Unassociated Document


     

    
      Exhibit
        10.5

       

    CONSENT,
      WAIVER, AMENDMENT AND EXCHANGE AGREEMENT

     

    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
      “Archer
      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
      (“Archer”),
      Archer 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 (“Archer
      Note”)
      (the
      issuance of the Archer Note pursuant to the Archer Agreement is hereafter
      referred to as the “ Archer
      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 Archer 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 Archer Financing and agrees that
      such restrictions shall not apply to the issuance of the Archer Note pursuant
      to
      the Archer 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 Salzwedel 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 Hudson Bay Overseas Fund,
      Ltd. (“HBOF”)
      and
      Hudson Bay Fund, L.P. (“HBF”,
      and
      together with HBOF, collectively, “Hudson 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 Hudson Bay, the Company agrees to issue, and Hudson Bay agrees to
      accept, in exchange for Hudson Bays’ respective Debentures and in full
      satisfaction of any legal fee reimbursement owing to Hudson 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 “Hudson
      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 Hudson 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 Hudson Bay Amended and Restated Debentures are being issued
      in
      substitution for and not in satisfaction of Hudson Bay’s March Debentures,
      provided, however, Hudson Bay acknowledges and agrees that upon the issuance
      and
      acceptance of the certificate evidencing the Hudson 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 Hudson 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 Hudson 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 Hudson 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 Hudson 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 Hudson 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 Archer 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 Archer
      Intercreditor Agreement, and otherwise in the same form of such Holder’s Amended
      and Restated March Debenture.

     

    (e) Certain
      Permitted Payments under the Archer Intercreditor Agreement.
      In
      connection with “Permitted Payments” (as defined in the Archer 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 Archer 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 Hudson Bay Amended and
      Restated March Debentures.
      The
      Amended and Restated Debentures March Debentures and the Hudson 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 Hudson 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 Hudson 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). 

     


    
      
        
        

      

      
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    (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 Hudson 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 Hudson 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 Hudson 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 Hudson
      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 Hudson
      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 Hudson 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 Hudson 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 Hudson
      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 Archer 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 Archer 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 Hudson Bay Amended and Restated March Debentures, the
      Intercreditor Agreement, all material agreements under the Archer 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 Hudson Bay Amended and Restated March Debentures for Hudson 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 Hudson 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:_____________________________________________