Document:

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                                                                     EXHIBIT 4.1

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is dated as of
April 22, 2002, and made by and among Gray Communications Systems, Inc., a
Georgia corporation (the "Company"), and each of the other persons set forth on
the signature pages hereto (each, a "Purchaser" and, collectively, the
"Purchasers"). Capitalized terms used but not otherwise defined herein shall
have the meaning set forth in Section 7 hereof.

         WHEREAS, each of the Purchasers has acquired shares of the Company's
Series C Preferred Stock pursuant to that certain Preferred Stock Purchase
Agreement, dated as of the date hereof, by and among the Company and certain of
the Purchasers (as amended, restated or modified from time to time, the
"Purchase Agreement") or that certain Exchange Agreement, dated as of the date
hereof, by and among the Company and certain of the other Purchasers (as
amended, restated or modified from time to time, the "Exchange Agreement");

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:

         1.       Shelf Registration by the Company.

         (a)      Shelf Registration. The Company shall file with the Securities
and Exchange Commission (the "Commission"), no later than 45 days after the date
hereof, a registration statement under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to resales of the Registrable Securities.
The registration provided by this Section shall be effected by the filing of a
registration statement on Form S-3 (or, if such form is unavailable, such other
form as the Company determines to be available and appropriate and selects with
the consent of the holders of a majority of the Registrable Securities), which
shall provide for sales of Registrable Securities to be made on a continuous
basis pursuant to Rule 415 under the Securities Act (or any similar rule that
may be adopted by the Commission) in accordance with the intended method or
methods of disposition by the holders of the Registrable Securities, which may,
as provided in Section 1(b), include an underwritten offering (the "Shelf
Registration Statement"). The Company shall use its reasonable best efforts to
cause the Shelf Registration Statement to be declared effective under the
Securities Act as soon as practicable after filing (but in no event later than
the earlier to occur of (x) 200 days after the date hereof and (y) 180 days
after the date of filing (such earlier date, "the Outside Effective Date")) and,
once effective, the Company shall cause such Shelf Registration Statement to
remain effective until the earlier to occur of (i) the date that is two years
following the date of initial issuance of the Series C Preferred Stock and (ii)
the date as of which there are no longer any Registrable Securities in
existence.

         (b)      Underwritten Offering. If at any time or from time to time
during the effectiveness of the Shelf Registration Statement the holders of a
majority of Registrable Securities propose to sell 25% or more of the
Registrable Securities held by such holders, such holders may, by notice to the
Company, require that such sale occur through a firm commitment
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underwritten offering (or any other type of underwritten offering specified by
such holders) and, in such event, (i) the Company will promptly give written
notice of such planned underwritten offering to all other holders of Registrable
Securities and will include in such registration (subject to any cutbacks
demanded by the managing underwriter, which shall be imposed pro rata among the
holders of such Registrable Securities on the basis of the number of Registrable
Securities owned by each such holder and subject to the other provisions of this
Agreement) all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within ten (10) business days
after the receipt of the Company's notice, (ii) the Company shall have the right
to select the managing underwriter, subject to the approval (which may not be
unreasonably withheld or denied) of the holders of a majority of the Registrable
Securities to be included in such offering, and (iii) the Company shall promptly
amend the Shelf Registration Statement to include any information reasonably
requested to be included therein by the underwriters or holders of Registrable
Securities. Holders of Registrable Securities may request an underwritten
offering pursuant to this Section 1(b) on not more than four occasions in the
aggregate (provided that no more than two requests may be made in any one
calendar year and a minimum of 90 days must elapse between the making of any
such requests) and the minimum amount of any such underwritten offering shall be
$4,000,000, it being understood that (x) the foregoing limitations applicable to
underwritten offerings shall not be deemed to limit the obligations of the
Company under Section 1(a) to keep the Shelf Registration Statement effective
for the time period specified therein for use in connection with
non-underwritten offerings and (y) the holders of Registrable Securities
requesting such underwritten offering will be entitled to withdraw such request
(such withdrawal to be effective only if (A) made within 40 days of the
Company's delivery of the notice to holders contemplated by clause (i) of this
Section 1(b), (B) made upon the failure to sell at least 50% of the Registrable
Securities requested to be included in such underwritten offering or (C) made
upon the failure to sell at least 75% of the Registrable Securities requested to
be included in such underwritten offering, provided that, notwithstanding
anything in this Agreement to the contrary, the holders requesting such
underwritten offering will bear any Registration Expenses arising prior to such
withdrawal under this clause (C)) and such withdrawn request will not count as
one of the four permitted underwritten offerings under this Section 1(b). Any
underwritten offering with respect to any securities covered by the Shelf
Registration Statement other than an underwritten offering of the type described
in this Section 1(b) shall be subject to the provisions of Section 2 of this
Agreement.

         (c)      Eligibility. The Company represents and warrants that it is,
and covenants that it will use its reasonable best efforts to remain, at all
times while there are any Registrable Securities outstanding, eligible to use
Form S-3 under the Securities Act.

         (d)      Liquidated Damages. The parties hereto agree that the holders
of the Registrable Securities will suffer damages if the Shelf Registration
Statement is not declared effective under the Securities Act by the Outside
Effective Date (a "Registration Default"), and that it would not be feasible to
ascertain the extent of such damages. Accordingly, in such event, damages
("Liquidated Damages") will accrue with respect to each share of Series C
Preferred Stock owned by a holder with respect to the first 90-day period
immediately following the occurrence of such Registration Default in an amount
equal to 0.5% of the Liquidation Preference (as such term is defined in the
Articles of Amendment, dated April 15, 2002, to the Articles of Incorporation of
the Company (the "Articles")) of such share of Series C Preferred Stock and will
increase by an additional 0.5% for each subsequent 90-day period until such

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Registration Default has been cured, up to an aggregate maximum amount of
Liquidated Damages of 2.0% of such Liquidation Preference. All accruals of
Liquidated Damages under the preceding sentence will be prorated for any partial
90-day period. Following the cure of a Registration Default, the accrual of
Liquidated Damages with respect to such Registration Default will cease. Such
Liquidated Damages shall be payable in cash on each dividend payment date for
the Series C Preferred Stock to the holders of record entitled to receive such
dividends on such date, regardless of whether such dividends are paid on such
date and regardless of whether Liquidated Damages have ceased to accrue as of
such date. The parties hereto agree that the Liquidated Damages provided for in
this Section 1(d) constitute a reasonable estimate of the damages that will be
suffered by the holders of the Registrable Securities by reason of the happening
of a Registration Default.

         2.       Piggyback Registration.

                  (a)      Right to Piggyback. If the Company shall propose the
registration under the Securities Act of an offering of any of its Class B
Common Stock, whether or not for its own account (other than pursuant to a
registration on Form S-4 or S-8 or any successor form), the Company, on each
such occasion, shall as promptly as practicable give written notice (the
"Notice") to all holders of Registrable Securities of its intention to effect
such registration, and such holders shall be entitled, on each such occasion, to
request to have all or a portion of their Registrable Securities included in
such registration statement (a "Piggyback Registration"). Upon the written
request of any holder of Registrable Securities that the Company include any
Registrable Securities in such registration statement (which request shall state
the number of the Registrable Securities for which registration is sought),
given within twenty (20) days after the giving of the Company's Notice, the
Company shall cause such Registrable Securities to be so included in the
offering covered by such registration statement, subject to the limitations
hereinafter set forth. Subject to Section 2(b) and 2(c), holders of Registrable
Securities may request registration pursuant to this Section 2(a) on not more
than six occasions in the aggregate, provided that any such request shall not
count as one of the six permitted registrations under this Section 2(a) if the
only Registrable Securities included in such registration were originally
acquired pursuant to the Exchange Agreement.

                  (b)      Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
the Company will include in such registration all securities requested to be
included in such registration; provided, that if the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering without adversely affecting the marketability of the
offering, the Company will include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included in such registration pro rata among the holders of such
Registrable Securities on the basis of the number of shares of Registrable
Securities owned by each such holder, and (iii) third, other securities, if any,
requested to be included in such registration.

                  (c)      Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities other than Registrable Securities, and the managing
underwriters advise the Company in writing that in

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their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Company will include
in such registration (i) first, the securities requested to be included therein
by the holders requesting such registration, (ii) second, the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Securities on the basis of the number of shares of
Registrable Securities owned by each such holder, and (iii) third, other
securities requested to be included in such registration not covered by clause
(i) or (ii) above.

         3.       Registration Procedures and Obligations.

                  (a)      Obligations of the Company. If and whenever the
Company is obligated by the provisions of this Agreement to effect the
registration of any Registrable Securities under the Securities Act, the Company
will use its reasonable best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof, and pursuant thereto the Company will as expeditiously as
possible (or within such specific time period as may otherwise be specified):

                           (i)      Prepare and file with the Commission a
                  registration statement with respect to such securities on such
                  form as the Company deems appropriate and is permitted or
                  qualified to use (subject to Section 1(a)) and shall use all
                  reasonable best efforts to cause such registration statement
                  to become and remain effective as provided herein; provided,
                  that in the case of any registration pursuant to Section 2,
                  such preparation and filing may be delayed in the sole
                  discretion of the Company;

                           (ii)     Furnish to counsel to the holders of a
                  majority of the Registrable Securities to be included under
                  any registration statement and to counsel for the underwriters
                  in any underwritten offering copies of all documents proposed
                  to be filed with the Commission in connection with such
                  registration, and to reflect in each such document, when so
                  filed with the Commission, such comments as such counsel
                  reasonably may propose (it being understood that (A) the
                  Company shall allow such counsel a reasonable period of time,
                  in light of all circumstances, to review the document to be
                  filed and (B) such counsel shall provide any comments to the
                  Company as soon as practicable following such review).

                           (iii)    Furnish to each holder of Registrable
                  Securities, without charge, such number of conformed copies of
                  such registration statement, the prospectus included in such
                  registration statement (including each preliminary prospectus)
                  and of each amendment and supplement thereto (in each case,
                  including all exhibits and documents filed therewith) and such
                  other documents as such holder may reasonably request in order
                  to facilitate the disposition of the Registrable Securities
                  owned by such holder.

                           (iv)     Use its reasonable best efforts to register
                  and qualify such Registrable Securities under such other
                  securities laws of such jurisdictions as shall be reasonably
                  requested by any holder of Registrable Securities and do any

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                  and all other acts and things which may be reasonably
                  necessary or advisable to enable such holder to consummate the
                  disposition of the Registrable Securities owned by such holder
                  in such jurisdictions; provided, however, that the Company
                  shall not be required in connection therewith or as a
                  condition thereto to qualify to transact business or to file a
                  general consent to service of process in any such states or
                  jurisdictions, or to maintain the effectiveness of any such
                  registration or qualification for any period during which it
                  is not required to maintain the effectiveness of the related
                  registration statement under the Securities Act.

                           (v)      Promptly notify each holder of Registrable
                  Securities of the happening of any event as a result of which
                  the prospectus included in such registration statement
                  contains an untrue statement of a material fact or omits any
                  fact necessary to make the statements therein not misleading
                  and, at the request of any such holder, and subject to the
                  provisions of Section 3(b)(ii), the Company will prepare a
                  supplement or amendment to such prospectus so that, as
                  thereafter delivered to the purchasers of such Registrable
                  Securities, such prospectus will not contain an untrue
                  statement of a material fact or omit to state any fact
                  necessary to make the statements therein not misleading.

                           (vi)     Enter into such customary agreements and
                  take all such other actions as the holders of a majority of
                  the Registrable Securities being sold or the underwriters, if
                  any, reasonably request in order to expedite or facilitate the
                  disposition of such Registrable Securities.

                           (vii)    Make reasonably available for inspection by
                  any holder of Registrable Securities, any underwriter
                  participating in any disposition pursuant to such registration
                  statement and any attorney, accountant or other agent retained
                  by any such holder or underwriter, all financial and other
                  records, pertinent corporate documents and properties of the
                  Company, and cause the officers, directors, employees and
                  independent accountants of the Company to supply all
                  information reasonably requested by any such holder,
                  underwriter, attorney, accountant or agent in connection with
                  such registration statement, in each case as and to the extent
                  necessary to permit the holders to conduct a reasonable
                  investigation within the meaning of the Securities Act. To
                  minimize disruption and expense to the Company during the
                  course of the registration process, the holders and any
                  transferee(s) of the holders hereunder shall, to the extent
                  practicable, coordinate investigation and due diligence
                  efforts hereunder and will enter into confidentiality
                  agreements with the Company in form and substance reasonably
                  satisfactory to the Company and the holders of the Registrable
                  Securities prior to the disclosure of any confidential or
                  proprietary information of the Company.

                           (viii)   Promptly notify each holder of Registrable
                  Securities of the following events and confirm such
                  notification in writing: (w) the filing of the prospectus or
                  any prospectus supplement and the registration statement and
                  any amendment or post-effective amendment thereto and, with
                  respect to the registration statement or any post-effective
                  amendment thereto, the declaration of the effectiveness of
                  such documents, (x) any requests by the Commission for

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                  amendments or supplements to the registration statement or the
                  prospectus or for additional information, (y) the issuance or
                  threat of issuance by the Commission of any stop order
                  suspending the effectiveness of the registration statement or
                  the initiation of any proceedings for that purpose, and (z)
                  the receipt by the Company of any notification with respect to
                  the suspension of the qualification of the Registrable
                  Securities for sale in any jurisdiction or the initiation or
                  threat of initiation of any proceeding for such purpose.

                           (ix)     In the event of the issuance of any stop
                  order suspending the effectiveness of a registration
                  statement, or of any order suspending or preventing the use of
                  any related prospectus or suspending the qualification of any
                  Registrable Securities included in such registration statement
                  for sale in any jurisdiction, the Company will use its
                  reasonable best efforts promptly to obtain the withdrawal of
                  such order;

                           (x)      Cooperate with the holders of Registrable
                  Securities to facilitate the timely preparation and delivery
                  of certificates representing the Registrable Securities to be
                  sold and not bearing any restrictive legends, and enable such
                  Registrable Securities to be in such lots and registered in
                  such names as the holders of Registrable Securities may
                  request at least two (2) business days prior to any delivery
                  of the Registrable Securities to the purchaser thereof,
                  provided that such holders shall have established to the
                  satisfaction of the Company that any transfer taxes and other
                  similar expenses of the sale of the Registrable Securities
                  have been paid or are not payable.

                           (xi)     Prior to the effectiveness of the
                  registration statement and any post-effective amendment
                  thereto, (A) make such representations and warranties to the
                  holders of Registrable Securities and the underwriters, if
                  any, with respect to the Registrable Securities and the
                  registration statement as are customarily made by issuers in
                  similar underwritten offerings; (B) deliver such documents and
                  certificates as may be reasonably requested (1) by the holders
                  of Registrable Securities, and (2) by the underwriters, if
                  any, to evidence compliance with clause (A) above and with any
                  customary conditions contained in the underwriting agreement
                  or other agreement entered into by the Company; and (C) obtain
                  and furnish to each holder of Registrable Securities included
                  in the registration signed counterparts, addressed to such
                  holders and the underwriters (if any) of: "a cold comfort"
                  letter from the Company's independent public accountants and
                  opinions of counsel to the Company (which counsel and which
                  opinions shall be reasonably satisfactory to such holders and
                  the underwriters, if any), in each case covering the matters
                  customarily covered in opinions requested in public offerings.

                           (xii)    Pay all Registration Expenses.

                           (xiii)   use its reasonable best efforts, to the
                  extent applicable, (i) (A) to list such Registrable Securities
                  on any securities exchange on which the equity securities of
                  the Company are then listed and (ii) to provide a transfer
                  agent and

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                  registrar for such Registrable Securities not later than the
                  effective date of such registration statement and to instruct
                  such transfer agent.

                           (xiv)    Otherwise use its reasonable best efforts to
                  comply with all applicable rules and regulations of the
                  Commission, and make generally available to its security
                  holders, as soon as reasonably practicable, an earnings
                  statement satisfying the provisions of Section 11(a) of the
                  Securities Act and Rule 158 promulgated thereunder, which
                  statement shall cover the period of at least twelve months
                  beginning with the first day of the Company's first full
                  calendar quarter after the effective date of the registration
                  statement.

                  (b)      Obligations of the Holders of Registrable Securities.
In consideration of the Company's obligations with respect to and compliance
with the registration statement provisions set forth herein, each holder of
Registrable Securities, severally and not jointly, agrees that (and, in the case
of clause (i) below, with respect to any given holder for any given
registration, such obligations of and compliance by the Company shall be
expressly conditioned upon such holder's compliance with the provisions of such
clause (i)):

                           (i)      Unless such holder has notified the Company
                  in writing of such holder's election to exclude all of such
                  holder's Registrable Securities from such registration, each
                  holder of Registrable Securities shall cooperate with the
                  Company in connection with the preparation of any registration
                  statement hereunder and shall provide to the Company, in
                  writing, for use in the Shelf Registration Statement or other
                  registration statement hereunder, all such information
                  regarding such holder, its ownership of Registrable Securities
                  and the plan(s) of distribution of the Registrable Securities
                  as the Company reasonably requests to prepare the registration
                  statement and prospectus covering the Registrable Securities
                  in accordance with applicable requirements of law, to maintain
                  the currency and effectiveness thereof and otherwise to comply
                  with all applicable requirements of law in connection
                  therewith.

                           (ii)     In the event that the Company informs the
                  holders of Registrable Securities of the happening of an event
                  described in Section 3(a)(v) or Section 3(a)(viii), the
                  holders of Registrable Securities shall refrain from selling
                  Registrable Securities until the earlier to occur of the date
                  (x) the Company notifies the holders of Registrable Securities
                  that it has filed with the Commission an amendment or
                  supplement to the prospectus included in the registration
                  statement, or (y) the Company notifies the holders of
                  Registrable Securities that the potentially disclosable event
                  no longer exists and that the prospectus included in the
                  registration statement does not contain an untrue statement of
                  material fact or omit to state any fact necessary to make the
                  statements therein not misleading.

         4.       Holdback Agreement. Notwithstanding anything set forth herein
to the contrary, the Company may suspend the use or effectiveness of the Shelf
Registration Statement (a "Suspension Period") if the Company reasonably
believes that the Company may, in the absence of such suspension, be required
under state or federal securities laws to disclose any bona fide financing,
acquisition or other plans of the Company or other matters, the premature
disclosure

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of any of which would reasonably be expected to have a material adverse effect
upon the Company, provided that (i) such Suspension Period may not be for longer
than 30 consecutive days and the total number of days in all Suspension Periods
during any given calendar year shall not be more than 120 days, (ii) the Company
shall notify all holders of Registrable Securities in writing prior to the
commencement of any Suspension Period (without disclosing the facts and
circumstances that underlie such Suspension Period) and will immediately notify
them in writing of the end of the Suspension Period, (iii) the Company will use
reasonable best efforts to ensure that the Suspension Period is kept to a
minimum number of days and (iv) no other holder of registration rights granted
by the Company will be permitted to sell equity securities pursuant to the
exercise of such rights during any Suspension Period.

         5.       Underwriting Agreements. If requested by the underwriters for
any underwritten offering pursuant to a registration contemplated by Section
1(b) or Section 2, the Company shall enter into a customary underwriting
agreement with the underwriters for such offering. Any such underwriting
agreement shall contain such representations and warranties by the Company and
such other terms and provisions as are customarily contained in agreements of
this type, including, without limitation, indemnities to the effect and to the
extent provided in Section 6. In the case of an underwritten offering under
Section 1(b) or 2, the holders of the Registrable Securities to be included in
such offering shall be parties to such underwriting agreement and the Company's
obligations under such Sections shall be expressly conditioned upon such
holders' participation in any such underwriting and the inclusion of their
Registrable Securities in any such underwriting to the extent provided herein.
If any holder does not agree to the terms of any such underwriting, such
holder's Registrable Securities shall be excluded therefrom. In the case of an
underwritten offering under Section 1(b) or 2, the holders of a majority of the
Registrable Securities to be included in such offering may, at their option,
require that any or all of the representations and warranties by, and the
agreements on the part of, the Company to and for the benefit of the
underwriters for such offering be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under the underwriting agreement shall also be
conditions precedent to the obligations of such holders of Registrable
Securities. No underwriting agreement (or other agreement in connection with any
offering of Registrable Securities hereunder) shall require any holder of
Registrable Securities, in their respective capacities as stockholders and/or
controlling persons, to make any representations or warranties to or agreements
with the Company or the underwriters other than representations, warranties or
agreements regarding such holder, the ownership of such holder's Registrable
Securities and such holder's intended method or methods of disposition and any
other representation required by law or to furnish any indemnity to any Person
which is broader than the indemnity furnished by such holder pursuant to Section
6(b). In connection with any underwritten offering under Section 1(b), the
Company, to the extent requested by the managing underwriter for such offering,
shall agree not to effect any public sale or distribution of its equity
securities or securities convertible into or exchangeable or exercisable for any
of such equity securities (except for any securities other than the Registrable
Securities covered by the Shelf Registration Statement) within seven days prior
to and 90 days following the pricing of such underwritten offering.

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         6.       Indemnification and Contribution.

                  (a)      By the Company. In connection with the registration
of Registrable Securities under this Agreement, the Company shall indemnify and
hold harmless each holder of Registrable Securities, its officers, directors,
members, stockholders, partners, employees, agents and Affiliates and each other
person, if any, who controls such holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act ("controlling persons"),
against any and all expenses, losses, claims, damages, liabilities or costs
(including without limitation court costs and attorneys' fees), joint or several
(or actions in respect thereof) ("Losses"), to which each such indemnified party
may become subject, under the Securities Act or otherwise, but only to the
extent such Losses arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in any registration statement under which the Registrable Securities
were registered under the Securities Act, in any preliminary prospectus (if used
prior to the effective date of such registration statement) or in any final
prospectus or summary prospectus contained therein or used in connection with
the offering of securities covered thereby, or in any post-effective amendment
or supplement thereto (if used during the period the Company is required to keep
the registration statement effective) (the "Disclosure Documents"), or (ii) any
omission or alleged omission to state in any of the Disclosure Documents a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, or (iii) any violation of any federal or state
securities laws or rules or regulations thereunder committed by the Company in
connection with the performance of its obligations under this Agreement; and the
Company will reimburse each such indemnified party for all legal and other
expenses reasonably incurred by such party in connection with enforcing its
rights hereunder or under the underwriting agreement entered into in connection
with such offering, including investigating, preparing, pursuing or defending
against any such Losses, whether or not resulting in any liability, or in
connection with any investigation or proceeding by any governmental agency or
instrumentality relating to any such Losses with respect to any offering of
securities pursuant to this Agreement; provided, however, that the Company shall
not be liable to an indemnified party in any such case to the extent that any
such Losses arise out of or are based upon (i) an untrue statement or alleged
untrue statement or omission or alleged omission made in any such Disclosure
Documents in reliance upon and in conformity with written information furnished
to the Company by such indemnified party expressly for use therein or (ii) the
use of any prospectus after such time as the Company has advised such
indemnified party in writing that the filing of a post-effective amendment or
supplement thereto is required, except the prospectus as so amended or
supplemented, or the use of any prospectus after such time as the obligation of
the Company to keep the same current and effective has expired.

                  (b)      By the Holder(s). In connection with the registration
of Registrable Securities under this Agreement, each holder of Registrable
Securities shall, severally, and not jointly, indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed such
registration statement, its employees, agents and Affiliates and each other
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each other holder(s) and
each controlling person of such holder(s), against any and all Losses to which
each such indemnified party may become subject under the Securities Act or
otherwise, but only to the extent such Losses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any of

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the Disclosure Documents or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with written information furnished to the Company by such
indemnifying party expressly for use therein, or (ii) the use of any prospectus
after such time as the Company has advised such indemnifying party in writing
that the filing of a post-effective amendment or supplement thereto is required,
except the prospectus as so amended or supplemented, or the use of any
prospectus after such time as the obligation of the Company to keep the same
current and effective has expired; provided, that the obligation to indemnify
will be limited to the net amount of proceeds received by such holder from the
sale of Registrable Securities pursuant to such registration statement; and such
indemnifying party shall reimburse each such indemnified party for all legal and
other expenses reasonably incurred by such party in connection with enforcing
its rights hereunder or under the underwriting agreement entered into in
connection with such offering, including investigating, preparing, pursuing or
defending against any such Losses, whether or not resulting in any liability, or
in connection with any investigation or proceeding by any governmental agency or
instrumentality relating to any such Losses with respect to any offering of
securities pursuant to this Agreement.

                  (c)      Actions Commenced. If a third party commences any
action or proceeding against an indemnified party related to any of the matters
subject to indemnification under subsection (a) or (b) hereof, such indemnified
party shall promptly give notice to the indemnifying party in writing of the
commencement thereof, but failure so to give notice shall not relieve the
indemnifying party from any liability which it may have hereunder unless the
indemnifying party is prejudiced thereby.

         The indemnifying party shall be entitled to control the defense or
prosecution of such claim or demand in the name of the indemnified party, with
counsel reasonably satisfactory to the indemnified party, if it notifies the
indemnified party in writing of its intention to do so within 20 days of its
receipt of the notice from the indemnified party without prejudice, however, to
the right of the indemnified party to participate therein through counsel of its
own choosing, which participation shall be at the indemnified party's expense
unless (i) the indemnified party shall have been advised by its counsel that use
of the same counsel to represent both the indemnifying party and the indemnified
party would represent a conflict of interest (which shall be deemed to include
any case where there may be a legal defense or claim available to the
indemnified party which is different from or additional to those available to
the indemnifying party), in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party,
or (ii) the indemnifying party shall fail to defend or prosecute vigorously such
claim or demand within a reasonable time. Whether or not the indemnifying party
chooses to defend or prosecute such claim, the parties hereto shall cooperate in
the prosecution or defense of such claim and shall furnish such records,
information and testimony and attend such conferences, discovery proceedings,
hearings, trials and appeals as may be requested in connection therewith. The
indemnifying party shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment against the indemnified
party (or settle any claim involving an admission of fault on the part of the
indemnified party), except with the consent of the indemnified party (which
consent shall not be unreasonably withheld).

                                       10
<PAGE>

                  (d)      The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and will survive the transfer of securities.

                  (e)      Contribution. If the indemnification provided for in
subsection (a) or (b) is unavailable to or insufficient to hold the indemnified
party harmless under subsection (a) or (b) above in respect of any Losses
referred to therein for any reason other than as specified therein, then the
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and such indemnified party on the other in connection with the statements
or omissions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault 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 (or omitted to be supplied by) the Company or
the holders of Registrable Securities 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 an indemnified party as a
result of the Losses referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim. 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.

         7.       Definitions. As used herein, the following terms shall have
the following meanings.

         "Affiliate" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person. As used in this definition, "control" (including
with its correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).

         "Class A Common Stock" shall mean the Class A Common Stock, no par
value, of the Company.

         "Class B Common Stock" means the Class B Common Stock, no par value, of
the Company and any other securities issuable with respect thereto by way of
stock split, stock dividend or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.

         "Conversion Shares" has the meaning set forth in the Purchase
Agreement.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

                                       11
<PAGE>

         "Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a limited liability company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.

         "Piggyback Registration" has the meaning set forth in Section 2(a) of
this Agreement.

         "Registrable Securities" means (i) the Conversion Shares issued or
issuable upon conversion of the Series C Preferred Stock issued pursuant to the
Purchase Agreement or the Exchange Agreement, (ii) any shares of capital stock
issued or issuable with respect to the Conversion Shares as a result of any
stock split, stock dividend, recapitalization, exchange, conversion or other
event, without regard to any limitations on conversions of the Series C
Preferred Stock. 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) such securities shall
have been distributed to the public in reliance upon Rule 144 or other
applicable exemption, (C) such securities held by a given holder are eligible
for sale under Rule 144(k) without volume or manner of sale limitations, (D)
such securities shall have been otherwise transferred, new certificates for such
securities not bearing a legend restricting further transfer shall have been
delivered by the Company and subsequent disposition of such securities shall not
require registration or qualification of such securities under the Securities
Act or any similar state law then in force, or(E) such securities shall have
ceased to be outstanding.

         "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with any registration pursuant to this Agreement,
including, without limitation, (i) registration, filing and National Association
of Securities Dealers, Inc. fees, (ii) fees and expenses of complying with
securities or blue sky laws, (iii) fees and expenses associated with listing
securities on an exchange or NASDAQ, (iv) word processing, duplicating and
printing expenses, (v) messenger and delivery expenses, (vi) transfer agents',
trustees', depositories', registrars' and fiscal agents' fees, (vii) fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits or "cold comfort"
letters, (viii) reasonable fees and disbursements of any one counsel retained by
the holders of Registrable Securities and chosen by the holders of a majority of
Registrable Securities, (ix) all costs of preparing, filing, amending and
maintaining the Shelf Registration Statement and any other registration
statement hereunder and (x) any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities; provided, however, that
with respect to any registration, the holders of the Registrable Securities
included in such registration shall be responsible for all underwriting
discounts or brokerage fees or commissions relating to the sale of the
Registrable Securities, and all transfer taxes and other similar expenses of the
sale of the Registrable Securities.

         "Rule 144" means Rule 144 under the Securities Act (or any similar or
successor rule then in force).

         "Series C Preferred Stock" has the meaning set forth in the Purchase
Agreement.

         "Shelf Registration Statement" is defined in Section 1(a).

                                       12
<PAGE>

         8.       Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be personally delivered,
mailed by registered or certified mail, postage prepaid, return receipt
requested, delivered by a nationally recognized overnight courier or sent by
facsimile transmission with receipt confirmed, addressed to the applicable party
at its address set forth next to its name on the signature page hereto (or such
other address as such party shall hereafter specify by written notice in writing
to the other parties hereto). Any such notice or communication shall be deemed
to have been received (A) in the case of personal delivery or facsimile
transmission, on the date of such delivery or transmission, (B) in the case of a
nationally recognized overnight courier, on the next business day after the date
when sent, and (C) in the case of mailing, on the third business day following
that on which the piece of mail containing such communication is posted.

         9.       Miscellaneous.

                  (a)      Grant of Future Registration Rights. During the term
of this Agreement, the Company shall not grant to any third party demand
registration rights that would not permit the holders of Registrable Securities
to exercise their piggyback registration rights under Section 2 hereof, subject
to the limitations contained in Section 2 hereof.

                  (b)      Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights specifically
to recover damages caused by reason of any breach of any provision of this
Agreement and to exercise all other rights granted by law. The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach of the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) for specific performance and for
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.

                  (c)      Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended or waived only upon the
prior written consent of the Company and the holders of 66 2/3% or more of the
Registrable Securities. The obligations of the holders of Registrable Securities
hereunder are several and no such holder will be responsible for the action or
inaction of any other holder.

                  (d)      Successors and Assigns. Subject to the following
sentence, all covenants and agreements in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto whether so expressed or
not. In addition, whether or not any express assignment has been made, the
provisions of this Agreement which are for the benefit of holders of Registrable
Securities are also for the benefit of, and enforceable by, any transferee of
(x) 50% or more of a holder's Registrable Securities beneficially owned (as
defined in Rule 13d-3 under the Exchange Act) by such holder on the date hereof
or (y) Registrable Securities of a holder having a Market Price (as such term is
defined in the Articles) of at least $2.5 million on the date of such transfer,
or any transferee that is an Affiliate of a Purchaser (for so long as such
Affiliate remains an Affiliate of such Purchaser), if: (i) such holder agrees in
writing with the transferee or assignee to assign such rights, and a copy of
such agreement is furnished to the Company within ten days after such
assignment; (ii) the Company is, at least ten days prior to such transfer or
assignment, furnished

                                       13
<PAGE>

with written notice of (a) the name and address of such transferee or assignee,
and (b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) at the time of such transfer or assignment, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (iv) such transfer shall have been made in
accordance with the applicable requirements of the Purchase Agreement. Any
transferring or assigning holder shall remain obligated under this Agreement.
For purposes of this Agreement, each of (x) the Gabelli Funds and (y) the
Capital Research and Management Company entities listed on the signature pages
hereto shall be treated as one holder or one Purchaser, as the case may be.

                  (e)      Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to its conflict of law doctrines.

                  (f)      Delays or Omissions. No delay or omission to exercise
any right, power or remedy accruing to any party hereto, upon any breach or
default of any other party hereto under this Agreement, shall impair any such
right, power or remedy of such party nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party hereto of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing.

                  (g)      Entire Agreement. This Agreement and the Purchase
Agreement contain the entire understanding of the parties with respect to their
subject matter and supersede all prior agreements and understandings among the
parties with respect to their subject matter.

                  (h)      Severability. Each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.

                  (i)      Headings. The section and other headings contained in
this Agreement are for convenience of reference only and shall not affect the
meaning or interpretation of this Agreement.

                  (j)      Counterparts. This Agreement may be executed in two
or more counterparts, each of which when so executed and delivered shall be
deemed to be an original and all of which together shall be deemed to be one and
the same agreement.

                                       14
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

GRAY COMMUNICATIONS SYSTEMS, INC.             4370 Peachtree Road, NE
                                              Atlanta, GA 30319
                                              Facsimile:  (404) 261-9607
                                              Attention:  James C. Ryan
By:   /s/ James C. Ryan
   -------------------------------------
   Name:  J.C. Ryan
   Title: V.P. - CFO

                                       15
<PAGE>

TEACHERS INSURANCE AND ANNUITY                Teachers Insurance and Annuity
    ASSOCIATION OF AMERICA                    Association of America
                                              Attn: John Goodreds
                                              730 Third Avenue
                                              New York, NY  10017
By:  /s/ John Goodreds                        Facsimile:  (212) 916-6582
   -------------------------------------
   Name:  John Goodreds
   Title: Associate Director - Private
          Placements

                                       16
<PAGE>

CONTINENTAL CASUALTY COMPANY                  Attn:   Investments
                                              333 South Wabash Avenue
                                              CNA Plaza - 23 South
                                              Chicago, IL  60685
By:  /s/  Marilou R. McGirr                   Facsimile:  (312) 817-1680
   -------------------------------------
   Name:  Marilou R. McGirr
   Title: Vice President

                                       17
<PAGE>

AMERICAN HIGH INCOME TRUST                    Capital Research and
                                              Management Company
                                              Attn: Michael J. Downer
                                              333 South Hope Street, 33rd Floor
By:  CAPITAL RESEARCH AND                     Los Angeles, CA  92821-5823
     MANAGEMENT COMPANY                       Facsimile:  (213) 486-9041

By:  /s/  Michael Downer
   -------------------------------------
   Name:  Michael J. Downer
   Title: Vice President and Secretary

  AMERICAN FUNDS INSURANCE SERIES--           Capital Research and
         HIGH YIELD BOND FUND                 Management Company
                                              Attn: Michael J. Downer
                                              333 South Hope Street, 33rd Floor
                                              Los Angeles, CA  92821-5823
By:  CAPITAL RESEARCH AND                     Facsimile:  (213) 486-9041
     MANAGEMENT COMPANY

By:  /s/  Michael Downer
   -------------------------------------
   Name:  Michael J. Downer
   Title: Vice President and Secretary

                                       18
<PAGE>

THE GABELLI EQUITY INCOME FUND                Gabelli Funds
                                              Attn: Jim McKee
                                              1 Corporate Center
                                              Rye, NY  10580
By:  /s/  Bruce Alpert                        Facsimile:  (914) 921-5384
   -------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI SMALL CAP GROWTH FUND             Gabelli Funds
                                              Attn: Jim McKee
                                              1 Corporate Center
                                              Rye, NY  10580
By:  /s/  Bruce Alpert                        Facsimile:  (914) 921-5384
   -------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI GLOBAL MULTIMEDIA TRUST INC.      Gabelli Funds
                                              Attn: Jim McKee
                                              1 Corporate Center
                                              Rye, NY  10580
By:  /s/  Bruce Alpert                        Facsimile:  (914) 921-5384
   -------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI CONVERTIBLE SECURITIES            Gabelli Funds
  FUND, INC.                                  Attn: Jim McKee
                                              1 Corporate Center
                                              Rye, NY  10580
By:  /s/  Bruce Alpert                        Facsimile:  (914) 921-5384
   -------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI EQUITY TRUST INC.                 Gabelli Funds
                                              Attn: Jim McKee
                                              1 Corporate Center
                                              Rye, NY  10580
By:  /s/  Bruce Alpert                        Facsimile:  (914) 921-5384
   -------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

                                       19
<PAGE>

                                              c/o Gray Communications
      /s/  J. Mack Robinson                   Systems, Inc.
   -------------------------------------      4370 Peachtree Road, NE
   J. MACK ROBINSON                           Atlanta, GA 30319
                                              Facsimile:  (404) 261-9607
                                              Attention:  James C. Ryan

                                              c/o Gray Communications
      /s/  Harriett J. Robinson               Systems, Inc.
   -------------------------------------      4370 Peachtree Road, NE
   HARRIETT J. ROBINSON                       Atlanta, GA 30319
                                              Facsimile:  (404) 261-9607
                                              Attention:  James C. Ryan

HARRIETT J. ROBINSON TRUSTEE U\A 08-25-84
FBO JILL E. ROBINSON

By:   /s/  Harriett J. Robinson               c/o Gray Communications
   -------------------------------------      Systems, Inc.
   Name:  Harriett J. Robinson                4370 Peachtree Road, NE
   Title: Trustee                             Atlanta, GA 30319
                                              Facsimile:  (404) 261-9607
                                              Attention:  James C. Ryan

HARRIETT J. ROBINSON TRUSTEE U\A 08-25-84     c/o Gray Communications
FBO ROBIN M. ROBINSON                         Systems, Inc.
                                              4370 Peachtree Road, NE
                                              Atlanta, GA 30319
                                              Facsimile:  (404) 261-9607
By:   /s/  Harriett J. Robinson               Attention:  James C. Ryan
   -------------------------------------
   Name:  Harriett J. Robinson
   Title: Trustee

GEORGIA CASULATY AND SURETY CO.               c/o Gray Communications
                                              Systems, Inc.
                                              4370 Peachtree Road, NE
                                              Atlanta, GA 30319
By:   /s/  Hilton Howell                      Facsimile:  (404) 261-9607
   -------------------------------------      Attention:  James C. Ryan
   Name:  Hilton H. Howell, Jr.
   Title: Vice Chairman

                                       20
<PAGE>

BANKERS FIDELITY LIFE INSURANCE CO.           c/o Gray Communications
                                              Systems, Inc.
                                              4370 Peachtree Road, NE
By:   /s/  Hilton Howell                      Atlanta, GA 30319
   -------------------------------------      Facsimile:  (404) 261-9607
   Name:  Hilton H. Howell, Jr.               Attention:  James C. Ryan
   Title: Vice Chairman

DELTA LIFE INSURANCE COMPANY                  c/o Gray Communications
                                              Systems, Inc.
                                              4370 Peachtree Road, NE
                                              Atlanta, GA 30319
By:     /s/  J. Mack Robinson                 Facsimile:  (404) 261-9607
   -------------------------------------      Attention:  James C. Ryan
   Name:  J. Mack Robinson
   Title: President

DELTA FIRE & CASUALTY INSURANCE COMPANY       c/o Gray Communications
                                              Systems, Inc.
                                              4370 Peachtree Road, NE
                                              Atlanta, GA 30319
By:   /s/  J. Mack Robinson                   Facsimile:  (404) 261-9607
   -------------------------------------      Attention:  James C. Ryan
   Name:  J. Mack Robinson
   Title: President

                                       21<PAGE>
                                                                    EXHIBIT 4.2

                       PREFERRED STOCK PURCHASE AGREEMENT

         THIS PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement") is entered
into as of this 22nd day of April, 2002 by and among Gray Communications
Systems, Inc., a Georgia corporation (the "Company"), and each of the other
entities set forth on the signature pages hereto (each, a "Purchaser" and,
collectively, the "Purchasers").

                                WITNESSETH THAT:

         WHEREAS, each Purchaser desires to purchase from the Company, and the
Company desires to issue and sell to each Purchaser, shares of the Company's
Series C Convertible Preferred Stock, no par value, having the terms set forth
in the Company's Articles of Amendment to its Articles of Incorporation (the
"Articles"), the form of which is attached hereto as Exhibit A ("Series C
Preferred Stock").

         NOW, THEREFORE, in consideration of the agreements and obligations
contained in this Agreement, the parties hereby agree as follows:

                                   ARTICLE I

                                SALE AND PURCHASE

         1.1.     Authorization of the Shares. The Company has, or before the
Closing (as defined in Section 1.2) will have, authorized the issue and sale of
4,000 shares of Series C Convertible Preferred Stock, having the terms set forth
in the Articles.

         1.2.     Purchase and Sale of Series C Preferred Stock. Subject to the
terms and conditions hereof, and in reliance upon the representations,
warranties and agreements contained herein, at the closing of the transactions
contemplated by this Agreement (the "Closing"), the Company shall issue and sell
to each Purchaser, and each Purchaser shall purchase from the Company, the
number of shares of Series C Preferred Stock set forth next to such Purchaser's
name on Exhibit B hereto (the shares to be purchased by each Purchaser hereunder
being hereinafter referred to as the "Shares") for the purchase price set forth
next to such Purchaser's name on Exhibit B hereto (the purchase price to be paid
by each Purchaser hereunder for the Shares being hereinafter referred to as the
"Purchase Price"). At the Closing, the Company shall deliver to each Purchaser,
against receipt of the Purchase Price, a certificate representing the Shares,
which certificate each Purchaser agrees shall bear a legend in substantially the
form specified below, it being agreed that the Company shall promptly remove
such legend upon the satisfaction of the requirements set forth in clause (1) or
(2) of such legend, to the extent appropriate:

                  "The securities represented by this certificate
                  have been acquired for investment only and have
                  not been registered

<PAGE>

                  under the Georgia Securities Act of 1973, as
                  amended (the "Georgia Act"), in reliance on the
                  exemption contained in Section 9(13) of the
                  Georgia Act, have not been registered under the
                  Securities Act of 1933, as amended (the
                  "Securities Act"), and have not been registered
                  under any other applicable securities laws.
                  Accordingly, the securities are "restricted
                  securities" within the meaning of said laws.
                  The securities may not be offered, sold,
                  exchanged, pledged, hypothecated or otherwise
                  disposed of in the absence of (1) a
                  registration statement being then in effect
                  under the Securities Act, the Georgia Act
                  and/or any other applicable securities laws; or
                  (2) an opinion of counsel to the shareholder
                  (including any in-house counsel of the
                  shareholder), which counsel must be, and the
                  form and substance of which opinion are,
                  reasonably satisfactory to the issuer, that the
                  transaction is exempt from registration under
                  said laws or is in compliance with said laws.
                  The securities shall not be transferred upon
                  the issuer's books and records except upon
                  compliance with the foregoing. The issuer will
                  furnish without charge to each shareholder who
                  so requests the powers, designations,
                  preferences and relative, participating,
                  optional or other special rights of each class
                  or series of shares authorized to be issued and
                  the qualifications, limitations or restrictions
                  of such preferences and/or rights."

         At the Closing, each Purchaser shall deliver to the Company the
Purchase Price by wire transfer of immediately available funds to an account
specified in writing by the Company. The Closing shall take place at 10:00 a.m.,
local time (or as soon thereafter as practicable), on the date hereof or on such
other business day on or prior to April 23, 2002 as may be agreed upon by the
Company and the Purchasers at the offices of the Company at 4370 Peachtree Road,
NE, Atlanta, GA 30319 or such other location as the parties hereto may agree.
The date at which the Closing shall occur is hereinafter referred to as the
"Closing Date". If the Closing does not occur by April 23, 2002, this Agreement
will be terminated forthwith and the parties hereto will have no further
obligations to each other under this Agreement, except that the Company shall
nevertheless be obligated to make such payments as provided for in Section 8.7
hereof.

                                       2
<PAGE>

                                   ARTICLE II

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         2.       Representations and Warranties of the Company. The Company
hereby represents and warrants to the Purchasers that:

         2.1.     Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Georgia and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as it is now being conducted
and as contemplated by the Confidential Private Placement Memorandum of the
Company, dated April 19, 2002 (the "Offering Memorandum"), heretofore furnished
to the Purchasers. The Company is duly qualified to do business and in good
standing in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification and
being in good standing necessary, other than where the failure to be so
qualified and in good standing would not have a "Company Material Adverse
Effect," which shall be defined as a material adverse effect on the Company and
its subsidiaries taken as a whole, their business, assets, financial condition
or results of operations.

         2.2.     Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 15,000,000 shares of Class A Common Stock, no
par value ("Class A Common Stock"), 15,000,000 shares of Class B Common Stock,
no par value ("Class B Common Stock"), and 20,000,000 shares of preferred stock,
no par value ("Preferred Stock"), of which 1,000 shares have been designated as
Series A Preferred Stock, 2,500 shares have been designated as Series B
Preferred Stock and 5,000 shares have been designated as Series C Preferred
Stock. As of the date hereof, (a) 6,848,467 shares of Class A Common Stock and
8,808,552 shares of Class B Common Stock were issued and outstanding, all of
which are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights and have been offered, issued, sold and delivered
by the Company in compliance with all applicable federal and state securities
laws; (b) 500 shares of Series A Preferred Stock and 360.5788 shares of Series B
Preferred Stock were issued and outstanding, all of which are duly authorized,
validly issued, fully paid and non-assessable, and not subject to preemptive
rights and have been offered, issued, sold and delivered by the Company in
compliance with all applicable federal and state securities laws; and (c)
1,517,000 shares of Class A Common Stock and 5,294,457 shares of Class B Common
Stock were reserved for future issuance pursuant to stock options, warrants and
other rights issued to certain officers, employees and other persons including
2,200,000 shares of Class B Common Stock reserved for future issuance upon
conversion of the Shares. Except as set forth in Schedule 2.2 hereto or this
Section 2.2, there are no (a) preemptive, conversion or other rights (including
registration rights), options, warrants, agreements, restrictions on transfer,
arrangements or commitments of any character to which the Company is a party
relating to the issued or

                                       3
<PAGE>

unissued capital stock of, or other equity interests in, the Company, except
with respect to the Series C Preferred Stock in accordance with the provisions
of this Agreement, the Registration Rights Agreement and the Articles, (b)
phantom equity, equity appreciation or similar rights which permit the holder
thereof to participate in the residual equity value of, or appreciation in the
equity value of, the Company, (c) securities, instruments or rights which permit
the holder thereof, under any circumstances, to vote for the election of members
of the Company's board of directors, except for the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock, or (d) securities,
instruments or rights which are, directly or indirectly, convertible into or
exercisable or exchangeable for any of the securities, instruments or rights
described in clauses (a), (b) or (c) above. The shares of Series C Preferred
Stock, when issued in accordance with this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive
rights and free of any liens and encumbrances, other than those created by any
Purchaser. The shares of Class B Common Stock issuable upon conversion of the
Series C Preferred Stock (the "Conversion Shares") have been duly authorized and
validly reserved, are not and will not be subject to any preemptive rights or
rights of first refusal, and when issued in accordance with the terms of the
Series C Preferred Stock, will be validly issued, fully paid, nonassessable and
free of any liens and encumbrances, other than those created by any Purchaser.

         2.3.     Authority. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by the Company (including the issuance and sale of the Shares and
the issuance of the Conversion Shares). The execution and delivery of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby (including the issuance and sale of the Shares and the
issuance of the Conversion Shares) have been duly authorized by all necessary
corporate action on the part of the Company, its directors and shareholders and
no other corporate proceedings on the part of the Company, its directors and
shareholders are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (including the issuance and sale of the Shares
and the issuance of the Conversion Shares). This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by each Purchaser, constitutes the legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited or
affected by (a) bankruptcy, insolvency, reorganization, moratorium, liquidation,
arrangement, fraudulent transfer, fraudulent conveyance and other similar laws
(including court decisions) now or hereafter in effect and affecting the rights
and remedies of creditors generally or providing for the relief of debtors, (b)
the refusal of a particular court to grant equitable remedies, including,
without limitation, specific performance and injunction relief, and (c) general
principles of equity (regardless of whether such remedies are sought in a
proceeding in equity or at law).

                                       4
<PAGE>

         2.4.     No Conflict; Required Filings and Consents.

         (a)      The execution and delivery of this Agreement by the Company
does not, and the performance by the Company of its obligations hereunder
(including the issuance and sale of the Shares and the issuance of the
Conversion Shares) will not, (i) conflict with, breach or violate the Restated
Articles of Incorporation or By-Laws of the Company or any of its subsidiaries,
(ii) conflict with or violate any laws in effect as of the date of this
Agreement applicable to the Company or any of its subsidiaries or by which any
of their respective properties or assets is bound or (iii) result in any breach
of, constitute a default (or an event that with notice or lapse of time or both
would become a default) under, give to any other entity any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or any of their
respective properties or assets is bound, except those with respect to which the
Company has obtained any required consent, waiver, approval or authorization. No
shareholder of the Company has any preemptive right or rights of first refusal
which will be triggered by reason of the issuance of the Shares. Without
limiting the generality of the foregoing, no Georgia state takeover statute or
similar Georgia statute or regulation applies or purports to apply to this
Agreement or any of the transactions contemplated by this Agreement (including
the issuance and sale of the Shares and the issuance of the Conversion Shares).

         (b)      The execution and delivery of this Agreement by the Company
does not, and the performance by the Company of its obligations hereunder
(including the issuance and sale of the Shares and the issuance of the
Conversion Shares) will not, require the Company to obtain any consent,
registration, approval, authorization or permit of, to make any filing with, or
to give any notification to, any governmental entities (or stock exchange) based
on any law in effect as of the date of this Agreement except those which have
been or will be timely obtained, made or given or as may be required in
connection with the Registration Rights Agreement attached hereto as Exhibit C
(the "Registration Rights Agreement").

         2.5.     Reports; Financial Statements.

         (a)      The Company has timely filed all forms, reports, statements
and schedules required to be filed with the Securities and Exchange Commission
(the "SEC") since January 1, 2000. The Company has made available to the
Purchasers copies of all reports, registration statements and other filings,
together with any amendments thereto, filed by the Company with the SEC since
January 1, 2001 through the date immediately prior to the date of this Agreement
(the "Company SEC Reports"). As of the respective

                                       5
<PAGE>

dates of their filing with the SEC, the Company SEC Reports complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the applicable rules and regulations of the
SEC promulgated thereunder, and did not at the time they were filed with the SEC
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

         (b)      The consolidated financial statements (including, in each
case, any related notes thereto) contained (or incorporated by reference) in the
Company SEC Reports (the "Financial Statements") (i) have been prepared in
accordance with the published rules and regulations of the SEC and generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto) and show
all material liabilities, absolute or contingent, of the Company required to be
recorded thereon in accordance with generally accepted accounting principles as
at the respective dates thereof and (ii) fairly present in all material respects
the consolidated financial position of the Company and its subsidiaries as of
the respective dates thereof and their consolidated results of operations,
stockholder equity and cash flows for the periods indicated, except that any
unaudited interim financial statements were subject to normal and recurring
year-end adjustments and may omit footnote disclosure as permitted by
regulations of the SEC.

         2.6.     Absence of Certain Changes. Since December 31, 2001, except to
the extent specified in Schedule 2.6, there has not been:

         (a)      Any Company Material Adverse Effect;

         (b)      Any damage, destruction or loss of any of the properties or
assets of the Company (whether or not covered by insurance) materially adversely
affecting the business of the Company;

         (c)      Any declaration, setting aside for payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase or other acquisition of any of such stock by the
Company; or

         (d)      Any labor trouble materially adversely affecting the business
of the Company.

         2.7.     No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission from any Purchaser in
connection with the sale of the Series C Preferred Stock provided for in this
Agreement based upon arrangements made by or on behalf of the Company.

                                       6
<PAGE>

         2.8.     Subsidiaries. Other than as specified in Schedule 2.8, the
Company has no subsidiaries and does not own, directly or indirectly, of record
or beneficially any capital stock or equity interest or investment in any
corporation, association or business entity. Each of the subsidiaries of the
Company is a form of entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Company Material Adverse Effect. Each of the subsidiaries of the Company has all
requisite power and authority to own the properties owned by it and to carry on
its business as now conducted and as presently proposed to be conducted. Except
as specified in the Company SEC Reports, all of the issued and outstanding
capital stock of, or other equity interests in, each of the subsidiaries of the
Company is owned beneficially and of record by the Company, one of its other
wholly-owned subsidiaries, or any combination of the Company and/or one or more
of its other subsidiaries, in each case free and clear of any liens, charges,
restrictions, claims or encumbrances of any nature whatsoever, except for those
arising under the Third Amended and Restated Loan Agreement, dated as of
September 25, 2001, by and among the Company, the financial institutions
signatory thereto and Bank of America, N.A. (the "Senior Credit Facility"); and
there are no outstanding subscriptions, warrants, options, convertible
securities, or other rights (contingent or other) pursuant to which any of the
subsidiaries of the Company is or may become obligated to issue any shares of
its capital stock or other equity interests to any person other than the Company
and/or one or more of its other wholly-owned subsidiaries. As used in this
Section 2 (unless the context otherwise requires), the term "Company" shall mean
the Company and each of its subsidiaries (other than Sarkes Tarzian, Inc.).

         2.9.     Outstanding Debt. Neither the Company nor any of its
subsidiaries has any outstanding indebtedness for borrowed money except as
reflected on the Financial Statements and is not a guarantor or otherwise
contingently liable for any such indebtedness, except that the subsidiaries of
the Company are guarantors (i) of the Company's 9.25% Senior Subordinated Notes
due 2011 (the "Notes") and (ii) under the Senior Credit Facility. There exists
no default in any material respect under the provisions of any instrument
evidencing any such indebtedness or of any agreement relating thereto.

         2.10.    Absence of Liabilities. Other than in connection with the
transactions contemplated by this Agreement, neither the Company nor any of its
subsidiaries has any liabilities (fixed or contingent, including without
limitation any tax liabilities due or to become due), except those which (i) are
fully reflected or provided for on the Financial Statements, except as specified
in Schedule 2.10, or (ii) were incurred in the ordinary course of business (and
which remain outstanding), none of which would, individually or in the
aggregate, have a Company Material Adverse Effect.

                                       7
<PAGE>

         2.11.    Taxes. The Company has duly filed within the time prescribed
by law (including extensions of time approved by the appropriate taxing
authority) all tax returns and reports required to be filed with the Internal
Revenue Service and (except to the extent that the failure to file would not
have a Company Material Adverse Effect) with all other jurisdictions where such
filing is required by law; all such tax returns are true and correct in all
material respects; and the Company has paid all taxes, interest, penalties,
assessments or deficiencies shown to be due or claimed to be due or in respect
of such tax returns and reports.

         2.12.    Employee Benefits; ERISA. (a) With respect to each employee
benefit plan (as such term is defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) maintained by the Company or
an "ERISA Affiliate" (as defined below), (i) such plan has been administered and
operated in all material respects in compliance with its terms and the
applicable requirements of ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"), and (ii) no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) which is not covered by an
applicable exemption and which has resulted in or would result in a Company
Material Adverse Effect has occurred. As used herein, the term "ERISA Affiliate"
refers to any organization that is (x) a member of a "controlled group" of which
the Company is a member or (y) under "common control" with the Company within
the meaning of Section 414(b) and (c) of the Code. (b) Neither the approval or
execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement (including the issuance and sale of the Shares
and the issuance of the Conversion Shares) will (i) entitle any individual to
severance pay or (ii) accelerate the time of payment or vesting of, or
materially increase the amount of, compensation due to any individual.

         2.13.    Contracts. The Company has complied in all material respects
with all the material provisions of each currently existing binding contract,
obligation, license, agreement, plan, arrangement, commitment or the like
(written or oral) of any material nature ("Contract"), and is not in default
thereunder or in breach thereof in any material respect nor in receipt of any
written claim of default or breach in any material respect by it thereof. The
Company does not have any knowledge of any breach or anticipated breach in any
material respect by the other parties to any such Contract.

         2.14.    Insurance. The Company maintains insurance which is adequate
to protect the Company and its financial condition against the risks involved in
the business conducted by the Company.

         2.15.    Litigation. Except as specified in Schedule 2.15, there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim, whether or not purportedly on behalf of the Company, against the Company
or its business or assets and in which an unfavorable outcome, ruling or finding
in any such

                                       8
<PAGE>

matter or for all such matters taken as a whole would have a Company Material
Adverse Effect; and the Company has no knowledge of any unasserted claim, the
assertion of which is likely and which, if asserted, will seek damages, an
injunction or other legal, equitable, monetary or nonmonetary relief which claim
individually or collectively with other such unasserted claims if granted would
have a Company Material Adverse Effect.

         2.16.    Properties; Liens and Encumbrances. Schedule 2.16 contains a
complete and correct list of the material real property owned by the Company.
The Company has a valid and indefeasible ownership interest in all such real
property and all its other material property and assets, free from all
mortgages, pledges, liens, security interests, conditional sale agreements,
encumbrances or charges, except (i) tax, materialmen's or like liens for
obligations not yet due or payable or being contested in good faith by
appropriate proceedings and for which an adequate reserve (if required by GAAP)
has been made on the Financial Statements; and (ii) for those arising under the
Senior Credit Facility. The assets, properties, contracts and rights of the
Company include all of the assets, properties, contracts and rights necessary or
material to the conduct of its business in the manner as it is currently
conducted and that are reflected in the consolidated balance sheet of the
Company as at December 31, 2001 (other than assets reflected on such balance
sheet that have been sold or disposed of in the ordinary course of business
since the date thereof).

         2.17.    Leases. The Company enjoys peaceful and undisturbed possession
under all material leases, whether for real or personal property (including
cable and telecommunication lines), under which the Company is a lessee. All of
such leases are valid and subsisting and neither the Company nor, to the
knowledge of the Company, the lessor thereunder is in default thereof in any
material respect.

         2.18.    Intentionally Omitted.

         2.19.    Communications Licenses and Regulations. (a) All of the
material certificates, licenses, permits, franchises and other authorizations
(collectively, the "Communications Licenses") issued to the Company by the
communications regulatory authorities of any federal, state or local government,
including, but not limited to, the Federal Communications Commission and state
public utility commissions or like agencies (collectively, the "Regulatory
Authorities"), are in full force and effect; (b) the Communications Licenses
constitute all of the material certificates, licenses, permits, franchises and
authorizations necessary or legally required for the conduct of the Company's
respective businesses as now being conducted by it, or as it presently intends
to conduct in the future; (c) the Company is in compliance in all material
respects with any and all applicable material federal, state and municipal
statutes, rules, regulations, policies, orders or ordinances (collectively, the
"Communications Laws") governing or relating to the Communications Licenses; and
(d) the Company has not received notice of any complaints, charges,
investigations, renewal or revocation hearings, or other

                                       9
<PAGE>

proceedings that have been initiated or, to the knowledge of the Company,
threatened against the Company, nor, to the knowledge of the Company, has any
Regulatory Authority proposed, announced, issued or adopted any amendment,
modification or change to any Communications Law or Communications License, that
would have a material adverse effect on the Company's ability to continue to
hold and/or renew or extend any of the Communications Licenses, or would
otherwise have a Company Material Adverse Effect. Without limiting the
generality of the foregoing, the Company has received no notice of denial or
intended denial by the Federal Communications Commission of the Company's
request for a six-month extension for digital broadcasting compliance (referred
to in the Company's report on Form 10-K for the year ended December 31, 2001).

         2.20.    Intellectual Property, etc. The Company has all franchises,
permits, licenses and other similar authority necessary for the conduct of its
business as now being conducted by it and as presently planned to be conducted,
including, but not limited to, all domain names and licenses with respect to
third party software or materials, the lack of which would have a Company
Material Adverse Effect, and it is not in default in any material respect under
any of such franchises, permits, licenses or other similar authority. The
Company is the exclusive owner of all right, title and interest in and /or has
the valid and legal right to use all material intellectual property and
proprietary rights owned or used by the Company, including, without limitation,
all material franchises, permits, licenses, software, trademarks, service marks,
domain names, trade rights, trade dress, patents, patent applications,
copyrights, inventions, know-how and other confidential information, necessary
to conduct its business as now being conducted and as presently planned to be
conducted, without conflict with or infringement upon any valid rights of others
except for infringements or conflicts which would not have a Company Material
Adverse Effect. The Company has not received any notice that the conduct of its
business infringes upon or conflicts with the asserted rights of others and has
no knowledge that any person is infringing upon or in conflict with its asserted
rights.

         2.21.    Affiliate Arrangements. Schedule 2.21 sets forth all material
transactions between the Company and any of its affiliates (as defined in Rule
12b-2 under the Exchange Act).

         2.22.    Compliance with Other Instruments and Laws. The Company is not
in violation of any term of its Restated Articles of Incorporation or By-Laws,
in each case, as in effect on the date hereof. The Company is not in violation
of any term of any mortgage, indenture, contract, agreement, instrument,
judgment, decree, order, statute, rule or regulation to which the Company is
subject and a violation of which would have a Company Material Adverse Effect.
The Company has all franchises, permits, licenses and other rights and
privileges from governmental authorities necessary to permit it to own its
property and to conduct its business as it is presently conducted and as
presently contemplated to be conducted, except where the failure to have any
such franchises,

                                       10
<PAGE>

permits, licenses or other rights or privileges would not have a Company
Material Adverse Effect.

         2.23.    Environmental and Safety Laws. The Company is not in violation
in any material respect of any applicable material statute, law or regulation
relating to the environment or occupational health and safety, and to its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation. To the knowledge of the
Company, no violation by the Company is being alleged of any such existing
statute, law or regulation that, if substantiated, would have a Company Material
Adverse Effect. The Company is not subject to any material liability or
obligation relating to the environmental conditions on, under, or about the real
property or other properties or assets owned, leased, operated or used by the
Company, including without limitation, the air, soil and groundwater conditions
at such properties.

         2.24.    Registration Rights. Except as will be provided for in the
Registration Rights Agreement, the Company is not under any obligation to
register under the Securities Act any of its currently outstanding securities or
any of its securities which may hereafter be issued, except for the Notes. The
Company's obligation to register the Notes will not delay (except in connection
with any review by the SEC of any filings of the Company) or prevent the
Purchasers' ability to exercise the rights granted to them under the
Registration Rights Agreement in accordance with the terms set forth therein.

         2.25.    Disclosure. Neither this Agreement nor the Offering Memorandum
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained therein, in the light
of the circumstances under which they were made, not misleading.

                                  ARTICLE III

                REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER

         3.       Representations and Warranties of Each Purchaser. Each
Purchaser, severally and not jointly, hereby represents and warrants to the
Company that:

         3.1.     Organization and Qualification. Such Purchaser is a form of
entity duly organized, validly existing and in good standing under the laws of
its state of organization and has all requisite power and authority to carry on
its business as it is now being conducted.

         3.2.     Authority. Such Purchaser has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to be
consummated by such Purchaser. The execution

                                       11
<PAGE>

and delivery of this Agreement by such Purchaser and the consummation by such
Purchaser of the transactions contemplated hereby have been duly authorized by
all necessary action on the part of such Purchaser and no other proceedings on
the part of such Purchaser are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by such Purchaser and, assuming the due authorization,
execution and delivery hereof by the Company and each of the other Purchasers,
constitutes the legal, valid and binding obligation of such Purchaser
enforceable against such Purchaser in accordance with its terms, except as such
enforceability may be limited or affected by (a) bankruptcy, insolvency,
reorganization, moratorium, liquidation, arrangement, fraudulent transfer,
fraudulent conveyance and other similar laws (including court decisions) now or
hereafter in effect and affecting the rights and remedies of creditors generally
or providing for the relief of debtors, (b) the refusal of a particular court to
grant equitable remedies, including, without limitation, specific performance
and injunction relief, and (c) general principles of equity (regardless of
whether such remedies are sought in a proceeding in equity or at law).

         3.3.     No Conflict; Required Filings and Consents.

         (a)      The execution and delivery of this Agreement by the Purchaser
does not, and the performance by the Purchaser of its obligations hereunder will
not, (i) conflict with, breach or violate the organizational documents of the
Purchaser, (ii) conflict with or violate any laws in effect as of the date of
this Agreement applicable to the Purchaser or by which any of its properties or
assets is bound or (iii) result in any material breach of, or constitute a
material default (or an event that with notice or lapse of time or both would
become a material default) under, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Purchaser is a party or by which the Purchaser or any of
its properties or assets is bound.

         (b)      The execution and delivery of this Agreement by the Purchaser
does not, and the performance by the Purchaser of its obligations hereunder will
not, require the Purchaser to obtain any consent, registration, approval,
authorization or permit of, to make any filing with, or to give any notification
to, any governmental entities based on any law in effect as of the date of this
Agreement, except those which have been or will be timely obtained, made or
given.

         3.4.     Acquisition of Shares for Investment. Such Purchaser has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its purchase of the Shares hereunder. Such
Purchaser is an "accredited investor" within the meaning of Rule 501 promulgated
under the Securities Act. Such Purchaser confirms that it has reviewed the
Company SEC Reports and the Offering Memorandum, including the documents
attached thereto, and that the

                                       12
<PAGE>

Company has made available to such Purchaser the opportunity to ask questions of
the officers and management of the Company and to acquire additional information
about the business and financial condition of the Company. Such Purchaser is
acquiring the Shares for investment and not with a view toward or for sale in
connection with any distribution thereof in violation of any federal or state
securities or "blue sky" laws, or with the present intention of distributing or
selling such Shares or the Conversion Shares in violation of any federal or
state securities or "blue sky" laws. Such Purchaser understands and agrees that
neither the Shares nor the Conversion Shares may be sold, transferred, offered
for sale, assigned, pledged, hypothecated or otherwise disposed of without
registration under the Securities Act or pursuant to an exemption therefrom, and
without compliance with state, local and foreign securities laws (in each case
to the extent applicable). Such Purchaser understands and agrees that the Shares
and the Conversion Shares are "restricted securities" within the meaning of Rule
144 promulgated under the Securities Act ("Rule 144").

         3.5.     No Brokers. No broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission from the Company in
connection with the purchase of the Series C Preferred Stock by such Purchaser
provided for in this Agreement based upon arrangements made by or on behalf of
such Purchaser.

                                   ARTICLE IV

                                    COVENANTS

         4.1.     Filing of Articles. On or prior to the Closing Date, the
Company shall file with the Secretary of State of the State of Georgia the
Articles and they shall be in full force and effect as of the Closing.

         4.2.     Listing of Conversion Shares. Prior to the Closing, the
Company shall file with the New York Stock Exchange a supplemental listing
application relating to the Conversion Shares. The Company shall use best
efforts to cause the Conversion Shares to be listed on the New York Stock
Exchange as soon as practicable, subject only to official notice of issuance,
evidence of which shall be delivered by the Company to each of the Purchasers
promptly following receipt thereof.

         4.3.     Exchange Act Filings. The Company shall deliver to each
Purchaser, as soon as practicable after the filing thereof, all Forms 10-K and
10-Q and proxy statements (and amendments thereto) filed by the Company with the
SEC.

         4.4.     Reporting Requirements Under the Exchange Act. The Company
shall timely file such information, documents and reports as the SEC may require
or prescribe under Section 13 of the Exchange Act. The Company acknowledges and
agrees that the purposes of the requirements contained in this Section 4.4 are
(a) to enable the Purchasers

                                       13
<PAGE>

to comply with the current public information requirement contained in paragraph
(c) of Rule 144 should any such Purchaser ever wish to dispose of any of the
Conversion Shares without registration under the Securities Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (b) to qualify the
Company for the use of registration statements on Form S-3 (which the Company
represents that it is qualified to use as of the date hereof).

         4.5.     Availability of Common Stock for Conversion. The Company will
reserve 2,200,000 shares of Class B Common Stock for issuance upon conversion of
the Shares. The Company will not issue or agree to issue any shares of Class B
Common Stock or options, rights or warrants to purchase Class B Common Stock or
securities convertible into or exchangeable for Class B Common Stock or take any
other action if, after giving effect thereto, the number of shares of Class B
Common Stock remaining unissued and duly reserved for issuance upon conversion
of the Shares shall be insufficient to permit conversion of all of the Shares.

         4.6.     Use of Proceeds. The Company will use the proceeds from the
sale of the Shares to repay current amounts outstanding under the Company's
revolving credit facility, to pay fees and expenses associated with the offering
and sale of the Shares and for other general corporate purposes.

         4.7.     Best Efforts. Each of the Company and the Purchasers shall use
its best efforts to satisfy the applicable conditions to Closing set forth in
Section 5 hereof.

                                   ARTICLE V

                CONDITIONS PRECEDENT TO EACH PARTY'S OBLIGATIONS

         5.       Conditions to Closing.

         5.1.     Conditions Precedent to Obligation of the Company. The
obligation of the Company to consummate the Closing shall be subject to the
satisfaction (or waiver in writing by the Company) of the following conditions
on or prior to the Closing Date:

                  (a)      the representations and warranties of each Purchaser
         contained in this Agreement shall be true and correct in all respects
         on and as of the Closing Date with the same effect as though such
         representations and warranties had been made on and as of the Closing
         Date (except to the extent such representations and warranties
         specifically relate to a prior date);

                  (b)      all covenants, agreements and conditions contained in
         this Agreement to be performed or complied with by each Purchaser on or
         prior to the Closing shall have been performed or complied with in all
         respects and at such time such

                                       14
<PAGE>

         Purchaser shall not be in default in the performance of or compliance
         with any of the provisions of this Agreement;

                  (c)      at the time of the Closing, the purchase and sale of
         the Shares to be purchased by each Purchaser hereunder shall be legally
         permitted by all laws and regulations to which such Purchaser and the
         Company are subject;

                  (d)      all governmental and regulatory approvals necessary
         to consummate the Closing shall have been obtained; (e) the
         Registration Rights Agreement shall have been executed by each of the
         Purchasers and duly delivered; and

                  (f)      except in connection with the Registration Rights
         Agreement, all authorizations, approvals or permits, if any, of any
         governmental authority or regulatory body that are now required in
         connection with the lawful issuance and sale of the Shares pursuant to
         this Agreement, the conversion of the Shares into Conversion Shares and
         the issuance of such Conversion Shares upon such conversion shall have
         been duly obtained and shall be in full force and effect on and as of
         the Closing.

         5.2.     Conditions Precedent to Obligation of Each Purchaser. The
obligation of each Purchaser to consummate the Closing shall be subject to the
satisfaction (or waiver in writing by such Purchaser) of the following
conditions on or prior to the Closing Date:

                  (a)      the representations and warranties of the Company
         contained in this Agreement shall be true and correct in all respects
         on and as of the Closing Date with the same effect as though such
         representations and warranties had been made on and as of the Closing
         Date (except to the extent such representations and warranties
         specifically relate to a prior date);

                  (b)      all covenants, agreements and conditions contained in
         this Agreement to be performed or complied with by the Company on or
         prior to the Closing shall have been performed or complied with in all
         respects and at such time the Company shall not be in default in the
         performance of or compliance with any of the provisions of this
         Agreement or of the Articles;

                  (c)      at the time of the Closing, the purchase and sale of
         the Shares to be purchased by each Purchaser hereunder shall be legally
         permitted by all laws and regulations to which such Purchaser and the
         Company are subject;

                  (d)      all governmental and regulatory approvals necessary
         to consummate the Closing shall have been obtained;

                                       15
<PAGE>

                  (e)      all corporate and other proceedings in connection
         with the transactions contemplated hereby shall be reasonably
         satisfactory in substance and form to such Purchaser and the Company
         shall have delivered a check or made a wire transfer to the Purchaser's
         outside counsel to satisfy its obligations under Section 8.7, if so
         requested, prior to the Closing;

                  (f)      the Registration Rights Agreement shall have been
         executed by the Company and each other Purchaser and duly delivered;

                  (g)      all outstanding shares of Series A Preferred Stock
         and Series B Preferred Stock shall have been exchanged on a one-for-one
         basis for shares of Series C Preferred Stock;

                  (h)      each of the other Purchasers shall have funded the
         portion of the Purchase Price payable by such Purchaser at the Closing
         in accordance with Section 1.2;

                  (i)      except in connection with the Registration Rights
         Agreement, all authorizations, approvals or permits, if any, of any
         governmental authority or regulatory body that are now required in
         connection with the lawful issuance and sale of the Shares pursuant to
         this Agreement, the conversion of the Shares into Conversion Shares and
         the issuance of such Conversion Shares upon such conversion shall have
         been duly obtained and shall be in full force and effect on and as of
         the Closing;

                  (j)      the Company shall have duly filed with the Secretary
         of State of the State of Georgia the Articles and the Articles shall be
         in full force and effect and shall not have been further amended; and

                  (k)      all taxes imposed by law in connection with the
         issuance, sale and delivery of the Shares shall have been fully paid,
         and all laws imposing such taxes shall have been fully complied with.

                                   ARTICLE VI

                               CLOSING DELIVERIES

         6.       Closing Deliveries.

         6.1.     Deliveries of the Company. At the Closing, the Company shall
deliver, or shall cause to be delivered, to each Purchaser:

         (a)      a stock certificate of the Company representing the Shares
registered in the name of such Purchaser or its nominee;

                                       16
<PAGE>

         (b)      written evidence of the filing of the Articles with the
Secretary of State of the State of Georgia;

         (c)      an opinion addressed to the Purchasers from Troutman Sanders
LLP, special counsel to the Company, dated the Closing Date, and in
substantially the form attached as Exhibit D hereto;

         (d)      a certificate of the President or a Vice President of the
Company, dated the date of the Closing, certifying to the fulfillment of the
conditions specified in Section 5.2 (a) and (b);

         (e)      if requested, reasonable evidence of the satisfaction of the
closing conditions set forth in Section 5.2; and

         (f)      an executed counterpart of the Registration Rights Agreement.

         6.2.     Deliveries of Each Purchaser. At the Closing, each Purchaser
shall deliver, or shall cause to be delivered, to the Company:

         (a)      a certificate of a senior officer of such Purchaser, dated the
date of the Closing, certifying to the fulfillment of the conditions specified
in Section 5.1(a) and (b);

         (b)      the Purchase Price; and

         (c)      an executed counterpart of the Registration Rights Agreement.

                                  ARTICLE VII

                                 INDEMNIFICATION

         7.1.     Indemnification by the Company. The Company shall indemnify,
defend and hold harmless each Purchaser and its shareholders, partners, members,
directors, managers, officers, employees, agents, representatives and
affiliates, without duplication (such Purchaser and the foregoing related
parties, collectively, the "Purchaser Indemnitees") from and against all
damages, losses, liabilities, claims, actions, suits, proceedings, judgments,
taxes, penalties, fines, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses), whether or not resulting from a third
party claim (all of the foregoing hereinafter collectively referred to as a
"Loss") incurred by any of the Purchaser Indemnitees arising out of or as a
result of: (i) any misrepresentation or breach of warranty made by the Company
herein or in any document or certificate delivered pursuant hereto; and (ii) any
breach or nonfulfillment of any agreement or covenant made by the Company herein
or in any document or certificate delivered pursuant hereto.

                                       17
<PAGE>

         7.2.     Indemnification by the Purchasers. Each Purchaser shall
indemnify, defend and hold harmless the Company and its shareholders, directors,
officers, employees, agents, representatives and affiliates, without duplication
(the "Company Indemnitees") from and against all Losses incurred by any of the
Company Indemnitees arising out of or as a result of: (i) any misrepresentation
or breach of warranty made by such Purchaser herein or in any document or
certificate delivered pursuant hereto; and (ii) any breach or nonfulfillment of
any agreement or covenant made by such Purchaser herein or in any document or
certificate delivered pursuant hereto.

         7.3.     Limitations on Indemnification.

                  (a)      No payment shall be required to be made by the
         Company pursuant to clause (i) of Section 7.1 hereof, or by any
         Purchaser pursuant to clause (i) of Section 7.2 hereof, unless, and
         except to the extent that, the amount of Loss suffered by the party
         claiming indemnification in connection with such claim, together with
         all claims asserted therewith or previously asserted under clause (i)
         of Section 7.1 or clause (i) of Section 7.2, as the case may be, by
         such party and/or the indemnitee group to which such party belongs
         (i.e., the Purchaser Indemnitees or the Company Indemnitees, as
         applicable), exceeds three percent (3%) of the Purchase Price paid by
         the Purchaser who is the indemnitee (directly or on behalf of a member
         of its indemnitee group) or indemnitor of such claim, it being
         understood that for purposes of measuring the amount of Losses suffered
         by a Company Indemnitee under clause (i) of Section 7.2 as of any given
         time, the Company Indemnitee may only include Losses attributable to
         the Purchaser from whom the Company Indemnitee is seeking to recover at
         such time. By way of illustration, the percentage referred to in the
         preceding sentence applicable to Teachers Insurance and Annuity
         Association of America would be $450,000.

                  (b)      Notwithstanding anything to the contrary herein, the
         maximum amount of Loss suffered, other than out-of-pocket Loss
         attributable to third-party claims or in respect of breach or
         nonfulfillment of agreements or covenants, for which a Purchaser (or a
         member of its indemnitee group) may be indemnified or from whom
         indemnification may be sought by a Company Indemnitee shall not exceed
         the total Purchase Price paid by such Purchaser.

                  (c)      No right to indemnification may be asserted under
         clause (i) of Section 7.1 or clause (i) of Section 7.2 after the
         expiration of 18 months following the Closing Date, except any such
         rights to indemnification arising out of or in connection with any
         claim as to which notice has been given on or prior to the expiration
         of 18 months following the Closing Date. Notwithstanding anything
         herein to the contrary, a right to indemnification for breach of the
         representations and warranties set forth in Sections 2.1, 2.3, 2.4,
         3.1, 3.2, 3.3 and 3.4 may be asserted under this Article VII
         indefinitely.

                                       18
<PAGE>

                  (d)      Notwithstanding anything herein to the contrary, the
         rights of indemnification under this Article VII shall not include any
         matters relating to the rights and obligations of the parties hereto
         under the Registration Rights Agreement.

                  (e)      In each case in which a breach of any representation
         or warranty creates entitlement to indemnification under this Article
         VII, the amount of any Loss shall be determined without taking into
         account any qualification as to materiality or Company Material Adverse
         Effect contained in any such representation or warranty. The provisions
         of this Article VII, subject to the limitations set forth herein, shall
         constitute the sole remedy for breach of any party hereto of any
         representation, warranty, covenant or agreement by any other party
         hereto. Notwithstanding anything to the contrary herein, nothing in
         this Agreement shall limit in any way any party's remedies in respect
         of fraud or intentional misrepresentation or omission or an intentional
         breach of this Agreement.

         7.4.     Notice and Defense of Claims. The following provisions shall
only apply in the event of a third-party claim.

         (a)      If any action or proceeding be commenced, or if any claim,
demand or assessment be asserted, in respect of which any party (the
"Indemnitee") proposes to hold any other party (the "Indemnitor") liable under
the indemnity provisions of this Article VII (a "Claim"), the Indemnitee shall
notify the Indemnitor in writing of such Claim in a timely manner and, in any
event, within any applicable time period specified in Section 7.3; provided,
however, that, so long as such notice is given within any applicable time period
specified in Section 7.3, an Indemnitee's failure to give timely notice to an
Indemnitor shall not constitute a defense (in whole or in part) to any claim for
indemnification by such Indemnitee unless, and only to the extent that, such
failure results in material prejudice to the Indemnitor. Such Indemnitor shall
be entitled, at its sole cost and expense, to contest or defend the same with
counsel of its own choosing, reasonably acceptable to Indemnitee, and Indemnitee
shall not admit any liability with respect thereto or settle, compromise, pay or
discharge the same without the prior written consent of the Indemnitor so long
as any Indemnitor is contesting or defending the same in good faith, and
Indemnitee (and its successors and assigns) shall cooperate with the Indemnitor
in the contest or defense thereof (and the Indemnitor shall reimburse Indemnitee
for the Indemnitee's reasonable actual out-of-pocket expenses incurred in
connection with such cooperation) and Indemnitee shall enter into any settlement
with respect thereto recommended by Indemnitor so long as (x) the amount of such
settlement is paid by the Indemnitor (subject to the limitations in Section
7.3), (y) no obligation to perform or refrain from performing any act or to
admit to any fault shall be imposed upon Indemnitee by reason thereof and (z)
such settlement otherwise is reasonable under the applicable circumstances.

                                       19
<PAGE>

         (b)      If (x) the Indemnitee shall have given the Indemnitor at least
thirty (30) days prior written notice that, in the event the Indemnitor fails to
assume the defense of any Claims as provided in Section 7.4(a), the Indemnitee
intends to assume the defense of such Claim and (y) the Indemnitor fails to
assume the defense of such Claim as provided in Section 7.4(a) by the end of
such thirty (30) day period or such later reasonable time (which shall be such
period of time as will not result in material prejudice to the rights of the
Indemnitee), then the Indemnitee shall have the right to prosecute and conduct
its own defense by a single counsel of its choice (in addition to appropriate
local counsel as may be required by the local rules of the applicable
jurisdiction), and in connection therewith shall have full right to conduct the
defense thereof and to enter into any compromise or settlement thereof with the
consent of the Indemnitor (which shall not unreasonably be withheld, conditioned
or delayed). Such defense shall be at the reasonable cost and expense of the
Indemnitor and the Indemnitor shall reimburse the Indemnitees promptly and
periodically for the reasonable costs of defending against such Claim.
Notwithstanding Section 7.4(a) and the foregoing sentence, any Indemnitee shall
be entitled to conduct its own defense at the reasonable cost and expense of the
Indemnitor if not doing so would materially prejudice the Indemnitee by virtue
of a conflict between the interest of the Indemnitee and the Indemnitor, and
provided further that in any event the Indemnitee may participate in such
defense at its own expense.

                                  ARTICLE VIII

                                  MISCELLANEOUS

         8.1.     Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflict of law doctrines.

         8.2.     Survival. Subject to Section 7.3, the representations,
warranties, covenants and agreements made herein shall survive (i) any
investigation made by the Purchasers and the Company and (ii) the Closing.

         8.3.     Amendment. Any term, covenant, agreement or condition of this
Agreement may be amended (either generally or in a particular circumstance and
either retroactively or prospectively) by a written instrument signed by the
Company and the holders of 50% or more of the Conversion Shares issued or
issuable upon conversion of the Shares, but in no event shall the obligations of
any Purchaser hereunder be increased, nor shall any right of a Purchaser in
respect of a post-Closing covenant under Article V, or any right of a Purchaser
(or a member of its indemnitee group) under Article VII be decreased, except
upon such Purchaser's written consent. The foregoing shall not limit the right
of any single Purchaser to seek to enforce on its behalf or on behalf of all
Purchasers in respect of any agreement or covenant of the Company hereunder.

                                       20
<PAGE>

         8.4.     Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party hereto, upon any breach or default
of any other party hereto under this Agreement, shall impair any such right,
power or remedy of such party nor shall it be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party hereto of any breach or default under this
Agreement, or any waiver on the part of any party hereto of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing.

         8.5.     Binding Effect; Assignment. This Agreement shall be binding on
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any rights or obligations
hereunder shall be assigned or delegated by the Company without the prior
written consent of the Purchasers. Prior to the Closing, any Purchaser may
assign or delegate this Agreement or any rights or obligations hereunder to any
affiliate of such Purchaser, provided that such assignee assumes all of the
obligations of such assigning Purchaser hereunder and executes a joinder
agreement to this Agreement. After the Closing, any Purchaser may assign or
delegate this Agreement or any rights or obligations hereunder to any permitted
transferee or assignee of such Purchaser's Shares that is an "accredited
investor" or a "qualified institutional buyer" (as defined in Rule 501 and Rule
144A, respectively, promulgated under the Securities Act) and otherwise in
compliance with applicable federal and state securities laws and exemptions
therefrom. In any of the foregoing events, such Purchaser shall remain obligated
under this Agreement. Nothing in this Agreement, express or implied, is intended
to confer upon any person, other than the parties hereto and their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein. For purposes of this Agreement, each of (x) the Gabelli Funds and (y)
the Capital Research and Management Company entities listed on the signature
pages hereto shall be treated as one Purchaser, unless the context otherwise
requires.

         8.6.     Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be personally delivered,
mailed by registered or certified mail, postage prepaid, return receipt
requested, delivered by a nationally recognized overnight courier or sent by
facsimile transmission with receipt confirmed, addressed to the applicable party
at its address set forth next to its name on the signature page hereto (or such
other address as such party shall hereafter specify by written notice in writing
to the other parties hereto). Any such notice or communication shall be deemed
to have been received (A) in the case of personal delivery or facsimile
transmission, on the date of such delivery or transmission, (B) in the case of a
nationally recognized overnight courier, on the next business day after the date
when sent, and (C)

                                       21
<PAGE>

in the case of mailing, on the third business day following that on which the
piece of mail containing such communication is posted.

         8.7.     Expenses. The Company shall bear its own expenses and legal
fees incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby, and the Company will pay (at Closing, if requested, or upon
any termination of this Agreement as contemplated by Section 1.2) all the
reasonable fees, charges and disbursements of one firm of outside counsel
representing the Purchasers, with respect to this Agreement and the transactions
contemplated hereby.

         8.8.     Entire Agreement. This Agreement (including the schedules and
exhibits hereto) and the documents referred to herein or delivered pursuant
hereto or pursuant to such documents, including all exhibits and schedules
thereto, contain the entire understanding of the parties with respect to their
subject matter and supersede all prior agreements and understandings among the
parties with respect to their subject matter. References herein to schedules to
this Agreement shall refer to the schedules contained in the Disclosure Letters
provided by the Company and the Purchasers, respectively, immediately prior to
the execution of this Agreement. The Company's schedules may cross-reference
applicable sections or pages of the Company SEC Reports.

         8.9.     Severability. Each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Agreement.
The obligations of the Purchasers hereunder are several. No Purchaser shall be
responsible for the obligations of, or any action taken or omitted by, any other
Purchaser hereunder or under the Registration Rights Agreement.

         8.10.    Headings. The section and other headings contained in this
Agreement are for convenience of reference only and shall not affect the meaning
or interpretation of this Agreement.

         8.11.    Counterparts. This Agreement may be executed in two or more
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which together shall be deemed to be one and the same
agreement.

                  [remainder of page intentionally left blank]

                                       22
<PAGE>

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

GRAY COMMUNICATIONS SYSTEMS, INC.               4370 Peachtree Road, NE
                                                Atlanta, GA 30319
                                                Facsimile:  (404) 261-9607
                                                Attention:  James C. Ryan
By:  /s/  James C. Ryan
   ------------------------------
   Name:  J.C. Ryan
   Title: V.P. - CFO

                                       23
<PAGE>

TEACHERS INSURANCE AND ANNUITY                  Teachers Insurance and Annuity
    ASSOCIATION OF AMERICA                      Association of America
                                                Attn: John Goodreds
                                                730 Third Avenue
                                                New York, NY  10017
By:  /s/ John Goodreds                          Facsimile:  (212) 916-6582
   ------------------------------
   Name:  John Goodreds
   Title: Associate Director - Private
          Placements

                                       24
<PAGE>

CONTINENTAL CASUALTY COMPANY                    Attn:   Investments
                                                333 South Wabash Avenue
                                                CNA Plaza - 23 South
                                                Chicago, IL  60685
By:  /s/  Marilou R. McGirr                     Facsimile:  (312) 817-1680
   ------------------------------
   Name:  Marilou R. McGirr
   Title: Vice President

                                       25
<PAGE>

AMERICAN HIGH INCOME TRUST                     Capital Research and
                                               Management Company
                                               Attn: Michael J. Downer
                                               333 South Hope Street, 33rd Floor
By:  CAPITAL RESEARCH AND MANAGEMENT COMPANY   Los Angeles, CA  92821-5823
                                               Facsimile:  (213) 486-9041

By:  /s/  Michael Downer
   -----------------------------------
   Name:  Michael J. Downer
   Title: Vice President and Secretary

AMERICAN FUNDS INSURANCE SERIES-
  HIGH YIELD BOND FUND                         Capital Research and
                                               Management Company
                                               Attn: Michael J. Downer
By:  CAPITAL RESEARCH AND                      333 South Hope Street, 33rd Floor
     MANAGEMENT COMPANY                        Los Angeles, CA  92821-5823
                                               Facsimile:  (213) 486-9041

By:  /s/  Michael Downer
   -----------------------------------
   Name:  Michael J. Downer
   Title: Vice President and Secretary

                                       26
<PAGE>

THE GABELLI EQUITY INCOME FUND                  Gabelli Funds
                                                Attn: Jim McKee
                                                1 Corporate Center
                                                Rye, NY  10580
By:  /s/  Bruce Alpert                          Facsimile:  (914) 921-5384
   ------------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI SMALL CAP GROWTH FUND               Gabelli Funds
                                                Attn: Jim McKee
                                                1 Corporate Center
                                                Rye, NY  10580
By:  /s/  Bruce Alpert                          Facsimile:  (914) 921-5384
   ------------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI GLOBAL MULTIMEDIA TRUST INC.         Gabelli Funds
                                                 Attn: Jim McKee
                                                 1 Corporate Center
                                                 Rye, NY  10580
By:  /s/  Bruce Alpert                           Facsimile:  (914) 921-5384
   ------------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI CONVERTIBLE SECURITIES FUND, INC.    Gabelli Funds
                                                 Attn: Jim McKee
                                                 1 Corporate Center
                                                 Rye, NY  10580
By: /s/  Bruce Alpert                            Facsimile:  (914) 921-5384
   ------------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

THE GABELLI EQUITY TRUST INC.                    Gabelli Funds
                                                 Attn: Jim McKee
                                                 1 Corporate Center
                                                 Rye, NY  10580
By: /s/  Bruce Alpert                            Facsimile:  (914) 921-5384
   ------------------------------------------
   Name:  Bruce N. Alpert
   Title: Vice President and Treasurer

                                       27
<PAGE>

                                    EXHIBIT B

<TABLE>
<CAPTION>
PURCHASER                                     NUMBER OF SHARES        PURCHASE PRICE
<S>                                           <C>                     <C>
Teachers Insurance and                             1,500               $15,000,000
Annuity Association of
America

Continental Casualty Company                         550               $ 5,500,000

American High Income Trust                           300               $ 3,000,000

American Funds Insurance Series,                     300               $ 3,000,000
                                                   -----               -----------
High Yield Bond Fund

         Capital Research and                        600               $ 6,000,000
         Management Company Subtotal

The Gabelli Equity Income Fund                       100               $ 1,000,000

The Gabelli Small Cap                                100               $ 1,000,000
Growth Fund

The Gabelli Global                                   100               $ 1,000,000
Multimedia Trust Inc.

The Gabelli Convertible                              100               $ 1,000,000
Securities Fund, Inc.

The Gabelli Equity Trust Inc.                         90               $   900,000
                                                   -----               -----------

         Gabelli Subtotal                            490               $ 4,900,000
                                                   -----               -----------

         TOTAL                                     3,140               $31,400,000
</TABLE>

                                       28
<PAGE>
                       GRAY COMMUNICATIONS SYSTEMS, INC.
                            DISCLOSURE SCHEDULES TO
                  SERIES C PREFERRED STOCK PURCHASE AGREEMENT

Schedule 2.2

         SEE ATTACHED SCHEDULE OF OPTIONS AND WARRANTS.

         The Company is authorized to issue 50,000,000 shares of all classes of
stock, of which, 15,000,000 shares are designed Class A Common Stock,
15,000,000 shares are designated Class B Common Stock, and 20,000,000 shares
are designated "blank check" preferred stock for which the Board of Directors
has the authority to determine the rights, powers, limitations and restrictions.
The rights of the Company's Class A and Class B Common Stock are identical,
except that the Class A Common Stock has 10 votes per share and the Class B
Common Stock has one vote per share. The Class A and B Common Stock receive
cash dividends on an equal per share basis.

         The Series A Preferred Stock includes detachable warrants issued to
Bull Run Corporation ("Bull Run") to purchase 731,250 shares of Class A Common
Stock for $11.92 per share. Of these warrants, 450,000 vested upon issuance,
with the remaining warrants vesting in five equal annual installments
commencing January 3, 1997, providing the Series A Preferred Stock remains
outstanding. The Series A Preferred Stock was originally issued to Bull Run;
however, these shares were sold by Bull Run to one of its affiliates in 2001.
The holder of the Series A Preferred Stock receives cash dividends at an annual
rate of $800 per share. During 2000, the Company redeemed 500 shares of
Series A Preferred Stock at a cost of $5.0 million. The liquidation or
redemption price of the Series A Preferred Stock is $10,000 per share.

         The Series B Preferred Stock includes warrants to purchase an
aggregate of 750,000 shares of Class A Common Stock at an exercise price of
$16.00 per share. Of these warrants 450,000 vested upon issuance, with the
remaining warrants vesting in five equal annual installments commencing on
September 24, 1997. The shares of Series B Preferred Stock were originally
issued to Bull Run and to J. Mack Robinson, Chairman of the Board of Bull Run
and President and Chief Executive Officer of the Company, and certain of his
affiliates. The Company obtained a written opinion from an investment banker as
to the fairness of the terms of the sale of such Series B Preferred Stock with
warrants. During 2001, Bull Run sold its shares of Series B Preferred Stock to
one of the other original Series B Preferred Stock shareholders. The holders of
the Series B Preferred Stock receive dividends at an annual rate of $600 per
share, with the Company having the option to pay these dividends in cash or in
additional shares. The liquidation or redemption price of the Series B
Preferred Stock is $10,000 per share. During 2000, the Company issued 11 shares
of Series B Preferred Stock as payment of dividends to the holders of its then
outstanding Series B Preferred Stock. The liquidation or redemption price of
the Series B Preferred Stock is $10,000 per share.

         In addition to the $13.2 million paid for the shares of Sarkes Tarzian,
Inc., the Company granted warrants to Bull Run to purchase up to 100,000 shares
of the Company's Class B Common Stock at $13.625 per share. These warrants are
fully vested and will expire in 10 years if not exercised.

         The Company is authorized by its Board of Directors to purchase up to
two million
<PAGE>

shares of the Company's Class A or Class B Common stock to either be retired or
reissued in connection with the Company's benefit plans, including its Capital
Accumulation Plan and long-term incentive plan. During 2000 and 1999, the
Company purchased 11,361 shares and 20,000 shares of its Class B Common Stock,
respectively, under this authorization. The 2000 and 1999 treasury shares were
purchased at prevailing market prices with an average effective price of $12.55
and $12.85 per share, respectively, and were funded from operating cash flow.

SCHEDULE 2.6

See page 4 of the Company's Registration Statement on Form S-4 (File No.
333-86068) filed on April 12, 2002 (the "Form S-4")

SCHEDULE 2.8

See the cover page and pages 3 and 4 of the Form S-4

SCHEDULE 2.10

See pages 4, 25 and 26 of the Form S-4

SCHEDULE 2.15

See pages 4, 25 and 26 of the Form S-4 and Item 3 (pages 25-26) of the
Company's Annual Report on Form 10-K for the year ended December 31, 2001 (the
"Form 10-K")

SCHEDULE 2.16

See Item 2 (pages 22-25) of the Form 10-K

SCHEDULE 2.21

See pages 3, 4 and 25 of the Form S-4 and page 40, Item 11 (pages 72-78), Item
12 (pages 79-80), Item 13 (pages 81-82), Note B (pages 54-55) and Note D (page
59) of the Form 10-K

<PAGE>

                                    SUMMARY

GRAY COMMUNICATIONS SYSTEMS, INC.
STOCK OPTION OUTSTANDING
NUMBER OF OPTIONS - SUMMARY - CLASS A
OPTION FORFEITURES UPDATED AS OF DECEMBER 31, 2002

<Table>
<Caption>
                                                    OPTIONS                                                              OPTIONS
 GRANT        VEST       EXPIRATION     STRIKE    OUTSTANDING     OPTIONS      OPTIONS       OPTIONS     OPTIONS       OUTSTANDING
  DATE        DATE          DATE        PRICE      @12/31/01      AWARDED     EXERCISED     FORFEITED    EXPIRED        @ 3/31/02
--------    --------     ----------    --------   -----------     -------     ---------     ---------    -------       -----------
<S>         <C>          <C>           <C>        <C>             <C>         <C>           <C>          <C>           <C>
3/30/95     03/30/97      03/30/00     $ 8.8889          0           0            0             0           0                 0
11/19/98    11/19/00      11/19/03     $17.8125     19,337           0            0             0           0            19,337
                                                  --------------------------------------------------------------------------------
                                                    19,337           0            0             0           0            19,337
                                                  ================================================================================
</Table>
<PAGE>

                                    SUMMARY

GRAY COMMUNICATIONS SYSTEMS, INC.
STOCK OPTIONS OUTSTANDING
NUMBER OF OPTIONS - SUMMARY - CLASS B
Option Forfeitures updated as of December 31, 2002

<Table>
<Caption>
                                                        OPTIONS                                                          OPTIONS
 GRANT        VEST      EXPIRATION      STRIKE        OUTSTANDING     OPTIONS      OPTIONS       OPTIONS     OPTIONS   OUTSTANDING
  DATE        DATE         DATE          PRICE         @12/31/01      AWARDED     EXERCISED     FORFEITED    EXPIRED    @ 3/31/02
--------    --------    ----------     ---------      -----------     -------     ---------     ---------    -------   -----------
<S>         <C>         <C>            <C>            <C>             <C>         <C>           <C>          <C>       <C>
12/12/96    12/12/98     12/12/01      $ 10.5833                0           0             0             0          0             0
02/12/97    02/12/99     02/12/02      $ 12.5000           10,500           0             0             0    (10,500)            0
9/25/97      9/25/99      9/25/02      $ 14.5000          343,545           0             0             0          0       343,545
02/12/98    02/12/00     02/12/03      $ 14.5000           10,500           0             0             0          0        10,500
10/5/98      10/5/00      10/5/03      $ 14.5000           11,250           0             0             0          0        11,250
11/19/98    11/19/00     11/19/03      $ 14.0000          106,750           0             0             0          0       106,750
2/12/99      2/12/01      2/12/04      $ 14.1875           10,500           0             0             0          0        10,500
11/18/99    11/18/01     11/18/04      $ 12.7500          168,700           0             0             0          0       168,700
2/11/00      2/11/02      2/11/05      $ 13.0000           10,500           0             0             0          0        10,500
02/21/00    02/21/02     02/21/05      $ 13.0000            2,500           0             0             0          0         2,500
5/25/00      5/25/00      5/25/05      $ 10.1250          771,185           0             0             0          0       771,185
09/21/00    09/21/00     09/20/05      $ 10.7500           80,000           0             0             0          0        80,000
10/26/00    10/26/02     10/26/05      $ 13.0000           10,500           0             0             0          0        10,500
10/11/01    10/11/03     10/11/06      $ 12.7400            6,000           0             0             0          0         6,000
12/6/01      12/6/03      12/6/06      $  9.9500           29,500           0             0             0          0        29,500
01/07/02    01/07/04     01/07/07      $ 11.2300                0     325,700             0             0          0       325,700

Directors:
11/18/99    01/01/00     01/31/01      $ 12.7500                0           0             0             0          0             0
10/26/00      1/1/01      1/31/02      $ 13.0000           37,500           0             0       (37,500)         0             0
12/06/01    01/01/02     01/31/03      $  9.9500           25,000           0             0             0          0        25,000
                                                      ----------------------------------------------------------------------------
                                                         1,634,430    325,700             0       (37,500)   (10,500)    1,912,130
                                                      ============================================================================
</Table>

<PAGE>

                                    SUMMARY

GRAY COMMUNICATIONS SYSTEMS, INC.
WARRANTS OUTSTANDING
NUMBER OF WARRANTS -- SUMMARY -- CLASS A
Warrant Forfeitures updated as of December 31, 2000

<TABLE>
<CAPTION>

                                             WARRANTS                                                     WARRANTS
GRANT      VEST      EXPIRATION   STRIKE   OUTSTANDING   WARRANTS   WARRANTS     WARRANTS     WARRANTS   OUTSTANDING
DATE       DATE         DATE      PRICE    @ 12/31/01    AWARDED    EXERCISED    FORFEITED    EXPIRED    @ 3/31/02
--------------------------------------------------------------------------------------------------------------------
<S>        <C>       <C>          <C>      <C>           <C>        <C>          <C>          <C>        <C>
1/3/96                            $ 11.92     731,250                                                        731,250
9/24/96                           $ 16.00     750,000                                                        750,000
                                           -------------------------------------------------------------------------
                                            1,281,250           0           0             0           0    1,481,250
                                           =========================================================================
</Table>

<Table>
<Caption>
GRAY COMMUNICATIONS SYSTEMS, INC.
WARRANTS OUTSTANDING
NUMBER OF WARRANTS -- SUMMARY -- CLASS B
Warrant Forfeitures updated as of December 31, 2000

                                             WARRANTS                                                     WARRANTS
GRANT      VEST      EXPIRATION   STRIKE   OUTSTANDING   WARRANTS   WARRANTS     WARRANTS     WARRANTS   OUTSTANDING
DATE       DATE         DATE      PRICE    @ 12/31/01    AWARDED    EXERCISED    FORFEITED    EXPIRED    @ 3/31/02
--------------------------------------------------------------------------------------------------------------------
<S>        <C>       <C>          <C>      <C>           <C>        <C>          <C>          <C>        <C>
3/1/99                            $ 13.63     100,000                                                        100,000
                                           -------------------------------------------------------------------------
                                              100,000           0           0             0           0      100,000
                                           =========================================================================
</TABLE>

These warrants are associated with the Sarkes Tarzian option and they will vest
upon exercise of that option.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]