Contract
EXHIBIT
10.11
This
2009 INTERCREDITOR
AGREEMENT (the “Agreement”) is made
and effective as of July 31, 2009, by and among the holders of the Company’s
Original Issue Discount Secured Convertible Debentures due March 2015 signatory
hereto (the “March
Creditors”), the holders of Capital Growth Systems, Inc.’s Original Issue
Discount Secured Convertible Debentures Due November 2015 signatory hereto (the
“November
Creditors”), the holders of the Company’s VPP Debentures due November
2011 signatory hereto (the “VPP Creditors” and together with the March
Creditors, the “Existing Creditors”)
and the July Creditors (as defined below) (the Existing Creditors and the July
Creditors are collectively referred to as the “Creditors”).
RECITALS
WHEREAS,
the March Creditors are parties to that certain Securities Purchase Agreement
dated March 11, 2008 (the “March Purchase
Agreement”) by and between each March Creditor and Capital Growth
Systems, Inc. (the “Company”) and are the
holders of Original Issue Discount Secured Convertible Debentures Due, subject
to the terms therein, March 2015 (the “March Debentures”),
with an aggregate total original face amount of $30,847,551 (within an aggregate
outstanding principal balance as of April 30, 2009 in aggregate of $27,610,912),
executed by the Company in favor of the March Creditors (the “March Indebtedness”),
and the March Creditors are the beneficiaries of that certain Security Agreement
dated March 11, 2008 (the “March Security Agreement”)
among the Company, the March Creditors and Enable Growth Partners, LP (“Collateral Agent”),
as collateral agent for the benefit of the March Creditors (“Collateral
Agent”);
WHEREAS,
the November Creditors are the parties to that certain Securities Purchase
Agreement dated as of November 19, 2008 (the “November Purchase Agreement”)
by and between each November Creditor and the Company and are the holders of
Original Issue Discount Secured Convertible Debentures Due, subject to the terms
therein, November 2015 (the “November Debentures”
and together with the March Debentures, the “Existing
Debentures”), with an aggregate total face amount of $14,891,250 (all of
which is presently outstanding) executed by the Company in favor of the November
Creditors (the “November
Indebtedness”), and the November Creditors are the beneficiaries of that
certain Security Agreement dated as of November 19, 2008 (the “November Security
Agreement”) among the Company, the November Creditors and Collateral
Agent;
WHEREAS,
the VPP Creditors are the parties to that certain Securities Purchase Agreement
dated as of July__, 2009 (the “VPP Purchase Agreement,
” and together with the March Purchase Agreement and the November
Purchase Agreement, collectively, the “Existing Purchase Agreements”) by and
between each VPP Creditor and the Company and are the holders of Original Issue
Discount Secured Convertible Debentures Due, subject to the terms therein,
November 2015 (the “VPP Debentures,” and
together with the November Debentures and the March Debentures, collectively,
the “Existing
Debentures”), which are currently or may hereafter be issued with
subscription amounts of up to $2,500,000, subject to an OID factor of 65%, which
would result in $4,125,000 if fully subscribed), executed by the Company in
favor of the VPP Creditors (the indebtedness evidenced thereby being the “VPP Indebtedness” and
together with the November Indebtedness and the March Indebtedness,
collectively, the “Existing
Indebtedness”), and the VPP Creditors are the beneficiaries of that
certain Security Agreement dated as of July __, 2009 (the “VPP Security
Agreement” and together with the March Security Agreement and the
November Security Agreement, collectively, the “Existing Security
Agreements”) among the Company, the VPP Creditors and the Collateral
Agent.
WHEREAS,
pursuant to that certain Securities Purchase Agreement dated July 31, 2009 (the
“July Purchase
Agreement” and together with the Existing Purchase Agreements, the “Purchase
Agreements”), the investors signatory thereto (the “July Creditors” and
together with the Existing Creditors, the “Creditors”) will be
purchasing up to $10,500,000, in the aggregate principal amount of Original
Issue Discount Secured Convertible Debentures due, subject to the terms therein,
May 30, 2011 (the “July Debentures” and
together with the Existing Debentures, the “Debentures”), from
the Company (the “July
Indebtedness” and together with the Existing Indebtedness, the “Indebtedness”), and
will be the beneficiaries of that certain Security Agreement, dated on or about
the date hereof (the “July Security
Agreement” and together with the Existing Security Agreements, the “Security
Agreements”);
WHEREAS,
the July Indebtedness will also be secured by all assets of the Company and rank
senior to the Existing Indebtedness;
WHEREAS,
the Creditors wish to memorialize their agreements concerning their respective
rights, duties and obligations to one another with respect to the security
interests granted under the Indebtedness.
NOW,
THEREFORE, in consideration of the mutual covenants herein, their respective
performances and benefits pertaining to the Indebtedness, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1.
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Ranking.
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1.1
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The
Indebtedness shall rank in the following order of priority: any
sums secured or owed to the Existing Creditors or the July Creditors,
first to the July Creditors (as it relates to the July Indebtedness),
second to the Existing Creditors (as it relates to the Existing
Indebtedness). The Existing Creditors authorize and direct the
Collateral Agent to perform its obligations under the Security Agreements
pursuant to this provision. The Company and each Subsidiary
agree that all payments of Obligations under the July Indebtedness and the
Existing Indebtedness shall be made in accordance with the relative
priorities and proportions set forth herein. In addition,
the Company hereby agrees to cause all direct and indirect subsidiaries
hereafter formed or acquired to agree to be bound by the terms of this
Agreement.
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1.2
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If
an Event of Default (as defined under any Indebtedness) occurs and any
Existing Creditor receives payment from the Company not in compliance with
this Agreement, the July Creditors shall be immediately notified and such
payment shall be immediately paid by the Existing Creditors to the July
Creditors pro-rata in
proportion to each July Creditor’s outstanding principal amount of July
Indebtedness at any given time that a determination needs to be made of
pro-rata holdings.
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1.3
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If
an Event of Default occurs and any Existing Creditor collects proceeds
pursuant to its rights under any Indebtedness, the July Creditors shall be
immediately notified and such payment shall be immediately paid by the
Existing Creditors to the July Creditors in proportion to each July
Creditor’s outstanding principal amount of July Indebtedness as set forth
above.
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2
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1.4
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Notwithstanding
any other provision in this Agreement, adjustments shall be made between
the Creditors from time to time to reflect the fact that any contingent
obligation taken into account as an obligation under the Indebtedness
becomes satisfied or incapable of maturing into an actual
obligation.
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1.5
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Notwithstanding
anything to the contrary contained in the Purchase Agreements,
or any document executed in connection with the Existing
Indebtedness and irrespective of: (i) the time, order or method of
attachment or perfection of the security interests created in favor of
Existing Creditors and the July Creditors, (ii) the time or order of
filing or recording of financing statements or other documents filed or
recorded to perfect security interests in any collateral; (iii) anything
contained in any filing or agreement to which any Creditor now or
hereafter may be a party; and (iv) the rules for determining perfection or
priority under the Uniform Commercial Code or any other law governing the
relative priorities of secured creditors, each Existing Creditor
acknowledges that all July Creditors (x) have a valid security interest in
the Collateral and (y) the security interests of the July Creditors in any
Collateral pursuant to any outstanding July Indebtedness shall have
priority over, and rank senior to, the security interests of the Existing
Creditors in such Collateral.
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1.6
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Each
Existing Creditor agrees not to commence any action or proceeding
concerning the Indebtedness or the Collateral without providing at least
three business day’s notice to all July
Creditors.
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2.
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Indemnification by
Existing Creditors. Existing Creditors shall indemnify,
defend, and hold harmless July Creditors against and in respect of any and
all claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including interest, penalties, and
reasonable professional and attorneys’ fees, including those arising from
settlement negotiations, that July Creditors shall incur or suffer, which
arise, result from, or relate to a breach of, or failure by Existing
Creditors to perform under this
Agreement.
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3.
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Indemnification by
July Creditors. July Creditors shall indemnify, defend,
and hold harmless Existing Creditors against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including interest, penalties, and
reasonable professional and attorneys’ fees, including those arising from
settlement negotiations, that Existing Creditors shall incur or
suffer, which arise, result from, or relate to a breach of, or failure by
July Creditors to perform under this
Agreement.
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4.
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Miscellaneous.
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4.1
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Assignment. The
rights and obligations of the Creditors under this Agreement may be
assigned to or assumed to a transferee of the Debentures, as
applicable.
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4.2
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Binding
Effect. This Agreement shall be binding on, and shall
inure to the benefit of, the parties to it and their respective heirs,
legal representatives, and
successors.
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3
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4.3
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Parties in
Interest. Except as expressly provided in this
Agreement, nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to
any party to this Agreement, nor shall any provision give any third
persons any right to subrogation or action over against any party to this
Agreement.
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4.4
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Entire
Agreement. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter contained
in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the
parties.
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4.5
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Amendment. No
supplement, modification, or amendment of this Agreement shall be binding
unless executed in writing by Existing Creditors holding not less than 67%
of then outstanding principal amount of Existing Debentures and July
Creditors holding not less than 67% of then outstanding principal amount
of New Debentures, which amendment shall be binding upon all holders
signatory hereto.
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4.6
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Waiver. No
waiver of any of the provisions of this Agreement shall be deemed, or
shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party making the
waiver.
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4.7
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Notices. Notices
given under this Agreement shall be delivered as set forth in the
applicable Purchase Agreement.
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4.8
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4.9
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Effect of
Headings. The headings of the Sections of this Agreement
are included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its
provisions.
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4.10
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Invalidity. Any
provision of this Agreement which is invalid, void, or illegal, shall not
affect, impair, or invalidate any other provision of this Agreement, and
such other provisions of this Agreement shall remain in full force and
effect.
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4.11
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Counterparts. This
Agreement may be executed in multiple counterparts, each of which may be
executed by less than all of the parties and shall be deemed to be an
original instrument which shall be enforceable against the parties
actually executing such counterparts and all of which together shall
constitute one and the same instrument. In lieu of the original
documents, a facsimile transmission or copy of the original documents
shall be as effective and enforceable as the
original.
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4.12
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Number and
Gender. When required by the context of this Agreement,
each number (singular and plural) shall include all numbers, and each
gender shall include all genders.
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4
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4.13
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Further
Assurances. Each party to this Agreement agrees to
execute further instruments as may be necessary or desirable to carry out
this Agreement, provided the party requesting such further action shall
bear all related costs and
expenses.
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4.14
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Professional Fees and
Costs. If any legal or equitable action, arbitration, or
other proceeding, whether on the merits or on motion, are brought or
undertaken, or an attorney retained, to enforce this Agreement, or because
of an alleged dispute, breach, default, or misrepresentation in connection
with any of the provisions of this Agreement, then the successful or
prevailing party or parties in such undertaking (or the party that would
prevail if an action were brought) shall be entitled to recover reasonable
attorney's fees and other professional fees and other costs incurred in
such action, proceeding, or discussions, in addition to any other relief
to which such party may be entitled. The parties intend this
provision to be given the most liberal construction possible and to apply
to any circumstances in which such party reasonably incurs
expenses.
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5
ACKNOWLEDGED
AND AGREED TO:
Capital Growth Systems, Inc.
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Magenta netLogic, Limited
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By:
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/s/ Xxxxxxx Xxxxx
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By:
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/s/ Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Title:
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CEO
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Title:
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CEO
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Global Capacity Group, Inc.
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CentrePath, Inc.
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By:
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/s/ Xxxxxxx Xxxxx
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By:
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/s/ Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Title:
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CEO
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Title:
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CEO
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Nexvu Technologies, LLC
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FNS 2007, INC.
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By:
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/s/ Xxxxxxx Xxxxx
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By:
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/s/ Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Title:
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CEO
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Title:
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CEO
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Global Capacity Direct, LLC
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20/20 Technologies, Inc..
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By:
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/s/ Xxxxxxx Xxxxx
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By:
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/s/ Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Name:
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Xxxxxxx Xxxxx
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Title:
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CEO
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Title:
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CEO
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