GLOBAL BRIDGE NOTE PURCHASE
AGREEMENT
THIS GLOBAL BRIDGE NOTE PURCHASE AGREEMENT
(“Agreement”) is made as of December 11, 2006, by and
among Capital Growth Systems, Inc., a Florida corporation
(“Borrower” or “Company”), and the lenders
(each individually a “Lender,” and collectively the
“Lenders”) executing a counterpart copy of this
Agreement. Capitalized terms not otherwise defined in this
Agreement shall have the meanings ascribed to them in
Section 1 below.
WHEREAS, each of the Lenders intends to fund a
bridge loan to Company (individually, a “Loan” and
collectively, the “Loans”), which Loans are anticipated
to be repaid from the proceeds of an equity financing by Borrower
of not less than $7,000,000 (the “Pipe Financing”) as
set forth below, together with the proceeds from additional debt
financing for the Company. The proceeds of Loans shall be used for
the acquisition of 100% of the capital stock of Global Capacity
Group, Inc., a Texas corporation by way of merger of a wholly owned
subsidiary of the Company with Global Capacity Group, Inc. (and the
successor corporation from such merger being hereinafter sometimes
referred to as “Global”), with the capital stock of
Global to be pledged as collateral security for the Loans; in
addition, with the consent of the Majority Note holders, the
principal amount of the Loans may be increased to fund additional
working capital needs of the Company or Global. A copy of the
merger agreement as amended effective November 30, 2006 for the
acquisition of Global Capacity Group, Inc. has been provided to
each of the Lenders.
WHEREAS, the Pipe Financing shall be structured
as an issuance of Units comprised of Series AA Preferred Stock and
warrants (the “Units Warrants”) to purchase Series AA
Preferred Stock. The Series AA Preferred Stock shall automatically
convert to Common Stock of the Company upon the amendment of its
articles of incorporation to authorize the issuance of not less
than 200,000,000 shares of Common Stock. The “Pipe Common
Stock Price” shall be the Unit purchase price divided by the
number of shares of Common Stock issuable to Units purchasers on
conversion of the Series AA Preferred Stock to Common Stock before
giving effect to the Units Warrants. It is anticipated that he Pipe
Common Stock Price shall be $0.45 per share, as specified in the
November 14, 2006 private placement memorandum for the Units
(“Memorandum”), a copy of which have been made
available for review by each Lender (and which will be supplemented
to reflect the terms of this Agreement);
WHEREAS, the Company has received a proposal
dated November 21, 2006 from Hilco for the provision of a line of
credit of up to $15,000,000, which the Company is considering (a
copy of which has been made available for review by the prospective
Lenders), and which may be modified or superseded by another
proposal from Hilco or other prospective lenders; the Company has
advised the Lenders that there can be no guarantees that the
Company will be able to meet the conditions to the breaking of
escrow with respect to the Memorandum. The Company has further
advised the Lenders that Hilco is expected to deliver a term sheet
for the proposed line of credit, which shall reduce the maximum
availability under the line of credit to $12,000,000 and further
will have certain holdback provisions with respect to the sums to
be advanced in the event that loan transaction is
consummated.
WHEREAS, the parties wish to provide for the
sale and issuance of the Notes in return for the provision by the
Lenders of the Consideration to the Company on the terms and
subject to the conditions set forth in this Agreement, and the
collateral security set forth below.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS
FOLLOWS:
(a) “ Aggregate Loan Amount ”
shall mean Notes with an aggregate principal amount of up to
$5,500,000, or such greater amount as is mutually agreed between
the Company on the one hand and the Majority Note
Holders.
(b) “ Consideration ” shall
mean the amount of money paid by each Lender pursuant to execution
of a counterpart of this Agreement, or the value as set forth on
the counterpart signature page of this Agreement “
Price ” shall mean the purchase price for Equity
Units.
(c) “ Initial Closing Date ”
shall be the date on which the Company acquires Global Capacity
Group, Inc. with the proceeds of the loans from the Lenders and
such other funds as are available to the Company.
(d) “ Knowledge ” shall mean
the actual knowledge of any officer of the Company.
(e) “ Majority Note Holders ”
shall mean the holders of a majority in interest of the aggregate
principal amount of Notes.
(f) “ Maturity Date ” shall
mean as to each Note, 60 days following the date of the
Note.
(g) “ Pipe Common Stock Price ”
shall have the meaning set forth in the preamble hereof.
(h) “ Pipe Financing ” shall
have the meaning set forth in the preamble hereof;
(i) “ Notes ” shall mean the
one or more secured promissory notes issued to each Lender pursuant
to Section 2.1 below, the form of which is attached
hereto as Exhibit A .
(j) “ Securities ” shall have
the meaning set forth in Section 6.2 below.
(k) “ Warrants ” shall mean the
detachable warrants issuable pursuant to Section 2
below.
2. Terms of the Notes and Warrants
. In return for the Consideration
paid by each Lender, the Borrower shall sell and issue to such
Lender one or more unsecured Notes in the principal amount equal to
the dollar amount set forth below the Lender’s name on the
signature
page hereof (the aggregate principal
amount so sold being the “Aggregate Note Amount”),
bearing interest at eight percent (8%) per annum. Borrower in its
sole discretion may increase the Aggregate Note Amount with respect
to any Lender. The proceeds of the Notes shall be used for the
funding in whole or part of the obligations of the Company with
respect to the merger agreement for the acquisition of 100% of the
beneficial ownership of Global Capacity Group, Inc., and any
remainder for general working capital purposes of the Borrower.
Effective as of the date of application of the proceeds of a
Lender’s funding as aforesaid, the Company shall issue to the
Lender a warrant (the “Warrant”) to purchase 225.00225
shares of Series AA Preferred Stock (in the form attached as
Exhibit B, and which equates to 500,000 shares of Common Stock on
an as converted basis assuming the Series AA Preferred Stock is
issued at $0.45 per share) for each $1,000,000 of Loan funded
(prorated for fractional amounts).
3. Closing . Each closing for the purchase of the Notes
shall take place at the offices of the Company at 12:00 p.m., on
the date of counterpart execution of this Agreement by the Lender
in question, or at such other time and place as the Borrower and
each Lender shall agree. At each Closing, each Lender shall deliver
the Consideration to the Borrower and the Borrower shall deliver to
each Lender one or more executed Notes in return for the respective
Consideration provided to the Borrower.
4. Use of Consideration . Subscription proceeds from the Notes either
shall be deposited in an escrow account to be established by the
Company with Shefsky & Froelich Ltd. or such other entity as
Company shall select, and shall be held in escrow pending the sale
of a sufficient amount of Notes, which together with other
available funds of the Company shall be sufficient for the Company
to consummate its acquisition of Global Capacity Group, Inc. (or
such lesser amount agreeable to the Company and the Majority Note
Holders), to be released from escrow in connection with the closing
of the acquisition of Global Capacity Group, Inc. by the Company;
provided however, in lieu of deposit of the Notes proceeds in
escrow a Lender may make direct payment to the account designated
by the Company for the purchase of Global Capacity Group, Inc., in
which event the proceeds of any such funding shall be deemed to
have been funded to the Company for purposes of the Loans called
for hereunder. Interest shall accrue on the Notes effective as of
the date of the closing of the acquisition of Global Capacity
Group, Inc. The Notes shall be secured by a collateral pledge of
the capital stock of Global pursuant to the form of Note
Administration and Security Agreement attached as Exhibit
C.
5. Representations and Warranties of the
Borrower . In connection
with the transactions provided for herein, the Borrower hereby
represents and warrants to the Lenders that:
5.1 Organization, Good Standing and
Qualification . The
Borrower is a corporation, validly existing, and in good standing
under the laws of the State of Florida and has all requisite
corporate power and authority to carry on its business as now
conducted.
5.2 Authorization . All corporate action has been taken on the
part of the Borrower, its shareholders, officers, and directors
necessary for the authorization, execution, delivery and
performance, of this Agreement and the Notes and Warrants. Except
as may be limited by applicable bankruptcy, insolvency,
reorganization, or similar laws relating to or affecting the
enforcement of creditors’ rights, the Borrower has taken all
corporate action
required to make all of the
obligations of the Borrower reflected in the provisions of this
Agreement and the Notes and Warrants the valid and enforceable
obligations they purport to be.
5.3 Compliance with Other Instruments
. Neither the authorization,
execution and delivery of this Agreement or the Notes and Warrants,
nor the issuance and delivery of the Notes and Warrants, will
constitute or result in a default or violation of any law or
regulation applicable to the Borrower or any term or provision of
the Borrower’s current Articles, Bylaws or any material
agreement or instrument by which it is bound or to which its
properties or assets are subject.
5.4 Valid Issuance . The Common Stock or Series AA Preferred Stock
issuable upon exercise of the Warrants will be, when issued in
accordance with the terms of this Agreement, duly and validly
issued, fully paid and nonassessable and, based in part upon the
representations and warranties of the Lenders in this Agreement,
will be issued in compliance with all applicable federal and state
securities laws.
5.5 No Violation . The Borrower is not in violation of any order
of any court, arbitrator or governmental body, material laws,
ordinances or governmental rules or regulations (domestic or
foreign) to which it is subject.
5.6 No Litigation . There are no suits or proceedings pending or,
to the Knowledge of the Borrower, threatened in any court or before
any regulatory commission, board or other governmental
administrative agency against or affecting the Borrower except as
set forth in the Memorandum.
5.7 Arms’ Length Transactions
. The transactions evidenced by this
Agreement and the Notes and the other documents and instruments
delivered in connection herewith or therewith (a) are the result of
arms’ length negotiations among the parties hereto, (b) are
made on commercially reasonable terms and (c) are undertaken by the
Borrower without any intent to hinder, delay or defraud any entity
to which the Borrower is or may become indebted.
6. Representations and Warranties of the
Lenders . In connection
with the transactions provided for herein, each Lender hereby
represents and warrants to the Borrower that:
6.1 Authorization . This Agreement constitutes such Lender’s
valid and legally binding obligation, enforceable in accordance
with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization, or similar laws relating to
or affecting the enforcement of creditors’ rights and (ii)
laws relating to the availability of specific performance,
injunctive relief or other equitable remedies. Each Lender
represents that the execution, delivery and performance of this
Agreement has been duly authorized and approved by such
Lender.
6.2 Purchase Entirely for Own Account
. Each Lender acknowledges that this
Agreement is made with Lender in reliance upon such Lender’s
representation to the Borrower that the Notes and any capital stock
issuable upon exercise of the Warrants (collectively, the
“Securities”) will be acquired for investment for
Lender’s own account, as principal and not as a nominee or
agent, and not with a view to the resale or distribution of any
part thereof, and that
such Lender has no present intention
of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, each Lender
further represents that such Lender does not have any contract,
undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third
person, with respect to the Securities.
6.3 Disclosure of Information
. Each Lender acknowledges that he
or it has received all the information, documents and materials he
or it considers necessary or appropriate for deciding whether to
acquire the Notes, and has been provided access to all public
filings of Borrower with the Securities & Exchange Commission.
Each Lender confirms that he or it has made such further
investigation of the Borrower as was deemed appropriate to evaluate
the merits and risks of this investment. Each Lender further
represents that he or it has had an opportunity to ask questions
and receive answers from the Borrower regarding the terms and
conditions of the offering of the Notes and Warrants.
6.4 Investment Experience . Each Lender is an investor in securities of
companies in the development stage and acknowledges that he or it
is able to fend for itself, can bear the economic risk of its
investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and
risks of the investment in the Notes and the Equity Units. If other
than an individual, each Lender also represents he or it has not
been organized solely for the purpose of acquiring the Notes and
the Warrants.
6.5 Accredited Investor . Each Lender is an “accredited
investor” within the meaning of Rule 501 of Regulation D of
the Securities Act of 1933, as presently in effect (the
“Securities Act”).
6.6 Restricted Securities . Each Lender understands that the Securities
are characterized as “restricted securities” under the
federal securities laws inasmuch as they are being acquired from
the Borrower in a transaction not involving a public offering and
that under such laws and applicable regulations such securities may
not be resold except through a valid registration statement or
pursuant to a valid exemption from the registration requirements
under the Securities Act and applicable state securities laws. Each
Lender represents that he or it is familiar with Rule 144 of the
Securities Act, and understands the resale limitations imposed
thereby and by the Securities Act and applicable state securities
laws.
6.7 Further Limitations on Disposition
. Without in any way limiting the
representations and warranties set forth above, each Lender further
agrees not to make any disposition of all or any portion of the
Securities unless and until the transferee has agreed in writing
for the benefit of the Borrower to be bound by this
Section 6 and:
(a) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and
such disposition is made in accordance with such registration
statement; or
(b) (i) Lender has notified the Borrower of the
proposed disposition and has furnished the Borrower with a detailed
statement of the circumstances surrounding the proposed disposition
and (ii) if reasonably requested by the Borrower,
Lender shall have furnished the
Borrower with an opinion of counsel, reasonably satisfactory to the
Borrower, that such disposition will not require registration of
such shares under the Securities Act.
(c) All transferees agree in writing to be subject
to the terms hereof, and any other agreements to which such
Securities may be subject, to the same extent as if they were
Lenders hereunder, including but not limited to the Note
Administration and Security Agreement in the form attached hereto
as Exhibit C.
6.8 Legends . It is understood that the certificates
evidencing the Securities, or any other securities issued in
respect of the Securities upon any stock split, stock dividend,
recapitalization, merger, consolidation, conversion, exercise or
similar event, shall bear the legends required by applicable law as
well as such agreements to which such Securities may be subject,
including, without limitation, legends relating to restrictions on
transfer under federal and state securities laws and legends
required under applicable state securities laws, as well as the
following legend:
“THESE SECURITIES HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR REGISTERED UNDER ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO (A) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, (B) AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR (C)
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), IN EACH OF CASES (A) THROUGH
(C) IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES.”
7. Defaults and Remedies .
7.1 Events of Default . The following events shall be considered
Events of Default with respect to each Note:
(a) The Borrower shall default in the payment of any
part of the principal or unpaid accrued interest on any Note for
more than thirty (30) days after the Maturity Date or at a date
fixed by acceleration or otherwise;
(b) The Borrower shall make an assignment for the
benefit of creditors, or shall admit in writing its inability to
pay its debts as they become due, or shall file a voluntary
petition for bankruptcy, or shall file any petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, dissolution or similar relief under any present or
future statute, law or regulation, or shall file any answer
admitting the material allegations of a petition filed against the
Borrower in any such proceeding, or shall seek or consent to or
acquiesce in the appointment of any
trustee, receiver or liquidator of
the Borrower, or of all or any substantial part of the properties
of the Borrower, or the Borrower or its respective manager,
officers or majority members shall take any action looking to the
dissolution or liquidation of the Borrower;
(c) Within sixty (60) days after the commencement of
any proceeding against the Borrower seeking any bankruptcy
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have
been dismissed, or within sixty (60) days after the appointment
without the consent or acquiescence of the Borrower of any trustee,
receiver or liquidator of the Borrower or of all or any substantial
part of the properties of the Borrower, such appointment shall not
have been vacated; or
(d) The Borrower or any of its subsidiaries shall
fail to observe or perform any other obligation to be observed or
performed by it under this Agreement or the Notes or the Note
Administration and Security Agreement attached hereto as Exhibit C
within 30 (thirty) days after written notice from the Servicer
named therein (the “Servicer”) or the Majority Note
Holders to perform or observe the obligation, or any representation
or warranty made by the Borrower hereunder or thereunder shall be
false in any material respect as of the date made and such
representation or warranty is not cured, if susceptible to cure,
within 30 (thirty) days after the Borrower’s Knowledge of
such failure.
7.2 Remedies . Upon the occurrence of an Event of Default
under Section 7.1 hereof, at the option and upon the
declaration of the Servicer or the Majority Note Holders, acting
pursuant to the form of Note Administration and Security Agreement,
the entire unpaid principal and accrued and unpaid interest on each
Note, and all other amounts owing under this Agreement shall,
without presentment, demand, protest, or notice of any kind, all of
which are hereby expressly waived, be forthwith due and payable,
and the Servicer named therein and acting on behalf of all of the
Note holders may, immediately and without expiration of any period
of grace, enforce payment of all amounts due and owing under each
Note and exercise any and all other remedies granted to it at law,
in equity or otherwise; provided, however, that if any Event of
Default occurs under Sections 7.1(b) or 7.1(c) , all
unpaid principal and accrued and unpaid interest on such Note, and
all other amounts owing under this Agreement, shall automatically
become immediately due and payable.
8.1 Successors and Assigns . Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and
be binding upon the respective successors and assigns of the
parties, provided, however, that the Borrower may not assign its
obligations under this Agreement without the written consent of the
Servicer or Majority Note Holders (which shall not be unreasonably
withheld), and no Lender may, without the written consent of the
Borrower (which shall not be unreasonably withheld), assign all or
any portion of a Note to any person or entity. Nothing in this
Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and
assigns any
rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
8.2 Governing Law . This Agreement and the Notes shall be governed
by and construed under the laws of the State of Illinois as applied
to agreements among Illinois residents, made and to be performed
entirely within the State of Illinois. Any action to enforce this
Agreement or any of the rights or obligations hereunder shall be
litigated by bench trial, with all parties hereto waiving their
right to trial by jury.
8.3 Counterparts, Power of Attorney
. This Agreement, and any of the
other agreements, documents and instruments contemplated hereby,
may be executed in two or more counterparts, whether by original,
photocopy, facsimile or email pdf, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument. Delivery of an executed signature page to this
Agreement, and any of the other Agreements, documents and
instruments contemplated hereby, by facsimile transmission shall be
effective as delivery of a manually signed counterpart hereof or
thereof. By execution of this Agreement, each Lender grants an
irrevocable power of attorney to each of Thomas G. Hudson, Lee
Wiskowski, Douglas Stukel and any Servicer named in the Note
Administration and Security Agreement, and any officer of the
Servicer (each an “Attorney”) to execute in the name,
place and stead of each Lender and such Lender’s successors
in interest: (i) the Note Administration and Security Agreement;
and (ii) any document requiring the execution of the Lender related
to any action to be taken by the Servicer on behalf of such Lender
pursuant to the Note Administration and Security
Agreement..
8.4 Titles and Subtitles . The titles and subtitles used in this
Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
8.5 Notices . All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed electronic mail or facsimile
if sent during normal business hours of the recipient, if not so
confirmed, then on the next business day, (iii) five (5) days after
having been sent by registered or certified mail, return receipt
requested, postage prepaid or (iv) one (1) day after deposit with a
nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications
shall be sent to the respective parties at the following addresses
(or at such other addresses as shall be specified by notice given
in accordance with this Section 8.5 ):
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If to the
Borrower:
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Capital Growth Systems,
Inc.
50 East Commerce Drive - Suite
A
Schaumburg, IL 60173
Attention: Thomas Hudson, CEO
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If to Lenders:
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At the respective addresses shown on
the signature page hereof.
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8.6 Expenses . If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys’ fees, costs
and necessary disbursements in addition to any other relief to
which such party may be entitled. The Borrower shall pay all costs
and expenses that it incurs with respect to the negotiation,
execution, delivery and performance of this Agreement.
8.7 Entire Agreement; Amendments and Waivers;
Counsel. This Agreement
and the Notes and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between
the parties with regard to the subjects hereof and thereof. The
Borrower’s agreements with each of the Lenders are separate
agreements, and the sales of the Notes to each of the Lenders are
separate sales. Nonetheless, any term of this Agreement or the
Notes may be amended and the observance of any term of this
Agreement or the Notes may be waived (either generally or in a
particular instance and either retroactively or prospectively),
with the written consent of the Borrower and either the Majority
Note Holders. Any waiver or amendment effected in accordance with
this Section 8.8 shall be binding upon each party to
this Agreement and any holder of any Note purchased under this
Agreement at the time outstanding and each future holder of all
such Notes. Each Lender has been advised by Shefsky & Froelich
Ltd. (“SF”) that: (i) in preparation of this Agreement
it has acted as counsel solely on behalf of the Company and not on
behalf of any of the Lenders or the Servicer; (ii) in the past it
may have represented one or more of the Lenders and may do so in
the future with respect to matters other than the subject matter of
this Agreement, which representation may be deemed to constitute a
conflict of interest; (iii) it has advised each of the Lenders and
the Servicer to retain separate counsel with respect to the subject
matter of this Agreement; and (iv) the Illinois Code of
Professional Responsibility requires SF to advise the Lenders and
Servicer of this conflict of interest and to obtain the consent of
the Company and of the Lenders and Servicer to SF’s
representation of the Company with respect to this Agreement and
future matters. By execution of this Agreement each Lender consents
(and by execution of the Note Administration and Security
Agreement, the Servicer consents) to SF’s representation of
Company as aforesaid and further acknowledges and agrees that in
the event of a dispute in the future between the Company and any of
the Lenders, each of the Lenders agrees that it will not take any
action to preclude SF from representing the Company in the
future.
8.8 Effect of Amendment or Waiver
. Each Lender acknowledges that by
the operation of Section 8.8 hereof, the Majority Note
Holders will have the right and power to diminish or eliminate all
rights of such Lender under this Agreement and each Note issued to
such Lender.
8.9 Severability . If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the
Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its
terms.
8.10 Exculpation Among Lenders
. Each Lender acknowledges that he,
she or it is not relying upon any person, firm, corporation or
stockholder, other than the Company and its officers and directors
in their capacities as such, in making its investment or decision
to invest in the Borrower. Each Lender agrees that no other Lender
nor the respective controlling persons, officers, directors,
partners, agents, stockholders or employees of any other Lender
shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the purchase
and sale of the Securities.
IN WITNESS WHEREOF, the parties have executed
this Global Bridge Note Purchase Agreement as of the date first
above written.
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BORROWER:
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LENDERS:
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Capital Growth Systems,
Inc.
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[Signature]
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By:
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/s/ Thomas Hudson
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Its:
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Chief Executive Officer
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[Print Name]
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Amount:
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$
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(Cash); or
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$
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Value for other
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consideration
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provided
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Address:
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[Signature]
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[Print Name]
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Amount:
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$
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(Cash); or
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$
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Value for other
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consideration
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provided
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Address:
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EXHIBIT
A
THIS NOTE AND THE SECURITIES
ISSUABLE UPON THE CONVERSION HEREOF OR IN CONNECTION HEREWITH HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), OR REGISTERED UNDER ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO (A) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, (B) AN OPINION OF COUNSEL SATISFACTORY TO THE BORROWER
THAT REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT, OR (C)
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF AVAILABLE), IN EACH OF CASES (A) THROUGH
(C) IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES.
CGSI GLOBAL PROMISSORY
NOTE
FOR VALUE RECEIVED, Capital Growth Systems,
Inc., a Florida corporation (the “Borrower”), hereby
promises to pay to the order of [_________________(the
“Lender”), the principal sum of __________________
($__________), together with interest thereon from the date of this
Promissory Note (the “Note”). Simple interest shall
accrue on the principal balance of this Note at eight percent (8%)
per annum. The principal and accrued interest shall be due and
payable by the Borrower on the Maturity Date. Following the
Maturity Date the principal balance of this Note shall bear simple
interest at ten percent (10%) per annum.
This Note is one of the Notes issued pursuant to
the Global Bridge Note Purchase Agreement dated as of November 30,
2006, pursuant to which this form of Note is attached as an exhibit
(“Purchase Agreement”), and capitalized terms not
defined herein shall have the meaning set forth in the Purchase
Agreement.
1. Payment . All payments shall be made in lawful money of
the United States of America at the principal office of the
Borrower, or at such other place as the holder hereof may from time
to time designate in writing to the Borrower. Payment shall be
credited first to Costs (as defined below), if any, then to accrued
interest due and payable and any remainder applied to principal.
Prepayment may be made in whole or part without penalty, and the
Company shall fund prepayments as provided for in the Purchase
Agreement. In connection with the delivery, acceptance, performance
or enforcement of this Note, the Borrower hereby waives demand,
notice, presentment, protest, notice of dishonor and other notice
of any kind, and asserts to extensions of the time of payment,
release, surrender or substitution of security, or forbearance or
other indulgence, without notice. The Borrower agrees to pay all
amounts under this Note without offset, deduction, claim,
counterclaim, defense or recoupment, all of which are hereby
waived.
2. Amendments and Waivers; Resolutions of Dispute;
Notice . The amendment or
waiver of any term of this Note, the resolution of any controversy
or claim arising out of or relating to this Note and the provision
of notice shall be conducted pursuant to the terms of the Purchase
Agreement.
3. Successors and Assigns . This Note applies to, inures to the benefit
of, and binds the successors and assigns of the parties hereto;
provided, however, that the Borrower may not
assign its obligations under this
Note without the written consent of the Servicer or Majority Note
Holders and the Lender may not, without the written consent of the
Borrower (which shall not be unreasonably withheld), assign all or
any portion of this Note to any person or entity. Any transfer of
this Note may be effected only pursuant to the Purchase Agreement
and by surrender of this Note to the Borrower and reissuance of a
new note to the transferee, who agrees in writing in form
satisfactory to Lender to be bound by the terms of the Purchase
Agreement. The Lender and any subsequent holder of this Note
receives this Note subject to the foregoing terms and conditions,
and agrees to comply with the foregoing terms and conditions for
the benefit of the Borrower and any other Lenders.
4. Officers and Directors not Liable
. In no event shall any officer or
director of the Borrower or Servicer be liable for any amounts due
and payable pursuant to this Note.
5. Expenses . The Borrower and hereby agrees, subject only
to any limitation imposed by applicable law, to pay all expenses,
including reasonable attorneys’ fees and legal expenses,
incurred by the holder of this Note (“Costs”) in
endeavoring to collect any amounts payable hereunder which are not
paid when due, whether by declaration or otherwise. The Borrower
agrees that any delay on the part of the holder in exercising any
rights hereunder will not operate as a waiver of such rights. The
holder of this Note shall not by any act, delay, omission or
otherwise be deemed to have waived any of its rights or remedies,
and no waiver of any kind shall be valid unless in writing and
signed by the party or parties waiving such rights or
remedies.
6. Governing Law . This Note shall be governed by and construed
under the laws of the State of Illinois as applied to other
instruments made by Illinois residents to be performed entirely
within the State of Illinois. Any dispute with respect to this Note
shall be litigated in the state or federal courts situated in Cook
County, Illinois.
7. Approval . The Borrower hereby represents that it has
approved the Borrower’s execution of this Note based upon a
reasonable belief that the principal provided hereunder is
appropriate for the Borrower after reasonable inquiry concerning
the Borrower’s financing objectives and financial situation.
In addition, the Borrower hereby represents that it intends to use
the principal of this Note primarily for the operations of its
business, and not for any personal, family or household
purpose.
IN WITNESS WHEREOF, the Borrower has executed
this Note on the day and year first above written.
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Capital Growth Systems,
Inc..
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By:
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Its:
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EXHIBIT
B
THE SECURITIES REPRESENTED HEREBY
HAVE BEEN ACQUIRED BY THE HOLDER HEREOF FOR ITS OWN ACCOUNT FOR
INVESTMENT