EXHIBIT 10.16
INDUCEMENT AGREEMENT
THIS INDUCEMENT AGREEMENT (this “Agreement”) is made as of September 8, 2006 by and
between Venture Equities Management, Inc . (“VEMI”) and Mellon Enterprises, Limited Partnership , a South
Dakota limited partnership (“Mellon”), and Capital Growth Systems, Inc ., a Florida corporation (“CGSY”),
under the following circumstances:
RECITALS
A.
Mellon is contemporaneously herewith seeking to borrow the sum of $2,250,000 from VEMI
(the “Loan”) in order to fund a convertible bridge loan from Mellon to Capital Growth Systems, Inc., a Florida
corporation (“CGSY”) in the amount of the Loan (the “Bridge Loan”).
B.
The Loan is evidenced by a certain $2,250,000 Promissory Note from Mellon to VEMI dated
of even date herewith (the “Note”).
C.
As a condition to extending the Loan to Mellon, VEMI requires that CGSY issue to VEMI as
an accommodation fee a warrant in the form attached as Exhibit A (“Warrant”) and the payment of the points and
the legal fees associated with Mellon issuing the Note. VEMI is unwilling to fund the Loan without the issuance of
the Warrant, and CGSY is desirous of causing the Loan to be funded so that it will be able to obtain a minimum
of $5,000,000 of subscriptions for bridge loans (including the Bridge Loan), as a condition precedent to breaking
of escrow; the proceeds of the bridge loans will be used to fund (in part) CGSY’s acquisition of 20/20
Technologies, Inc. and general working capital needs of CGSY and subsidiaries.
NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements and covenants
contained herein, the parties hereto hereby agree as follows:
1.
Recitals
. The recitals set forth above are incorporated by reference herein and made a part hereof as if fully
rewritten.
2.
Issuance of Warrant. CGSY agrees that promptly following the funding of the Loan and the
breaking of escrow with respect to the bridge loans referenced above it shall (i) cause to be filed the Cer