CONSENT, WAIVER, AMENDMENT AND EXCHANGE AGREEMENT
Exhibit
10.5
THIS
CONSENT, WAIVER, AMENDMENT AND EXCHANGE AGREEMENT (the“Agreement”),
dated
as
of November ___, 2008, is entered into by and among Capital Growth Systems,
Inc., a Florida corporation (the “Company”),
and
the persons identified as “Holders” on the signature pages hereto (the
“Holders”).
Defined terms not otherwise defined herein shall have the meanings set forth
in
the March Purchase Agreement (as defined below).
WHEREAS,
pursuant
to a Securities
Purchase Agreement, dated March 11, 2008 (the “March
Purchase Agreement”),
among
the Company and the Holders, the Holders purchased from the Company an aggregate
of $19,000,000 in principal amount of Variable Rate Secured Convertible
Debentures of the Company (the “March
Debentures”)
and
were issued warrants exercisable for shares of Common Stock (the “March
Warrants”);
WHEREAS,
pursuant to a Securities Purchase Agreement of even date herewith in the form
attached as Exhibit
A
hereto
(the “New
Purchase Agreement”)
among
the Company and the purchasers identified on the signature pages thereto
(collectively, the “New
Investors”),
the
New Investors will be purchasing $14,891,250 in aggregate principal amount
of
Original Issue Discount Secured Convertible Debentures due, subject to the
terms
therein, due in 364 days and subject to automatic extension upon the final
closing of the Company’s acquisition of beneficial ownership of Vanco Direct
USA, LLC (“VDUL,”
with
the final closing being the “Final
Closing”)
to
seven years from their issuance date (the “New
Debentures”
together with warrants to purchase shares of Common Stock (the offer and sale
of
such New Debentures and warrants pursuant to the New Purchase Agreement are
hereafter referred to as the “New
Financing”);
and
WHEREAS,
pursuant to a Loan and Security Agreement by and among the Company and its
Subsidiaries and ACF CGS, L.L.C. as Agent for itself and/or other lenders (the
“▇▇▇▇▇▇
Agreement”)
of
even date herewith in the form attached as Exhibit
B
hereto
among the Company and the investor identified on the signature pages thereto
(“▇▇▇▇▇▇”),
▇▇▇▇▇▇ will be lending the Company $8,500,000 pursuant to a secured promissory
note due 364 days from issuance but subject to automatic extension as of the
Final Closing to 24 months following its issuance (“▇▇▇▇▇▇
Note”)
(the
issuance of the ▇▇▇▇▇▇ Note pursuant to the ▇▇▇▇▇▇ Agreement is hereafter
referred to as the “ ▇▇▇▇▇▇
Financing”);
NOW
THEREFORE,
for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, each Holder hereby agrees as follows:
1. Waivers.
Subject
to the terms and conditions hereunder, each Holder hereby waives compliance
with
the Company’s obligation to provide, and the Holder’s right to receive, notice
of the New Financing in accordance with the time frames set forth in Section
4.12(b) of the March Purchase Agreement (it being understood that the waiver
in
this sentence shall in no way limit a Holder’s right to participate in such New
Financing as set forth in Section 4.12 of the March Purchase Agreement), and
each Holder hereby waives its right under Section 4.12 of the March Purchase
Agreement to participate in the ▇▇▇▇▇▇ Financing. In addition, subject to the
terms and conditions hereunder, each Holder hereby waives the restrictions
set
forth in Sections 4.13(a) of the March Purchase Agreement and Sections 7(a)
and
7(b) of the March Debentures with respect to the New Financing and agrees that
such restrictions shall not apply to the issuance of the New Debentures pursuant
to the New Financing. Further, subject to the terms and conditions hereunder,
each Holder hereby waives the restrictions set forth in Sections 7(a) and 7(b)
of the March Debentures with respect to the ▇▇▇▇▇▇ Financing and agrees that
such restrictions shall not apply to the issuance of the ▇▇▇▇▇▇ Note pursuant
to
the ▇▇▇▇▇▇ Financing. In addition, subject to the terms and conditions
hereunder, each Holder hereby waives the restrictions set forth in Section
7(a)
of the March Debentures with respect to the issuance of the Administrator
Debenture (as defined in the New Purchase Agreement). Lastly, subject to the
terms hereunder, each Holder hereby waives the restrictions set forth in Section
4.13(a) of the March Purchase Agreement with respect to (i) the issuance of
2,000,000 shares of Common Stock and warrants to purchase 15,000,000 shares
of
Common Stock to ▇▇▇▇▇▇▇▇▇ Financial Communications, Inc., (ii) warrants to
purchase 1,500,000 shares of Common Stock to Aequitas Capital Management, Inc.
and (iii) warrants to the placement agent for the New Financing to purchase
that
number of shares that would be purchasable with 7% of the cash investments
(or
cash equivalent value) from the New Financing, each as descried on the
Disclosure Schedules to the New Purchase Agreement.
2.
Amendments
and other Agreements.
(a)
Amended
and Restated March Debentures.
(i) The
Company hereby agrees to issue each Holder other than ▇▇▇▇▇▇ Bay Overseas Fund,
Ltd. (“HBOF”)
and
▇▇▇▇▇▇ Bay Fund, L.P. (“HBF”,
and
together with HBOF, collectively, “▇▇▇▇▇▇ Bay”), in exchange for such
purchaser’s March Debenture, an amended and restated debenture, in the form of
Exhibit
C
attached
hereto (the “Amended
and Restated March Debenture(s)”)
with a
principal amount equal to the principal amount of such Holder’s current March
Debenture multiplied by 1.77 minus any interest paid thereon through the date
hereof. The individual principal amounts of the Amended and Restated March
Debentures are as set forth on Schedule
A
attached
hereto. Other than as amended thereunder, the rights and obligations of the
Holders and of the Company with respect to the Amended and Restated March
Debentures shall be identical in all respects to the rights and obligations
of
the Holders and of the Company with respect to the March Debentures and the
Underlying Shares issued and issuable pursuant to the Purchase Agreement,
subject to the understanding that the Company shall have the right to effect
the
Amendment within 75 days following the date of New Purchase Agreement, to the
extent that it presently has not reserved sufficient authorized Common Stock
underlying the Amended and Restated March Debentures due to the reset in the
conversion price for the Amended and Restated March Debentures to $0.24 per
share. For clarity, the March Purchase Agreement and all Transaction Documents
thereunder are hereby amended so that the term “Debentures” includes the Amended
and Restated March Debentures and the term “Underlying Shares” includes the
shares of Common Stock issuable upon conversion and redemption thereof, and
the
term “Transaction Documents” shall be amended to include this Agreement. The
Amended and Restated March Debentures are being issued in substitution for
and
not in satisfaction of the March Debentures, provided, however, the Holder
acknowledges and agrees that upon the issuance and acceptance of the certificate
evidencing its Amended and Restated March Debenture issued pursuant to this
Section, the original certificate evidencing its March Debenture will be deemed
cancelled.
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(ii) With
respect to ▇▇▇▇▇▇ Bay, the Company agrees to issue, and ▇▇▇▇▇▇ Bay agrees to
accept, in exchange for ▇▇▇▇▇▇ Bays’ respective Debentures and in full
satisfaction of any legal fee reimbursement owing to ▇▇▇▇▇▇ Bay and all
liquidated damages due and which may become due under the Registration Rights
Agreement, the amended and restated debentures in the form attached as
Exhibit
C-2
attached
hereto (the “▇▇▇▇▇▇
Bay Amended and Restated March Debentures”),
having
principal amounts set forth on Schedule
A
attached
hereto, which shall also be deemed to constitute Amended and Restated March
Debentures for all purposes hereof, but shall have the differing economic rights
as set forth below in Section 2(a)(iii). For clarity, the term “Debentures” in
all of the Transaction Documents shall mean both the Amended and Restated March
Debentures and the ▇▇▇▇▇▇ Bay Amended and Restated March Debentures. All of
the
Holders hereby consent to the amendments to the Debentures set forth on the
Amended and Restated Debentures attached hereto as Exhibits C-1 and C-2,
respectively. The ▇▇▇▇▇▇ Bay Amended and Restated Debentures are being issued
in
substitution for and not in satisfaction of ▇▇▇▇▇▇ Bay’s March Debentures,
provided, however, ▇▇▇▇▇▇ Bay acknowledges and agrees that upon the issuance
and
acceptance of the certificate evidencing the ▇▇▇▇▇▇ Bay Amended and Restated
Debentures issued pursuant to this Section, the original certificate evidencing
its March Debenture will be deemed cancelled.
(iii) Interest.
All interest with respect to the ▇▇▇▇▇▇ Bay Amended and Restated March
Debentures (including any future make whole payments that may be due thereunder)
shall be satisfied in full with the payment of a cash sum equal to the sum
of
$915,202.59 (allocated pro rata among HBOF and HBO based upon the respective
outstanding principal amounts of their respective March Debentures immediately
preceding the date hereof), which sum reflects the remaining unpaid interest
and
make whole amount of the March Debentures, after giving effect to all prior
payments of interest or make whole payments by the Company, and all liquidated
damages due and which may become due under the Registration Rights Agreement
(including for failure of the Company to register the shares of Common Stock
underlying the ▇▇▇▇▇▇ Bay Amended and Restated March Debentures and the warrants
issued to them under the March Purchase Agreement, but excluding any liquidated
damages which may become due pursuant to Section 4 hereunder) shall be satisfied
with the issuance of the ▇▇▇▇▇▇ Bay Amended and Restated March
Debentures.
(b) Amendments
to the March Purchase Agreement.
(i) The
term
“Exempt Issuance” in the March Purchase Agreement is hereby amended to add the
following: shares of Common Stock issued and issuable with respect to the
redemption of the Amended and Restated March Debentures, the ▇▇▇▇▇▇ Bay Amended
and Restated March Debentures and the New Debentures or payment of any
liquidated damages with respect to the Amended and Restated March Debentures,
the ▇▇▇▇▇▇ Bay Amended and Restated March Debentures and the New Debentures,
the
New Purchase Agreement and the warrants issued pursuant to the New Purchase
Agreement in each case pursuant to the terms thereof as in effect on the date
of
the New Purchase Agreement.
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(ii) The
following is added as new Section 4.18 of the March Purchase
Agreement:
“Notwithstanding
anything to the contrary contained herein or in any Transaction Document, if
at
any time prior to the Senior Creditor Repayment (as defined in that certain
subordination agreement among the Company, its Subsidiaries, the Purchasers,
and
ACF CGS, LLC and the other investors signatory thereto) the Company is
prohibited from paying, and the Purchasers are prohibited from receiving, cash
payments of liquidated damages pursuant to any Transaction Document, at the
option of each Purchaser on written notice to the Company, such amounts
otherwise payable in cash under such Transaction Documents shall either accrue,
or be payable in the form of shares of Common Stock. The price at which shares
of Common Stock issuable in lieu of the cash payment of liquidated damages
under
the Transaction Documents shall be equal to the least of (x) 90% of the average
of the 10 consecutive VWAPs immediately prior to the date such liquidated
damages become due, (y) 90% of the average of the 10 consecutive VWAPs
immediately prior to the date such shares are actually issued, and (z) the
then
applicable Conversion Price.
(c) Consent
to Certain Prior Acts.
To the extent not previously executed and delivered, each Holder agrees to
execute the waivers attached hereto as Exhibits
D-1 and D-2 with
respect to (i) $500,000 bridge loan transaction with Aequitas Catalyst Fund,
LLC
and (ii) the
restatement of the Company’s financial statements as evidenced by its 2008 Form
8-K filing made prior to the date hereof.
(d) Removal
of Subordination Legend.
Following the Senior Creditor Repayment (as defined in the ▇▇▇▇▇▇ Intercreditor
Agreement), within 3 Business Days of a written request from any Holder, the
Company hereby agrees to issue such Holder a replacement Amended and Restated
March Debenture, without the restrictive legend referencing the ▇▇▇▇▇▇
Intercreditor Agreement, and otherwise in the same form of such Holder’s Amended
and Restated March Debenture.
(e) Certain
Permitted Payments under the ▇▇▇▇▇▇ Intercreditor Agreement.
In
connection with “Permitted Payments” (as defined in the ▇▇▇▇▇▇ Intercreditor
Agreement) pursuant to Section 2(c)(iv) thereunder, no
less than ten (10) days prior to the due date of the applicable Quarterly
Redemption Amounts (as defined in the Amended and Restated March Debentures)
as
described in such Section, the Company agrees to deliver each Holder a written
certification of compliance with the financial covenants under the ▇▇▇▇▇▇ Loan
Agreement for the month prior to the date such Quartlery Redemption Amount
is
due, and, if requested in writing by a Holder and subject to Section 4.8 of
the
March Purchase Agreement, calculations in reasonable detail evidencing
compliance with such financial covenants.
3. Representations
and Warranties.
The
Company hereby makes to the Holders the following representations and
warranties:
(a) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith. This Agreement has
been duly executed by the Company and, when delivered in accordance with the
terms hereof will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may
be
limited by applicable law.
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(b) No
Conflicts.
The
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby do not
and
will not: (i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become
a
default) under, result in the creation of any Lien upon any of the properties
or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any material agreement, credit facility, debt or
other material instrument (evidencing a Company or Subsidiary debt or otherwise)
or other material understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction
of
any court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations), or by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not have
or
reasonably be expected to result in a Material Adverse Effect.
(c) Issuance
of the Amended and Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended and
Restated March Debentures.
The
Amended and Restated Debentures March Debentures and the ▇▇▇▇▇▇ Bay Amended
and
Restated March Debentures are duly authorized and, upon the execution of this
Agreement by the Holders will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The
Underlying Shares, when issued in accordance with the terms of the Amended
and
Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended and Restated March
Debentures, as applicable, will be validly issued, fully paid and nonassessable,
free and clear of all Liens imposed by the Company. The Company has reserved
from its duly authorized capital stock a number of shares of Common Stock for
issuance of the Underlying Shares sufficient for the conversion in full of
the
Amended and Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended and Restated
March Debentures prior to giving effect to the reset provision contained
therein, and the Company covenants to authorize a sufficient number of its
shares of Common Stock by way of amendment to its articles of incorporation
no
later than 75 days following the date hereof (subject to extension as may be
agreed to by the Holders of a majority of the outstanding principal amount
of
the Amended and Restated March Debentures).
5
(d) Equal
Consideration.
No
consideration has been offered or paid to any person to amend or consent to
a
waiver, modification, forbearance or otherwise of any provision of any of the
Transaction Documents.
(e) Survival
and Bring Down.
All of
the Company’s warranties and representations contained in this Agreement shall
survive the execution, delivery and acceptance of this Agreement by the parties
hereto. The Company expressly reaffirms that, except as set forth in the
Disclosure Schedules to the New Purchase Agreement, each of the representations
and warranties set forth in the March Purchase Agreement, continues to be true,
accurate and complete, and the Company hereby remake and incorporate herein
by
reference each such representation and warranty as though made on the date
of
this Agreement.
(f) Holding
Period for Amended and Restated Debentures.
Pursuant
to Rule 144, the holding period of the Amended and Restated March Debentures
and
the ▇▇▇▇▇▇ Bay Amended and Restated March Debentures (and Underlying Shares
issuable upon conversion and redemption thereof) shall tack back to the original
issue date of the March Debentures. The
Company agrees not to take a position contrary to this Section 3(f). The Company
agrees to take all actions, including, without limitation, the issuance by
its
legal counsel of any necessary legal opinions (which may be satisfied pursuant
to Section 5), necessary to issue to the Amended
and Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended and Restated March
Debentures (and Underlying Shares issuable upon conversion and redemption
thereof) without
restriction and not containing any restrictive legend without the need for
any
action by the Holder.
(g) No
Novation.
The
Amended and Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended and Restated
March Debentures are being issued in substitution for and not in satisfaction
of
the March Debentures. The Amended and Restated March Debentures and the ▇▇▇▇▇▇
Bay Amended and Restated March Debentures shall not constitute a novation or
satisfaction and accord of any of the March Debentures. The Company hereby
acknowledges
and agrees that the Amended and Restated March Debentures and the ▇▇▇▇▇▇
Bay Amended and Restated March Debentures shall
amend, restate, modify, extend, renew and continue the terms and provisions
contained in the March Debentures and shall not extinguish or release the
Company or any of its Subsidiaries under any Transaction Document (as defined
in
the March Purchase Agreement) or otherwise constitute a novation of its
obligations thereunder.
(h) No
Event of Default.
The
Company represents and warrants to each Holder that after giving effect to
the
terms of the waivers contemplated in this Agreement, no Event of Default (as
defined in the Amended and Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended
and Restated March Debentures, as applicable) shall have occurred and be
continuing as of the date hereof.
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4. Public
Information Failure Payments.
As a
result of the changes made to Rule 144 promulgated under the Securities Act
of
1933, as amended (the “Securities
Act”)
which
are effective February 15, 2008, the Company's obligations, pursuant to the
Registration Rights Agreement, by and among the Company and each of the
undersigned (the “Registration
Rights Agreement”),
to
register the shares of Common Stock issuable upon conversion and/or exercise
of
the (i) Amended and Restated March Debentures and the ▇▇▇▇▇▇ Bay Amended and
Restated March Debentures, including shares of Common Stock issued in lieu
of
cash redemptions thereunder, and (ii) the March Warrants (collectively, the
“144
Eligible Securities”),
are
hereby suspended, so long as (a) the Company is in compliance with the current
public information requirement under Rule 144 and (b) the Holder may sell the
144 Eligible Securities without any restriction or limitation under Rule 144
as
of that date. In connection with the foregoing, the Company hereby covenants
and
agrees that at any time during the period commencing on the date hereof and
ending at such time that all of the Underlying Shares can be sold without the
requirement that adequate public information with respect to the Company be
available as set forth in Rule 144(c)(1) and otherwise without restriction
or
limitation pursuant to Rule 144, if the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c)(1) and
such
failure exceeds the extension period afforded to the Company under Rule 12b-25
of the Exchange Act to file a report that is not filed within the time period
prescribed for such report, provided the Company timely files a Form 12b-25
with
the Commission (any such failure being referred to as a “Public
Information Failure”
and
the
Business Day immediately following the extension period afforded by Rule 12b-25
being referred to as the “Public
Information Failure Date”),
then,
as partial relief for the damages to the Holder by reason of any such delay
in
or reduction of its ability to sell the Underlying Shares (which remedy shall
not be exclusive of any other remedies available at law or in equity), the
Company shall pay to each such holder an amount in cash equal to two percent
(2.0%) of the aggregate purchase price paid by such holder under each of the
Purchase Agreement for any Securities then held by such holder on the Public
Information Failure Date and on every thirtieth day (pro rated for periods
totaling less than thirty days) thereafter until the earlier of (y) the date
such Public Information Failure is cured and (z) such date that the public
information requirement set forth in Rule 144(c)(1) is no longer required
pursuant to Rule 144. The foregoing payments to which a holder shall be entitled
are referred to herein as “Public
Information Failure Payments.”
Public
Information Failure Payments shall be paid on the earlier of (I) the last day
of
the calendar month during which such Public Information Failure Payments are
incurred and (II) the third Business Day after the event or failure giving
rise
to the Public Information Failure Payments is cured. In the event the Company
fails to make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at the rate of 1.5%
per
month (prorated for partial months) until paid in full.
5. Legal
Opinion.
The
Company hereby agrees to cause its legal counsel to issue a legal opinion to
the
undersigned Holders and the Company’s Transfer Agent regarding this Agreement
and the transactions contemplated hereby, in form and substance reasonably
acceptable to the Purchasers, including an opinion that the 144 Eligible
Securities may be sold pursuant to Rule 144 without volume restrictions or
manner of sale limitations as of September 11, 2008 and that certificates
representing the 144 Eligible Securities issuable upon conversion of the Amended
and Restated March Debentures or a “cashless exercise” of the Warrants may be
issued without a restrictive legend as required pursuant to Section 4.1 of
the
March Purchase Agreement.
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6. Withdrawal
of Registration Statement.
Subject
to the terms and conditions set forth herein, the Holders hereby agree that
the
Company can withdraw the registration statement filed pursuant to the
Registration Rights Agreement, and agree that the Company shall not be required
to file or maintain the effectiveness with respect to any Underlying Shares
that
are eligible for resale without volume or manner-of-sale restrictions so long
as
the Company is in compliance with the current public information requirements
pursuant to Rule 144. As of the date hereof the Company satisfies the current
public information requirement under Rule 144(c)(1).
7. Confirmation
of Dilution Adjustment.
In
connection with the issuance of the securities in the New Financing, the
Conversion Price of the Amended and Restated March Debentures and the ▇▇▇▇▇▇
Bay
Amended and Restated March Debentures has been reduced to $0.24, subject to
further adjustment therein, and the exercise price of the March Warrants has
been reduced to $0.24, and the number of shares underlying the March Warrants
has been increased in the individual amounts set forth on Schedule
B
attached
hereto, each subject to further adjustment pursuant to the March
Warrants.
8. Conversion
Between Signing and Closing.
In the
event a Holder wishes to convert its March Debentures between the date hereof
and the Closing Date (as defined in Section 9(a)), the Company shall convert
the
March Debentures pursuant to its existing terms of the March Debentures without
giving effect to the terms of this Agreement, such that the aggregate principal
amount subject to the exchange set forth in Sections 2(a)(i) and 2(a)(ii),
as
applicable, shall be reduced by the amount of such conversion.
9. Miscellaneous.
(a) The
foregoing waivers shall not be effective unless and until: (i) all Holders
shall
have agreed to the terms and conditions hereunder, (ii) the New Investors and
all of the Holders execute and deliver an Intercreditor Agreement in the Form
of
Exhibit
C
attached
hereto, (iii) the Holders, the New Investors and ▇▇▇▇▇▇ execute and deliver
an
Intercreditor Agreement in the Form of Exhibit
D
attached
hereto and (iv) the Administrator (as defined in the New Purchase Agreement),
the Company and its subsidiaries executed and deliver a subordination and
intercreditor agreement in the Form of Exhibit
E
attached
hereto. The waivers, agreements and obligations of the Holders set forth herein
shall be null and void in the event the New Financing and the ▇▇▇▇▇▇ Financing
are not consummated on or before November 21, 2008 and the Company files a
Current Report on Form 8-K with respect thereto by November 24, 2008. In
addition, the respective obligations, amendments, agreements and waivers of
the
Holders hereunder are subject to the following conditions being met: (a) the
accuracy in all material respects of the representations and warranties of
the
Company contained herein (except
for those representations and warranties that are qualified by materiality
or
Material Adverse Effect, which shall be true and correct in all
respects)
and (b)
the performance by the Company of all if its obligations, covenants and
agreements required to be performed hereunder. Except as expressly set forth
above, all of the terms and conditions of the Transaction Documents shall
continue in full force and effect after the execution of this Agreement and
shall not be in any way changed, modified or superseded by the terms set forth
herein. The Company shall, on or before 8:30 AM (NY time) on the 1st
Trading
Day following the date hereof, issue a Current Report on Form 8-K, reasonably
acceptable to the Holders, disclosing the material terms of the transactions
contemplated hereby, and shall attach this Agreement and all other related
agreements thereto, including, without limitation, the Amended and Restated
March Debentures, the ▇▇▇▇▇▇ Bay Amended and Restated March Debentures, the
Intercreditor Agreement, all material agreements under the ▇▇▇▇▇▇ Financing and
all “Transaction Documents” (as defined in the New Purchase Agreement (the
“8-K
Filing”).
From
and after the filing of the 8-K Filing with the Commission, the Holder shall
not
be in possession of any material, nonpublic information received from the
Company, any of its Subsidiaries or any of their respective officers, directors,
employees or agents, that is not disclosed in the 8-K Filing. The
Company shall consult with the Holders in issuing any other press releases
with
respect to the transactions contemplated hereby.
8
(b) This
Agreement may be executed in two or more counterparts and by facsimile signature
or otherwise, and each of such counterparts shall be deemed an original and
all
of such counterparts together shall constitute one and the same
agreement.
(c) The
Company has elected to provide all Holders with the same terms and form of
agreement for the convenience of the Company and not because it was required
or
requested to do so by the Holders. The obligations of each Holder under this
Agreement, and any Transaction Document are several and not joint with the
obligations of any other Holder, and no Holder shall be responsible in any
way
for the performance or non-performance of the obligations of any other Holder
under this Agreement or any Transaction Document. Nothing contained herein
or in
any Transaction Document, and no action taken by any Holder pursuant thereto,
shall be deemed to constitute the Holders as a partnership, an association,
a
joint venture or any other kind of entity, or create a presumption that the
Holders are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement or the
Transaction Documents. Each Holder shall be entitled to independently protect
and enforce its rights, including without limitation, the rights arising out
of
this Agreement or out of the other Transaction Documents, and it shall not
be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose. Each Holder has been represented by its own
separate legal counsel in their review and negotiation of this Agreement and
the
Transaction Documents.
(d) Except
as
set forth in the Transaction Documents (as defined in the New Purchase
Agreement) and except for $43,325 that will be added to the principal amount
of
the ▇▇▇▇▇▇ Bay Amended and Restated March Debentures for ▇▇▇▇▇▇ Bay’s legal fees
and expenses, each party shall pay the fees and expenses of its advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party incident to the negotiation, preparation, execution, delivery
and
performance of this Agreement. The Company shall pay all stamp and other taxes
and duties levied in connection with the issuance of the Amended and Restated
March Debentures and the ▇▇▇▇▇▇ Bay Amended and Restated March
Debentures.
9
(e) If
any
provision of this Agreement is prohibited by law or otherwise determined to
be
invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does
not
substantially impair the respective expectations or reciprocal obligations
of
the parties or the practical realization of the benefits that would otherwise
be
conferred upon the parties. The parties will endeavor in good faith negotiations
to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the
prohibited, invalid or unenforceable provision(s).
10
IN
WITNESS WHEREOF, this Agreement is executed as of the date first set forth
above.
CAPITAL
GROWTH SYSTEMS, INC.
By:_____________________________________
Name:
Title:
[signature
page(s) of Holders to follow]
11
COUNTERPART
SIGNATURE PAGE
OF
HOLDER
TO
AMENDMENT
AGREEMENT
AMONG
CAPITAL GROWTH SYSTEMS, INC. AND
THE
HOLDERS THEREUNDER
Name
of
Holder:___________________________________
By:______________________________________________
Name:____________________________________________
Title:_____________________________________________