder of a release, in form and
         substance satisfactory to the Indemnified Holder, from all liability in
         respect of such proceeding for which such Indemnified Holder would be
         entitled to indemnification hereunder (whether or not any Indemnified
         Holder is a party thereto).

                  (ii)     Indemnification by Holder of Registrable Securities.

                  Each holder of Registrable Securities agrees to indemnify and
         hold harmless the Company, its directors and officers and each Person,
         if any, who controls the Company within the meaning of either Section
         15 of the Securities Act or Section 20 of the Exchange Act to the same
         extent as the foregoing indemnity from the Company to such holders, but
         only with respect to information relating to such holders furnished in
         writing by such holders expressly for use in any registration statement
         or prospectus, or any amendment or supplement thereto, or any
         preliminary prospectus. In case any action or proceeding shall be
         brought against the Company or its directors or officers or any such
         controlling person, in respect of which indemnity may be sought against
         a holder of Registrable Securities, such holder shall have the rights
         and duties given to the Company and the Company or its directors or
         officers or such controlling person shall have the rights and duties
         given to each holder by the preceding paragraph.

                  (iii)    Contribution

                  If the indemnification provided for in this Section 22(b) is
         unavailable to or insufficient to hold harmless an indemnified party
         under Section 22(b)(i) or Section 22(b)(ii) hereof (other than by
         reason of exceptions provided in those Sections) in respect of any
         losses, claims, damages, liabilities or expenses referred to therein,
         then each applicable indemnifying party, in lieu of indemnifying such
         indemnified party, shall contribute to the amount paid or payable by
         such indemnified party as a result of such losses, claims, damages,
         liabilities or expenses in such proportion as is appropriate to reflect
         the relative benefits received by the Company on the one hand and the
         Holders on the other hand from their sale of Registrable Securities or
         if such allocation is not permitted by applicable law, the relative
         fault of the Company on the one hand and of the Indemnified Holder on
         the other in connection with the statements or omissions

                                       15

<PAGE>



         which resulted in such losses, claims, damages, liabilities or
         expenses, as well as any other relevant equitable considerations. The
         relative fault of the Company on the one hand and of the Indemnified
         Holder on the other shall be determined by reference to, among other
         things, whether the untrue or alleged untrue statement of a material
         fact or the omission or alleged omission to state a material fact
         relates to information supplied by the Company or by the Indemnified
         Holder and the parties' relative intent, knowledge, access to
         information and opportunity to correct or prevent such statement or
         omission. The amount paid or payable by a party as a result of the
         losses, claims, damages, liabilities and expenses referred to above
         shall be deemed to include, subject to the limitations set forth in the
         second paragraph of Section 22(b)(i), any legal or other fees or
         expenses reasonably incurred by such party in connection with
         investigating or defending any action or claim.

                  The Company and each Holder of Registrable Securities agree
         that it would not be just and equitable if contribution pursuant to
         this Section 22(b)(iii) were determined by pro rata allocation or by
         any other method of allocation which does not take account of the
         equitable considerations referred to in the immediately preceding
         paragraph. No person guilty of fraudulent misrepresentation (within the
         meaning of Section 11(f) of the Securities Act) shall be entitled to
         contribution from any person who was not guilty of such fraudulent
         misrepresentation.

                  (c) Expenses. The Company shall pay all Registration Expenses
in connection with each registration of Registrable Securities.

                  SECTION 23. Lock-Up Agreement. The Holder hereby agrees to
enter into an agreement with the Company, in form and substance reasonably
satisfactory to such Holder, restricting such Holder's ability to sell Warrant
Shares for a period not to exceed one hundred eighty (180) days following any
underwritten public offering of Common Stock pursuant to an effective
registration statement under the Securities Act.

                  SECTION 24. Exchange of Warrant. This Warrant is exchangeable
upon the surrender hereof by the holder hereof at such office or agency of the
Company, for new warrants of like tenor representing in the aggregate the right
to subscribe for and purchase the number of shares which may be subscribed for
and purchased hereunder from time to time after giving effect to all the
provisions hereof, each of such new warrants to represent the right to subscribe
for and purchase such number of shares as shall be designated by said holder
hereof at the time of such surrender.

                  SECTION 25. Financial Information. Within one hundred twenty
(120) days after the close of each fiscal year of the Company ending after the
date of the issuance of this Warrant and prior to the Expiration Date, the
Company shall furnish to the Holder the audited consolidated financial
statements of the Company and its consolidated subsidiaries (including balance
sheet and income statements) as at the end of each such fiscal year in
comparative form certified by a firm of independent certified public accountants
of recognized national standing, reasonably acceptable to the Holder and
selected by the Company, which financial statements shall be accompanied by the
opinion of such certified public accountants thereon.

                  SECTION 26. Lost, Stolen, Mutilated or Destroyed Warrant. If
this Warrant is lost, stolen, mutilated or destroyed, the Company shall, on such
terms as to indemnify or otherwise as it may in its discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.


                                       16

<PAGE>



                  SECTION 27. Representation of Holder. The holder of this
Warrant, by the acceptance hereof, represents that it is acquiring this Warrant
for its own account for investment and not with a view to, or sale in connection
with, any distribution hereof or of any of the shares of Common Stock or other
securities issuable upon the exercise thereof, nor with any present intention of
distributing any of the same.

                  SECTION 28. Notice. All notices, demands and other
communications under this Warrant shall be in writing (which shall include
communications by telex and telecopy) and shall be delivered (a) in person or by
courier or overnight service, (b) mailed by first class registered or certified
mail, postage prepaid, return receipt requested, by prepaid telex or telecopier,
or by hand, courier or overnight service, and (c) be given at the following
respective addresses and telecopier numbers and to the attention of the
following Persons:

                  (i)      if to the Company, to:


                           Gray Communications Systems, Inc.
                           126 North Washington Street
                           Albany, Georgia 31701
                           Attn: Mr. William A. Fielder, III
                           Telecopier No.:  (912) 888-9374


                  with a copy (which shall not constitute notice) to:


                           Heyman & Sizemore
                           2300 Cain Tower
                           229 Peachtree Street, NE
                           Atlanta, Georgia 30303-1608
                           Attn:  Neal H. Ray, Esq.
                           Telecopier No.:  (404) 521-2838


                  (ii)     if to the Holder hereof, to:


                           Bull Run Corporation
                           4370 Peachtree Road
                           Atlanta, Georgia 30319
                           Attn:  Mr. Robert S. Prather
                           Telecopier No.:  (404) 261-9607


or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other specifically captioned "Notice of Change of
Address", and (d) be effective or deemed delivered or furnished (i) if given by
mail, on the third Business Day after such communication is deposited in the
mail, addressed as above provided, (ii) if given by telecopier, when such
communication is transmitted to the appropriate number determined as above
provided in this Section 28 and the appropriate answer back is received or
receipt is otherwise acknowledged, and (iii) if given by hand delivery or
overnight

                                       17

<PAGE>



delivery service when left at the address of the addressee addressed as above
provided, except that notices of a change of address or telecopier number, shall
not be deemed furnished until received.

                  SECTION 29. Miscellaneous. This Warrant and any term hereof
may be changed, waived, discharged, or terminated only by an instrument in
writing signed by the party or holder hereof against whom enforcement of such
change, waiver, discharge or termination is sought. The headings in this Warrant
are for purposes of reference only and shall not limit or otherwise affect the
meaning hereof.

                  SECTION 30. Remedies. The Company stipulates that the remedies
at law of the Holder in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.

                  SECTION 31. Governing Law. This Warrant shall be governed by
the laws of the State of Georgia, without regard to conflict of laws principles.

                  SECTION 32. Date. The date of this Warrant is September 24,
1996. This Warrant, in all events, shall be wholly void and of no effect after
the close of business on the Expiration Date, except that notwithstanding any
other provisions hereof, the provisions of Sections 20, 21 and 22 shall continue
in full force and effect after such date as to any Warrant Shares or other
securities issued upon the exercise of this Warrant.

                  SECTION 33. Certain Limitations on Exercise of Warrant. This
Warrant may not be exercised by the Holder to the extent, but only to the
extent, that the exercise of this Warrant would result in the Holder and its
Affiliates owning more than 49.9% of the outstanding shares of Common Stock, on
a fully diluted basis. In the event the circumstances described in the foregoing
sentence preclude the Holder from exercising any portion of this Warrant, the
Holder may, in accordance with the provisions of Section 18 of this Warrant,
freely sell or otherwise transfer this Warrant to any third party other than a
third party to which the Holder has previously sold, in one or more
installments, an aggregate of twenty-five percent (25%) or more of the
outstanding Common Stock, on a fully diluted basis.


         IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officers and its seal to be hereunto affixed as of
September 24, 1996.


                                           GRAY COMMUNICATIONS SYSTEMS, INC.



                                           By:  /s/ J. MACK ROBINSON
                                                Name: J. Mack Robinson
                                                Title: President
ATTEST:


By: ______________________________
         Secretary

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                                    EXHIBIT A

                               Notice of Exercise

                                     [Date]


Gray Communications Systems, Inc.
126 North Washington Street
Albany, Georgia 31701
Attn:  Mr. William A. Fielder, III

         Re:  Exercise of Warrant


         Pursuant to the provisions of that certain Warrant to Purchase Common
Stock (the "Warrant") of Gray Communications Systems, Inc., a Georgia
corporation (the "Company"), dated September 24, 1996, Bull Run Corporation, a
Georgia corporation ("Bull Run"), hereby represents, warrants, covenants, and
agrees with the Company as follows:

                  The shares of common stock of the Company being acquired by
         Bull Run pursuant to this exercise of the Warrant (the "Warrant
         Shares") will be acquired for its own account without the participation
         of any other person, with the intent of holding the Warrant Shares for
         investment and without the intent of participating, directly or
         indirectly, in a distribution of the Warrant Shares and not with a view
         to, or for resale in connection with, any distribution of the Warrant
         Shares, nor is Bull Run aware of the existence of any distribution of
         the Warrant Shares;

                  Bull Run is not acquiring the Warrant Shares based upon any
         representation, oral or written, by any person with respect to the
         future value of, or income from, the Warrant Shares but rather upon an
         independent examination and judgment as to the prospects of the
         Company;

                  The Warrant Shares were not offered to Bull Run by means of
         publicly disseminated advertisements or sales literature;

                  Bull Run is able to bear the economic risks of the investment
         in the Warrant Shares, including the risk of a complete loss of Bull
         Run's investment therein;

                  Bull Run understands and agrees that the Warrant Shares will
         be issued and sold to Bull Run in reliance upon an exemption from, but
         without registration under any state law relating to the registration
         of securities for sale, and will be issued and sold in reliance on the
         exemptions from registration under the Securities Act of 1933 (the
         "1933 Act"), provided by Sections 3(b) and/or 4(2) thereof and the
         rules and regulations promulgated thereunder;

                  Except as set forth in Section 18 of the Warrant, the Warrant
         Shares cannot be offered for sale, sold or transferred by Bull Run
         other than pursuant to: (A) an effective registration under the 1933
         Act or in a transaction otherwise in compliance with the 1933 Act; and
         (B) evidence reasonably satisfactory to the Company of compliance with
         the applicable securities laws of other jurisdictions. The Company
         shall be entitled to rely upon an opinion of counsel reasonably
         satisfactory to it with respect to compliance with the above laws;

                                        1

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                  Except as set forth in Sections 20, 21 and 22 of the Warrant,
         the Company will be under no obligation to register the Warrant Shares
         or to comply with any exemption available for sale of the Warrant
         Shares without registration or filing, and the information or
         conditions necessary to permit routine sales of securities of the
         Company under Rule 144 of the 1933 Act are not now available and no
         assurance has been given that it or they will become available. The
         Company is under no obligation to act in any manner so as to make Rule
         144 available with respect to the Warrant Shares;

                  Bull Run has and has had complete access to and the
         opportunity to review and make copies of all material documents related
         to the business of the Company, including, but not limited to,
         contracts, financial statements, tax returns, leases, deeds, and other
         books and records. Bull Run has examined such of these documents as it
         wished and is familiar with the business and affairs of the Company.
         Bull Run realizes that the purchase of the Warrant Shares is a
         speculative investment and that any possible profit therefrom is
         uncertain;

                  Bull Run has had the opportunity to ask questions of and
         receive answers from the Company and any person acting on its behalf
         and to obtain all material information reasonably available with
         respect to the Company and its affairs. Bull Run has received all
         information and data with respect to the Company which it has requested
         and which it has deemed relevant in connection with the evaluation of
         the merits and risks of its investment in the Company;

                  Bull Run has such knowledge and experience in financial and
         business matters that it is capable of evaluating the merits and risks
         of the purchase of the Warrant Shares hereunder and it is able to bear
         the economic risk of such purchase; and

                  The agreements, representations, warranties, and covenants
         made by Bull Run herein extends to and applies to all of the Warrant
         Shares. Acceptance by Bull Run of the certificate representing such
         Warrant Shares shall constitute a confirmation by Bull Run that all
         such agreements, representations, warranties, and covenants made herein
         shall be true and correct at that time.

         Bull Run understands that the certificates representing the Warrant
Shares shall bear a legend referring to the foregoing covenants, representations
and warranties and restrictions on transfer, and agrees that a legend to that
effect may be placed on any certificate which may be issued to Bull Run as a
substitute for the certificates representing the Warrant Shares.

                                                     Very truly yours,

                                                     BULL RUN CORPORATION



                                                      By:
                                                           Its:








                                        2

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AGREED TO AND ACCEPTED:


GRAY COMMUNICATIONS SYSTEMS, INC.


By:
Title:


Number of Shares
Exercised:


Number of Shares
Remaining:                                            Date:

                                        3

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