FIRST AMENDMENT TO TWO YEAR TEAM NOTE PURCHASE AGREEMENT
EXHIBIT
4.1
FIRST
AMENDMENT TO
First
Amendment (“Amendment”) dated as of this 5th
day of
June, 2007 CGSI 2-Year Term Note Purchase Agreement, dated as of January 12,
2007 ("Agreement") by and among Capital Growth Systems, Inc. ("Company"), 20/20
Technologies, Inc. (“2020, Inc.), 20/20 Technologies I, LLC (“2020, LLC”),
Magenta netLogic, Limited (“Magenta”), Frontrunner Network Services Corporation
(“Frontrunner”), CentrePath, Inc. (“Centrepath”) and Global Capacity Group, Inc.
(“Global”—together with 2020, Inc., 2020, LLC Magenta, Frontrunner and
Centrepath, --together with Company collectively referred to as "Debtor"),
CGSI
Bridge Note Servicer, Inc. ("Servicer") and each holder of a bridge note (each
a
"Note" and collectively the "Notes") issued by Company pursuant to the
Agreement, with each such holder individually referred to as a "Lender" and
collectively, as the "Lenders." Capitalized terms used herein and not otherwise
defined shall have the same meaning as set forth in the Agreement.
WHEREAS,
the Lenders have issued an aggregate of $6,887,708.31 of original principal
amount of Notes and are desirous of issuing additional Notes, and are desirous
of inducing existing or new lenders to advance additional funds to the Company,
with the understanding that the ceiling and floor on the conversion price for
the Notes is to be adjusted as provided herein, and the form of Warrant to
be
held by the Lenders is to be modified as attached as Exhibit A, as a condition
precedent to the bringing in of additional loans pursuant to the
Notes.
WHEREAS
the Company and Co-Borrowers are willing to amend the Agreement and the Notes
as
provided herein, effective as of the initial funding of additional monies
following the date hereof.
WHEREAS,
each of the Lenders has been provided and opportunity to review the Form 10-KSB,
Forms 8-K and Form 10-Q and all amendments thereto as filed by the Company
in
2007.
NOW
THEREFORE, in consideration for the premises and covenants contained herein
and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the undersigned hereby amend the Agreement as
follows.
1. Terms
of the Notes and Warrants.
Section
2 of the Agreement is amended in paragraph 2 as follows:
(a).
The
first sentence in paragraph of Section 2 is amended by deleting the following
language (so that there shall be no ceiling or floor on the conversion price
for
the Notes):
“subject
in all events to the price per share of the Common Stock being not less than
$0.65 nor more than $1.25 per share, irrespective of the irrespective of the
Fair Market Value.”
2. Notice.
The
address for notice to be delivered to the Company shall be amended to as
follows: Capital Growth Systems, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇.
3. Miscellaneous.
The
following Section 8.11 is added:
8.11 Modification.
The
terms of this Agreement shall supersede any inconsistency with: (i) the form
of
Note, and specifically, each Lender’s Note is hereby amended to eliminate the
$0.65 per share floor and the $1.25 per share ceiling with respect to issuances
of Common Stock on conversion of the Note (or if the Note is still convertible
into AA Preferred Stock), then the floor and ceiling applicable to the AA
Preferred Stock conversion ratio, and each Lender shall take the necessary
steps
to amend the form of the Note to reflect this change; and (ii) the form of
Warrant attached as a form to the original Agreement, which effective as of
the
date of this Amendment is amended and restated in its entirety as set forth
on
Exhibit A with respect to each Lender executing a counterpart copy of the First
Amendment to this Agreement, and as so amended and restated, shall provide
that
effective as of the later of June 5, 2007 or the date of the issuance of the
Warrant, the Warrant shall have a cashless exercise feature at the option of
the
holder of the Warrant (in lieu of the obligation of the Company to register
the
shares underlying the Warrant or to extend the term of the Warrant); and (iii)
with respect to investments made after June 5, 2007, the number of shares
purchasable for each $100,000 of such investment on the new Warrants shall
be
90.0009 shares of Series AA Preferred Stock (200,000 shares of Common Stock
on
an as converted to Common Stock basis). The form of Warrant attached as Exhibit
A shall supersede any inconsistencies with the foregoing.
IN
WITNESS WHEREOF the undersigned has executed this First Amendment as of the
date
first set forth above.
This
First Amendment may be executed in one or more counterparts, by original,
photocopy, facsimile or email pdf, all of which when taken together constitute
one instrument, and will be binding once executed by Company, Co-Borrowers
and
the holders of a majority in original aggregate principal amount of the
Notes.
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Lenders
holding a Majority of the Notes by Outstanding Principal
Amount:
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Capital
Growth Systems, Inc.
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By:
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/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
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Its:
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CEO
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20/20
Technologies, Inc..*
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By:
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/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, CEO
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*
On behalf of itself and 20/20 Technologies I, LLC
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Frontrunner
Networks Corporation
By:
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, CEO
CentrePath,
Inc.
By:
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, CEO
Global
Capacity Group, Inc.
By:
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, CEO
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EXHIBIT
A
FORM
OF
WARRANT EFFECTIVE AS OF FIRST AMENDMENT DATE
THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER HEREOF FOR ITS
OWN ACCOUNT FOR INVESTMENT WITH NO INTENTION OF MAKING OR CAUSING TO BE MADE
A
PUBLIC DISTRIBUTION OF ALL OR ANY PORTION THEREOF. SUCH SECURITIES HAVE NOT
BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND
MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED, EXCEPT PURSUANT TO
AN
EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT.
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No.
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________________,
200__
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Chicago,
Illinois
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CAPITAL
GROWTH SYSTEMS, INC.
FORM
OF CGSI TERM NOTE WARRANT TO PURCHASE
SERIES
AA PREFERRED STOCK AT $1,000 PER PREFERRED SHARE, OR $0.45 PER COMMON SHARE
ON
AS CONVERTED BASIS
Void
after December 31, 2009, Unless Extended
Capital
Growth Systems, Inc., a Florida corporation (the “Company”), hereby certifies
that, for value received, _______________________________________ (including
any
successors and assigns, “Holder”), is entitled, subject to the terms set forth
below, to purchase from the Company at any time or from time to time before
5:00
PM Central time, on December 31, 2009 (the “Expiration Date”), fully paid and
nonassessable shares of the Company’s Series AA Preferred Stock (the “Warrant
Shares”) under the terms set forth herein. Holder acknowledges that effective
upon the filing of an amendment to the Articles of Incorporation of the Company
increasing its authorized Common Stock to not less than 200,000,000 shares
(the
“Amendment”), each share of Series AA Preferred Stock shall automatically be
converted into 2,222.2 shares of $0.0001 par value Company common stock (“Common
Stock”) and for purposes of this Warrant, effective as of the filing of the
Amendment, all references hereto to Warrant Shares shall be automatically
amended to refer to the corresponding number of shares of Common Stock into
which the shares of Series AA Preferred Stock have been converted.
1. Number
of Warrant Shares; Exercise Price.
This
Warrant shall evidence the right of the Holder to purchase up to __________
Warrant Shares (which number of Warrant Shares will remain fixed and is not
subject to any adjustment except as provided in Sections
5 and 6
below)
at an initial exercise price per Warrant Share of $1,000 per share of Series
AA
Preferred Stock (i.e.,
$0.45
per share of Common Stock following the Amendment) (the “Exercise Price”),
subject to adjustment as provided in Sections
5 and 6
below.
2. Definitions.
As used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Common Stock” shall mean the common stock, par value $0.0001 of the
Company.
(b) The
term
“Company” shall mean Capital Growth Systems, Inc., a Florida corporation, and
shall include any company which shall succeed to or assume the obligations
of
the Company hereunder.
(c) The
term
“Corporate Transaction” shall mean (i) a sale, lease transfer or conveyance of
all or substantially all of the assets of the Company; (ii) a consolidation
of
the Company with, or merger of the Company with or into, another corporation
or
other business entity in which the stockholders of the Company immediately
prior
to such consolidation or merger own less than 50% of the voting power of the
surviving entity immediately after such consolidation or merger; or (iii) any
transaction or series of related transactions to which the Company is a party
in
which in excess of 50% of the Company’s voting power is transferred, excluding
any consolidation or merger effected exclusively to change the domicile of
the
Company and/or an effective change of the number of issued and outstanding
shares of the Company (i.e.,
reverse
or forward split), and further including any of the issuances of capital stock
with respect to any of the transactions contemplated in the Memorandum.
(d) The
term
“Memorandum” shall mean the private placement memorandum dated November 14, 2006
of the Company, as supplemented on December 21, 2006, January 3, 2007, January
12, 2007 and as amended from time to time.
(e) The
term
“Offering Warrants” shall mean this Warrant and each other warrant issued to
purchasers of Notes pursuant to the CGSI Term Note Purchase Agreement, to which
this form of Warrant is attached as an Exhibit.
3. Exercise
Date; Expiration.
Subject
to the terms hereof, this Warrant may be exercised by the Holder at any time
or
from time to time before the Expiration Date (the “Exercise
Period”).
4. Exercise
of Warrant; Partial Exercise.
This
Warrant may be exercised in full or in part by the Holder by: (i) surrender
of
this Warrant, together with the Holder’s duly executed form of subscription
attached hereto as Exhibit A,
to the
Company at its principal office, accompanied by payment, in cash or by certified
or official bank check payable to the order of the Company, of the aggregate
exercise price (as determined above) of the number of Warrant Shares to be
purchased hereunder (with a replacement warrant to be issued as necessary to
reflect the unexercised portion of this Warrant if exercised in part and not
in
full); or (ii) by way of cashless exercise as provided in Section 7 of this
Warrant. The exercise of this Warrant pursuant to this Section 4
shall be
deemed to have been effected immediately prior to the close of business on
the
business day on which this Warrant is surrendered to the Company as provided
in
this Section 4,
and at
such time the person in whose name any certificate for Warrant Shares shall
be
issuable upon such exercise shall be deemed to be the record holder of such
Warrant Shares for all purposes. As soon as practicable after the exercise
of
this Warrant, the Company at its expense will cause to be issued in the name
of
and delivered to the Holder, or as the Holder may direct, a certificate or
certificates for the number of fully paid and nonassessable full shares of
Warrant Shares to which the Holder shall be entitled on such exercise, together
with cash, in lieu of any fraction of a share, equal to such fraction of the
current fair market value of one full Warrant Share as determined in good faith
by the board of directors of the Company and as set forth in Section
7,
and, if
applicable, a new warrant evidencing the balance of the shares remaining subject
to the Warrant.
5. Weighted
Average Anti-Dilution Price Protection.
The
purchase price of Warrant Shares or any shares of stock or other securities
which may be issuable upon the exercise of this Warrant shall be subject to
adjustment from time to time, as follows:
(a) “New
Securities” shall mean any Common Stock or preferred stock of Company issued
during the term of this Warrant, whether now authorized or not, and rights,
options or warrants to purchase said Common Stock or preferred stock, and
securities of any type whatsoever that are, or may become, convertible into
said
Common Stock or preferred stock (including but not limited to convertible debt
or any other instrument exercisable for or convertible into Common Stock);
provided, however, that “New Securities” does not include (i) any securities
issued or issuable pursuant to any of the notes, options, warrants or other
securities outstanding as of the date of the closing of the offering pursuant
to
the Memorandum, including all Offering Warrants; (ii) up to 5,000,000 shares
of
Common Stock issued pursuant to the stock option plan contemplated in the
Memorandum; any stock option plan maintained by Company; or (iii) shares of
Company's Common Stock issued in connection with any stock split, stock
dividend, or recapitalization by Company.
(b) In
the
event that Company issues New Securities for a consideration of less than $0.45
per share of Common Stock (on an as converted to Common Stock basis, as adjusted
per this Section
5
hereof)
(the “Original Purchase Price”), or if the Original Purchase Price shall have
been adjusted hereunder, and the Company issues New Securities for a purchase
price below the adjusted Purchase Price, then the then-current Purchase Price
shall be adjusted downward to a price determined by dividing
(i) the
sum
of (w) the Purchase Price in effect before the issuance of such New Securities
multiplied by the number of shares of the Company’s Common Stock then issued and
outstanding plus the number of shares of Company preferred stock then issued
as
converted into shares of Common Stock (including shares of Common Stock reserved
pursuant to the issued Offering Warrants) immediately prior to the issuance
of
such New Securities and (x) the consideration, if any, received by or deemed
to
have been received by the Company on the issue of such New Securities
by:
(ii) the
sum
of (y) the number of shares of the Company’s Common Stock then issued and
outstanding plus the number of shares of the Company’s preferred stock then
issued as converted into shares of Common Stock (including shares of Common
Stock reserved pursuant to the issued Offering Warrants) immediately prior
to
the issuance of such New Securities and (z) the number of Additional Shares
of
Common Stock issued or deemed to have been issued in the issuance of such New
Securities.
(c) In
the
case of the issuance of Common Stock for cash, the consideration shall be deemed
to be the amount of cash paid.
(d) In
the
case of the issuance of Common Stock for a consideration in whole or in part
other than cash, the consideration other than cash shall be deemed to be the
fair value thereof as reasonably determined by the Company’s board of directors
consistent with its fiduciary duties irrespective of any accounting
treatment.
(e) The
Company will not by reorganization, transfer of assets, consolidation, merger,
dissolution, or otherwise, avoid or seek to avoid observance or performance
of
any of the terms of this Section
5,
but
will at all times in good faith assist in the carrying out and performance
of
all provisions of this Section
5
in order
to protect the rights of the Holder against impairment.
6. Adjustments
to Number of Warrants and Conversion Price.
The
number and kind of Warrant Shares or any shares of stock or other securities
which may be issuable upon the exercise of this Warrant and the exercise price
hereunder shall be subject to adjustment from time to time upon the happening
of
certain events, as follows:
(a) Splits
and Subdivisions.
In the
event the Company should at any time or from time to time fix a record date
for
the effectuation of a split or subdivision of the outstanding shares of Series
AA Preferred Stock (or following the Amendment, of the Common Stock) or the
determination of the holders of Series AA Preferred Stock (or following the
Amendment, of the Common Stock) entitled to receive a dividend or other
distribution payable in additional shares of Series AA Preferred Stock (or
following the Amendment, of the Common Stock) or other securities or rights
convertible into, or entitling the holder thereof to receive directly or
indirectly, additional shares of Series AA Preferred Stock (hereinafter referred
to as the “Series AA Preferred Stock Equivalents”) (or following the Amendment,
of the Common Stock, with the entitlement for the holder thereof to receive
directly or indirectly, additional shares of Common Stock, hereinafter referred
to as the “Common Stock Equivalents”) without payment of any consideration by
such Holder for the additional shares of Series AA Preferred Stock (or following
the Amendment, of the Common Stock) or Series AA Preferred Stock Equivalents,
(or following the Amendment, of the Common Stock Equivalents), then, as of
such
record date (or the date of such distribution, split or subdivision if no record
date is fixed), the Exercise Price shall be appropriately decreased and the
number of Warrant Shares for which this Warrant is exercisable shall be
appropriately increased in proportion to such increase of outstanding
shares.
(b) Combination
of Shares.
If the
number of shares of Series AA Preferred Stock (or following the Amendment,
of
the number of shares of Common Stock) outstanding at any time after the date
hereof is decreased by a combination of the outstanding shares of Series AA
Preferred Stock (or following the Amendment, of the number of shares of Common
Stock), the Exercise Price shall be appropriately increased and the number
of
Warrant Shares for which this Warrant is exercisable shall be appropriately
decreased in proportion to such decrease in outstanding shares.
(c) Reclassification
or Reorganization.
If the
Warrant Shares issuable upon the exercise of this Warrant shall be changed
into
the same or different number of shares of any class or classes of stock, whether
by capital reorganization, reclassification or otherwise (other than a split,
subdivision or stock dividend provided for in Section 6(a)
above or
a combination of shares provided for in Section 6(b)
above,
or a reorganization, merger or consolidation provided for in Section 6(d)
below,
then and in each such event the Holder shall be entitled to receive upon the
exercise of this Warrant the kind and amount of shares of stock and other
securities and property receivable upon such reorganization, reclassification
or
other change, to which a holder of the number of Warrant Shares issuable upon
the exercise of this Warrant would have received if this Warrant had been
exercised immediately prior to such reorganization, reclassification or other
change, all subject to further adjustment as provided herein.
(d) Merger
or Consolidation.
If at
any time or from time to time there shall be a capital reclassification or
reorganization of the Warrant Shares or a Corporate Transaction (other than
a
subdivision, combination, reclassification or exchange of shares provided for
elsewhere in this Section 6)
of the
Company, then as a part of such reorganization or Corporate Transaction,
adequate provision shall be made so that the Holder shall thereafter be entitled
to receive upon the exercise of this Warrant, the number of shares of stock
or
other securities or property of the Company, resulting from such reorganization,
recapitalization or Corporate Transaction to which a holder of the number of
Warrant Shares issuable upon the exercise of this Warrant would have received
if
this Warrant had been exercised immediately prior to such reorganization or
Corporate Transaction. In any such case, the Company will make appropriate
provision to insure that the provisions of this Section 6(d)
hereof
will thereafter be applicable as nearly as may be in relation to any shares
of
stock or securities thereafter deliverable upon the exercise of this Warrant.
The Company shall not effect any such Corporate Transaction unless prior to
or
simultaneously with the consummation thereof the successor corporation (if
other
than the Company) resulting from such Corporate Transaction or the corporation
purchasing or acquiring such assets or other appropriate corporation or entity
shall assume the obligation to deliver to the Holder, at the last address of
the
Holder appearing on the books of the Company, such shares of stock, securities
or assets as, in accordance with the foregoing provisions, the Holder may be
entitled to purchase, and the other obligations under this Warrant. The
provisions of this paragraph 6(d) shall similarly apply to successive
reorganizations, reclassifications, or Corporate Transactions. Notwithstanding
anything to the contrary contained herein, in the event at least 30 days prior
to the closing of the reorganization or Corporate Transaction the Company
receives the written consent from holders of Offering Warrants outstanding
which
represent the right to purchase eighty-five percent (85%) of the shares of
Common Stock purchasable under the Offering Warrants (the “Offering Warrant
Majority”) that all Offering Warrants shall be cancelled effective as of the
closing of the reorganization or Corporate Transaction, then provided the
Company provides notice to the Holder of this Warrant at least 20 days prior
to
the closing of such reorganization or Corporate Transaction of such approval,
then effective upon the closing of such reorganization or Corporate Transaction,
this Warrant shall be cancelled. For purposes hereof, “Offering Warrants” shall
mean the warrants issued pursuant to offering of up to $10,000,000 of original
instrument pursuant to the CGSI Term Note Purchase Agreement pursuant to which
this form of warrant is attached as an exhibit.
(e) Notice
of Record Dates; Adjustments.
In the
event of a Corporate Transaction, the Company shall provide to the Holder twenty
(20) days advance written Notice of such Corporate Transaction. The Company
shall promptly notify the Holder in writing of each adjustment or readjustment
of the Exercise Price hereunder and the number of Warrant Shares issuable upon
the exercise of this Warrant. Such Notice shall state the adjustment or
readjustment and show in reasonable detail the facts on which that adjustment
or
readjustment is based, as well as whether this Warrant will be cancelable as
specified above.
7. Registration
Rights.
The
Company shall have the right, but not the obligation to seek to register the
shares underlying this Warrant; should the Company elect to do so, the Holder
of
this Warrant as a condition to such registration shall provide such information
as is necessary to effect a registration of the shares. In all events, Holder
shall have the right to effect a cashless exercise of the shares subject to
this
Warrant pursuant to the following process.
(a) Upon
execution of the cashless exercise of the shares subject to this Warrant (the
“Converted Warrant Shares”), the Company shall deliver to the Holder (without
payment by the Holder of any exercise price or any cash or other consideration)
that number of fully paid and nonassessable Warrant Shares computed using the
following formula:
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X = Y (A
- B)
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| A |
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Where:
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X
=
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the
number of shares of Warrant Shares to be delivered to the
Holder;
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Y
=
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the
number of Converted Warrant Shares;
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A
=
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the
fair market value of one Warrant Share on the Conversion Date (as
defined
below); and
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B
=
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the
Exercise Price (as adjusted to the Conversion
Date).
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(b) No
fractional shares shall be issuable upon cashless exercise of the Warrant,
and
if the number of shares to be issued, determined in accordance with the
foregoing formula, is other than a whole number, the Company shall pay to the
Holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as defined below).
(i) Method
of Exercise.
The
Holder may execute the cashless exercise by the surrender of this Warrant at
the
principal office of the Company together with a written statement specifying
that the Holder thereby intends to execute a cashless exercise and indicating
the total number of shares under this Warrant that the Holder is exercising
through the cashless exercise. Such conversion shall be effective upon receipt
by the Company of this Warrant together with the aforesaid written statement,
or
on such later date as is specified therein (the “Conversion Date”). Certificates
for the shares issuable upon execution of the cashless exercise shall be
delivered to the Holder within three business days following the Conversion
Date.
(ii) Determination
of Fair Market Value.
For
purposes of this Section 7,
fair
market value of a Warrant Share on the Conversion Date shall be determined
as
follows:
(1) If
the
Common Stock is traded on a stock exchange or the Nasdaq Stock Market (or a
similar national quotation system), the fair market value of a Warrant Share
shall be deemed to be the average of the closing selling prices of the Common
Stock on the stock exchange or system determined by the Board to be the primary
market for the Common Stock over the ten (10) trading day period ending on
the
date prior to the Conversion Date, as such prices are officially quoted in
the
composite tape of transactions on such exchange or system;
(2) If
the
Common Stock is traded over-the-counter, the fair market value of a Warrant
Share shall be deemed to be the average of the closing bid prices (or, if such
information is available, the closing selling prices) of the Common Stock over
the ten (10) trading day period ending on the date prior to the Conversion
Date,
as such prices are reported by the National Association of Securities Dealers
through its NASDAQ system or any successor system; and
(3) If
there
is no public market for the Common Stock, then the fair market value of a
Warrant Share shall be determined by the board of directors of the Company
in
good faith, and, upon request of the Holder, the Board (or a representative
thereof) shall, as promptly as reasonably practicable but in any event not
later
than 15 days after such request, notify the Holder of the Fair Market Value
per
share of Common Stock.
8. Replacement
of Warrants.
On
receipt by the Company of evidence reasonably satisfactory to the Company of
the
loss, theft, destruction or mutilation of this Warrant and, in the case of
any
such loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company or, in
the
case of any such mutilation, on surrender and cancellation of such Warrant,
the
Company at its expense will execute and deliver to the Holder, in lieu thereof,
a new Warrant of like tenor.
9. No
Rights or Liability as a Stockholder.
This
Warrant does not entitle the Holder hereof to any voting rights or other rights
as a stockholder of the Company. No provisions hereof, in the absence of
affirmative action by the Holder to purchase Warrant Shares, and no enumeration
herein of the rights or privileges of the Holder, shall give rise to any
liability of the Holder as a stockholder of the Company.
10. No
Impairment.
The
Company will not, by amendment of its charter or through reorganization,
consolidation, merger, dissolution, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms
of this Warrant but will at all times carry out all such terms and take all
such
action as may be reasonably necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment, subject to any
amendment or waiver as permitted pursuant to Section
11(e).
11. Miscellaneous.
(a) Transfer
of Warrant.
The
Holder agrees not to make any disposition of this Warrant, the Warrant Shares
or
any rights hereunder without the prior written consent of the Company. Any
such
permitted transfer must be made by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached
hereto as Exhibit B
to any
such permitted transferee. As a condition precedent to such transfer, the
transferee shall sign an investment letter in form and substance satisfactory
to
the Company. Subject to the foregoing, the provisions of this Warrant shall
inure to the benefit of and be binding upon any successor to the Company and
shall extend to any holder hereof.
(b) Titles
and Subtitles.
The
titles and subtitles used in this Warrant are for convenience only and are
not
to be considered in construing or interpreting this Warrant.
(c) Notices.
Any
notice required or permitted to be given to a party pursuant to the provisions
of this Warrant shall be in writing and shall be effective and deemed delivered
to such party under this Warrant on the earliest of the following: (a) the
date
of personal delivery; (b) two (2) business days after transmission by facsimile,
addressed to the other party at its facsimile number, with confirmation of
transmission; (c) four (4) business days after deposit with a return receipt
express courier for United States deliveries; or (d) five (5) business days
after deposit in the United States mail by registered or certified mail (return
receipt requested) for United States deliveries. All notices not delivered
personally or by facsimile will be sent with postage and/or other charges
prepaid and properly addressed to such party at the address set forth on the
signature page hereto, or at such other address as such party may designate
by
ten (10) days advance written notice to the other party hereto. Notices to
the
Company will be marked “Attention: Chief Financial Officer.”
(d) Attorneys’
Fees.
If any
action at law or in equity is necessary to enforce or interpret the terms of
this Warrant, the prevailing party shall be entitled to reasonable attorneys’
fees, costs and disbursements in addition to any other relief to which such
party may be entitled.
(e) Amendments
and Waivers.
Any
term of this Warrant may be amended and the observance of any term of this
Warrant may be waived (either generally or in a particular instance and either
retroactively or prospectively) with the written consent of either: (i) the
Holder and the Company; or (ii) the Offering Warrant Majority and the Company.
Any amendment or waiver effected in accordance with this Section 11(e)
shall be
binding upon the Holder of this Warrant (and of any securities into which this
Warrant is convertible), each future holder of all such securities, and the
Company.
(f) Severability.
If one
or more provisions of this Warrant are held to be unenforceable under applicable
law, such provision shall be excluded from this Warrant and the balance of
the
Warrant shall be interpreted as if such provision were so excluded and shall
be
enforceable in accordance with its terms.
(g) Governing
Law.
This
Warrant shall be governed by and construed and enforced in accordance with
the
laws of the State of Illinois, without giving effect to its conflicts of laws
principles.
(h) Counterparts.
This
Warrant may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
[REMAINDER
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IN
WITNESS WHEREOF, the Company has caused this CGSI Term Note Warrant to be
executed by its duly authorized officer as of the date first written
above.
| CAPITAL GROWTH SYSTEMS, INC. | |||||
| By: |
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| Name: |
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| Title: |
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| HOLDER NAME: | |||||
| Address: |
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