WAIVER AND FIRST AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT
This
WAIVER AND FIRST AMENDMENT TO REGISTRATION RIGHTS
AGREEMENT (this
“
Amendment ”),
effective as of February 12, 2008 (the “
Effective Date ”),
is by and between Capital Growth Systems, Inc., a Florida
corporation with headquarters located at 500 West Madison Street,
Suite 2060, Chicago, Illinois 60661 (the “
Company ”),
and the undersigned lender (“
Lender ”).
Capitalized terms used in this Amendment but not defined herein
have the meaning set forth in the RRA (as defined
below).
WHEREAS ,
the Company and Lender entered into that certain Registration
Rights Agreement (as amended, restated, supplemented or otherwise
modified and in effect from time to time, the “
RRA ”),
dated as of November 1, 2007, in which the Company agreed to
provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the “
1933 Act ”),
and applicable state securities laws; and
WHEREAS ,
pursuant to the terms of this Amendment, the Company and Lender
desire to amend the RRA.
NOW, THEREFORE ,
in consideration of the premises and the mutual covenants contained
herein and in the RRA, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the parties hereto, intending to be legally
bound, hereby agrees as follows:
1.
Amendments to RRA .
(a)
Each of Sections 2 (including subsections (a) through (g) thereof),
3(a), 3(b), 3(c), 3(d), 3(f), 3(g), 3(h), 3(i), 3(m), 3(n), 3(o),
3(p), 3(r), 3(t) and 4 (including subsections (a) through (d)
thereof) and Exhibits A, B and C of the RRA is hereby deleted in
its entirety and is replaced with “
[Intentionally Omitted] .”
(b)
Section 3(e) of the RRA is hereby amended and restated to read in
its entirety as follows:
“(e)
So
long as any Investor holds, or is deemed to hold, any Warrants
or Registrable Securities, the Company shall use its best
efforts to (i) register and qualify, unless an exemption from
registration and qualification applies, the resale by the
Investors of the Registrable Securities under such other
securities or “blue sky” laws of all applicable
jurisdictions in the United States, (ii) prepare and file in
those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the
effectiveness thereof, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in
effect at all times during such period, and (iv) take all
other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to (x) qualify
to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(e),
(y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of
process in any such jurisdiction. The Company shall promptly
notify Lender’s legal counsel (“
Legal Counsel ”),
which shall be Katten Muchin Rosenman LLP or such other counsel as
hereafter designated by Lender, and each Investor who holds
Registrable Securities in writing of the receipt by the Company of
any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice
of the initiation or threatening of any proceeding for such
purpose.”
(c)
Section 3(k) of the RRA is hereby amended and restated to read in
its entirety as follows:
“(k)
So
long as any Investor holds, or is deemed to hold, any Warrants
or Registrable Securities, the Company shall use its best
efforts to cause all of the Registrable Securities to be
listed or quoted on each securities exchange, quotation system
or trading market on which securities of the same class or
series issued by the Company are listed or quoted, and without
limiting the generality of the foregoing, arrange for at least
three market makers to register with the Financial Industry
Regulatory Authority (“
FINRA ”)
as such with respect to the Registrable Securities. The Company
shall pay all fees and expenses in connection with satisfying its
obligation under this Section 3(k).”
(d)
Section 3(l) of the RRA is hereby amended and restated to read in
its entirety as follows:
“‘(l)
The
Company shall cooperate with the Investors who hold
Registrable Securities and, to the extent applicable,
facilitate the timely preparation and delivery of certificates
representing the Registrable Securities and enable such
certificates to be in such denominations or amounts, as the
case may be, as the Investors may reasonably request and
registered in such names as the Investors may
request.”
(e)
Section 3(q) of the RRA is hereby amended and restated to read in
its entirety as follows:
“‘(q)
If
an Investor (i) acquires Registrable Securities pursuant to a
Cashless Exercise (as defined in the Warrants) of any of the
Warrants on or after May 1, 2008, (ii) provides the Company
with an opinion of counsel, in a generally acceptable form, to
the effect that a public sale, assignment or transfer of the
Registrable Securities may be made without registration under
the 1933 Act, or (iii) provides the Company with reasonable
assurance that the Registrable Securities can be sold pursuant
to Rule 144 without any restriction as to the number of
securities acquired as of a particular date that can then be
immediately sold, the Company shall cause its transfer agent
to promptly issue one or more stock certificates or credit
shares to the applicable balance accounts at the Depository
Trust Company in such name and in such denominations as
specified by such Investor and without any restrictive legend.
The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the
Investors. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this
Section 3(q) will be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions
of this Section 3(q), that each Buyer shall be entitled, in
addition to all other available remedies, to an injunctive
order and/or injunction restraining any breach and requiring
immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security
being required.”
(f)
Section 3(s) of the RRA is hereby amended and restated to read in
its entirety as follows:
“(s)
So
long as any Investor holds, or is deemed to hold, any Warrants
or Registrable Securities, the Company shall make all other
filings and take all other actions reasonably necessary to
expedite and facilitate disposition by the Investors of the
Registrable Securities.”
(g)
Section 6 of the RRA is hereby amended and restated to read in its
entirety as follows:
“6.
Indemnification .
(a)
To
the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each
Investor, the directors, officers, members, partners,
employees, agents, representatives of, and each Person, if
any, who controls each Investor within the meaning of the 1933
Act or the Securities Exchange Act of 1934, as amended (the
“
1934 Act ”)
(each, an “
Indemnified Person ”
and collectively, the “
Indemnified Persons ”),
against any losses, claims, damages, liabilities, judgments, fines,
penalties, charges, costs, reasonable attorneys’ fees,
amounts paid in settlement or expenses, joint or several
(collectively, “
Claims ”)
incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken
from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether
pending or threatened, whether or not an Indemnified Person is or
may be a party thereto (“
Indemnified Damages ”),
to which any Indemnified Person may become subject insofar as such
Claims (or actions or proceedings, whether commenced or threatened,
in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in any
filing made in connection with the qualification of the offering
under the securities or other “blue sky” laws of any
jurisdiction in which Registrable Securities are offered, or the
omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or (ii) any violation of this Agreement (the matters in
the foregoing clauses (i) and (ii) being, collectively,
“
Violations ”).
The Company shall reimburse the Indemnified Persons, promptly as
such expenses are incurred and are due and payable, for any legal
fees or other reasonable expenses incurred by such Indemnified
Persons in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(a) shall
not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld,
conditioned or delayed. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive the transfer of any of the
Registrable Securities by the Investors pursuant to Section 9
hereof.
(b)
[INTENTIONALLY OMITTED]
(c)
Promptly
after receipt by an Indemnified Person under this Section 6 of
notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a
Claim, such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under
this Section 6, deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person; provided,
however, that an Indemnified Person shall have the right to
retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the
indemnifying party has agreed in writing to pay such fees and
expenses; (ii) the indemnifying party shall have failed
promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Indemnified Person; or
(iii) the named parties to any such Claim (including any
impleaded parties) include both such Indemnified Person and
the indemnifying party, and such Indemnified Person shall have
been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such
Indemnified Person and the indemnifying party (in which case,
if such Indemnified Person notifies the indemnifying party in
writing that it elects to employ separate counsel at the
expense of the indemnifying party, then the indemnifying party
shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the indemnifying
party, provided further, that in the case of clause (iii)
above the indemnifying party shall not be responsible for the
reasonable fees and expenses of more than one (1) separate
legal counsel for such Indemnified Person. In the case of an
Indemnified Person, legal counsel referred to in
the
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