Document:

Unassociated Document

     

    
      Exhibit
        10.4

       

      SUBSIDIARY
        GUARANTEE

       

      SUBSIDIARY
        GUARANTEE, dated as of November __, 2008 (this “Guarantee”), made by each of the
        signatories hereto (together with any other entity that may become a party
        hereto as provided herein, the “Guarantors”), in favor of Vanco plc (in
        administration) (together with its permitted assigns, “Vanco”).

       

      WITNESSETH:

       

      WHEREAS,
        pursuant to that certain Interest and Loan Purchase Agreement, dated as of
        the
        date hereof, by and between Capital Growth Systems, Inc., a Florida corporation
        (the “Company”), Capital Growth Acquisition Inc., a wholly owned subsidiary of
        the Company (“CGAI”), Vanco and Vanco Direct USA, LLC, a wholly owned subsidiary
        of Vanco (“VDUL”) (the “Purchase Agreement”), in partial consideration for all
        of the outstanding membership interests of VDUL, the Company has agreed to
        sell
        and issue to Vanco the Company’s Variable
        Rate Convertible
        Debenture, due seven years following its issuance (the “Debenture”), subject to
        the terms and conditions set forth therein; and

       

      WHEREAS,
        each Guarantor will directly benefit from the extension of credit to the
        Company
        represented by the issuance of the Debenture; and 

       

      NOW,
        THEREFORE, in consideration of the premises and to induce Vanco to enter
        into
        the Purchase Agreement and purchase the Debenture and to carry out the
        transactions contemplated thereby, each Guarantor hereby agrees with Vanco
        as
        follows:

       

      1. Definitions.
        Unless otherwise defined herein, terms defined in the Debenture and used
        herein
        shall have the meanings given to them in the Debenture. The words “hereof,”
“herein,” “hereto” and “hereunder” and words of similar import when used in this
        Guarantee shall refer to this Guarantee as a whole and not to any particular
        provision of this Guarantee, and Section and Schedule references are to this
        Guarantee unless otherwise specified. The meanings given to terms defined
        herein
        shall be equally applicable to both the singular and plural forms of such
        terms.
        The following terms shall have the following meanings:

       

      “Affiliate”
        means any Person that, directly or indirectly through one or more
        intermediaries, controls or is controlled by or is under common control with
        a
        Person, as such terms are used in and construed under Rule 405 under the
        Securities Act.

       

      “Guarantee”
        means this Subsidiary Guarantee, as the same may be amended, supplemented
        or
        otherwise modified from time to time.

       

      “Lien”
        means a lien, charge, security interest, encumbrance, right of first refusal,
        preemptive right or other restriction.

       

      “Obligations”
        means, in addition to all other costs and expenses of collection incurred
        by
        Vanco in enforcing any of such Obligations and/or this Guarantee, all of
        the
        liabilities and obligations (primary, secondary, direct, contingent, sole,
        joint
        or several) due or to become due, or that are now or may be hereafter contracted
        or acquired, or owing to, of the Company or any Guarantor to Vanco, including,
        without limitation, all obligations under this Guarantee, the Debenture and
        any
        other instruments, agreements or other documents executed and/or delivered
        in
        connection herewith or therewith, in each case, whether now or hereafter
        existing, voluntary or involuntary, direct or indirect, absolute or contingent,
        liquidated or unliquidated, whether or not jointly owed with others, and
        whether
        or not from time to time decreased or extinguished and later increased, created
        or incurred, and all or any portion of such obligations or liabilities that
        are
        paid, to the extent all or any part of such payment is avoided or recovered
        directly or indirectly from Vanco as a preference, fraudulent transfer or
        otherwise as such obligations may be amended, supplemented, converted, extended
        or modified from time to time. Without limiting the generality of the foregoing,
        the term “Obligations” shall include, without limitation: (i) principal of, and
        interest on the Debenture and the loans extended pursuant thereto; (ii) any
        and
        all other fees, indemnities, costs, obligations and liabilities of the Company
        or any Guarantor from time to time under or in connection with this Guarantee,
        the Debenture and any other instruments, agreements or other documents executed
        and/or delivered in connection herewith or therewith; and (iii) all amounts
        (including but not limited to post-petition interest) in respect of the
        foregoing that would be payable but for the fact that the obligations to
        pay
        such amounts are unenforceable or not allowable due to the existence of a
        bankruptcy, reorganization or similar proceeding involving the Company or
        any
        Guarantor. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Person”
        means an individual or corporation, partnership, trust, incorporated or
        unincorporated association, joint venture, limited liability company, joint
        stock company, government (or an agency or subdivision thereof) or other
        entity
        of any kind.

       

      “Subsidiary”
        means any direct or indirect subsidiary of the Company.

       

      2. Guarantee.

       

      (a) Guarantee.

       

      (i) The
        Guarantors hereby, jointly and severally, unconditionally and irrevocably,
        guarantee to Vanco and its successors, indorsees, transferees and assigns,
        the
        prompt and complete payment and performance when due (whether at the stated
        maturity, by acceleration or otherwise) of the Obligations. 

       

      (ii) The
        maximum liability of each Guarantor hereunder shall in no event exceed the
        amount which can be guaranteed by such Guarantor under applicable federal
        and
        state laws, including laws relating to the insolvency of debtors, fraudulent
        conveyance or transfer or laws affecting the rights of creditors generally
        (after giving effect to the right of contribution established in Section
        2(b)).
        

       

      (iii) Each
        Guarantor agrees that the Obligations may at any time and from time to time
        exceed the amount of the liability of such Guarantor hereunder without impairing
        the guarantee contained in this Section
        2
        or affecting the rights and remedies of Vanco hereunder.

       

      (iv) The
        guarantee contained in this Section
        2
        shall remain in full force and effect until all the Obligations and the
        obligations of each Guarantor under the guarantee contained in this Section
        2
        shall have been satisfied by indefeasible payment in full. 

       

      (v) No
        payment made by the Company, any of the Guarantors, any other guarantor or
        any
        other Person or received or collected by Vanco from the Company, any of the
        Guarantors, any other guarantor or any other Person by virtue of any action
        or
        proceeding or any set-off or appropriation or application at any time or
        from
        time to time in reduction of or in payment of the Obligations shall be deemed
        to
        modify, reduce, release or otherwise affect the liability of any Guarantor
        hereunder which shall, notwithstanding any such payment (other than any payment
        made by such Guarantor in respect of the Obligations or any payment received
        or
        collected from such Guarantor in respect of the Obligations), remain liable
        for
        the Obligations up to the maximum liability of such Guarantor hereunder until
        the Obligations are indefeasibly paid in full.

       

      (vi) Notwithstanding
        anything to the contrary in this Guarantee, with respect to any defaulted
        non-monetary Obligations the specific performance of which by the Guarantors
        is
        not reasonably possible (e.g. the issuance of the Company's Common Stock),
        the
        Guarantors shall only be liable for making Vanco whole on a monetary basis
        for
        the Company's failure to perform such Obligations in accordance with the
        Debenture. 

       

       

      
        
          
          

        

        
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      (b) Right
        of Contribution.
        Subject to Section
        2(c),
        each Guarantor hereby agrees that to the extent that a Guarantor shall have
        paid
        more than its proportionate share of any payment made hereunder, such Guarantor
        shall be entitled to seek and receive contribution from and against any other
        Guarantor hereunder which has not paid its proportionate share of such payment.
        Each Guarantor's right of contribution shall be subject to the terms and
        conditions of Section
        2(c).
        The provisions of this Section
        2(b)
        shall in no respect limit the obligations and liabilities of any Guarantor
        to
        Vanco and each Guarantor shall remain liable to Vanco for the full amount
        guaranteed by such Guarantor hereunder.

       

      (c) No
        Subrogation.
        Notwithstanding any payment made by any Guarantor hereunder or any set-off
        or
        application of funds of any Guarantor by Vanco, no Guarantor shall be entitled
        to be subrogated to any of the rights of Vanco against the Company or any
        other
        Guarantor or any collateral security or guarantee or right of offset held
        by
        Vanco for the payment of the Obligations, nor shall any Guarantor seek or
        be
        entitled to seek any contribution or reimbursement from the Company or any
        other
        Guarantor in respect of payments made by such Guarantor hereunder, until
        all
        amounts owing to Vanco by the Company on account of the Obligations are
        indefeasibly paid in full. If any amount shall be paid to any Guarantor on
        account of such subrogation rights at any time when all of the Obligations
        shall
        not have been paid in full, such amount shall be held by such Guarantor in
        trust
        for Vanco, segregated from other funds of such Guarantor, and shall, forthwith
        upon receipt by such Guarantor, be turned over to Vanco in the exact form
        received by such Guarantor (duly indorsed by such Guarantor to Vanco, if
        required), to be applied against the Obligations, whether matured or unmatured,
        in such order as Vanco may determine.

       

      (d) Amendments,
        Etc. With Respect to the Obligations.
        Each Guarantor shall remain obligated hereunder notwithstanding that, without
        any reservation of rights against any Guarantor and without notice to or
        further
        assent by any Guarantor, any demand for payment of any of the Obligations
        made
        by Vanco may be rescinded by Vanco and any of the Obligations continued,
        and the
        Obligations, or the liability of any other Person upon or for any part thereof,
        or any collateral security or guarantee therefor or right of offset with
        respect
        thereto, may, from time to time, in whole or in part, be renewed, extended,
        amended, modified, accelerated, compromised, waived, surrendered or released
        by
        Vanco, and the Purchase Agreement and the Debenture and any other documents
        executed and delivered in connection therewith may be amended, modified,
        supplemented or terminated, in whole or in part, as Vanco may deem advisable
        from time to time, and any collateral security, guarantee or right of offset
        at
        any time held by Vanco for the payment of the Obligations may be sold,
        exchanged, waived, surrendered or released. Vanco shall have no obligation
        to
        protect, secure, perfect or insure any Lien at any time held by them as security
        for the Obligations or for the guarantee contained in this Section
        2
        or any property subject thereto. 

       

      (e) Guarantee
        Absolute and Unconditional.
        Each Guarantor waives any and all notice of the creation, renewal, extension
        or
        accrual of any of the Obligations and notice of or proof of reliance by Vanco
        upon the guarantee contained in this Section
        2
        or acceptance of the guarantee contained in this Section
        2;
        the Obligations, and any of them, shall conclusively be deemed to have been
        created, contracted or incurred, or renewed, extended, amended or waived,
        in
        reliance upon the guarantee contained in this Section
        2;
        and all dealings between the Company and any of the Guarantors, on the one
        hand,
        and Vanco, on the other hand, likewise shall be conclusively presumed to
        have
        been had or consummated in reliance upon the guarantee contained in this
        Section
        2.
        Each Guarantor waives to the extent permitted by law diligence, presentment,
        protest, demand for payment and notice of default or nonpayment to or upon
        the
        Company or any of the Guarantors with respect to the Obligations. Each Guarantor
        understands and agrees that the guarantee contained in this Section
        2
        shall be construed as a continuing, absolute and unconditional guarantee
        of
        payment and performance without regard to (a) the validity or enforceability
        of
        the Purchase Agreement or the Debenture, any of the Obligations or any other
        collateral security therefor or guarantee or right of offset with respect
        thereto at any time or from time to time held by Vanco, (b) any defense,
        set-off
        or counterclaim (other than a defense of payment or performance or fraud
        by
        Vanco) which may at any time be available to or be asserted by the Company
        or
        any other Person against Vanco, or (c) any other circumstance whatsoever
        (with
        or without notice to or knowledge of the Company or such Guarantor) which
        constitutes, or might be construed to constitute, an equitable or legal
        discharge of the Company for the Obligations, or of such Guarantor under
        the
        guarantee contained in this Section
        2,
        in bankruptcy or in any other instance. When making any demand hereunder
        or
        otherwise pursuing its rights and remedies hereunder against any Guarantor,
        Vanco may, but shall be under no obligation to, make a similar demand on
        or
        otherwise pursue such rights and remedies as they may have against the Company,
        any other Guarantor or any other Person or against any collateral security
        or
        guarantee for the Obligations or any right of offset with respect thereto,
        and
        any failure by Vanco to make any such demand, to pursue such other rights
        or
        remedies or to collect any payments from the Company, any other Guarantor
        or any
        other Person or to realize upon any such collateral security or guarantee
        or to
        exercise any such right of offset, or any release of the Company, any other
        Guarantor or any other Person or any such collateral security, guarantee
        or
        right of offset, shall not relieve any Guarantor of any obligation or liability
        hereunder, and shall not impair or affect the rights and remedies, whether
        express, implied or available as a matter of law, of Vanco against any
        Guarantor. For the purposes hereof, “demand” shall include the commencement and
        continuance of any legal proceedings.

       

       

      
        
          
          

        

        
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      (f) Reinstatement.
        The guarantee contained in this Section
        2
        shall continue to be effective, or be reinstated, as the case may be, if
        at any
        time payment, or any part thereof, of any of the Obligations is rescinded
        or
        must otherwise be restored or returned by Vanco upon the insolvency, bankruptcy,
        dissolution, liquidation or reorganization of the Company or any Guarantor,
        or
        upon or as a result of the appointment of a receiver, intervenor or conservator
        of, or trustee or similar officer for, the Company or any Guarantor or any
        substantial part of its property, or otherwise, all as though such payments
        had
        not been made.

       

      (g) Payments.
        Each Guarantor hereby guarantees that payments hereunder will be paid to
        Vanco
        without set-off or counterclaim in U.S. dollars at the address set forth
        or
        referred to in the Purchase Agreement.

       

      3. Representations
        and Warranties.
        Each Guarantor hereby makes the following representations and warranties
        to
        Vanco as of the date hereof:

       

      (a) Organization
        and Qualification. The Guarantor is a corporation or limited liability
        company, duly incorporated or organized, validly existing and in good standing
        under the laws of the applicable jurisdiction set forth on Schedule 1,
        with the requisite corporate power and authority to own and use its properties
        and assets and to carry on its business as currently conducted. The Guarantor
        is
        duly qualified to do business and is in good standing as a foreign corporation
        in each jurisdiction in which the nature of the business conducted or property
        owned by it makes such qualification necessary, except where the failure
        to be
        so qualified or in good standing, as the case may be, could not, individually
        or
        in the aggregate, (x) adversely affect the legality, validity or enforceability
        of any of this Guaranty in any material respect, (y) have a material adverse
        effect on the results of operations, assets, prospects, or financial condition
        of the Guarantor or (z) adversely impair in any material respect the Guarantor's
        ability to perform fully on a timely basis its obligations under this Guaranty
        (a “Material Adverse Effect”).

       

      (b) Authorization;
        Enforcement.
        The Guarantor has the requisite corporate or limited liability company power
        and
        authority to enter into and to consummate the transactions contemplated by
        this
        Guaranty, and otherwise to carry out its obligations hereunder. The execution
        and delivery of this Guaranty by the Guarantor and the consummation by it
        of the
        transactions contemplated hereby have been duly authorized by all requisite
        corporate or limited liability company action on the part of the Guarantor.
        This
        Guaranty has been duly executed and delivered by the Guarantor and constitutes
        the valid and binding obligation of the Guarantor enforceable against the
        Guarantor in accordance with its terms, except as such enforceability may
        be
        limited by applicable bankruptcy, insolvency, reorganization, moratorium,
        liquidation or similar laws relating to, or affecting generally the enforcement
        of, creditors' rights and remedies or by other equitable principles of general
        application.

       

       

      
        
          
          

        

        
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      (c) No
        Conflicts.
        The execution, delivery and performance of this Guaranty by the Guarantor
        and
        the consummation by the Guarantor of the transactions contemplated thereby
        do
        not and will not (i) conflict with or violate any provision of its Certificate
        of Incorporation, By-laws or other organizational documents or (ii) conflict
        with, constitute a default (or an event which with notice or lapse of time
        or
        both would become a default) under, or give to others any rights of termination,
        amendment, acceleration or cancellation of, any agreement, indenture or
        instrument to which the Guarantor is a party, or (iii) result in a violation
        of
        any law, rule, regulation, order, judgment, injunction, decree or other
        restriction of any court or governmental authority to which the Guarantor
        is
        subject (including Federal and State securities laws and regulations), or
        by
        which any material property or asset of the Guarantor is bound or affected,
        except in the case of each of clauses (ii) and (iii), such conflicts, defaults,
        terminations, amendments, accelerations, cancellations and violations as
        could
        not, individually or in the aggregate, have or result in a Material Adverse
        Effect. The business of the Guarantor is not being conducted in violation
        of any
        law, ordinance or regulation of any governmental authority, except for
        violations which, individually or in the aggregate, do not have a Material
        Adverse Effect.

       

      (d) Consents
        and Approvals.
        The Guarantor is not required to obtain any consent, waiver, authorization
        or
        order of, or make any filing or registration with, any court or other federal,
        state, local, foreign or other governmental authority or other person in
        connection with the execution, delivery and performance by the Guarantor
        of this
        Guaranty.

       

      (e) Purchase
        Agreement.
        The representations and warranties of the Company set forth in the Purchase
        Agreement as they relate to such Guarantor, each of which is hereby incorporated
        herein by reference, are true and correct as of each time such representations
        are deemed to be made pursuant to such Purchase Agreement, and Vanco shall
        be
        entitled to rely on each of them as if they were fully set forth herein,
        provided that each reference in each such representation and warranty to
        the
        Company's knowledge shall, for the purposes of this Section
        3,
        be deemed to be a reference to such Guarantor's knowledge. 

       

      (f) Foreign
        Law.
        Each Guarantor has consulted with appropriate foreign legal counsel with
        respect
        to any of the above representations for which non-U.S. law is applicable.
        Such
        foreign counsel have advised each applicable Guarantor that such counsel
        knows
        of no reason why any of the above representations would not be true and
        accurate. Such foreign counsel were provided with copies of this Subsidiary
        Guarantee and the Debenture prior to rendering their advice. 

       

       

      
        
          
          

        

        
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      4. Covenants.
        Each
        Guarantor covenants and agrees with Vanco that, from and after the date of
        this
        Guarantee until the Obligations shall have been indefeasibly paid in full,
        such
        Guarantor shall take, and/or shall refrain from taking, as the case may be,
        each
        commercially reasonable action that is necessary to be taken or not taken,
        as
        the case may be, so that no Event of Default (as defined in the Debenture)
        is
        caused by the failure to take such action or to refrain from taking such
        action
        by such Guarantor. 

       

      5. Miscellaneous.

       

      (a) Amendments
        in Writing.
        None of the terms or provisions of this Guarantee may be waived, amended,
        supplemented or otherwise modified except in writing by Vanco.

       

      (b) Notices.
        All notices, requests and demands to or upon Vanco or any Guarantor hereunder
        shall be effected in the manner provided for in the Purchase Agreement, provided
        that any such notice, request or demand to or upon any Guarantor shall be
        addressed to such Guarantor at its notice address set forth on Schedule
        5(b).

       

      (c) No
        Waiver By Course Of Conduct; Cumulative Remedies.
        Vanco shall not by any act (except by a written instrument pursuant to
Section
        5(a)),
        delay, indulgence, omission or otherwise be deemed to have waived any right
        or
        remedy hereunder or to have acquiesced in any default under the Debenture
        or
        Event of Default. No failure to exercise, nor any delay in exercising, on
        the
        part of Vanco, any right, power or privilege hereunder shall operate as a
        waiver
        thereof. No single or partial exercise of any right, power or privilege
        hereunder shall preclude any other or further exercise thereof or the exercise
        of any other right, power or privilege. A waiver by Vanco of any right or
        remedy
        hereunder on any one occasion shall not be construed as a bar to any right
        or
        remedy which Vanco would otherwise have on any future occasion. The rights
        and
        remedies herein provided are cumulative, may be exercised singly or concurrently
        and are not exclusive of any other rights or remedies provided by
        law.

       

      (d) Enforcement
        Expenses; Indemnification.

       

      (i) Each
        Guarantor agrees to pay, or reimburse Vanco for, all its costs and expenses
        incurred in collecting against such Guarantor under the guarantee contained
        in
Section
        2
        or otherwise enforcing or preserving any rights under this Guarantee, including,
        without limitation, the reasonable fees and disbursements of counsel to
        Vanco.

       

      (ii) Each
        Guarantor agrees to pay, and to save Vanco harmless from, any and all
        liabilities with respect to, or resulting from any delay in paying, any and
        all
        stamp, excise, sales or other taxes which may be payable or determined to
        be
        payable in connection with any of the transactions contemplated by this
        Guarantee.

       

      (iii) Each
        Guarantor agrees to pay, and to save Vanco harmless from, any and all
        liabilities, obligations, losses, damages, penalties, actions, judgments,
        suits,
        costs, expenses or disbursements of any kind or nature whatsoever with respect
        to the execution, delivery, enforcement, performance and administration of
        this
        Guarantee to the extent the Company would be required to do so pursuant to
        the
        Debenture.

       

      (iv) The
        agreements in this Section shall survive repayment of the Obligations and
        all
        other amounts payable under the Debenture. 

       

      (e) Successor
        and Assigns.
        This Guarantee shall be binding upon the successors and assigns of each
        Guarantor and shall inure to the benefit of Vanco and their respective
        successors and assigns; provided that no Guarantor may assign, transfer or
        delegate any of its rights or obligations under this Guarantee without the
        prior
        written consent of Vanco.

       

       

      
        
          
          

        

        
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      (f) Set-Off.
        Each Guarantor hereby irrevocably authorizes Vanco at any time and from time
        to
        time while an Event of Default under the Debenture shall have occurred and
        be
        continuing, without notice to such Guarantor or any other Guarantor, any
        such
        notice being expressly waived by each Guarantor, to set-off and appropriate
        and
        apply any and all deposits, credits, indebtedness or claims, in any currency,
        in
        each case whether direct or indirect, absolute or contingent, matured or
        unmatured, at any time held or owing by Vanco to or for the credit or the
        account of such Guarantor, or any part thereof in such amounts as Vanco may
        elect, against and on account of the obligations and liabilities of such
        Guarantor to Vanco hereunder and claims of every nature and description of
        Vanco
        against such Guarantor, in any currency, whether arising hereunder, under
        the
        Purchase Agreement, the Debenture or otherwise, as Vanco may elect, whether
        or
        not Vanco have made any demand for payment and although such obligations,
        liabilities and claims may be contingent or unmatured. Vanco shall notify
        such
        Guarantor promptly of any such set-off and the application made by Vanco
        of the
        proceeds thereof, provided that the failure to give such notice shall not
        affect
        the validity of such set-off and application. The rights of Vanco under this
        Section are in addition to other rights and remedies (including, without
        limitation, other rights of set-off) which Vanco may have.

       

      (g) Counterparts.
        This Guarantee may be executed by one or more of the parties to this Guarantee
        on any number of separate counterparts (including by telecopy), and all of
        said
        counterparts taken together shall be deemed to constitute one and the same
        instrument. 

       

      (h) Severability.
        Any provision of this Guarantee which is prohibited or unenforceable in any
        jurisdiction shall, as to such jurisdiction, be ineffective to the extent
        of
        such prohibition or unenforceability without invalidating the remaining
        provisions hereof, and any such prohibition or unenforceability in any
        jurisdiction shall not invalidate or render unenforceable such provision
        in any
        other jurisdiction. 

       

      (i) Section
        Headings.
        The Section headings used in this Guarantee are for convenience of reference
        only and are not to affect the construction hereof or be taken into
        consideration in the interpretation hereof.

       

      (j) Integration.
        This Guarantee represents the agreement of the Guarantors and Vanco with
        respect
        to the subject matter hereof, and there are no promises, undertakings,
        representations or warranties by Vanco relative to subject matter hereof
        and
        thereof not expressly set forth or referred to herein.

       

      (k) Governing
        Laws.
        All questions concerning the construction, validity, enforcement and
        interpretation of this Guarantee shall be governed by and construed and enforced
        in accordance with the internal laws of the State of New York, without regard
        to
        the principles of conflicts of law thereof. Each of the Company and the
        Guarantors agree that all proceedings concerning the interpretations,
        enforcement and defense of the transactions contemplated by this Guarantee
        (whether brought against a party hereto or its respective affiliates, directors,
        officers, shareholders, partners, members, employees or agents) shall be
        commenced exclusively in the state and federal courts sitting in the City
        of New
        York, Borough of Manhattan. Each of the Company and the Guarantors hereby
        irrevocably submits to the exclusive jurisdiction of the state and federal
        courts sitting in the City of New York, Borough of Manhattan for the
        adjudication of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein, and hereby irrevocably
        waives, and agrees not to assert in any proceeding, any claim that it is
        not
        personally subject to the jurisdiction of any such court, that such proceeding
        is improper. Each party hereto hereby irrevocably waives personal service
        of
        process and consents to process being served in any such proceeding by mailing
        a
        copy thereof via registered or certified mail or overnight delivery (with
        evidence of delivery) to such party at the address in effect for notices
        to it
        under this Guarantee and agrees that such service shall constitute good and
        sufficient service of process and notice thereof. Nothing contained herein
        shall
        be deemed to limit in any way any right to serve process in any manner permitted
        by law. Each party hereto hereby irrevocably waives, to the fullest extent
        permitted by applicable law, any and all right to trial by jury in any legal
        proceeding arising out of or relating to this Guarantee or the transactions
        contemplated hereby.

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      (l) Acknowledgements.
        Each Guarantor hereby acknowledges that:

       

      (i) it
        has been advised by counsel in the negotiation, execution and delivery of
        this
        Guarantee and the other Transaction Documents to which it is a party;

       

      (ii) Vanco
        has no fiduciary relationship with or duty to any Guarantor arising out of
        or in
        connection with this Guarantee, and the relationship between the Guarantors,
        on
        the one hand, and Vanco, on the other hand, in connection herewith or therewith
        is solely that of debtor and creditor; and 

       

      (iii) no
        joint venture is created hereby or otherwise exists by virtue of the
        transactions contemplated hereby among the Guarantors and Vanco. 

       

      (m) Additional
        Guarantors.
        The Company shall cause each of its subsidiaries formed or acquired on or
        subsequent to the date hereof to become a Guarantor for all purposes of this
        Guarantee by executing and delivering an Assumption Agreement in the form
        of
Annex
        1
        hereto.

       

      (n) Release
        of Guarantors.
        Each Guarantor will be released from all liability hereunder concurrently
        with
        the indefeasible repayment in full of all amounts owed under the Debenture.
        

       

      (o) [Reserved].
        

       

      (p) Waiver
        of Jury Trial.
        EACH GUARANTOR AND, BY ACCEPTANCE OF THE BENEFITS HEREOF, VANCO, HEREBY
        IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
        PROCEEDING RELATING TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM
        THEREIN.

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, each of the undersigned has caused this Guarantee to be
        duly
        executed and delivered as of the date first above written.

       

      

        
          	
                  20/20
                    Technologies, Inc.

                	 	
                  Magenta
                    netLogic, Limited

                
	 	 	 
	 	 	 
	
                  By:

                	 	 	
                  By:

                	 
	
                  Name:

                	 	 	
                  Name:

                	 
	
                  Title:

                	 	 	
                  Title:

                	 
	 	 	 	 	 
	 	 	 	 	 
	
                  Global
                    Capacity Group, Inc.

                	 	
                  CentrePath,
                    Inc.

                
	 	 	 	 	 
	 	 	 	 	 
	
                  By:

                	 	 	
                  By:

                	 
	
                  Name:

                	 	 	
                  Name:

                	 
	
                  Title:

                	 	 	
                  Title:

                	 
	 	 	 	 	 
	 	 	 	 	 
	
                  Nexvu
                    Technologies, LLC

                	 	
                  FNS
                    2007, INC.

                
	 	 	 	 	 
	 	 	 	 	 
	
                  By:

                	 	 	
                  By:

                	 
	
                  Name:

                	 	 	
                  Name:

                	 
	
                  Title:

                	 	 	
                  Title:

                	 
	 	 	 	 	 
	 	 	 	 	 
	
                  20/20
                    TECHNOLOGIES I, LLC

                	 	 
	 	 	 
	 	 	 
	
                  By: __________________________________

                  Name: 

                  Title: _______________________

                	 	 

        

      

      

      [ADD
        NEW SUB]

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      ANNEX
        1 TO SUBSIDIARY GUARANTEE

       

      ASSUMPTION
        AGREEMENT, dated as of ______________________, made by
        ______________________________, a ______________ corporation (the “Additional
        Guarantor”), in favor of Vanco pursuant to the Purchase Agreement referred to
        below. All capitalized terms not defined herein shall have the meaning ascribed
        to them in such Purchase Agreement. 

       

      WITNESSETH:

       

      WHEREAS,
        Capital Growth Systems, Inc., a Florida corporation (the “Company”) and Vanco
        have entered into a Interest and Loan Purchase Agreement, dated as of November
        __, 2008 (as amended, supplemented or otherwise modified from time to time,
        the
“Purchase Agreement”), and in connection therewith, the Company issued to Vanco
        a variable rate convertible debenture having a principal amount of $3 million
        (the “Debenture”); 

       

      WHEREAS,
        in connection with the Debenture, the Subsidiaries of the Company (other
        than
        the Additional Guarantor) have entered into the Subsidiary Guarantee, dated
        as
        of November __, 2008 (as amended, supplemented or otherwise modified from
        time
        to time, the “Guarantee”) in favor of Vanco; 

       

      WHEREAS,
        the Guarantee requires the Additional Guarantor to become a party to the
        Guarantee; and

       

      WHEREAS,
        the Additional Guarantor has agreed to execute and deliver this Assumption
        Agreement in order to become a party to the Guarantee;

       

      NOW,
        THEREFORE, IT IS AGREED:

       

      1. Guarantee.
        By executing and delivering this Assumption Agreement, the Additional Guarantor,
        as provided in Section
        5(m)
        of the Guarantee, hereby becomes a party to the Guarantee as a Guarantor
        thereunder with the same force and effect as if originally named therein
        as a
        Guarantor and, without limiting the generality of the foregoing, hereby
        expressly assumes all obligations and liabilities of a Guarantor thereunder.
        The
        information set forth in Annex
        1
        hereto is hereby added to the information set forth in Schedule
        1
        to the Guarantee. The Additional Guarantor hereby represents and warrants
        that
        each of the representations and warranties contained in Section
        3
        of the Guarantee is true and correct on and as the date hereof as to such
        Additional Guarantor (after giving effect to this Assumption Agreement) as
        if
        made on and as of such date.

       

      2. Governing
        Law.
        THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
        IN
        ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

       

      IN
        WITNESS WHEREOF, the undersigned has caused this Assumption Agreement to
        be duly
        executed and delivered as of the date first above written.

       

      
        	 	 	
                [ADDITIONAL
                  GUARANTOR]

              
	 	 	 
	 	 	 
	 	 	
                By:

              	 
	 	 	
                Name:

              	 
	 	 	
                Title:

              	 

      

      

        
          
            
            

          

          
            A1-1Unassociated Document

     

    
      Exhibit
        10.5

       

    CONSENT,
      WAIVER, AMENDMENT AND EXCHANGE AGREEMENT

     

    THIS
      CONSENT, WAIVER, AMENDMENT AND EXCHANGE AGREEMENT (the“Agreement”),
      dated
      as
      of November ___, 2008, is entered into by and among Capital Growth Systems,
      Inc., a Florida corporation (the “Company”),
      and
      the persons identified as “Holders” on the signature pages hereto (the
“Holders”).
      Defined terms not otherwise defined herein shall have the meanings set forth
      in
      the March Purchase Agreement (as defined below).

     

    WHEREAS,
      pursuant
      to a Securities
      Purchase Agreement, dated March 11, 2008 (the “March
      Purchase Agreement”),
      among
      the Company and the Holders, the Holders purchased from the Company an aggregate
      of $19,000,000 in principal amount of Variable Rate Secured Convertible
      Debentures of the Company (the “March
      Debentures”)
      and
      were issued warrants exercisable for shares of Common Stock (the “March
      Warrants”);

     

    WHEREAS,
      pursuant to a Securities Purchase Agreement of even date herewith in the form
      attached as Exhibit
      A
      hereto
      (the “New
      Purchase Agreement”)
      among
      the Company and the purchasers identified on the signature pages thereto
      (collectively, the “New
      Investors”),
      the
      New Investors will be purchasing $14,891,250 in aggregate principal amount
      of
      Original Issue Discount Secured Convertible Debentures due, subject to the
      terms
      therein, due in 364 days and subject to automatic extension upon the final
      closing of the Company’s acquisition of beneficial ownership of Vanco Direct
      USA, LLC (“VDUL,”
with
      the final closing being the “Final
      Closing”)
      to
      seven years from their issuance date (the “New
      Debentures”
      together with warrants to purchase shares of Common Stock (the offer and sale
      of
      such New Debentures and warrants pursuant to the New Purchase Agreement are
      hereafter referred to as the “New
      Financing”);
      and

     

    WHEREAS,
      pursuant to a Loan and Security Agreement by and among the Company and its
      Subsidiaries and ACF CGS, L.L.C. as Agent for itself and/or other lenders (the
      “Archer
      Agreement”)
      of
      even date herewith in the form attached as Exhibit
      B
      hereto
      among the Company and the investor identified on the signature pages thereto
      (“Archer”),
      Archer will be lending the Company $8,500,000 pursuant to a secured promissory
      note due 364 days from issuance but subject to automatic extension as of the
      Final Closing to 24 months following its issuance (“Archer
      Note”)
      (the
      issuance of the Archer Note pursuant to the Archer Agreement is hereafter
      referred to as the “ Archer
      Financing”);

     

    NOW
      THEREFORE,
      for
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, each Holder hereby agrees as follows:

     

    1. Waivers.
      Subject
      to the terms and conditions hereunder, each Holder hereby waives compliance
      with
      the Company’s obligation to provide, and the Holder’s right to receive, notice
      of the New Financing in accordance with the time frames set forth in Section
      4.12(b) of the March Purchase Agreement (it being understood that the waiver
      in
      this sentence shall in no way limit a Holder’s right to participate in such New
      Financing as set forth in Section 4.12 of the March Purchase Agreement), and
      each Holder hereby waives its right under Section 4.12 of the March Purchase
      Agreement to participate in the Archer Financing. In addition, subject to the
      terms and conditions hereunder, each Holder hereby waives the restrictions
      set
      forth in Sections 4.13(a) of the March Purchase Agreement and Sections 7(a)
      and
      7(b) of the March Debentures with respect to the New Financing and agrees that
      such restrictions shall not apply to the issuance of the New Debentures pursuant
      to the New Financing. Further, subject to the terms and conditions hereunder,
      each Holder hereby waives the restrictions set forth in Sections 7(a) and 7(b)
      of the March Debentures with respect to the Archer Financing and agrees that
      such restrictions shall not apply to the issuance of the Archer Note pursuant
      to
      the Archer Financing. In addition, subject to the terms and conditions
      hereunder, each Holder hereby waives the restrictions set forth in Section
      7(a)
      of the March Debentures with respect to the issuance of the Administrator
      Debenture (as defined in the New Purchase Agreement). Lastly, subject to the
      terms hereunder, each Holder hereby waives the restrictions set forth in Section
      4.13(a) of the March Purchase Agreement with respect to (i) the issuance of
      2,000,000 shares of Common Stock and warrants to purchase 15,000,000 shares
      of
      Common Stock to Salzwedel Financial Communications, Inc., (ii) warrants to
      purchase 1,500,000 shares of Common Stock to Aequitas Capital Management, Inc.
      and (iii) warrants to the placement agent for the New Financing to purchase
      that
      number of shares that would be purchasable with 7% of the cash investments
      (or
      cash equivalent value) from the New Financing, each as descried on the
      Disclosure Schedules to the New Purchase Agreement. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.
Amendments
      and other Agreements.

     

    
      (a)
Amended
        and Restated March Debentures.
        

    

     

    (i) The
      Company hereby agrees to issue each Holder other than Hudson Bay Overseas Fund,
      Ltd. (“HBOF”)
      and
      Hudson Bay Fund, L.P. (“HBF”,
      and
      together with HBOF, collectively, “Hudson Bay”), in exchange for such
      purchaser’s March Debenture, an amended and restated debenture, in the form of
Exhibit
      C
      attached
      hereto (the “Amended
      and Restated March Debenture(s)”)
      with a
      principal amount equal to the principal amount of such Holder’s current March
      Debenture multiplied by 1.77 minus any interest paid thereon through the date
      hereof. The individual principal amounts of the Amended and Restated March
      Debentures are as set forth on Schedule
      A
      attached
      hereto. Other than as amended thereunder, the rights and obligations of the
      Holders and of the Company with respect to the Amended and Restated March
      Debentures shall be identical in all respects to the rights and obligations
      of
      the Holders and of the Company with respect to the March Debentures and the
      Underlying Shares issued and issuable pursuant to the Purchase Agreement,
      subject to the understanding that the Company shall have the right to effect
      the
      Amendment within 75 days following the date of New Purchase Agreement, to the
      extent that it presently has not reserved sufficient authorized Common Stock
      underlying the Amended and Restated March Debentures due to the reset in the
      conversion price for the Amended and Restated March Debentures to $0.24 per
      share. For clarity, the March Purchase Agreement and all Transaction Documents
      thereunder are hereby amended so that the term “Debentures” includes the Amended
      and Restated March Debentures and the term “Underlying Shares” includes the
      shares of Common Stock issuable upon conversion and redemption thereof, and
      the
      term “Transaction Documents” shall be amended to include this Agreement. The
      Amended and Restated March Debentures are being issued in substitution for
      and
      not in satisfaction of the March Debentures, provided, however, the Holder
      acknowledges and agrees that upon the issuance and acceptance of the certificate
      evidencing its Amended and Restated March Debenture issued pursuant to this
      Section, the original certificate evidencing its March Debenture will be deemed
      cancelled.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (ii) With
      respect to Hudson Bay, the Company agrees to issue, and Hudson Bay agrees to
      accept, in exchange for Hudson Bays’ respective Debentures and in full
      satisfaction of any legal fee reimbursement owing to Hudson Bay and all
      liquidated damages due and which may become due under the Registration Rights
      Agreement, the amended and restated debentures in the form attached as
Exhibit
      C-2
      attached
      hereto (the “Hudson
      Bay Amended and Restated March Debentures”),
      having
      principal amounts set forth on Schedule
      A
      attached
      hereto, which shall also be deemed to constitute Amended and Restated March
      Debentures for all purposes hereof, but shall have the differing economic rights
      as set forth below in Section 2(a)(iii). For clarity, the term “Debentures” in
      all of the Transaction Documents shall mean both the Amended and Restated March
      Debentures and the Hudson Bay Amended and Restated March Debentures. All of
      the
      Holders hereby consent to the amendments to the Debentures set forth on the
      Amended and Restated Debentures attached hereto as Exhibits C-1 and C-2,
      respectively. The Hudson Bay Amended and Restated Debentures are being issued
      in
      substitution for and not in satisfaction of Hudson Bay’s March Debentures,
      provided, however, Hudson Bay acknowledges and agrees that upon the issuance
      and
      acceptance of the certificate evidencing the Hudson Bay Amended and Restated
      Debentures issued pursuant to this Section, the original certificate evidencing
      its March Debenture will be deemed cancelled.

     

    (iii) Interest.
      All interest with respect to the Hudson Bay Amended and Restated March
      Debentures (including any future make whole payments that may be due thereunder)
      shall be satisfied in full with the payment of a cash sum equal to the sum
      of
      $915,202.59 (allocated pro rata among HBOF and HBO based upon the respective
      outstanding principal amounts of their respective March Debentures immediately
      preceding the date hereof), which sum reflects the remaining unpaid interest
      and
      make whole amount of the March Debentures, after giving effect to all prior
      payments of interest or make whole payments by the Company, and all liquidated
      damages due and which may become due under the Registration Rights Agreement
      (including for failure of the Company to register the shares of Common Stock
      underlying the Hudson Bay Amended and Restated March Debentures and the warrants
      issued to them under the March Purchase Agreement, but excluding any liquidated
      damages which may become due pursuant to Section 4 hereunder) shall be satisfied
      with the issuance of the Hudson Bay Amended and Restated March
      Debentures.

     

    (b) Amendments
      to the March Purchase Agreement.
      

     

    (i) The
      term
“Exempt Issuance” in the March Purchase Agreement is hereby amended to add the
      following: shares of Common Stock issued and issuable with respect to the
      redemption of the Amended and Restated March Debentures, the Hudson Bay Amended
      and Restated March Debentures and the New Debentures or payment of any
      liquidated damages with respect to the Amended and Restated March Debentures,
      the Hudson Bay Amended and Restated March Debentures and the New Debentures,
      the
      New Purchase Agreement and the warrants issued pursuant to the New Purchase
      Agreement in each case pursuant to the terms thereof as in effect on the date
      of
      the New Purchase Agreement.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (ii) The
      following is added as new Section 4.18 of the March Purchase
      Agreement:

     

    “Notwithstanding
      anything to the contrary contained herein or in any Transaction Document, if
      at
      any time prior to the Senior Creditor Repayment (as defined in that certain
      subordination agreement among the Company, its Subsidiaries, the Purchasers,
      and
      ACF CGS, LLC and the other investors signatory thereto) the Company is
      prohibited from paying, and the Purchasers are prohibited from receiving, cash
      payments of liquidated damages pursuant to any Transaction Document, at the
      option of each Purchaser on written notice to the Company, such amounts
      otherwise payable in cash under such Transaction Documents shall either accrue,
      or be payable in the form of shares of Common Stock. The price at which shares
      of Common Stock issuable in lieu of the cash payment of liquidated damages
      under
      the Transaction Documents shall be equal to the least of (x) 90% of the average
      of the 10 consecutive VWAPs immediately prior to the date such liquidated
      damages become due, (y) 90% of the average of the 10 consecutive VWAPs
      immediately prior to the date such shares are actually issued, and (z) the
      then
      applicable Conversion Price.

    

    (c) Consent
      to Certain Prior Acts.
      To the extent not previously executed and delivered, each Holder agrees to
      execute the waivers attached hereto as Exhibits
      D-1 and D-2 with
      respect to (i) $500,000 bridge loan transaction with Aequitas Catalyst Fund,
      LLC
      and (ii) the
      restatement of the Company’s financial statements as evidenced by its 2008 Form
      8-K filing made prior to the date hereof.

     

    (d) Removal
      of Subordination Legend.
      Following the Senior Creditor Repayment (as defined in the Archer Intercreditor
      Agreement), within 3 Business Days of a written request from any Holder, the
      Company hereby agrees to issue such Holder a replacement Amended and Restated
      March Debenture, without the restrictive legend referencing the Archer
      Intercreditor Agreement, and otherwise in the same form of such Holder’s Amended
      and Restated March Debenture.

     

    (e) Certain
      Permitted Payments under the Archer Intercreditor Agreement.
      In
      connection with “Permitted Payments” (as defined in the Archer Intercreditor
      Agreement) pursuant to Section 2(c)(iv) thereunder, no
      less than ten (10) days prior to the due date of the applicable Quarterly
      Redemption Amounts (as defined in the Amended and Restated March Debentures)
      as
      described in such Section, the Company agrees to deliver each Holder a written
      certification of compliance with the financial covenants under the Archer Loan
      Agreement for the month prior to the date such Quartlery Redemption Amount
      is
      due, and, if requested in writing by a Holder and subject to Section 4.8 of
      the
      March Purchase Agreement, calculations in reasonable detail evidencing
      compliance with such financial covenants.

     

    3. Representations
      and Warranties.
      The
      Company hereby makes to the Holders the following representations and
      warranties:

     

    (a) Authorization;
      Enforcement.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by this Agreement and otherwise to
      carry out its obligations hereunder and thereunder. The execution and delivery
      of this Agreement by the Company and the consummation by it of the transactions
      contemplated hereby have been duly authorized by all necessary action on the
      part of the Company and no further action is required by the Company, its board
      of directors or its stockholders in connection therewith. This Agreement has
      been duly executed by the Company and, when delivered in accordance with the
      terms hereof will constitute the valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms except (i) as
      limited by general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (b) No
      Conflicts.
      The
      execution, delivery and performance of this Agreement by the Company and the
      consummation by the Company of the transactions contemplated hereby do not
      and
      will not: (i) conflict with or violate any provision of the Company’s or any
      Subsidiary’s certificate or articles of incorporation, bylaws or other
      organizational or charter documents, or (ii) conflict with, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) under, result in the creation of any Lien upon any of the properties
      or
      assets of the Company or any Subsidiary, or give to others any rights of
      termination, amendment, acceleration or cancellation (with or without notice,
      lapse of time or both) of, any material agreement, credit facility, debt or
      other material instrument (evidencing a Company or Subsidiary debt or otherwise)
      or other material understanding to which the Company or any Subsidiary is a
      party or by which any property or asset of the Company or any Subsidiary is
      bound or affected, or (iii) conflict with or result in a violation of any law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which the Company or a Subsidiary is
      subject (including federal and state securities laws and regulations), or by
      which any property or asset of the Company or a Subsidiary is bound or affected;
      except in the case of each of clauses (ii) and (iii), such as could not have
      or
      reasonably be expected to result in a Material Adverse Effect.

     

    (c) Issuance
      of the Amended and Restated March Debentures and the Hudson Bay Amended and
      Restated March Debentures.
      The
      Amended and Restated Debentures March Debentures and the Hudson Bay Amended
      and
      Restated March Debentures are duly authorized and, upon the execution of this
      Agreement by the Holders will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other than
      restrictions on transfer provided for in the Transaction Documents. The
      Underlying Shares, when issued in accordance with the terms of the Amended
      and
      Restated March Debentures and the Hudson Bay Amended and Restated March
      Debentures, as applicable, will be validly issued, fully paid and nonassessable,
      free and clear of all Liens imposed by the Company. The Company has reserved
      from its duly authorized capital stock a number of shares of Common Stock for
      issuance of the Underlying Shares sufficient for the conversion in full of
      the
      Amended and Restated March Debentures and the Hudson Bay Amended and Restated
      March Debentures prior to giving effect to the reset provision contained
      therein, and the Company covenants to authorize a sufficient number of its
      shares of Common Stock by way of amendment to its articles of incorporation
      no
      later than 75 days following the date hereof (subject to extension as may be
      agreed to by the Holders of a majority of the outstanding principal amount
      of
      the Amended and Restated March Debentures). 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (d) Equal
      Consideration.
      No
      consideration has been offered or paid to any person to amend or consent to
      a
      waiver, modification, forbearance or otherwise of any provision of any of the
      Transaction Documents.

     

    (e) Survival
      and Bring Down.
      All of
      the Company’s warranties and representations contained in this Agreement shall
      survive the execution, delivery and acceptance of this Agreement by the parties
      hereto. The Company expressly reaffirms that, except as set forth in the
      Disclosure Schedules to the New Purchase Agreement, each of the representations
      and warranties set forth in the March Purchase Agreement, continues to be true,
      accurate and complete, and the Company hereby remake and incorporate herein
      by
      reference each such representation and warranty as though made on the date
      of
      this Agreement.

     

    (f) Holding
      Period for Amended and Restated Debentures.
      Pursuant
      to Rule 144, the holding period of the Amended and Restated March Debentures
      and
      the Hudson Bay Amended and Restated March Debentures (and Underlying Shares
      issuable upon conversion and redemption thereof) shall tack back to the original
      issue date of the March Debentures. The
      Company agrees not to take a position contrary to this Section 3(f). The Company
      agrees to take all actions, including, without limitation, the issuance by
      its
      legal counsel of any necessary legal opinions (which may be satisfied pursuant
      to Section 5), necessary to issue to the Amended
      and Restated March Debentures and the Hudson Bay Amended and Restated March
      Debentures (and Underlying Shares issuable upon conversion and redemption
      thereof) without
      restriction and not containing any restrictive legend without the need for
      any
      action by the Holder.

     

    (g) No
      Novation.
      The
      Amended and Restated March Debentures and the Hudson Bay Amended and Restated
      March Debentures are being issued in substitution for and not in satisfaction
      of
      the March Debentures. The Amended and Restated March Debentures and the Hudson
      Bay Amended and Restated March Debentures shall not constitute a novation or
      satisfaction and accord of any of the March Debentures. The Company hereby
      acknowledges
      and agrees that the Amended and Restated March Debentures and the Hudson
      Bay Amended and Restated March Debentures shall
      amend, restate, modify, extend, renew and continue the terms and provisions
      contained in the March Debentures and shall not extinguish or release the
      Company or any of its Subsidiaries under any Transaction Document (as defined
      in
      the March Purchase Agreement) or otherwise constitute a novation of its
      obligations thereunder.

     

    (h) No
      Event of Default.
      The
      Company represents and warrants to each Holder that after giving effect to
      the
      terms of the waivers contemplated in this Agreement, no Event of Default (as
      defined in the Amended and Restated March Debentures and the Hudson Bay Amended
      and Restated March Debentures, as applicable) shall have occurred and be
      continuing as of the date hereof.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    4. Public
      Information Failure Payments.
      As a
      result of the changes made to Rule 144 promulgated under the Securities Act
      of
      1933, as amended (the “Securities
      Act”)
      which
      are effective February 15, 2008, the Company's obligations, pursuant to the
      Registration Rights Agreement, by and among the Company and each of the
      undersigned (the “Registration
      Rights Agreement”),
      to
      register the shares of Common Stock issuable upon conversion and/or exercise
      of
      the (i) Amended and Restated March Debentures and the Hudson Bay Amended and
      Restated March Debentures, including shares of Common Stock issued in lieu
      of
      cash redemptions thereunder, and (ii) the March Warrants (collectively, the
      “144
      Eligible Securities”),
      are
      hereby suspended, so long as (a) the Company is in compliance with the current
      public information requirement under Rule 144 and (b) the Holder may sell the
      144 Eligible Securities without any restriction or limitation under Rule 144
      as
      of that date. In connection with the foregoing, the Company hereby covenants
      and
      agrees that at any time during the period commencing on the date hereof and
      ending at such time that all of the Underlying Shares can be sold without the
      requirement that adequate public information with respect to the Company be
      available as set forth in Rule 144(c)(1) and otherwise without restriction
      or
      limitation pursuant to Rule 144, if the Company shall fail for any reason to
      satisfy the current public information requirement under Rule 144(c)(1) and
      such
      failure exceeds the extension period afforded to the Company under Rule 12b-25
      of the Exchange Act to file a report that is not filed within the time period
      prescribed for such report, provided the Company timely files a Form 12b-25
      with
      the Commission (any such failure being referred to as a “Public
      Information Failure”
and
      the
      Business Day immediately following the extension period afforded by Rule 12b-25
      being referred to as the “Public
      Information Failure Date”),
      then,
      as partial relief for the damages to the Holder by reason of any such delay
      in
      or reduction of its ability to sell the Underlying Shares (which remedy shall
      not be exclusive of any other remedies available at law or in equity), the
      Company shall pay to each such holder an amount in cash equal to two percent
      (2.0%) of the aggregate purchase price paid by such holder under each of the
      Purchase Agreement for any Securities then held by such holder on the Public
      Information Failure Date and on every thirtieth day (pro rated for periods
      totaling less than thirty days) thereafter until the earlier of (y) the date
      such Public Information Failure is cured and (z) such date that the public
      information requirement set forth in Rule 144(c)(1) is no longer required
      pursuant to Rule 144. The foregoing payments to which a holder shall be entitled
      are referred to herein as “Public
      Information Failure Payments.”
Public
      Information Failure Payments shall be paid on the earlier of (I) the last day
      of
      the calendar month during which such Public Information Failure Payments are
      incurred and (II) the third Business Day after the event or failure giving
      rise
      to the Public Information Failure Payments is cured. In the event the Company
      fails to make Public Information Failure Payments in a timely manner, such
      Public Information Failure Payments shall bear interest at the rate of 1.5%
      per
      month (prorated for partial months) until paid in full. 

    

    5. Legal
      Opinion.
      The
      Company hereby agrees to cause its legal counsel to issue a legal opinion to
      the
      undersigned Holders and the Company’s Transfer Agent regarding this Agreement
      and the transactions contemplated hereby, in form and substance reasonably
      acceptable to the Purchasers, including an opinion that the 144 Eligible
      Securities may be sold pursuant to Rule 144 without volume restrictions or
      manner of sale limitations as of September 11, 2008 and that certificates
      representing the 144 Eligible Securities issuable upon conversion of the Amended
      and Restated March Debentures or a “cashless exercise” of the Warrants may be
      issued without a restrictive legend as required pursuant to Section 4.1 of
      the
      March Purchase Agreement.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    6. Withdrawal
      of Registration Statement.
      Subject
      to the terms and conditions set forth herein, the Holders hereby agree that
      the
      Company can withdraw the registration statement filed pursuant to the
      Registration Rights Agreement, and agree that the Company shall not be required
      to file or maintain the effectiveness with respect to any Underlying Shares
      that
      are eligible for resale without volume or manner-of-sale restrictions so long
      as
      the Company is in compliance with the current public information requirements
      pursuant to Rule 144. As of the date hereof the Company satisfies the current
      public information requirement under Rule 144(c)(1).

    

    7. Confirmation
      of Dilution Adjustment.
      In
      connection with the issuance of the securities in the New Financing, the
      Conversion Price of the Amended and Restated March Debentures and the Hudson
      Bay
      Amended and Restated March Debentures has been reduced to $0.24, subject to
      further adjustment therein, and the exercise price of the March Warrants has
      been reduced to $0.24, and the number of shares underlying the March Warrants
      has been increased in the individual amounts set forth on Schedule
      B
      attached
      hereto, each subject to further adjustment pursuant to the March
      Warrants.

    

    8. Conversion
      Between Signing and Closing.
      In the
      event a Holder wishes to convert its March Debentures between the date hereof
      and the Closing Date (as defined in Section 9(a)), the Company shall convert
      the
      March Debentures pursuant to its existing terms of the March Debentures without
      giving effect to the terms of this Agreement, such that the aggregate principal
      amount subject to the exchange set forth in Sections 2(a)(i) and 2(a)(ii),
      as
      applicable, shall be reduced by the amount of such conversion.

    

    9. Miscellaneous.

    

    (a) The
      foregoing waivers shall not be effective unless and until: (i) all Holders
      shall
      have agreed to the terms and conditions hereunder, (ii) the New Investors and
      all of the Holders execute and deliver an Intercreditor Agreement in the Form
      of
Exhibit
      C
      attached
      hereto, (iii) the Holders, the New Investors and Archer execute and deliver
      an
      Intercreditor Agreement in the Form of Exhibit
      D
      attached
      hereto and (iv) the Administrator (as defined in the New Purchase Agreement),
      the Company and its subsidiaries executed and deliver a subordination and
      intercreditor agreement in the Form of Exhibit
      E
      attached
      hereto. The waivers, agreements and obligations of the Holders set forth herein
      shall be null and void in the event the New Financing and the Archer Financing
      are not consummated on or before November 21, 2008 and the Company files a
      Current Report on Form 8-K with respect thereto by November 24, 2008. In
      addition, the respective obligations, amendments, agreements and waivers of
      the
      Holders hereunder are subject to the following conditions being met: (a) the
      accuracy in all material respects of the representations and warranties of
      the
      Company contained herein (except
      for those representations and warranties that are qualified by materiality
      or
      Material Adverse Effect, which shall be true and correct in all
      respects)
      and (b)
      the performance by the Company of all if its obligations, covenants and
      agreements required to be performed hereunder. Except as expressly set forth
      above, all of the terms and conditions of the Transaction Documents shall
      continue in full force and effect after the execution of this Agreement and
      shall not be in any way changed, modified or superseded by the terms set forth
      herein. The Company shall, on or before 8:30 AM (NY time) on the 1st
      Trading
      Day following the date hereof, issue a Current Report on Form 8-K, reasonably
      acceptable to the Holders, disclosing the material terms of the transactions
      contemplated hereby, and shall attach this Agreement and all other related
      agreements thereto, including, without limitation, the Amended and Restated
      March Debentures, the Hudson Bay Amended and Restated March Debentures, the
      Intercreditor Agreement, all material agreements under the Archer Financing and
      all “Transaction Documents” (as defined in the New Purchase Agreement (the
“8-K
      Filing”).
      From
      and after the filing of the 8-K Filing with the Commission, the Holder shall
      not
      be in possession of any material, nonpublic information received from the
      Company, any of its Subsidiaries or any of their respective officers, directors,
      employees or agents, that is not disclosed in the 8-K Filing. The
      Company shall consult with the Holders in issuing any other press releases
      with
      respect to the transactions contemplated hereby.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b) This
      Agreement may be executed in two or more counterparts and by facsimile signature
      or otherwise, and each of such counterparts shall be deemed an original and
      all
      of such counterparts together shall constitute one and the same
      agreement.

    

    (c) The
      Company has elected to provide all Holders with the same terms and form of
      agreement for the convenience of the Company and not because it was required
      or
      requested to do so by the Holders. The obligations of each Holder under this
      Agreement, and any Transaction Document are several and not joint with the
      obligations of any other Holder, and no Holder shall be responsible in any
      way
      for the performance or non-performance of the obligations of any other Holder
      under this Agreement or any Transaction Document. Nothing contained herein
      or in
      any Transaction Document, and no action taken by any Holder pursuant thereto,
      shall be deemed to constitute the Holders as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Holders are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by this Agreement or the
      Transaction Documents. Each Holder shall be entitled to independently protect
      and enforce its rights, including without limitation, the rights arising out
      of
      this Agreement or out of the other Transaction Documents, and it shall not
      be
      necessary for any other Holder to be joined as an additional party in any
      proceeding for such purpose. Each Holder has been represented by its own
      separate legal counsel in their review and negotiation of this Agreement and
      the
      Transaction Documents. 

     

    (d) Except
      as
      set forth in the Transaction Documents (as defined in the New Purchase
      Agreement) and except for $43,325 that will be added to the principal amount
      of
      the Hudson Bay Amended and Restated March Debentures for Hudson Bay’s legal fees
      and expenses, each party shall pay the fees and expenses of its advisers,
      counsel, accountants and other experts, if any, and all other expenses incurred
      by such party incident to the negotiation, preparation, execution, delivery
      and
      performance of this Agreement. The Company shall pay all stamp and other taxes
      and duties levied in connection with the issuance of the Amended and Restated
      March Debentures and the Hudson Bay Amended and Restated March
      Debentures.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (e) If
      any
      provision of this Agreement is prohibited by law or otherwise determined to
      be
      invalid or unenforceable by a court of competent jurisdiction, the provision
      that would otherwise be prohibited, invalid or unenforceable shall be deemed
      amended to apply to the broadest extent that it would be valid and enforceable,
      and the invalidity or unenforceability of such provision shall not affect the
      validity of the remaining provisions of this Agreement so long as this Agreement
      as so modified continues to express, without material change, the original
      intentions of the parties as to the subject matter hereof and the prohibited
      nature, invalidity or unenforceability of the provision(s) in question does
      not
      substantially impair the respective expectations or reciprocal obligations
      of
      the parties or the practical realization of the benefits that would otherwise
      be
      conferred upon the parties. The parties will endeavor in good faith negotiations
      to replace the prohibited, invalid or unenforceable provision(s) with a valid
      provision(s), the effect of which comes as close as possible to that of the
      prohibited, invalid or unenforceable provision(s).

     

    

     

     

     

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, this Agreement is executed as of the date first set forth
      above.

    

    CAPITAL
      GROWTH SYSTEMS, INC.

    

    

    By:_____________________________________

    Name:

    Title:

    

    [signature
      page(s) of Holders to follow]

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    COUNTERPART
      SIGNATURE PAGE

    OF
      HOLDER
      TO

    AMENDMENT
      AGREEMENT

    AMONG
      CAPITAL GROWTH SYSTEMS, INC. AND

    THE
      HOLDERS THEREUNDER

    

    

    

    Name
      of
      Holder:___________________________________

    

    By:______________________________________________

    

    Name:____________________________________________

    

    Title:_____________________________________________

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