Exhibit
10.17
INTER-CREDITOR
AGREEMENT
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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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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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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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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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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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,
o
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