INTER-CREDITOR AGREEMENT
Exhibit
10.17
This
INTER-CREDITOR
AGREEMENT
(the
“Agreement”)
is
made and effective as of November __, 2008, by and between the holders of
Capital Growth Systems, Inc.’s Original Issue Discount Secured Convertible
Debentures Due March 2015signatory hereto (“Existing
Creditors”)
and
the New Creditors (as defined below) (the Existing Creditors and the New
Creditors are collectively referred to as the “Creditors”).
RECITALS
WHEREAS,
the Existing Creditors are the parties to that certain Securities Purchase
Agreement dated March 11, 2008 (the “Purchase
Agreement”)
by and
between each Existing 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, with an aggregate total face amount
of
$30,877,552 executed by the Company in favor of the Existing Creditors (the
“Existing
Indebtedness”),
and
the Existing Creditors are the beneficiaries of that certain Security Agreement
dated March 11, 2008 (the “Security
Agreement”)
between the Company and the Existing Creditors and Enable Growth Partners,
LP
(“Collateral
Agent”),
as
collateral agent for the benefit of the Existing Creditors (“Collateral
Agent”);
WHEREAS,
pursuant to that certain Securities Purchase Agreement dated November ___,
2008,
the investors signatory thereto (the “New
Creditors”)
will
be purchasing $14,891,250, in the aggregate principal amount of Original Issue
Discount Secured Convertible Debentures due, subject to the terms therein,
seven
years from their issuance, from the Company (the “New
Indebtedness”
and
together with the Existing Indebtedness, the “Indebtedness”);
WHEREAS,
the New Indebtedness will also be secured by all assets of the
Company;
WHEREAS,
the New Indebtedness and the Existing Indebtedness will also be secured by
all
assets of the Company on a pari passu
basis;
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:
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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 New Creditors,
pari
passu
and pro-rata
in
proportion to such Creditor’s outstanding principal amounts of
Indebtedness at any given time that a determination needs to be made
of
pro-rata holdings. For clarity, as of the date of the closing of
the
issuance of the New Indebtedness, the pro-rata
holdings of the Existing Creditors (collectively) are $30,877,552
and the
pro-rata
holdings of the New Creditors (collectively) are $14,891,250. The
Creditors authorize 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 New
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
party hereto receives payment from the Company not in compliance
with this
Agreement, the other parties hereto shall be immediately notified
and such
payment shall be shared with all of the other Creditors in proportion
to
their respective pro-rata holdings as set forth
above.
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1.3
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If
an Event of Default occurs and any party hereto collects proceeds
pursuant
to its rights under any Indebtedness, the other parties shall be
immediately notified and such payment shall be shared with all of
the
other Creditors as set forth above.
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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 Agreement or any
document executed in connection with the New Indebtedness or 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 New 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 Creditor acknowledges that (x) all other
Creditors have a valid security interest in the Collateral and (y)
the
security interests of the Creditors in any Collateral pursuant to
any
outstanding Indebtedness shall be pari-passu with each
other.
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1.6
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Each
Creditor agrees not to commence any action or proceeding concerning
the
Indebtedness or the Collateral without providing at least one business
day’s notice to all Creditors.
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2.
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Indemnification
by Existing Creditors.
Existing Creditors shall indemnify, defend, and hold harmless New
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 New 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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2
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3.
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Indemnification
by New Creditors.
New 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 New Creditors to perform
under
this Agreement.
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4.
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Miscellaneous.
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4.1 Assignment.
The
rights and obligations of the Creditors under this Agreement may be assigned
to
or assumed to a transferee of the Debentures (as defined in the Existing
Creditors Securities Purchase Agreement and as defined in the New Creditors
Securities Purchase Agreement), as applicable.
4.2 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.
4.3 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.
4.4 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.
4.5 Amendment.
No
supplement, modification, or amendment of this Agreement shall be binding unless
executed in writing by all the parties.
4.6 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.
4.7 Notices.
Notices
given under this Agreement shall be delivered as set forth in the Purchase
Agreement.
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4.8 Governing
Law and Venue.
This
Agreement shall be construed in accordance with, and governed by, the laws
of
the State of New York, and any action or proceeding, including arbitration,
brought by any party in which this Agreement is a subject, shall be brought
in
New York County, New York.
4.9 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.
4.10 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.
4.11 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.
4.12 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.
4.13 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.
4.14 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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[SIGNATURE
PAGE CGSY INTERCREDITOR AGREEMENT]
IN
WITNESS WHEREOF, this Agreement has been duly executed by the Creditors as
of
the day and year first written above.
CREDITORS:
Print
Name: __________________________
By:
________________________________
Name:
Title:
Address
for Notice:
________________________
________________________
ACKNOWLEDGED
AND AGREED TO:
CAPITAL
GROWTH SYSTEMS, INC.
By:
________________________________
Name:Title:
[INSERT
NAMES AND SIGNATURE BLOCKS FOR SUBSIDIARIES]
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