PLACEMENT
      AGENCY AGREEMENT

     

    November
      14, 2006

     

    National
      Securities Corporation

    875
      N.
      Michigan Avenue, Suite 1560

    Chicago,
      IL 60611

     

    
      	 	
              Re:

            	
              Capital
                Growth Systems, Inc.

            


    

     

    Ladies
      and Gentlemen:

     

    This
      Placement Agency Agreement ("Agreement") sets forth the terms upon which
      National Securities Corporation, a Washington corporation, registered
      broker-dealer and a member of the National Association of Securities Dealers,
      Inc. ("NASD") (together with its dealers, the “Placement Agent”), shall be
      engaged by Capital Growth Systems, Inc., a Florida corporation (“Capital Growth”
or the “Company”), to act as exclusive Placement Agent in connection with the
      private placement (the “Offering”) of a minimum of 100 units ($10,000,000) (the
“Minimum Amount”) and a maximum of 150 units ($15,000,000) (the “Maximum
      Amount”). Each unit (a “Unit”) shall consist of (i) 100 Shares of Series AA
      Preferred Stock (the “Series AA Preferred Stock” or the “Shares”)
      (ii) a
      warrant (the “$0.45 Warrant”) to purchase 50 shares of Series AA Preferred Stock
      at an exercise price of $1,000 per share, exercisable on or before December
      31,
      2008 and exercisable as described below on an as-converted to Common Stock
      price
      of $0.45 per share and (iii) a warrant (the “$0.65 Warrant” - together with the
      $0.45 Warrant, collectively referred to as the “Warrants”) to purchase 50 shares
      of Series AA Preferred Stock, at an exercise price of $1,444.43 per share,
      exercisable on or before December 31, 2009 and exercisable as described below
      on
      an as-converted to Common Stock price of $0.65 per share (subject to possible
      extension of the exercise periods of the Warrants in certain circumstances
      as
      described in the Memorandum).  Each share of Series AA Preferred Stock is
      convertible into 2,222.2 shares of common stock, $0.0001 par value per share
      (the “Common Stock”) of the Company (an effective price of $0.45 per share of
      Common Stock) and shall automatically convert into such number of shares of
      Common Stock upon the filing of an Amendment to the Articles of Incorporation
      of
      the Company (“Charter Amendment”) authorizing the issuance of not less than
      200,000,000 shares of Common Stock. Each $0.45 Warrant issued per Unit shall,
      upon the filing of the Charter Amendment, provide the holder with the right
      to
      acquire up to 111,111.1 shares of Common Stock at an exercise price of $0.45
      per
      share.   Each $0.65 Warrant issued per Unit shall, upon the filing of
      the Charter Amendment, provide the holder with the right to acquire up to
      111,111.1 shares of Common Stock at an exercise price of $0.65 per share. The
      Company has also commenced an interim offering of convertible promissory notes,
      bearing interest at 8% per annum, which by their terms shall convert into the
      securities issued by the Company on the terms of its next equity placement.
      All
      of such notes will upon the first closing of the Private Placement be converted
      into Units and applied toward satisfaction of the Minimum Amount; similarly,
      any
      other outstanding debt securities which convert to Units on a discretionary
      basis by such holders will be applied toward satisfaction of the Minimum Amount
      (all of such notes or other debt securities are hereinafter sometimes
      collectively referred to as the “Converting Debt Securities”). 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    The
      minimum investment will be one Unit ($100,000); provided, however, that
      subscriptions in lesser amounts may be accepted in the Company’s and Placement
      Agent’s discretion. The Placement Agent shall not tender to the Company
      subscriptions for any persons or entities who do not qualify as “accredited
      investors,” as such term is defined in Rule 501 of Regulation D (“Regulation D”)
      as promulgated under Section 4(2) of the Securities Act of 1933, as amended
      (the
“Act”). The Units will be offered until the earlier of the time that all Units
      offered in the Offering are sold or January 25, 2007 (“Initial Offering
      Period”), which date may be extended by the Company and the Placement Agent to a
      date not later than April 10, 2007 (this additional period and the Initial
      Offering Period shall be referred to as the “Offering Period”). The date on
      which the Offering is terminated shall be referred to as the “Termination
      Date.”

     

    With
      respect to the Offering, the Company shall provide the Placement Agent, on
      terms
      set forth herein, the right to offer and sell all of the Units being offered.
      It
      is understood that no sale shall be regarded as effective unless and until
      accepted by the Company. The Company may, in its sole discretion, accept or
      reject in whole or in part any prospective investment in the Units or allot
      to
      any prospective subscriber less than the number of Units that such subscriber
      desires to purchase. Purchases of Units may be made by the Placement Agent
      and
      its officers, directors, employees and affiliates. All such purchases, together
      with purchases by officers, directors, employees and affiliates of the Company,
      may be used to satisfy the Minimum Amount if the Minimum Amount has not been
      subscribed for on or before the end of the Offering Period.

     

    The
      Offering will be made by the Company solely pursuant to the Memorandum, which
      at
      all times will be in form and substance reasonably acceptable to the Company,
      the Placement Agent and their respective counsel and contain such legends and
      other information as the Company, the Placement Agent and their respective
      counsel may, from time to time, deem necessary and desirable to be set forth
      therein. “Memorandum” as used in this Agreement means the Company’s Confidential
      Private Placement Memorandum dated November 14, 2006, inclusive of all annexes,
      and all amendments, supplements and appendices thereto.

     

    1.  Appointment
      of Placement Agent.
      On the
      basis of the representations and warranties provided herein, and subject to
      the
      terms and conditions set forth herein, the Placement Agent is appointed as
      the
      exclusive agent of the Company during the Offering Period to assist the Company
      in finding qualified subscribers for the Offering. The Placement Agent may
      sell
      Units through other broker-dealers that it selects who are NASD members and
      may
      reallow all or a portion of the compensation it receives hereunder to such
      other
      broker-dealers. On the basis of such representations and warranties and subject
      to such terms and conditions, the Placement Agent hereby accepts such
      appointment and agrees to perform its services hereunder in a professional
      and
      businesslike manner and to use its reasonable efforts to assist the Company
      in
      finding subscribers of Units who qualify as “accredited investors,” as such term
      is defined in Rule 501 of Regulation D and to complete the Offering. The
      Placement Agent has no obligation to purchase any of the Units. Unless sooner
      terminated in accordance with this Agreement, the engagement of the Placement
      Agent hereunder shall continue until the later of the Termination Date or the
      Final Closing (as defined below).

     

    2.  Representations
      and Warranties.
      The
      representations and warranties contained in this Section 2
      are true
      and correct as of the date of this Agreement, except as set forth in the
      disclosure schedule attached hereto as Schedule 1.
      

     

    
      
        
        

      

      
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    (a)  Capital
      Growth is a corporation duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation. Capital Growth is
      duly
      qualified to transact business as a foreign corporation and is in good standing
      under the laws of each jurisdiction where the location of its properties or
      the
      conduct of its business makes such qualification necessary, except where the
      failure to be so qualified would not, or could not reasonably be expected to,
      have a material adverse effect on the (i) assets, liabilities, results of
      operations, condition (financial or otherwise), business or business prospects
      of Capital Growth and the Subsidiaries (as hereinafter defined), taken as a
      whole or (ii) ability of Capital Growth to perform its obligations under this
      Agreement (hereinafter referred to as a “Material Adverse Effect”). Capital
      Growth does not directly or indirectly control or own any interest in any other
      corporation, partnership, joint venture or other business association or entity
      (a “Subsidiary”), other than those listed in Schedule 1.
      Except
      as disclosed in Schedule 1,
      Capital
      Growth owns, directly or indirectly, all of the capital stock of each Subsidiary
      free and clear of any lien, charge, claim, security interest, encumbrance,
      right
      of first refusal or other restriction (collectively, “Liens”), and all the
      issued and outstanding shares of capital stock of each Subsidiary are validly
      issued and are fully paid, non-assessable and free of preemptive and similar
      rights. 

     

    (b)  Each
      of
      Capital Growth and its Subsidiaries have requisite corporate power and authority
      to conduct their respective businesses as presently conducted and as proposed
      to
      be conducted. Capital Growth has all requisite corporate power and authority
      to
      enter into and perform its obligations under this Agreement and, immediately
      prior to the Initial Closing (as hereinafter defined), the other agreements
      contemplated hereby and by the Memorandum (collectively, the “Transaction
      Documents”). Immediately prior to each Closing, Capital Growth will have all
      requisite power and authority to issue, sell and deliver the Shares, the
      Warrants and the shares of Preferred Stock issuable upon exercise of the
      Warrants (the “Warrant Preferred Shares”), the Placement Agent Warrants (as
      hereinafter defined), the shares of Preferred Stock issuable upon exercise
      of
      the Placement Agent Warrants (the “Placement Agent Warrant Preferred Shares”).
      Immediately following the filing of the Charter Amendment, Capital Growth will
      have all requisite power and authority to issue and deliver the shares of Common
      Stock issuable upon conversion of Shares (“Conversion Shares”), the shares of
      Common Stock issuable upon conversion of the Warrant Preferred Shares (the
      “Warrant Common Shares”) and the shares of Common Stock issuable upon conversion
      of the Placement Agent Warrant Preferred Shares (the “Placement Agent Warrant
      Common Shares”). Upon due execution and delivery, this Agreement and the
      Subscription Agreements in the form annexed to the Memorandum (collectively,
      “Subscription Agreements”) will constitute the valid and binding obligations of
      the Company, enforceable against the Company in accordance with their respective
      terms, subject to any applicable bankruptcy, insolvency, reorganization,
      moratorium or other similar laws now or hereafter in effect affecting the rights
      of creditors generally and to general equitable principles and the availability
      of specific performance. Upon due execution and delivery, the Placement Agent
      Warrants will constitute the valid and binding obligations of the Company,
      enforceable against the Company in accordance with their respective terms,
      subject to any applicable bankruptcy, insolvency, reorganization, moratorium
      or
      other similar laws now or hereafter in effect affecting the rights of creditors
      generally and to general equitable principles and the availability of specific
      performance.

     

    
      
        
        

      

      
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    (c)  None
      of
      the execution and delivery of, or performance by, the Company under this
      Agreement or, immediately prior to each Closing, the Subscription Agreements,
      the Placement Agent Warrants will conflict with or violate any material term
      or
      provision of, or will result in the creation or imposition of any lien, charge
      or other encumbrance upon any of the assets of the Company under, any other
      agreement or other instrument to which the Company is a party or by which the
      Company or its assets is bound, or any term of the charter or by-laws of the
      Company, or any license, permit, statute, rule or regulation applicable to
      the
      Company or any of its assets, or any judgment, decree, or order of any court
      or
      governmental body having jurisdiction over the Company. 

     

    (d)  None
      of
      the Shares, the Conversion Shares, the Warrants, the Warrant Preferred Shares,
      the Warrant Common Shares, the Placement Agent Warrants, the Placement Agent
      Warrant Preferred Shares and the Placement Agent Warrant Common Shares will
      be
      subject to preemptive or similar rights of any stockholder or security holder
      of
      the Company or an adjustment under the anti-dilution or exercise rights of
      any
      holders of any outstanding shares of capital stock, options, warrants or other
      rights to acquire any securities of the Company, except that the holders of
      up
      to $7,000,000 of convertible bridge notes of the Company (the “Bridge Notes”)
      and Mandatory Notes (as defined in the Memorandum), if any, shall have the
      right
      to cause their conversions into Common Stock to be reduced to an effective
      price
      of $0.45 per share. 

     

    (e)  No
      consent, authorization or filing of or with any federal court or government
      authority of the United States is required in connection with the consummation
      of the transactions contemplated herein, except for required filings with the
      United States Securities and Exchange Commission (the “SEC”) and applicable
“Blue Sky” or state securities commissions relating specifically to the
      Offering.

     

    (f)  The
      Memorandum as of November 14, 2006 did not, and as of the date of any amendment
      or supplement thereto, will not, include any untrue statement of a material
      fact
      or omit to state any material fact necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading.

     

    (g)  The
      Memorandum has been prepared in conformity in all material respects with all
      federal law applicable to the Offering and is in compliance with Rule 506 of
      Regulation D, the Act and the requirements of all other rules and regulations
      of
      the SEC relating to offerings of the type contemplated by the Offering, and
      the
      applicable state securities laws and the rules and regulations of those
      jurisdictions in the United States wherein the Placement Agent has informed
      the
      Company the Units are to be offered and sold. The Company has not taken, nor
      will it take, any action which conflicts with the conditions and requirements
      of, or which would make unavailable with respect to the Offering, the
      exemption(s) from registration available pursuant to Rule 506 of Regulation
      D or
      Section 4(2) and/or Section 4(6) of the Act. None of the Company or, to the
      Company’s knowledge, its affiliates, has been subject to any order, judgment or
      decree of any court of competent jurisdiction temporarily, preliminarily or
      permanently enjoining such person for failing to comply with Rule 503 of
      Regulation D. 

     

    
      
        
        

      

      
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    (h)  The
      Company has authorized and outstanding the capital stock as set forth in the
      Memorandum as of the date set forth therein. All outstanding shares of capital
      stock of the Company are duly authorized, validly issued and outstanding, fully
      paid and non-assessable. Except as set forth in the Memorandum: (i) there are
      no
      outstanding options, warrants or other rights permitting or requiring the
      Company or others to purchase or acquire any shares of capital stock or other
      equity securities of the Company or to pay any dividend or make any other
      distribution in respect thereof; (ii) there are no securities issued or
      outstanding which are convertible into or exchangeable for shares of capital
      stock or other equity securities of the Company and there are no contracts,
      commitments or understandings to which the Company is a party, whether or not
      in
      writing, to issue or grant any such option, warrant, right or convertible or
      exchangeable security; (iii) no shares of stock or other securities of the
      Company are reserved for issuance for any purpose; (iv) there are no voting
      trusts or other contracts, commitments, understandings, arrangements or
      restrictions of any kind to which the Company is a party with respect to the
      ownership, voting or transfer of shares of stock or other securities of the
      Company, including without limitation, any preemptive rights, rights of first
      refusal, proxies or similar rights and (v) no person holds a right to require
      the Company to register any securities of the Company under the Act or to
      participate in any such registration. The issued and outstanding shares of
      capital stock of the Company conform to all statements in relation thereto
      contained in the Memorandum and the Memorandum describes all material terms
      and
      conditions thereof. Except as set forth in the Memorandum or the SEC Filings
      (as
      hereinafter defined), all offers and sales of capital stock of the Company
      prior
      to the date hereof were at all relevant times duly registered or exempt from
      the
      registration requirements of the Act and were duly registered or subject to
      an
      available exemption from the registration requirements of the applicable state
      securities or blue sky laws.

     

    (i)  The
      financial statements, together with the related notes, of the Company included
      in the Memorandum present fairly in all material respects the financial position
      of the Company as of the respective dates specified and the results of its
      operations and cash flow for the respective periods covered thereby. Except
      as
      set forth in such financial statements, the Memorandum or the SEC Filings,
      the
      Company has not incurred any material liabilities of any kind, whether accrued,
      absolute, contingent or otherwise or entered into any material transactions
      subsequent to December 31, 2005 except in the ordinary course of its business.
      

     

    (j)  The
      conduct of business by the Company and its Subsidiaries as presently and
      proposed to be conducted is not subject to continuing oversight, supervision,
      regulation or examination by any governmental official or body of the United
      States or any other jurisdiction wherein the Company conducts or proposes to
      conduct such business, except as described in the Memorandum and except such
      regulation as is applicable to commercial enterprises generally. Except as
      described in the Memorandum, the Company and its Subsidiaries have complied
      with
      all applicable laws, regulations, judgments, decrees or orders of any court
      or
      governmental agency or entity except where the failure to so comply would not
      have a Material Adverse Effect and has obtained all requisite licenses, permits
      and other governmental authorizations to conduct its business as presently
      conducted, except to the extent the failure to so obtain and maintain would
      not
      have a Material Adverse Effect. Neither the Company or its Subsidiaries have
      received any notice of any violation of, or noncompliance with, any federal,
      state, local or foreign laws, ordinances, regulations and orders (including,
      without limitation, those relating to environmental protection, occupational
      safety and health, federal securities laws, equal employment opportunity,
      consumer protection, credit reporting, "truth-in-lending", and warranties and
      trade practices) applicable to its business, the violation of, or noncompliance
      with, which would have a Material Adverse Effect, and the Company knows of
      no
      facts or set of circumstances which would give rise to such a
      notice.

     

    
      
        
        

      

      
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    (k)  The
      Company and its Subsidiaries own their respective properties and assets free
      and
      clear of all Liens, except such Liens which are either disclosed in the
      Memorandum or otherwise arise in the ordinary course of business and do not,
      or
      could not reasonably be expected to, materially impair the Company’s or its
      Subsidiaries’ ownership or use of such property or assets. The Company and its
      Subsidiaries are in compliance in all material respects with any leases to
      which
      it is a party and, to its knowledge, with respect to any such leases, holds
      a
      valid leasehold interest free of any Liens. Except as set forth in the
      Memorandum, no default by the Company or, to the knowledge of the Company,
      any
      other party exists in the due performance under any of the agreements referred
      to in the Memorandum to which the Company is a party or to which any of its
      assets are subject, other than defaults that would not have a Material Adverse
      Effect. 

     

    (l)  Except
      as
      set forth in the Memorandum, there are no actions, suits, claims, hearings,
      or
      proceedings pending before any court or governmental authority or, to the
      knowledge of the Company, threatened, against the Company, or involving its
      assets or any of its officers or directors (in their capacity as such) which,
      if
      determined adversely to the Company or such officer or director, would have
      a
      Material Adverse Effect or adversely affect the transactions contemplated by
      this Agreement or the other Transaction Documents or the enforceability
      thereof.

     

    (m)  The
      Company is not: (i) in violation of its charter or By-laws; (ii) except as
      set
      forth in the Memorandum, in default of any indenture, mortgage, deed of trust,
      note or other agreement or instrument to which the Company is a party or by
      which it is or may be bound or to which any of its assets may be subject; (iii)
      in violation of any statute, rule or regulation which violation would have
      a
      Material Adverse Effect; or (iv) in violation of any judgment, decree or order
      of any court or governmental body having jurisdiction over the Company and
      specifically naming the Company, which violation or violations individually,
      or
      in the aggregate, could reasonably be expected to have a Material Adverse
      Effect.

     

    (n)  Subsequent
      to the respective dates as of which information is given in the Memorandum,
      except as may otherwise be set forth in the Memorandum, there has been no:
      (i)
      material adverse change in the financial condition of the Company and its
      Subsidiaries as a whole; (ii) damage, loss or destruction, whether or not
      covered by insurance, with respect to any material asset or property of the
      Company or its Subsidiaries; or (iii) agreement to permit any of the
      foregoing.

     

    (o)  Each
      description of each material contract in the Memorandum reflects in all material
      respects the material terms of such material contract. Each material contract
      is
      in full force and effect and is valid and enforceable by and against the Company
      or its Subsidiaries, as the case may be, in accordance with its terms. Except
      as
      provided in the Memorandum: (i) neither the Company nor any of its Subsidiaries,
      if a subsidiary is a party, nor to the Company's knowledge, any other party
      is
      in default in the observance or performance of any term or obligation to be
      performed by it under any material contract; and (ii)no event has occurred
      which
      with notice or lapse of time or both would constitute such a default, in any
      such case which default or event, individually or in the aggregate, would result
      in a Material Adverse Effect. Except as provided in the Memorandum, no default
      exists, and no event has occurred which with notice or lapse of time or both
      would constitute a default, in the due performance and observance of any term,
      covenant or condition, by the Company or its subsidiaries, if a subsidiary
      is a
      party thereto, of any other agreement or instrument to which the Company or
      any
      of its subsidiaries is a party or by which Company or its properties or business
      or a subsidiary or its properties or business is bound which default or event,
      individually or in the aggregate, would result in a Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (p)  Since
      January 1, 2004 the Company has filed all reports required to be filed by it
      under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
      including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials
      being collectively referred to herein as the “SEC Filings”) on a timely basis or
      has received a valid extension of such time of filing and has filed any such
      SEC
      reports prior to the expiration of any such extension. As of their respective
      dates, the SEC Filings complied in all material respects with the requirements
      of the Act and the Exchange Act and the rules and regulations of the SEC
      promulgated thereunder, and none of the SEC Filings, when filed, contained
      any
      untrue statement of a material fact or omitted a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. All material
      agreements to which the Company is a party have been filed as exhibits to the
      SEC Filings to the extent required. The financial statements of the Company
      included in the SEC Filings comply in all material respects with applicable
      accounting requirements and the rules and regulations of the SEC with respect
      thereto as in effect at the time of filing.

     

    (q)  Except
      as
      disclosed in the Memorandum, as of the date of this Agreement no current or
      former stockholder, director, officer or employee of the Company, nor any
      affiliate of any such person is presently, directly or indirectly through his
      or
      her affiliation with any other person or entity, a party to any loan from the
      Company or any other transaction (other than as an employee) with the Company
      providing for the furnishing of services by, or rental of any personal property
      from, or otherwise requiring cash payments to any such person (other than with
      respect to loans to the Company by such persons which by their terms require
      repayment as set forth in the Memorandum).

     

    (r)  Since
      the
      adoption of the Sarbanes-Oxley Act of 2002 (the “New Act”), the Company has
      complied in all material respects with the laws, rules and regulations
      applicable to the Company under the New Act. 

     

    (s)  The
      Company has made or filed all federal, state and foreign income and all other
      tax returns, reports and declarations required by any jurisdiction to which
      it
      is subject and which are due (unless and only to the extent that the Company
      has
      set aside on its books provisions reasonably adequate for the payment of all
      unpaid and unreported taxes or has obtained an extension of the deadline for
      such filing) and has paid all taxes and other governmental assessments and
      charges that are material in amount, shown or determined to be due on such
      returns, reports and declarations, except those being contested in good faith
      and has set aside on its books provisions reasonably adequate for the payment
      of
      all taxes for periods subsequent to the periods to which such returns, reports
      or declarations apply. To the Company’s knowledge, there are no unpaid taxes in
      any material amount claimed to be due by the taxing authority of any
      jurisdiction, and the officers of the Company know of no basis for any such
      claim. The Company has not executed a waiver with respect to the statute of
      limitations relating to the assessment or collection of any foreign, federal,
      statue or local tax. To the Company’s knowledge, none of the Company’s tax
      returns is presently being audited by any taxing authority.

     

    
      
        
        

      

      
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    (t)  Neither
      the sale of the Units nor its use of the proceeds thereof will violate the
      Trading with the Enemy Act, as amended, or any of the foreign assets control
      regulations of the United States Treasury Department (31 CFR, Subtitle B,
      Chapter V, as amended) or any enabling legislation or executive order relating
      thereto. Without limiting the foregoing, neither the Company nor any of its
      subsidiaries (a) is a person whose property or interests in property are blocked
      pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
      Property and Prohibiting Transactions With Persons Who Commit, Threaten to
      Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) or (b) engages in
      any
      dealings or transactions, or be otherwise associated, with any such person.
      The
      Company and its subsidiaries are in compliance with the USA Patriot Act of
      2001
      (signed into law October 26, 2001).

     

    (u)  Each
      of
      the Company and each of its Subsidiaries is in compliance in all material
      respects with all rules, laws and regulation relating to the use, treatment,
      storage and disposal of toxic substances and protection of health or the
      environment ("Environmental Law") which are applicable to its business. Neither
      the Company nor its Subsidiaries has received any notice from any governmental
      authority or third party of an asserted claim under Environmental Laws. Each
      of
      the Company and each of its Subsidiaries has received all permits required
      of it
      under applicable Environmental Laws to conduct its business and is in compliance
      with all terms and conditions of any such permit, license or approval (except
      where failure to receive such permits, licenses or approvals would not have
      a
      Material Adverse Effect). No facts currently exist that will require the Company
      or any of its Subsidiaries to make future material capital expenditures to
      comply with Environmental Laws. No property which is or has been owned, leased
      or occupied by the Company or its Subsidiaries has been designated as a
      Superfund site pursuant to the Comprehensive Environmental Response,
      Compensation of Liability Act of 1980, as amended (42 D.S.C. Section 9601,
      et.
      seq.) (“CERCLA”) or otherwise designated as a contaminated site under applicable
      state or local law. Neither the Company nor any of its subsidiaries has been
      named as a "potentially responsible party" under CERCLA.

     

    (v)  To
      the
      knowledge of the Company, except as disclosed in the Memorandum, neither the
      Company, its Subsidiaries nor their respective officers or directors, have
      been
      subject to or suffered any of the following: (i) any bankruptcy petition filed
      by or against any business of which such person was a general partner or
      executive officer either at the time of the bankruptcy or within two (2) years
      prior to that time; (ii) any conviction in a criminal proceeding or being
      subject to a pending criminal proceeding (excluding traffic violations and
      other
      misdemeanor offenses) within ten (10) years from the date hereof; (iii) any
      order, judgment or decree, not subsequently reversed, suspended or vacated,
      of
      any court of competent jurisdiction, permanently or temporarily enjoining,
      barring, suspending or otherwise limiting such Person's involvement in any
      type
      of business, securities or banking activities; or (iv) being found guilty by
      a
      court of competent jurisdiction (in a civil action), the SEC or the Commodity
      Futures Trading Commission to have violated a federal or state securities or
      commodities law, and the judgment has not been reversed, suspended or
      vacated.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    (w)  Neither
      the Company nor any of its Subsidiaries has, nor to the best of the knowledge
      of
      the Company, any director, officer, agent, employee or other person acting
      on
      behalf of the Company or any Subsidiary has in the course of his actions for
      or
      on behalf of the Company, used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; made any direct or indirect unlawful payment to any foreign
      or domestic government official or employee from corporate funds; violated
      or is
      in violation of any provision of the U.S. Foreign Corrupt Practices Act of
      1977,
      as amended; or made any bribe, rebate, payoff, influence payment, kickback
      or
      other unlawful payment to any foreign or domestic government official or
      employee. Without limiting the generality of the foregoing, to the best of
      the
      knowledge of the Company, the Company and its Subsidiaries have not directly
      or
      indirectly made or agreed to make (whether or not said payment is lawful) any
      payment to obtain, or with respect to, sales other than usual and regular
      compensation to its or their employees and sales representatives with respect
      to
      such sales.

     

    (x)  No
      individual or entity will have, as a result of the transactions contemplated
      by
      this Agreement, any valid right, interest or claim against or upon the Company
      for any commission, fee or other compensation pursuant to any agreement,
      arrangement or understanding entered into by or on behalf of the Company, other
      than in favor of the Placement Agent.

     

    (y)  To
      the
      best of the Company’s knowledge, the Company has appropriate casualty and
      liability insurance coverage, in scope and amounts reasonable and to the
      Company’s knowledge, customary for similar businesses. 

     

    (z)  The
      Company has fulfilled its obligations, if any, under the minimum funding
      standards of Section 302 of the U.S. Employee Retirement Income Security Act
      of
      1974 ("ERISA") and the regulations and published interpretations thereunder
      with
      respect to each "plan" as defined in Section 3(3) of ERISA and such regulations
      and published interpretations in which its employees are eligible to participate
      and each such plan is in compliance in all material respects with the presently
      applicable provisions of ERISA and such regulations and published
      interpretations. No "Reportable Event" (as defined in 12 ERISA) has occurred
      with respect to any "Pension Plan" (as defined in ERISA) for which the Company
      could have any liability.

     

    (aa)  Neither
      the Company, its affiliates, nor any person acting on its or their behalf,
      has
      knowingly, either directly or indirectly made any offers or sales of any
      security or solicited any offers to buy any security under circumstances that
      would cause the offer of the Units pursuant to this Agreement to be integrated
      with prior offerings by the Company for purposes of the Act, or any applicable
      stockholder approval provisions, which would impair the exemptions relied upon
      in this Offering or the Company's ability to timely comply with its obligations
      hereunder. Nor will the Company or its affiliates take any action or steps
      that
      would knowingly cause the offer or issuance of the Units to be integrated with
      other offerings which would impair the exemptions relied upon in this Offering
      or the Company's ability to timely comply with its obligations hereunder. The
      Company will not knowingly conduct any offering other than the transactions
      contemplated hereby that will be integrated with the offer or issuance of the
      Units, which would impair the exemptions relied upon in this Offering or the
      Company's ability to timely comply with its obligations hereunder. In addition,
      neither the Company nor its affiliates nor to its knowledge, any person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D under the 1933 Act)
      in
      connection with the offer or sale of the Units.

     

    
      
        
        

      

      
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    (bb)  Except
      as
      disclosed in the Memorandum, the Company's Common Stock is quoted on OTC
      Bulletin Board under the symbol CGSY.OB. The Company has not received any oral
      or written notice that the Common Stock is not eligible nor will become
      ineligible for quotation on the OTC Bulletin Board nor that the Common Stock
      does not meet all requirements for the continuation of such quotation. To the
      best of its knowledge, the Company satisfies all the requirements for the
      continued quotation of the Common Stock on the OTC Bulletin Board. 

     

    3.  Placement
      Agent Compensation.

     

    (a)  As
      compensation for its services under this Agreement, at each Closing, the
      Placement Agent will receive, subject to the terms of the last sentence of
      this
      paragraph: (i) a cash fee (the “Selling Commissions”) equal to six percent (6%)
      of the gross proceeds of the Offering, (ii) a nonaccountable marketing allowance
      of 1% of the gross proceeds of the Offering to defray marketing expenses
      (“Marketing Allowance”), and (iii) a management fee of 3% of the gross proceeds
      of the Offering for providing certain services as lead placement agent
      (“Management Fee”). With respect to investors who purchase Units through the
      conversion to equity of some or all of the indebtedness evidenced by their
      Bridge Notes or Mandatory Notes (which the Company shall be permitted to
      continue to sell through the date of the Initial Closing) or unsecured
      promissory notes issued by 20/20 Technologies, Inc., the Placement Agent will
      be
      entitled to a selling commission equal to 1% of the gross proceeds invested
      by
      such persons in the purchase of Units, and the Placement Agent shall be entitled
      to no other fees or compensation (including but not limited to Marketing
      Allowance, Management Fee or Placement Agent Warrants) with respect to any
      such
      purchases of Units; for purposes hereof, all investors in the Offering other
      than investors referenced in this sentence are collectively referred to as
      the
“Offering New Investors.” In addition, to the extent the Company sells Units to
      one or more offshore investors independent of the Placement Agent and pays
      a fee
      in connection therewith comparable or less than the compensation that it would
      have paid to the Placement Agent if it had made the placement of such Units,
      the
      Company will pay the Placement Agent a reduced fee of cash compensation of
      not
      less than 2%. 

     

    (b)  As
      additional compensation hereunder, the Placement Agent will be entitled (i)
      to
      reimbursement of all reasonable, actual out-of-pocket expenses, including,
      without limitation, the travel expenditures and expenses of counsel (inclusive
      of work performed in connection with the Offering and blue sky services and
      related fees) (the “Expense Reimbursement”); provided that no other expense for
      the Placement Agent shall be paid by the Company and provided further that
      any
      single or related series of non-legal expenses of Placement Agent involving
      $1,000 or more shall require the prior consent of the Company, which consent
      shall not be unreasonably withheld; (ii) to receive the $0.45 Warrant to
      purchase up to 5% of the shares of Series AA Preferred Stock underlying the
      Units sold in the Offering to Offering New Investors; and (iii) to receive
      the
      $0.65 Warrant to purchase up to 5% of the shares of Series AA Preferred Stock
      underlying the Units sold in the Offering to Offering New Investors
      substantially in the form of the corresponding warrants to be issued per the
      Memorandum (“Placement Agent Warrants”). The shares Common Stock issuable upon
      conversion of the Series AA Preferred Stock underlying the Placement Agent
      Warrants shall have the same registration rights as those afforded to investors
      in the Offering and the Placement Agent Warrants shall contain a cashless
      exercise provision. 

     

    
      
        
        

      

      
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    (c)  The
      Company shall also pay to the Placement Agent the Selling Commissions, Marketing
      Allowance, Management Fee and Placement Agent Warrants with respect to, and
      based on, any Company securities sold to any party introduced to the Company
      by
      Placement Agent (“Post Closing Investor”) at any time prior to the date twelve
      (12) months after the later to occur of the Termination Date or the Final
      Closing (as hereinafter defined). In that regard, the Placement Agent shall
      provide a written list of all investors that it introduced to the Company within
      10 business days of the later to occur of the Termination Date or the Final
      Closing.

     

    (d)  To
      the
      extent there is more than one Closing, payment of the proportional amount of
      the
      Selling Commissions, Marketing Allowance and Management Fee will be made out
      of
      the proceeds of subscriptions for the Units sold at each Closing and Placement
      Agent Warrants shall be issued at each Closing. Payment of the Expense
      Reimbursement incurred as of the date of each Closing will be made out of the
      proceeds of subscriptions for Units at each Closing.

     

    (e)  Placement
      Agent agrees and understands that the compensation set forth in Sections 3(a)
      and 3(b)(ii)
      is
      conditioned upon the sale of the Minimum Amount and the satisfaction of the
      other conditions precedent to the Initial Closing set forth herein and in the
      Memorandum by the end of the Offering Period and acceptance of said sales by
      the
      Company and that the failure to sell the Minimum Amount or to satisfy such
      conditions precedent by the end of the Offering Period shall relieve the Company
      and any other party of any obligation to pay Placement Agent any such
      compensation, except as otherwise set forth in Section 12
      hereto.
      No such compensation shall be payable with respect to any subscriptions for
      Units that are rejected by the Company and no such compensation shall be payable
      to Placement Agent with respect to any sale of Units unless and until such
      time
      as the proceeds thereof are received from the Escrow Account (as hereinafter
      defined).

     

    4.  Subscription
      and Closing Procedures.
      

     

    (a)  The
      Company shall cause to be delivered to the Placement Agent copies of the
      Memorandum and has consented, and hereby consents, to the use of such copies
      for
      the purposes permitted by the Act and applicable securities laws and in
      accordance with the terms and conditions of this Agreement, and hereby
      authorizes the Placement Agent and its agents and employees to use the
      Memorandum in connection with the sale of the Units until the Termination Date,
      and no person or entity is or will be authorized to give any information or
      make
      any representations other than those contained in the Memorandum or to use
      any
      offering materials other than those contained in the Memorandum in connection
      with the sale of the Units.

     

    (b)  The
      Company shall make available to the Placement Agent and its representatives
      such
      information as may be reasonably requested in making a reasonable investigation
      of the Company and its affairs and shall provide access to such employees during
      normal business hours as shall be reasonably requested by the Placement Agent.
      The Units sold in the Offering will be sold pursuant to Subscription Agreements
      between the Company and the investors in the Offering in the form annexed to
      the
      Memorandum.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (c)  All
      funds
      for subscriptions received from the sale of Units in the Offering will be
      deposited into the escrow account (the “Escrow Account”) established for such
      purpose with Signature Bank, New York, New York (the “Escrow Agent”). All such
      funds for subscriptions will be held in the Escrow Account pursuant to the
      terms
      of the Escrow Agreement by and among the Company, the Placement Agent and the
      Escrow Agent. The Company will pay all fees related to the establishment and
      maintenance of the Escrow Account.

     

    (d)  If
      subscriptions for at least the Minimum Amount have been accepted prior to the
      Termination Date, the funds therefore have been collected by the Escrow Agent
      and all of the conditions set forth elsewhere in this Agreement are fulfilled,
      a
      closing shall be held promptly with respect to the Units sold (the “Initial
      Closing”) at the offices of Shefsky & Froelich Ltd., counsel to the Company
      or by exchange of documentation by facsimile or email. To the extent the Maximum
      Amount is not sold at the Initial Closing, the remaining Units will continue
      to
      be offered and sold until the Termination Date (subject to the Company’s right
      upon ten (10) days notice to terminate the Offering in its sole discretion
      at
      any time following the sale of the Minimum Amount subject to the termination
      provisions contained herein), and the proceeds thereof delivered to the Company
      at one or more closings as agreed upon by the Company and Placement Agent,
      with
      the final closing (“Final Closing”) to occur within 10 days from the earlier of
      the Termination Date or the sale of all Units offered. The Initial Closing,
      the
      Final Closing and any other interim closing may be referred to herein as a
      “Closing.” Delivery of payment for the accepted subscriptions for Units from
      funds held in the Escrow Account will be made at each Closing against delivery
      of the Shares and Warrants by the Company. Executed certificates for the Shares,
      the Warrants and the Placement Agent Warrants will be in such authorized
      denominations and, with respect to investors located by the Placement Agent,
      will be registered in such names as the Placement Agent may request and will
      be
      made available to the Placement Agent for checking and packaging at the
      Placement Agent’s office at each Closing or within five (5) business days
      following a Closing.

     

    (e)  If
      subscriptions for the Minimum Amount have not been received and accepted by
      the
      Company on or before the Termination Date for any reason, the Offering will
      be
      terminated, no Units will be sold, and the Escrow Agent will, at the request
      of
      the Company and the Placement Agent, cause all monies received from subscribers
      and deposited in the Escrow Account to be promptly returned to such subscribers
      without interest, penalty, expense or deduction.

     

    5.  Further
      Covenants.
      The
      Company hereby covenants and agrees that:

     

    (a)  Except
      with the prior written notice to the Placement Agent, the Company shall not,
      at
      any time prior to the Final Closing, knowingly take any action which would
      cause
      any of the representations and warranties made by it in this Agreement not
      to be
      complete and correct in all material respects on and as of each Closing date
      with the same force and effect as if such representations and warranties had
      been made on and as of each such date. 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    (b)  If,
      at
      any time prior to the Final Closing, any event shall occur that causes or is
      reasonably likely to cause a Material Adverse Effect, or as a result of which
      it
      becomes necessary to amend or supplement the Memorandum so that the
      representations and warranties herein remain true and correct in all material
      respects, or in case it shall be necessary to amend or supplement the Memorandum
      to comply with Regulation D or any other applicable securities laws or
      regulations, the Company will promptly notify the Placement Agent and shall,
      at
      its sole cost, prepare and furnish to the Placement Agent copies of appropriate
      amendments and/or supplements in such quantities as the Placement Agent may
      reasonably request. The Company will not at any time before the Final Closing,
      prepare or use any amendment or supplement to the Memorandum of which the
      Placement Agent will not previously have been advised and furnished with a
      copy,
      or which is not in compliance in all material respects with the Act and other
      applicable securities laws. As soon as the Company is advised thereof, the
      Company will advise the Placement Agent and its counsel, and confirm the advice
      in writing, of any order preventing or suspending the use of the Memorandum,
      or
      the suspension of any exemption for such qualification or registration thereof
      for the Offering in any jurisdiction, or of the institution or threatened
      institution of any proceedings for any of such purposes, and the Company will
      use its best efforts to prevent the issuance of any such order and, if issued,
      to obtain as soon as reasonably possible the lifting thereof.

     

    (c)  The
      Company shall comply with the Act, the Securities Exchange Act of 1934 (the
      “Exchange Act”) and the rules and regulations thereunder, all applicable state
      securities laws and the rules and regulations thereunder in the states that
      the
      Units are qualified or registered for sale or exempt from such qualification
      or
      registration, so as to permit the continuance of the sales of the Units.
      Furthermore, the Company shall file five copies of a Notice of Sales of
      Securities on Form D with the SEC no later than 15 days after the commencement
      of the sale of Units and shall file all amendments with the SEC as may be
      required. Copies of the Form D and all amendments thereto shall be provided
      to
      the Placement Agent. 

     

    (d)  The
      Company shall use best efforts to qualify the Units for sale under the
      securities laws of such jurisdictions in the United States as may be mutually
      agreed to by the Company and the Placement Agent, and the Company will make
      such
      applications and furnish information as may be required for such purposes,
      provided that the Company will not be required to qualify as a foreign
      corporation in any jurisdiction or execute a general consent to service of
      process. The Company will, from time to time, prepare and file such statements
      and reports as are or may be required to continue such qualifications in effect
      for so long a period as the Placement Agent may reasonably request with respect
      to the Offering.

     

    (e)  The
      Company shall place a legend on the certificates representing the Shares, the
      Conversion Shares, the Warrants, the Warrant Preferred Shares, the Warrant
      Common Shares, the Placement Agent Warrants, the Placement Agent Warrant
      Preferred Shares and the Placement Agent Warrant Common Shares that the
      securities evidenced thereby have not been registered under the Act or
      applicable state securities laws, setting forth or referring to the applicable
      restrictions on transferability and sale of such securities under the Act and
      applicable state laws.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    (f)  The
      Company shall apply the net proceeds from the sale of the Units for the purposes
      as described under the “Use of Proceeds” section of the Memorandum, subject to
      the understanding that to the extent the assumptions contained therein do not
      fully materialize, the application may be altered in a manner consistent with
      the Company’s fiduciary obligations to investors.

     

    (g)  During
      the Offering Period, the Company shall afford each prospective purchaser of
      Units the opportunity to ask questions of and receive answers from an officer
      of
      the Company concerning the terms and conditions of the Offering and the
      opportunity to obtain such other additional information necessary to verify
      the
      accuracy of the Memorandum to the extent it possesses such information or can
      acquire it without unreasonable expense.

     

    (h)  The
      Company shall pay all reasonable expenses incurred in connection with the
      preparation and printing of all necessary offering documents and instruments
      related to the Offering and the issuance of the Shares, the Warrants, and the
      Placement Agent Warrants and will also pay the Company’s own expenses for
      accounting fees, legal fees, and other costs involved with the Offering. The
      Company will provide at its own expense such quantities of the Memorandum and
      other documents and instruments relating to the Offering as the Placement Agent
      may reasonably request. In addition, the Company will pay all reasonable filing
      fees, costs and legal fees for Blue Sky services and related filings and
      expenses of counsel of which $6,000 ($3,500 on account of legal fees and $2,500
      on account of filings fees), shall be paid upon delivery to the Placement Agent
      of the first draft of the Memorandum with respect to Blue Sky qualifications
      and
      the Company shall pay the Expense Reimbursement at each Closing. The Blue Sky
      filings shall be prepared by the Placement Agent’s Blue Sky counsel and all Blue
      Sky filing fees shall be paid by the Company prior to any filing. All other
      fees
      and expenses of Blue Sky counsel shall be payable at the Closing. Further,
      as
      promptly as practicable after the Closing, the Company shall prepare, at its
      own
      expense, velobound “closing binders” relating to the Offering and will
      distribute such binders to the individuals designated by counsel to the
      Placement Agent. Lastly, upon filing of the registration statement relating
      to
      the resale of the Conversion Shares, the Warrant Common Shares and the Placement
      Agent Warrant Common Shares per the terms set forth in the Memorandum, the
      Company will pay all filing fees, costs and reasonable legal fees in connection
      with the Placement Agent’s NASD Rule 2710 filing to be prepared by the Placement
      Agent’s counsel. 

     

    (i)  Until
      the
      Termination Date, neither the Company nor any person or entity acting on its
      behalf will negotiate with any other placement agent or underwriter with respect
      to a private or public offering of the Company's or any subsidiary's equity
      securities; provided however that the Company may commence such negotiations
      if
      the Minimum Amount of Units for the consummation of the Initial Closing has
      not
      been subscribed for before January 10, 2007 (unless the Offering is terminated
      prior to such date pursuant to Section 12(b)(iv) hereto in which event the
      Company shall have the ability to negotiate in such manner as of the effective
      date of such termination). Neither the Company nor anyone acting on its behalf
      will, until the Termination Date, without the prior written consent of the
      Placement Agent, offer for sale to, or solicit offers to subscribe for Units
      from, or otherwise approach or negotiate in respect thereof with, any other
      person. 

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    (j)  In
      the
      event a Closing occurs, for a period of not less than one year from the date
      thereof, the Placement Agent shall have the right to send a representative
      (who
      need not be the same individual from meeting to meeting) to observe each meeting
      of the Board of Directors. The Company agrees to give Placement Agent notice
      of
      each such meeting (or copies of any consents in lieu of meetings) and to provide
      Placement Agent with an agenda and minutes of the meeting no later than it
      gives
      such notice and provides such items to the directors. In addition, should the
      Placement Agent propose a nominee for the board of directors of the Company
      at
      any election to be held until one year from the Termination Date, the Company
      agrees to cause such person to be nominated for election to its board of
      directors, provided that the nominee would meet the independence standards
      for
      an independent member of the board of directors under the then applicable Nasdaq
      rules; in the event of the election of such person to the board of directors,
      the observer rights set forth above shall lapse, as the nominee shall be deemed
      to constitute the observer for the benefit of the Placement Agent.

     

    (k)  Effective
      with the Closing on investments in Units totaling $15,000,000,
      the
      Placement Agent shall have a right of first refusal (“Right of First Refusal”)
      to act as lead placement agent on any subsequent private placement of the
      Company's equity securities or as lead managing underwriter on any subsequent
      public offering of the Company’s equity securities (or the Company shall use
      commercial reasonable efforts to have Placement Agent selected as co-managing
      underwriter with a "major bracket" underwriter (as such term is commonly
      understood in the investment banking community) reasonably acceptable to the
      Company) for a period of twelve (12) months following the Final Closing. Such
      Right of First Refusal shall mean that the Placement Agent will have the right
      to act as the Company’s investment banker in any such financing if the Placement
      Agent is prepared to proceed with such transaction on terms that are then
      comparable to those being offered by other investment banking firms to similarly
      situated companies. 

     

    (l)  Neither
      the Company nor any of its Subsidiaries will enter into any agreement or
      arrangement, written or oral, directly or indirectly, with an affiliate, or
      provide services or sell goods to, or for the benefit of, or pay or otherwise
      distribute monies, goods or other valuable consideration to, an affiliate,
      except upon fair and reasonable terms under the circumstances as determined
      by
      such company in good faith, taking into account all of the facts and
      circumstances of such agreement or arrangement.

     

    (m)  The
      Company covenants to hold its annual meeting to seek the approval of the filing
      of the Charter Amendment within 90 days from the date hereof.

     

    (n)  The
      Company shall provide weekly status reports with respect to its efforts in
      obtaining its Debt Facility and its negotiations with its and its Subsidiaries’
creditors. 

     

    6.  Conditions
      of Placement Agent’s Obligations.
      The
      obligations of the Placement Agent hereunder to effect any Closing are subject
      to the fulfillment, at or before each Closing, of the following additional
      conditions:

     

    (a)  Each
      of
      the representations and warranties made by the Company qualified as to
      materiality shall be true and correct at all times prior to and on each Closing
      Date, except to the extent any such representation or warranty expressly speaks
      as of an earlier date, in which case such representation or warranty shall
      be
      true and correct as of such earlier date, and, the representations and
      warranties made by the Company not qualified as to materiality shall be true
      and
      correct in all material respects at all times prior to and on each Closing
      Date,
      except to the extent any such representation or warranty expressly speaks as
      of
      an earlier date, in which case such representation or warranty shall be true
      and
      correct in all material respects as of such earlier date.

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    (b)  The
      Company shall have performed and complied in all material respects with all
      agreements, covenants and conditions required to be performed and complied
      with
      by it at or before each Closing.

     

    (c)  No
      order
      suspending the use of the Memorandum or enjoining the Offering or sale of the
      Units shall have been issued, and no proceedings for that purpose or a similar
      purpose shall have been initiated or pending, or, to best of the Company’s
      knowledge, be contemplated or threatened by a court or governmental
      authority.

     

    (d)  The
      Placement Agent shall have received a certificate of the Chief Executive Officer
      and Chief Financial Officer of the Company, dated as of each Closing Date,
      certifying as to the fulfillment of the conditions set forth in subparagraphs
      (a), (b) and (c) above.

     

    (e)  The
      Company shall have delivered to the Placement Agent: (i) a currently dated
      good
      standing certificate with respect to the Company and each active subsidiary
      of
      the Company; and (ii) resolutions of the Company’s Board of Directors approving
      this Agreement and the transactions and agreements contemplated by this
      Agreement and the Memorandum, certified by the Secretary of the
      Company.

     

    (f)  At
      each
      Closing, the Company shall have paid to the Placement Agent, the Selling
      Commissions, Marketing Allowance, Management Fee and the Expense Allowance
      as
      set forth in Sections 3(a)
      hereof
      and shall execute and deliver to the Placement Agent, the Placement Agent
      Warrant as set forth in Section 3(b).
      

     

    (g)  The
      Company shall deliver to the Placement Agent a signed opinion of Shefsky &
Froelich Ltd., counsel to the Company (“Company Counsel”), dated as of each
      Closing Date, substantially in the form annexed hereto as Exhibit A.
      

     

    (h)  All
      proceedings taken at or prior to each Closing in connection with the
      authorization, issuance and sale of the Units and the Placement Agent Warrant
      will be reasonably satisfactory in form and substance to the Placement Agent
      and
      its counsel, and such counsel shall have been furnished with all such documents,
      certificates and opinions as they may reasonably request upon reasonable prior
      notice in connection with the transactions contemplated hereby.

     

    (i)  A
      Registration Rights Agreement covering the Conversion Shares, the Warrant Common
      Shares and the Placement Agent Warrant Common Shares in the form attached to
      the
      Memorandum shall be executed and delivered by the Company.

     

    (j)  Lock-up
      agreements with all of the Company’s executive officers and directors, in form
      and substance reasonably acceptable to the Placement Agent and consistent with
      the terms set forth in the Memorandum, shall have been executed and delivered
      to
      the Placement Agent. 

     

    
      
        
        

      

      
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    (k)  A
      merger
      agreement with Global Capacity Group, Inc. shall have been consummated or is
      consummated concurrently with the Initial Closing.

     

    (l)  The
      Company has consummated a Debt Financing on the terms set forth in the
      Memorandum. 

     

    7.  Scope
      of Responsibility.
      Except
      for the indemnification obligations set forth in Section 10(b)
      below,
      neither the Placement Agent nor any of its affiliates (nor any of their
      respective directors, officers, selected dealers and employees, and each person
      who controls the Placement Agent within the meaning of the Act) shall be liable
      to the Company or to any other person claiming through the Company for any
      claim, loss, damage, liability, cost or expense suffered by the Company or
      any
      such other person arising out of or related to this engagement except for a
      claim, loss or expense that arises out of or is based upon an action or failure
      to act by the Placement Agent that constitutes bad faith, willful misconduct
      or
      negligence on the part of the Placement Agent or any of the selected dealers.
      

     

    8.  Representations
      and Warranties of the Placement Agent.
      The
      Placement Agent hereby represents, warrants and covenants to the Company as
      follows:

     

    (a)  The
      Placement Agent is a registered broker-dealer pursuant to the Exchange Act,
      a
      member in good standing of the National Association of Securities Dealers,
      Inc.,
      and registered and qualified to act in each state and jurisdiction in which
      it
      is required to be registered as such in order to offer and sell the
      Units.

     

    (b)  The
      Placement Agent shall not engage in any form of general solicitation or general
      advertising that is prohibited by Regulation D in connection with the Offering,
      or take any action that might reasonably be expected to jeopardize the
      availability for the Offering of the exemption from registration provided by
      Rule 506 under Regulation D. The Placement Agent shall comply in all material
      respects with all laws in effect in any jurisdiction in which securities of
      the
      Company are offered by it and the rules, regulations and orders of any
      securities administrator existing or adopted thereunder, including without
      limitation, the Act, the Exchange Act and the rules and regulations thereunder.
      Prior to the sale by the Company to any purchaser of any of the Units, the
      Placement Agent will furnish to such purchaser a copy of the
      Memorandum.

     

    9.  Confidentiality.
      In the
      course of its services under this Agreement, the Placement Agent will have
      access to Confidential Information (as defined below) concerning the Company.
      The Placement Agent agrees that all Confidential Information will be treated
      by
      the Placement Agent as confidential in all respects. The Placement Agent hereby
      agrees that it and its dealers, affiliates and representatives shall: (i) use
      the Confidential Information solely for the purposes of its engagement
      hereunder; and (ii) not disclose any Confidential Information to any other
      party
      except to those Placement Agent representatives who need to know such
      information for the purposes of the Placement Agent’s engagement hereunder and
      who have been advised of such confidentiality restrictions. The term
“Confidential Information” shall mean all information, whether written or oral,
      which is or has been disclosed by the Company or its affiliates, or
      representatives to the Placement Agent or any of its representatives in
      connection with the Offering and the transactions contemplated hereby, which
      is
      not in the public domain, but shall not include: (i) information which is
      publicly disclosed other than by the Placement Agent in violation of this
      Agreement or other obligation of the Placement Agent; (ii) information which
      is
      obtained by the Placement Agent from a third party that the Placement Agent
      does
      not know to have violated, or to have obtained such information in violation
      of,
      any obligation to the Company or its affiliates with respect to such
      information; and (iii) information which is required to be disclosed by the
      Placement Agent or its outside counsel under compulsion of law (whether by
      oral
      question, interrogatory, subpoena, civil investigative demand or otherwise)
      or
      by order of any court or governmental or regulatory body to whose supervisory
      authority the Placement Agent is subject; provided that, in such circumstance,
      the Placement Agent will give the Company prior written notice of such
      disclosure and cooperate with the Company to minimize the scope of any such
      disclosure. The Placement Agent’s obligation under this section shall continue
      after the date of expiration, termination or completion of this Agreement or
      the
      Placement Agent’s engagement hereunder.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    10.  Indemnification.

     

    (a)  The
      Company will: (i) indemnify and hold harmless the Placement Agent, its selected
      dealers and their respective officers, directors, employees and each person,
      if
      any, who controls such persons within the meaning of the Act (each an
“Indemnitee”) against, and pay or reimburse each Indemnitee for, any and all
      losses, claims, damages, liabilities or out-of-pocket expenses whatsoever (or
      actions or proceedings or investigations in respect thereof), joint or several
      (which will, for all purposes of this Agreement, include, but not be limited
      to,
      all reasonable costs of defense and investigation and all reasonable attorneys’
fees, including appeals), to which any Indemnitee may become subject, under
      the
      Act or otherwise, in connection with the offer and sale of the Units, whether
      such losses, claims, damages, liabilities or expenses shall result from any
      claim of any Indemnitee or any third party; and (ii) reimburse each Indemnitee
      (subject to the terms of subparagraph 10(c) below) for any legal or other
      expenses reasonably incurred in connection with investigating or defending
      against any such loss, claim, action, proceeding or investigation; provided,
      however, that the Company will not be liable in any such case to the extent
      that
      any such claim, damage or liability are finally judicially determined to have
      resulted exclusively from (A) an untrue statement or alleged untrue statement
      of
      a material fact made in the Memorandum, or an omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading, in reliance upon and in conformity with
      written information furnished to the Company by the Placement Agent or any
      such
      controlling persons specifically for use in the preparation thereof, or (B)
      the
      gross negligence, willful misconduct, or bad faith of an Indemnitee. In addition
      to the foregoing agreement to indemnify and reimburse, the Company will
      indemnify and hold harmless each Indemnitee against any and all losses, claims,
      damages, liabilities or expenses whatsoever (or actions or proceedings or
      investigations in respect thereof), joint or several (which shall for all
      purposes of this Agreement, include, but not be limited to, all reasonable
      costs
      of defense and investigation and all reasonable attorneys' fees, including
      appeals) to which any Indemnitee may become subject insofar as such costs,
      expenses, losses, claims, damages or liabilities arise out of or are based
      upon
      the claim of any person or entity that he or it is entitled to broker’s or
      finder’s fees from any Indemnitee in connection with the Offering, unless the
      action arises due to the Indemnitee having agreed to pay such broker’s or
      finder’s fees. The foregoing indemnity agreements will be in addition to any
      liability which the Company may otherwise have.

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

       

    

    (b)  The
      Placement Agent will indemnify and hold harmless the Company, its officers,
      directors, employees and each person, if any, who controls the Company within
      the meaning of the Act against, and pay or reimburse any such person for, any
      and all losses, claims, damages, liabilities or expenses whatsoever (or actions,
      proceedings or investigations in respect thereof) joint or several (which shall
      for all purposes of this Agreement, include, but not be limited to, all
      reasonable costs of defense and investigation and all reasonable attorneys’
fees, including appeals) to which the Company or any such person may become
      subject under the Act or otherwise, but only insofar as such losses, claims,
      damages or liabilities are finally judicially determined to have resulted
      exclusively from (i) any untrue statement or alleged untrue statement of any
      material fact contained in the Memorandum but only with reference to information
      contained in the Memorandum relating to the Placement Agent furnished to the
      Company by the Placement Agent specifically for use in the preparation thereof;
      or (ii) the negligence, willful misconduct, or bad faith of the Placement Agent
      or selected dealers retained by the Placement Agent.. The Placement Agent will
      reimburse the Company or any such person for any legal or other expenses
      reasonably incurred in connection with investigating or defending against any
      such loss, claim, damage, liability or action, proceeding or investigation
      to
      which such indemnity obligation applies. The foregoing indemnity agreements
      will
      be in addition to any liability which the Placement Agent may otherwise
      have.

     

    (c)  Promptly
      after receipt by an indemnified party under this Section 10
      of
      notice of the commencement of any action, claim, proceeding or investigation
      (the “Action”), such indemnified party, if a claim in respect thereof is to be
      made against the indemnified party under this Section 10,
      will
      notify the indemnifying party of the commencement thereof, but the omission
      to
      so notify the indemnifying party will not relieve it from any liability which
      it
      may have to any indemnified party under this Section 10
      unless
      the indemnifying party has been substantially prejudiced by such omission.
      The
      indemnifying party will have the right, at its option, to assume the defense
      thereof subject to the provisions herein stated, with counsel reasonably
      satisfactory to such indemnified party, which consent shall not be unreasonably
      withheld. The indemnified party will have the right to employ separate counsel
      in any such Action and to participate in the defense thereof, but the fees
      and
      expenses of such counsel will not be at the expense of the indemnifying party
      if
      the indemnifying party has assumed the defense of the Action with counsel
      reasonably satisfactory to the indemnified party, provided, however, that if
      the
      indemnified party shall be requested by the indemnifying party to participate
      in
      the defense thereof or shall have concluded in good faith and specifically
      notified the indemnifying party either that there may be specific defenses
      available to it which are different from or additional to those available to
      the
      indemnifying party or that such Action involves or could have a material adverse
      effect upon it with respect to matters beyond the scope of the indemnity
      agreements contained in this Agreement, then the counsel representing the
      indemnified party, to the extent made necessary by such defenses, shall have
      the
      right to direct such defenses of such Action on its behalf and in such case
      the
      reasonable fees and expenses of such counsel in connection with any such
      participation or defenses shall be paid by the indemnifying party. No settlement
      of any Action against an indemnified party will be made without the consent
      of
      the indemnified party, which consent shall not be unreasonably withheld or
      delayed in light of all factors of importance to such party, unless such
      settlement includes an unconditional release of such indemnified party from
      all
      liability arising or that may arise out of such Action. No indemnified party
      shall settle any Action for which indemnification may be sought by him or it
      hereunder without the prior written consent of the indemnifying
      party.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

       

    

    11.  Contribution.
      To
      provide for just and equitable contribution, if: (i) an indemnified party makes
      a claim for indemnification pursuant to Section 10
      hereof
      and it is finally determined, by a judgment, order or decree not subject to
      further appeal that such claims for indemnification may not be enforced, even
      though this Agreement expressly provides for indemnification in such case;
      or
      (ii) any indemnified or indemnifying party seeks contribution under the Act,
      the
      Exchange Act, or otherwise, then each indemnifying party shall contribute to
      such amount paid or payable by such indemnified party in such proportion as
      is
      appropriate to reflect not only such relative benefits but also the relative
      fault of the Company on the one hand and the Placement Agent on the other in
      connection with the statements or omissions which resulted in such losses,
      claims, damages, liabilities or expenses (or actions in respect thereof), as
      well as any other relevant equitable considerations. The relative benefits
      received by the Company on the one hand and the Placement Agent on the other
      shall be deemed to be in the same proportion as the total net proceeds from
      the
      Offering (before deducting expenses) received by the Company bear to the total
      compensation received by the Placement Agent and selected dealers if any
      participating with the Placement Agent. The relative fault, in the case of
      an
      untrue statement, alleged untrue statement, omission or alleged omission will
      be
      determined by, among other things, whether such statement, alleged statement,
      omission or alleged omission relates to information supplied by the Company
      or
      by the Placement Agent (or participating selected dealers), and the parties’
relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such statement, alleged statement, omission or alleged omission. The
      Company and the Placement Agent agree that it would be unjust and inequitable
      if
      the respective obligations of the Company and the Placement Agent for
      contribution were determined by pro rata allocation of the aggregate losses,
      liabilities, claims, damages and expenses or by any other method or allocation
      that does not reflect the equitable considerations referred to in this
Section 11.
      No
      person guilty of a fraudulent misrepresentation (within the meaning of Section
      10(f) of the Act) will be entitled to contribution from any person who is not
      guilty of such fraudulent misrepresentation. For purposes of this Section 11,
      each
      person, if any, who controls the Placement Agent within the meaning of the
      Act
      will have the same rights to contribution as the Placement Agent, and each
      person, if any, who controls the Company within the meaning of the Act will
      have
      the same rights to contribution as the Company, subject in each case to the
      provisions of this Section 11.
      Anything in this Section 11
      to the
      contrary notwithstanding, no party will be liable for contribution with respect
      to the settlement of any claim or action effected without its written consent.
      This Section 11
      is
      intended to supersede, to the extent permitted by law, any right to contribution
      under the Act, the Exchange Act or otherwise available.

     

    12.  Termination.
      

     

    (a)  This
      Agreement may be terminated by the Placement Agent at any time prior to the
      expiration of the Offering Period in the event that: (i) any of the
      representations or warranties of the Company contained herein or in the
      Memorandum shall prove to have been false or misleading in any material respect
      when made or deemed made; (ii) the Company shall have failed to perform any
      of
      its material obligations hereunder; (iii) the Placement Agent shall determine
      in
      good faith that it is reasonably likely that any of the conditions to Closing
      set forth herein will not or cannot be satisfied prior to the expiration of
      the
      Offering Period; or (iv) there shall occur any event which materially and
      adversely affects the transactions contemplated hereby not occasioned by or
      arising out of or in connection with any breach or failure hereunder on the
      part
      of the Placement Agent. In the event of any such termination occasioned by
      or
      arising out of or in connection with any breach or failure hereunder described
      in clauses (i), (ii), (iii) or (iv) above, the Placement Agent shall be entitled
      to receive, upon demand, in addition to other rights and remedies it may have
      hereunder, at law or otherwise, an amount equal to the sum of: (A) all unpaid
      Selling Commissions, Marketing Allowance, Management Fee earned through the
      date
      of termination of this Agreement by Placement Agent based upon the amount of
      funds then in escrow, (B) reimbursement for all reasonable expenses incurred
      by
      the Placement Agent through the date of such termination, including without
      limitation, the unpaid Expense Reimbursement, and (C) the amounts that may
      become payable thereafter as a result of purchases of the Company’s securities
      by Post-Closing Investors in accordance with the terms of Section 3(c)
      above.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

       

    

    (b)  The
      Company may terminate this Agreement at any time prior to the expiration of
      the
      Offering Period in the event: (i) any of the representations or warranties
      of
      the Placement Agent contained herein shall prove to have been false or
      misleading in any material respect when made or deemed made; (ii) the Placement
      Agent shall have failed to perform any of its material obligations hereunder
      and
      such failure cannot be cured by Placement Agent within a reasonable period
      of
      time after receipt by the Placement Agent from the Company of notice of the
      occurrence of such failure; (iii) there shall occur any event described in
      Section 12(a)(iv)
      above
      not occasioned by or arising out of or in connection with any breach or failure
      hereunder on the part of the Company; (iv) there is less than $7,000,000 funded
      into the Escrow Account on December 10, 2006; or (v) of the gross negligence,
      bad faith, or willful misconduct of the Placement Agent or any selected dealers
      participating with Placement Agent in connection with the Offering. In the
      event
      of any termination by the Company pursuant to clause (i), (ii), (iii) or (iv)
      above, the Company shall be entitled to reimbursement for all reasonable
      expenses incurred by the Placement Agent through the date of such termination,
      including without limitation, the unpaid Expense Reimbursement and the amounts
      that may become payable thereafter as a result of purchases of the Company’s
      securities by Post-Closing Investors in accordance with the terms of
Section 3(c)
      above In
      the event of any termination by the Company pursuant to clause (v) above, the
      Placement Agent shall not be entitled to any further compensation hereunder.
      

     

    13.  Survival.
      The
      provisions of Sections
      3(c), 5(l), 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19
      shall
      survive any termination hereunder.

     

    14.  Notices.
      All
      communications hereunder will be in writing and, except as otherwise expressly
      provided herein or after notice by one party to the other of a change of
      address, if sent to the Placement Agent, will be mailed, delivered or telefaxed
      and confirmed to National Securities Corporation, 875 N. Michigan Avenue, Suite
      1560, Chicago, IL 60611 telefax number (312) 751-0769, with a copy to Littman
      Krooks LLP, 655 Third Avenue, 20th Floor, New York, NY 10017, Attn: Steven
      D.
      Uslaner, Esq., telefax number (212) 490-2990, and if sent to the Company, will
      be mailed, delivered or telefaxed and confirmed to Lee Wiskowski, Executive
      Vice
      President, Capital Growth Systems, Inc., 3111 N. Seminary Street; Suite 1N,
      Chicago, IL 60657, telefax number (773) 525-1881 with a copy to Shefsky &
Froelich Ltd., 111 East Wacker Drive, Suite 2800, Chicago, IL 60601, Attn:
      Mitchell D. Goldsmith, telefax number (312) 527-3194.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    15.  Governing
      Law, Jurisdiction.
      This
      Agreement shall be deemed to have been made and delivered in New York and shall
      be governed as to validity, interpretation, construction, effect and in all
      other respects by the internal laws of the State of New York without regard
      to
      principles of conflicts of law thereof. Any and all disputes, controversies
      or
      claims arising out of or relating to this Agreement, or the breach, termination
      or invalidity thereof, shall be finally and exclusively resolved by arbitration
      in accordance with the Rules of the NASD as at present in force. The arbitration
      shall take place in New York, New York. The parties hereby submit themselves
      to
      the exclusive jurisdiction of the arbitration tribunal in New York, New York
      under the auspices of NASD. To the extent permitted by law, the award of the
      arbitrators may include, without limitation, one or more of the following:
      a
      monetary award, a declaration of rights, an order of specific performance,
      an
      injunction, reformation of the contract. The decision of the arbitrators shall
      be final and binding upon the parties hereto, and judgment on the award may
      be
      entered in any court having jurisdiction over the subject matter thereof. The
      cash expenses of the arbitration (including without limitation reasonable fees
      and expenses of counsel, experts and consultants) shall be borne by the party
      against whom the decision of the arbitrators is rendered; provided that if
      a
      party prevails only partially, such party shall be entitled to be reimbursed
      for
      such costs and expenses in the proportion that the dollar amount successfully
      claimed by the prevailing party bears to the aggregate dollar amount
      claimed.

     

    16.  Miscellaneous.
      No
      provision of this Agreement may be changed or terminated except by a writing
      signed by the party or parties to be charged therewith. Unless expressly so
      provided, no party to this Agreement will be liable for the performance of
      any
      other party’s obligations hereunder. Either party hereto may waive compliance by
      the other with any of the terms, provisions and conditions set forth herein;
      provided, however, that any such waiver shall be in writing specifically setting
      forth those provisions waived thereby. No such waiver shall be deemed to
      constitute or imply waiver of any other term, provision or condition of this
      Agreement. Neither party may assign its rights or obligations under this
      Agreement to any other person or entity without the prior written consent of
      the
      other party.

     

    17.  Entire
      Agreement; Severability.
      This
      Agreement together with any other agreement referred to herein supersedes all
      prior understandings and written or oral agreements between the parties with
      respect to the Offering and the subject matter hereof, and expressly supersedes
      the Memorandum of Understanding between the parties dated as of August 24,
      2006.
      If any portion of this Agreement shall be held invalid or unenforceable, then
      so
      far as is reasonable and possible (i) the remainder of this Agreement shall
      be
      considered valid and enforceable and (ii) effect shall be given to the intent
      manifested by the portion held invalid or unenforceable.

     

    18.  Amounts
      Payable to Placement Agent.
      All
      amounts payable to the Placement Agent by the Company which are not paid within
      thirty (30) days of the dates payable shall accrue interest at the rate of
      twelve percent (12%) per annum from the date due until paid. 

     

    19.  Press
      Releases.
      On or
      after the Closing, the Company may issue a press release or otherwise make
      a
      public statement or announcement with respect to this Agreement or the
      transactions contemplated hereby or the existence of this Agreement (including,
      without limitation, by filing a copy of this Agreement with the Commission);
      provided, however, that prior to issuing any such press release, or making
      any
      such public statement or announcement, the Company shall consult with and obtain
      the consent of the Placement Agent on the form and substance of such press
      release or other disclosure.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    20.  Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which when taken
      together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered to
      the
      other party, it being understood that both parties need not sign the same
      counterpart. In the event that any signature is delivered by facsimile
      transmission or by e-mail delivery of a “.pdf” format data file, such signature
      shall create a valid and binding obligation of the party executing (or on whose
      behalf such signature is executed) with the same force and effect as if such
      facsimile or “.pdf” signature page were an original thereof. 

     

    If
      the
      foregoing is in accordance with your understanding of the agreement, kindly
      sign
      and return this Agreement, whereupon it will become a binding agreement between
      the Company and the Placement Agent in accordance with its terms.

     

    
      	
              1023122_3

            	 	
              Capital
                Growth Systems, Inc.

            
	
              ACCEPTED
                AND AGREED to this 14th 

            	 	 
	
              day
                of November, 2006:

            	 	
              By:

            	 
	 	 	 	
              Thomas
                G. Hudson

            
	
              National
                Securities Corporation

            	 	 	
              Chief
                Executive Officer

            
	 	 	 
	
              By:

            	 	 	 
	 	
              Brian
                Friedman

            	 	 
	 	
              Director
                Corporate Finance

            	 	 


    

    


    


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    SCHEDULE
      1

     

    COMPANY
      DISCLOSURE SCHEDULE

     

    [NONE]

     

    


    


    
      
        
        

      

      
        S1-1

        
          

        

      

      
        
        

      

    



    EXHIBIT
      A

     

    FORM
      OF LEGAL OPINION

     

    1. Each
      of
      the Company and its Subsidiaries have been duly organized as a corporation
      and
      is validly existing and in good standing under the laws of the jurisdiction
      of
      its incorporation, has full corporate power and authority to own, lease and
      operate its properties and conduct its business as described in the Memorandum
      and is duly qualified as a foreign corporation for the transaction of business
      and is in good standing in each jurisdiction where the conduct of its business
      makes such qualification necessary, except where the failure to so qualify
      would
      not have a material adverse effect on the (i) assets, liabilities, results of
      operations, condition (financial or otherwise), business or business prospects
      of the Company or any of its Subsidiaries, considered as a whole or (ii) ability
      of the Company to perform its obligations under this Agreement (a "Material
      Adverse Effect").

     

    2. All
      of
      the issued and outstanding capital stock of each Subsidiary has been duly
      authorized and validly issued, is fully paid and non-assessable and is owned
      by
      the Company, directly or through subsidiaries, to the knowledge of such counsel,
      free and clear of any security interest, mortgage, pledge, lien, encumbrance
      or,
      to the knowledge of such counsel, any pending or threatened claim. 

     

    3. The
      authorized capital stock of the Company on the date hereof consists of (i)
      [_______________] shares of Common Stock, [$0.___] par value per share, and
      (ii)
      [_________________] shares of Preferred Stock, [$0.____] par value per share.
      The authorized capital stock of the Company conforms in all material respects
      as
      to legal matters to the descriptions thereof set forth in the Memorandum under
      the caption “Description of Capital Stock.”

     

    4. The
      shares of Preferred Stock (“Shares”), the Warrants and the Placement Agent
      Warrants have been duly authorized for issuance by all necessary corporate
      action on the part of the Company. The Shares and the Shares issuable upon
      exercise of the Warrants (“Warrant Preferred Shares”) and the Placement Agent
      Warrants (“Placement Agent Warrant Preferred Shares”) when issued, sold and
      delivered against payment therefore in accordance with the provisions of the
      Memorandum, the Subscription Agreements, the Placement Agency Agreement, as
      applicable, will be duly and validly issued, fully paid and non-assessable.
      Immediately following the filing of the Charter Amendment, the Company will
      have
      all requisite power and authority to issue and deliver the shares of Common
      Stock issuable upon conversion of Shares (“Conversion Shares”), the shares of
      Common Stock issuable upon conversion of the Warrant Preferred Shares (the
      “Warrant Common Shares”) and the shares of Common Stock issuable upon conversion
      of the Placement Agent Warrant Preferred Shares (the “Placement Agent Warrant
      Common Shares”). No shareholder of the Company or any other person holding
      securities of the Company has any preemptive right, right of first refusal
      or
      other similar right to subscribe for or purchase securities of the Company
      as a
      result of the issuance of any of the foregoing securities arising (i) by
      operation of the articles of incorporation or bylaws of the Company or the
      Florida Business Corporation Act, or (ii) to such counsel’s knowledge,
      otherwise. 

     

    
      
        
        

      

      
        A-1

        
          

        

      

      
        
        

      

       

    

    5. The
      execution and delivery by the Company of the Transaction Documents to which
      it
      is a party and the consummation by the Company of the transactions contemplated
      thereby have been duly authorized by all necessary corporate action on the
      part
      of the Company and duly executed and delivered by the Company. Each of the
      Transaction Documents to which it is a party constitutes the legal, valid and
      binding obligation of the Company, enforceable against the Company in accordance
      with its terms, subject to qualification by operation of applicable bankruptcy
      laws or equitable principles applied pursuant to judicial
      authority.

     

    6. The
      execution and delivery by the Company of the Transaction Documents to which
      it
      is a party and the consummation by the Company of the transactions contemplated
      thereby will not (i) violate the provisions of the Florida Business Corporation
      Act or any United States federal or state law, rule or regulation known to
      us to
      be currently applicable to the Company or (ii) violate the provisions of the
      Company’s Articles of Incorporation or By-Laws; (iii) violate any judgment,
      decree, order or award known to us of any court, governmental body or arbitrator
      having jurisdiction over the Company; or (iv) result in the breach or
      termination of any material term or provision of an agreement known to us to
      which the Company is a party, except in any such case where the breach or
      violation would not have a Material Adverse Effect on the Company or its ability
      to perform its obligations under the Transaction Documents.

     

    7. To
      our
      knowledge, there is no action, proceeding or litigation pending or threatened
      against the Company before any court, governmental or administrative agency
      or
      body.

     

    8. Each
      document filed pursuant to the Exchange Act (other than the financial statements
      and schedules included therein or in exhibits thereto and other financial,
      accounting and statistical data and information contained therein, as to which
      no opinion need be rendered) when so filed, to the extent filed by us or
      reviewed by us, appeared on their face to comply when so filed as to form in
      all
      material respects with the applicable requirements of the Exchange Act and
      the
      rules and regulations thereunder.

     

    9. Either
      (i) no consent, approval or authorization of, or other action by, and no notice
      to or filing with, any United States federal or state governmental authority
      on
      the part of the Company is required in connection with the valid execution
      and
      delivery of the Transaction Documents to which it is a party and the
      consummation by the Company of the transactions contemplated thereunder, except
      for (A) the filing of a Form D that may be filed with the United States
      Securities and Exchange Commission; (B) any filings under the securities laws
      of
      the various jurisdictions in which the Shares, Warrants and Placement Agent
      Warrants are being offered and sold in the Offering; and (C) any filings
      relating to public disclosure of the transactions contemplated by the
      Transaction Documents, or (ii) any required consent, approval, authorization,
      action or filing has been obtained, performed or made by the
      Company.

     

    10. Assuming
      that the Shares were sold only to "accredited investors" (as defined in Rule
      501
      of Regulation D promulgated under the Securities Act of 1933, as amended ("1933
      Act")) and the Placement Agent complied in all material respects with Regulation
      D and the terms and conditions of the Offering set forth in the Placement Agency
      Agreement, including the accuracy of the factual representations made by the
      Company therein, such sales were made in conformity in all material respects
      with the requirements of Section 4(2) of the 1933 Act and Regulation D, and
      with
      the requirements of all other United States federal regulations applicable
      to
      the Company currently in effect relating to private offerings of securities
      of
      the type made in the Offering.

     

    
      
        
        

      

      
        A-2

        
          

        

      

      
        
        

      

       

    

    11. We
      participated in the preparation of the Memorandum and in conferences with
      officers and other representatives of the Company, at which the contents of
      the
      Memorandum and related matters were discussed, and although we have not
      undertaken to determine independently, and do not assume any responsibility
      for,
      the accuracy or completeness of the statements contained in the Memorandum,
      based on such conferences and our participation in the preparation of the
      Memorandum, and any amendment or supplement thereto (other than the financial
      statements, including supporting schedules and other financial and statistical
      information derived therefrom), to our knowledge the Memorandum, as of its
      date,
      does not contain any untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading.

     

    


    1042593_1

    


    


    


     

    


    
      
        
        

      

      
        A-3

        
          

        

      

      
        
        

      

    



    EXHIBIT
      B

     

    FORM
      OF PLACEMENT AGENT WARRANT

     

    [SAME
      AS INVESTOR WARRANT EXCEPT FOR CASHLESS PROVISION]

     

    


    


    
      
        
        

      

      
        B-1