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PLAN AND AGREEMENT OF TRIANGULAR
MERGER
BETWEEN
CHARYS HOLDING COMPANY, INC.,
CHARYS ACQUISITION COMPANY, INC.
AND
CCI TELECOM, INC.
CHARYS HOLDING COMPANY, INC., a Delaware corporation ("Charys"),
CHARYS
ACQUISITION COMPANY, INC., a Nevada corporation (the
"Subsidiary"), and CCI
TELECOM, INC., a Nevada corporation ("CCI"), hereby agree as
follows:
WHEREAS, the Subsidiary is a wholly-owned subsidiary of Charys;
and
WHEREAS, Charys desires to cause the merger of the Subsidiary
with and into
CCI (the "Merger"); and
WHEREAS, the holders (the "CCI Shareholders") of all of the
common stock of
CCI, par value $0.01 per share (the "CCI Common Stock") are
described in
Attachment A hereto; and
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WHEREAS, as a result of the Merger, the CCI Shareholders will
receive
shares of the common stock of Charys, par value $0.001 per share
(the "Charys
Common Stock") in exchange for all of their shares of the CCI
Common Stock; and
WHEREAS, it is intended that the Merger shall constitute a
reorganization
under the provisions of Section 368(a)(1)(A) of the Internal
Revenue Code of
1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the
following mutual
covenants and agreements, the parties agree as follows:
1. Plan Adopted. A plan of merger whereby the Subsidiary merges
with
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and into CCI (this "Plan of Merger"), pursuant to the provisions
of Chapter 92A
of the Nevada Revised Statutes (the "NRS") and Section
368(a)(1)(A) of the Code
is adopted as follows:
(a) The Subsidiary shall be merged with and into CCI, to exist
and
be governed by the laws of the State of Nevada.
(b) CCI shall be the Surviving Corporation (the "Surviving
Corporation") and will be a wholly-owned subsidiary of
Charys.
(c) When this Plan of Merger shall become effective, the
separate
existence of the Subsidiary shall cease and the Surviving
Corporation shall
succeed, without other transfer, to all the rights and
properties of the
Subsidiary and shall be subject to all the debts and liabilities
of such
corporation in the same manner as if the Surviving Corporation
had itself
incurred them. All rights of creditors and all liens upon the
property of each
constituent entity shall be preserved unimpaired, limited in
lien to the
property affected by such liens immediately prior to the
Merger.
(d) The Surviving Corporation will be responsible for the
payment
of all fees and franchise taxes of the constituent entities
payable to the State
of Nevada, if any.
(e) The Surviving Corporation will carry on business with
the
assets of the Subsidiary, as well as the assets of CCI.
(f) The Surviving Corporation will be responsible for the
payment
of the fair value of shares, if any, required under Chapter 92A
of the NRS.
(g) The CCI Shareholders will surrender all of their shares of
the
CCI Common Stock in the manner hereinafter set forth.
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(h) In exchange for the shares of the CCI Common Stock
surrendered
by the CCI Shareholders, Charys will issue and transfer to them
on the basis
hereinafter set forth, shares of the Charys Common Stock.
(i) A copy of this Plan of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any
shareholder of any
constituent corporation.
(j) The authorized capital stock of the Subsidiary is 10,000
shares of common stock, par value $0.001 per share (the
"Subsidiary Common
Stock"), of which 1,000 shares are issued and outstanding.
(k) The authorized capital stock of CCI is 25,000,000 shares
of
the CCI Common Stock, of which 18,000,000 shares are issued and
outstanding, all
of which are held by the CCI Shareholders as described on
Attachment A hereto.
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2. Effective Date. The effective date of the Merger (the
"Effective
---------------
Date") shall be the date of the filing of Articles of Merger for
the Subsidiary
and CCI in the State of Nevada.
3. Submission to Stockholders. This Plan of Merger shall be
submitted
---------------------------
for approval separately to the CCI Shareholders and the
shareholders of the
Subsidiary in the manner provided by the laws of the State of
Nevada.
4. Manner of Exchange. As soon as practicable after the
Effective
--------------------
Date, the CCI Shareholders shall surrender to Charys their stock
certificates
representing the CCI Common Stock in exchange for certificates
representing the
shares of the Charys Common Stock to which they are entitled
pursuant to the
provisions of Section 5 hereof. All shares of the Charys Common
Stock, when
issued and delivered to the CCI Shareholders in accordance with
the terms
hereof, will be duly authorized, validly issued, fully-paid and
non-assessable.
The issued and outstanding shares of the Subsidiary Common Stock
will be
cancelled. In furtherance of the foregoing, as soon as
practicable after the
Effective Date, Charys shall mail to each CCI Shareholder, a
letter of
transmittal in form reasonably acceptable to CCI and Charys
(which shall specify
that delivery shall be effected, and risk of loss and title to
any certificates
that immediately prior to the Effective Date represented
outstanding shares of
CCI Common Stock shall pass, only upon actual delivery of the
certificates to
Charys, and shall contain instructions for use in effecting the
surrender of the
certificate in exchange for certificates representing shares of
Charys Common
Stock). Upon surrender for cancellation to Charys by a CCI
Shareholder of any
certificate(s) held by such CCI Shareholder representing shares
of CCI Common
Stock, together with the letter of transmittal, duly executed by
such CCI
Shareholder, the surrendering CCI Shareholder shall be entitled
to receive in
exchange therefore a certificate representing that number of
shares of Charys
Common Stock into which the shares represented by the
surrendered certificate
shall have been converted upon the Merger pursuant to Section 5
of this
Agreement, and any certificate so surrendered shall immediately
be cancelled by
Charys.
5. Basis of Exchange.
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(a) The CCI Shareholders currently own 20,100,000 shares of
the
CCI Common Stock, which shares constitute all of the issued and
outstanding
shares of the capital stock of CCI. As a result of the Merger,
each share of
CCI Common Stock held by the CCI Shareholders shall be converted
into (i)
0.037199 of a share of Charys Common Stock adjusted up to the
next whole share
in the case of fractional shares and (ii) if a CCI Shareholder
shall make the
election provided for in Section 5(b) hereof within thirty (30)
days after the
Effective Date, as to each share of CCI Common Stock held by
such electing CCI
Shareholder the right to receive an additional 0.030712 of a
share of Charys
Common Stock adjusted up to the next whole share in the case of
fractional
shares (such number of shares described in clause (ii) equaling
85% of the
minimum number of shares that may be issued on account of each
share of Charys
Common Stock in connection with the earn-out payments provided
for in Section 11
hereof and being in lieu of receiving any additional shares of
Common Stock
pursuant to Section 11 hereof on account of any shares of Charys
Common Stock
received by such CCI Shareholder in the Merger). Therefore, as a
result of the
Merger, each CCI Shareholder shall be entitled to receive one
share of Charys
Common Stock for each 26.882453 shares of CCI Common Stock
converted in the
Merger and an additional 0.030712 share of Charys Common Stock
adjusted up to
the next whole share in the case of fractional shares on account
thereof if such
CCI Shareholder makes the election provided for in Section 5(b).
By virtue of
the Merger, all shares of CCI Common Stock, when so converted,
shall no longer
be outstanding and shall automatically cease to exist and each
CCI Shareholder
shall cease to have any rights with respect thereto, except the
right to receive
the
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certificates representing the shares of Charys Common Stock into
which such
shares are converted, and the right to receive the additional
consideration
provided for in Sections 7 and 11 hereof. As a result of the
Merger, 747,710
shares adjusted for fractional shares of the Charys Common Stock
shall be issued
to the CCI Shareholders (including an adjustment for fractional
shares). For
purposes of the calculations of the number of shares of Charys
Common Stock to
be issued in the Merger, the parties have assumed a value of
$4.00 per share, or
an aggregate value of $2,990,798.53.
(b) Except as limited in accordance with the last sentence of
this
Section 5(b), a CCI Shareholder may elect at any time within
thirty (30) days
after the Effective Date, to receive 0.030712 of a share of
Charys Common Stock
on account of each share of CCI Common Stock held by such CCI
Shareholder
immediately prior to the Effective Time, the right to receive
the same being in
lieu of receving any shares of Charys Common Stock pursuant to
Section 11 hereof
on account of any shares of Charys Common Stock received by such
CCI Shareholder
in the Merger. Such an election shall be made on the letter of
transmittal form
to be provided by Charys to the CCI Shareholders pursuant to
Setion 4 hereof
promplty after the Effective Date, which letter of transmittal
form shall be
returned by such CCI Shareholders to Charys in accordance with
the instructions
set forth therein. Notwithstanding the foregoing, no holder of
more than five
percent (5%) of outstanding shares of the CCI Common Stock
immediately prior to
the Effective Date nor any executive officer of CCI may make
such an election,
and each of them have heretofore entered into separate
agreements with Charys to
such effect.
6. Existing Debt. Charys anticipates that the debt of CCI
will
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continue as before the Merger on substantially similar terms as
are currently in
force, subject to the approval and written waiver of any "Due on
Sale" clauses
by the holders of the indebtedness. CCI will use its best
efforts to secure
such approvals, waivers, and "Change of Control" provisions as
are necessary to
facilitate the Merger.
7. Make Whole Provision. The shares of the Charys Common Stock
held by
--------------------
a Qualified Holder (as defined herein) will be subject to a
"Make Whole
Calculation" defined below where if the average "Market Price"
per share defined
below of the Charys Common Stock is less than $4.00 over a
period of time
described hereinafter, then additional shares and/or cash will
be delivered to
the CCI Shareholders. The Make Whole Calculation will not apply
if (a) the
average Market Price per share for the Charys Common Stock for
the 20 trading
days ending on the date which is 24 months from the Effective
Date is equal to
or greater than $4.00 per share, or (b) the average Market Price
per share for
the Charys Common Stock for any 20 consecutive trading days
during the period
commencing after the first anniversary of the Effective Date and
ending on the
second anniversary of the Effective Date is equal to or greater
than $4.25 per
share. Under either circumstance, the shares of the Charys
Common Stock issued
at the Effective Date would not be adjusted, and that portion of
the
consideration for the Merger would be deemed to have been paid
in full.
Otherwise, the Make Whole Calculation will apply. The Make Whole
Amount shall
be payable within ten (10) days after the second anniversary of
the Effective
Date.
8. Make Whole Calculation. If the average Market Price per share
of
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Charys Common Stock for the twenty (20) consecutive trading days
ending on the
date which is the second anniversary of the Effective Date is
not equal to or
greater than $4.00 per share at the time, then the difference
between such
average Market Price per share and $4.00 per share, if any,
multiplied by the
number of shares of the Charys Common Stock initially issued at
the Effective
Date, and still held on such second anniversary of the Effective
Date, would be
the "Make Whole Amount." The portion of the Make Whole Amount
payable on
account of each share entitled to receive the same would be an
amount equal to
the quotient of the Make Whole Amount divided by the number of
shares of Charys
Common Stock initially issued on the Effective Date and still
held on such
second anniversary of the Effective Date, excluding any shares
issued pursuant
to Section 5(b) hereof. For example, if the average Market Price
per share is
$3.70 per share, then the Make Whole Amount per share would be
$0.30 per share
and would be payable by Charys in cash and/or in shares of the
Charys Common
Stock, at the discretion of Charys, based upon the average
Market Price per
share, unless otherwise agreed by Charys and each former CCI
Shareholder
entitled to receive the Make Whole Amount. The Make Whole Amount
would not be
payable on the additional Charys shares paid at the Effective
Date to those of
the CCI Shareholders who elected to take such additional shares
pursuant to
Section 5(b) hereof. Further, the Make Whole Amount would be
payable only on
shares of the Charys Common Stock issued in the Merger that are
held by
Qualified Holders.
9. Make Whole Adjustment. If CCI, on the second anniversary date
of
-----------------------
the Effective Date has reported EBITDA (as defined in Section
11) equal to or
less than 75 percent of the EBITDA Target (the "EBITDA Target"
being EBITDA
equal to 7% CCI's of revenue for the two year period ending on
April 30, 2007),
then the
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Make Whole Amount related to the Charys Common Stock issued in
connection with
the Merger will be adjusted proportionately in relation to the
short fall in the
reported EBITDA to the EBITDA Target. If, for example, CCI
reaches 75 percent
of the EBITDA Target, then 75 percent of the Make Whole Amount
shall be paid.
In the event CCI has reported EBITDA of 50 percent or less of
the EBITDA Target,
there shall be no Make Whole Amount. If CCI reaches more than 75
percent of the
EBITDA Target, then the entire Make Whole amount shall be
paid.
10. Certain Definitions. For purposes of this Agreement, the
following
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terms have the respective meanings set forth below:
(a) "Market Price" means the market price of Charys Common
Stock
determined on the basis of:
(i) The closing sale price (or the closing bid price, if no
sales were reported) of the Charys Common Stock on the principal
stock exchange,
or the National Association of Securities Dealers' Automated
Quotation National
Market System ("NASDAQ/NMS"), as the case may be, on which the
Charys Common
Stock is then listed or admitted to trading;
(ii) If the Charys Common Stock is not then listed or
admitted to trading on any stock exchange or the NASDAQ/NMS,
then the average of
the closing bid and ask prices (if the bid price is 50 percent
or less of the
ask then only the ask price shall be used) on such day in the
over-the-counter
market, as furnished by the NASDAQ OTC Bulletin Board Service or
the National
Quotation Bureau, Inc.;
(iii) If neither the NASDAQ Bulletin Board Service nor the
National Quotation Bureau, Inc. then reports such prices, then
as furnished by
any comparable service then engaged in providing price
quotations; or
(iv) If there is no such comparable service, as furnished by
any member of the National Association of Securities Dealers
("NASD") selected
by Charys, with the consent of the two former CCI Shareholders
who, at the
Effective Date, held the largest number of outstanding shares of
the CCI Common
Stock, which consent shall not be unreasonably refused or
delayed, and so long
as such NASD member is not an affiliate of Charys.
(b) "Qualified Holder" has the meaning set forth in Section
11(a)(x) hereof.
(c) "Permitted Transferee," with respect to any Qualified
Holder,
means any other Qualified Holder;
(i) any member of an individual Qualified Holder's family
(including ancestors, descendants and siblings) or any trust
primarily for the
benefit of an individual Qualified Holder or the benefit of any
member of an
individual Qualified Holder's family;
(ii) any transferee pursuant to a testamentary disposition
upon the death of an individual Qualified Holder;
(iii) any spouse or former spouse of a Qualified Holder
pursuant to an agreement for division of community property or
other property
settlement agreement in the event of a marital dissolution or
legal separation;
(iv) any successor in interest upon the sale of all assets
or
the merger, consolidation or dissolution of any Qualified Holder
that is itself
a partnership, limited liability company or corporation;
(v) to any entity that controls, is controlled by or is
under
common control with a Qualified Holder that is a partnership,
limited liability
company or corporation;
(vi) by court order to any trustee, receiver or creditor
upon
the bankruptcy of a Qualified Holder;
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(vii) to any guardian or conservator appointed by court
order
upon an adjudication of incompetency of an individual Qualified
Holder;
(viii) any successor trustees or fiduciaries of any trust
that is a Qualified Holder; or
(ix) one or more of the partners of a partnership or members
of a limited liability company that, in either case, is a
Qualified Holder, upon
distribution in kind of such Qualified Holder's shares of Charys
Common Stock to
such partner(s) or member(s).
11. Earn-Out Payments.
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(a) For purposes of this Section 11, the following terms have
the
respective meanings set forth below:
(i) "CCI" means CCI and its consolidated subsidiaries.
(ii) "EBITDA" means, for any Earn-Out Period, the net income
of CCI for such Earn-Out Period determined in accordance with
GAAP, (A) before
the deduction of interest expenses paid or accrued by CCI with
respect to such
period, (B) before deduction of income taxes and other taxes
based upon the
income of CCI for such period, (C) before the deduction of
depreciation, (D)
before the amortization of goodwill and other amortizable
assets, (E) before any
deductions for extraordinary or nonrecurring losses or charges
of CCI (as such
terms are used under GAAP) for such period and before any
increases due to
extraordinary or nonrecurring items of income of CCI (as such
terms are used
under GAAP) for such period, (F) before a deduction with respect
to any Excess
Payments, (G) before any deductions for financing costs,
accounting fees, legal
fees or any other fees and expenses incurred in connection with
the Merger or
any acquisition or business combination transactions, whether or
not
consummated, pursued by CCI following the Merger, and (H) before
any costs and
expenses incurred in order to comply with the provisions of the
Sarbanes-Oxley
Act of 2002 and the regulations promulgated thereunder, with all
items referred
to in subsections (A) through (H) in this definition determined
in accordance
with GAAP.
(iii) "GAAP" means generally accepted accounting principles,
applied on a basis consistent with CCI's past practices.
(iv) "Eligible Charys Stock" means the Charys Common Stock
issued to the CCI Stockholders upon the effectiveness of the
Merger, excluding,
however, those shares issued pursuant to Section 5(b)
hereof.
(v) "Excess Payments" means the amount by which (i) any
corporate overhead of Charys allocated to CCI, management fees
paid by CCI to
Charys or other payments made by CCI to Charys which are not
directly
attributable or related to CCI's operation of its business
exceeds (ii) the
lower of (A) the actual internal cost to Charys of providing
such service or (B)
the aggregate costs that CCI would have incurred for the
services to which such
payments or allocations relate if CCI had acquired such services
from a third
party on an arm's length basis.
(vi) "Triggering Change of Control" means (A) any sale or
transfer of all or substantially all of the assets of Charys and
its
subsidiaries on a consolidated basis, or (B) any sale of stock,
merger,
consolidation, share exchange, business combination, or other
similar
transaction which results in persons other than holders of
shares of the Charys
Common Stock prior to any such transaction holding a number of
shares of Charys
Common Stock possessing the power, under ordinary circumstances,
to elect a
majority of the board of directors of Charys or the surviving
entity of such
transaction.
(vii) "First Earn-Out Period" means the 12-month period
commencing on May 1, 2005 and ending April 30, 2006.
(viii) "Second Earn-Out Period" means the 12-month period
commencing on May 1, 2006 and ending April 30, 2007.
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(ix) "Earn-Out Periods" means the First Earn-Out Period and
the Second Earn-Out Period.
(x) "Qualified Holder" means a former CCI Shareholder that
received shares of Charys Stock in the Merger and any Permitted
Transferee of
such CCI Shareholder that received any of such Charys Common
Stock.
(xi) "2006 Revenue Growth" means the amount, expressed as a
percentage, that the total revenues of CCI for the First
Earn-Out Period exceed
the total revenues of CCI for the twelve months ending April 30,
2005.
(xii) "2007 Revenue Growth" means the amount, expressed as a
percentage, that the total revenues of CCI for the Second
Earn-Out Period exceed
the total revenues of CCI for the First Earn-Out Period.
(xiii) "2006 Earn-Out Threshold" means that the 2006 Revenue
Growth is at least 7.5%, and EBITDA for the First Earn-Out
Period, expressed as
a percentage of total revenues of CCI for the First Earn-Out
Period, is at least
4.0%.
(xiv) "2007 Earn-Out Threshold" means that the 2007 Revenue
Growth is at least 7.5%, and EBITDA for the Second Earn-Out
Period, expressed as
a percentage of total revenues of CCI for the Second Earn-Out
Period, is at
least 6.0%.
(xv) "2006 Earn-Out Amount Shortfall" means the amount by
which $2,233,000 exceeds the 2006 Earn-Out Amount.
(xvi) "2006 Earn-Out AmounT" means, but only in the case
that
the 2006 Earn-Out Threshold is achieved, and subject to any
Share Reduction
Amount, the amount calculated as follows:
First, 2006 Revenue Growth shall be divided by 0.15, then
the quotient thereof shall be multiplied by 0.35, and the
product thereof is
being the "2006 Revenue Component."
Next, EBITDA for the First Earn-Out Period, expressed as a
percentage of total revenues for CCI for the First Earn-Out
Period, shall be
divided by .06, then the quotient thereof shall be multiplied by
0.65, and the
product thereof is the "2006 EBITDA Component."
Last, the amount of $1,540,000 shall be multiplied by an
amount equal to the sum of the 2006 Revenue Component and the
2006 EBITDA
Component, and the product thereof is the 2006 Earn-Out Amount;
provided,
however, the 2006 Earn-Out Amount shall not exceed
$2,233,000.
(xvii) "2007 Earn-Out Amount" means, but only in the case
that the 2007 Earn-Out Threshold is achieved, and subject to any
Share Reduction
Amount, the amount calculated as follows:
First, 2007 Revenue Growth shall be divided by 0.15, then
the quotient thereof shall be multiplied by 0.35, and the
product thereof is the
"2007 Revenue Component."
Next, EBITDA for the Second Earn-Out Period, expressed as a
percentage of total revenues of CCI for the Second Earn-Out
Period, shall be
divided by 0.08, then the quotient thereof shall be multiplied
by 0.65, and the
product thereof is the "2007 EBITDA Component."
Last, the amount of $2,970,000 shall be multiplied by an
amount equal to the sum of the 2007 Revenue Component and the
2007 EBITDA
Component, and the product thereof is the 2007 Earn-Out Amount;
provided,
however, the 2007 Earn-Out Amount shall not exceed $4,146,000
unless there is a
2006 Earn-Out Amount Shortfall, in which event the 2007 Earn-Out
Amount shall
not exceed the sum of $4,146,000 and the 2006 Earn-Out Amount
Shortfall.
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(xviii) "2006 Earn-Out Payment" means an amount payable upon
each share of Eligible Charys Stock then held by a Qualified
Holder equal to
quotient of the 2006 Earn-Out Amount divided by the number of
shares of Eligible
Charys Shares issued upon the effectiveness of the Merger.
(xix) "2007 Earn-Out Payment" means an amount payable upon
each share of Eligible Charys Stock then held by a Qualified
Holder equal to the
quotient of the 2007 Earn-Out Amount divided by the number of
shares of Eligible
Charys Stock issued upon the effectiveness of the Merger.
(xx) "Share Reduction Amount" means with respect to each of
(i) the amounts of $1,540,000 and $2,233,000 appearing in the
definition of 2006
Earn-Out Amount, (ii) the amounts of $2,970,000 and $4,146,000
appearing in the
definition of 2007 Earn-Out Amount, and (iii) and the amount of
$2,233,000
appearing in the definition of 2006 Earn-Out Amount Shortfall,
the reduction of
each such amount to a fraction thereof, the numerator of which
is the number of
shares of Eligible Charys Stock issued to CCI Stockholders in
the Merger and the
denominator of which is the total number of shares of Charys
Common Stock issued
to CCI Stockholders in the Merger.
(b) Not later than thirty (30) days after the completion of
the
audit of CCI's financial statements for each Earn-Out Period,
Charys shall
prepare and deliver to the Qualified Holders entitled to receive
the payment of
an Earn-Out Amount for such Earn-Out Period a statement (the
"Earn-Out
Statement") setting forth for such Earn-Out Period the total
revenues of CCI,
the Revenue Growth, EBITDA of CCI, EBITDA expressed as a
percentage of CCI's
total revenues, the Earn-Out Amount and the amount of the
Earn-Out Payment, and
a reasonably detailed description of the calculations of all of
such items .
The amount of the Earn-Out Payment reflected on such Earn-Out
Statement shall be
paid to the Qualified Holders on account of each share of
Eligible Charys Stock
issued in the Merger not later than the twentieth day following
the date the
Earn-Out Statement is required to be delivered to such Qualified
Holders (the
"Earn-Out Payment Date"). Any objections made to the calculation
of the set
forth in the Earn-Out Statement shall be resolved in accordance
with Section 11
d.
(c) The Earn-Out Payment shall be paid to each Qualified Holder
on
account of each share of Eligible Charys Stock issued in the
Merger held of
record by such Qualified Holder at the close of business on the
date that is the
last day of the Earn-Out Period in cash and/or in shares of the
Charys Common
Stock, the method of payment to be at the discretion of Charys.
The value of
the shares of Charys Common Stock paid on account of the
Earn-Out Payment shall
be the average Market Price Per Share of the Charys Common Stock
for the twenty
(20) trading days ending on the last day of the Earn-Out Period,
unless
otherwise agreed upon by Charys and such Qualified Holder
entitled to receive
the Earn-out Payment.
(d) If a Qualified Holder entitled to receive payment of an
Earn-Out Amount shall have any objections to an Earn-Out
Statement, such
Qualified Holder shall deliver a reasonably detailed statement
describing such
objections to Charys within fifteen (15) days after receiving
such Earn-Out
Statement (the "Objection Period"). In the event such statement
is not
delivered to Charys within such 15-day period, Charys'
calculations set forth
therein shall be conclusive as to such Qualified Holder. The
Qualified Holders
entitled to receive payment and Charys will use reasonable
efforts to resolve
any objections raised with respect to such calculations which
are timely raised
by such Qualified Holders. If the parties do not obtain a final
resolution
within twenty (20) days after the expiration of the Objection
Period, the
Qualified Holder's entitled to receive payment and Charys will
select an
accounting firm mutually acceptable to them to resolve any
remaining objections.
If such Qualified Holders and Charys are unable to agree on the
choice of an
accounting firm within ten (10) days, then Charys' then current
regular outside
accounting firm and Padgett, Stratemann & Co., L.L.P., San
Antonio. Texas, shall
select a reputable accounting firm to resolve such objections.
The
determination of such accounting firm so selected will be set
forth in writing
and will be conclusive and binding upon the parties. If such
accounting firm
determines that the Qualified Holders are entitled, under this
Section 11, to an
additional payment from Charys, Charys shall pay such amount on
the fifth
business day following the date of the determination by such
accounting firm.
In the event that the parties submit any unresolved objections
to an accounting
firm for resolution as provided in this Section 11(d), the fees
and expenses of
the accounting firm shall (i) be borne by the objecting
Qualified Holders if
such accounting firm determines that no additional payment is
due to such
Qualified Holders, (ii) be borne equally by Charys and such
Qualified Holders if
the payment which such accounting firm determines to be due to
such Qualified
Holders does not exceed the Earn-Out Payment reflected on the
Earn-Out Statement
by more than $25,000, or (iii) be borne by Charys if the payment
which such
accounting firm determines to be due to such Qualified Holders
exceeds the
Earn-Out Payment reflected on the Earn-Out Statement by more
than $25,000.
7
<PAGE>
(e) Charys agrees, so long as CCI operations are achieving
the
minimum performance levels outlined in the earn-out matrix set
forth in
Attachment B, that Charys will (i) make reasonable commercial
efforts to
-------------
preserve the structure, assets, business and operations of CCI
during the
two-year period following the Effective Date in such a manner as
to permit the
Qualified Holders to attain the benefits of the provisions of
this Section 11
through the achievement of Earn-Out Payments for both of the
Earn-Out Periods
and (ii) to refrain from taking any significant action, or
permitting any
significant action to be taken, respecting the structure,
assets, business or
operations of CCI that would frustrate the purpose and intent of
this Section
11. Charys further agrees that in carrying out any
transaction(s) that may
affect CCI, Charys will make, or cause to be made, all practical
provisions to
ensure CCI's ability to account for and determine Revenue Growth
and EBITDA to
the end that the objectives set forth in the preceding sentence
are attained.
Further, in the event that a Triggering Change of Control occurs
prior to the
end of the Second Earn-Out Period, Charys agrees that, prior to
or at the time
of such Triggering Change of Control, it will make reasonable
provision or cause
reasonable provision to be made so that (A) the Earn-Out
Payments, if any, can
be calculated and made following the Triggering Change of
Control at the times
and in the manner set forth in this Section 11 and (B) Charys'
obligations under
this Section 11 are expressly assumed by the acquiring person;
provided,
however, no such assumption by the acquiring person shall
relieve Charys from
its obligations respecting the provisions of this Section
11.
(f) The right to receive payment of an Earn-Out Amount is
personal
to Qualified Holder and shall not be transferable other than
together with
shares of Eligible Charys Shares to another Qualified Holder.
Any attempted
transfer of the right to receive payment of an Earn-Out Amount
shall be null and
void.
(g) In the event Charys effects any stock split, stock
dividend,
recapitalization or other similar event after the date of this
Agreement and
prior to the Earn-Out final payment of any Earn-Out Payment
hereunder,
appropriate adjustments to will be made to the number of shares
of Charys Common
Stock which are subject to the foregoing provisions of this
Section 11 in order
to carry out the purposes and intent thereof.
12. No Fractional Shares. No fractional shares of the Charys
Common
----------------------
Stock shall be issued in connection with the Merger, including
shares issued
pursuant to Sections 7 and 11 hereof. In the event that any
fractional shares
of the Charys Common Stock would be issued to a CCI Shareholder,
the number of
shares of the Charys Common Stock to be issued shall be rounded
up to the
nearest whole share.
13. Registration Rights. Upon the effectiveness of the Merger,
each of
-------------------
the CCI Shareholders shall have the registration rights
specified in
Attachment C hereto with respect to all of the shares of Charys
Common Stock
------------
received by such CCI Shareholder in the Merger, including shares
received by
such CCI Stockholder pursuant to Sections 7 and 11 hereof.
14. [RESERVED]
----------
15. Restricted Shares. All shares of the Charys Common Stock to
be
------------------
received by the CCI Shareholders hereunder shall be restricted
in their resale
as provided in the Securities Act of 1933, as amended (the
"Securities Act"),
and shall contain a legend as required by Rule 144 promulgated
under the
Securities Act ("Rule 144"), which shall read as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER
SUCH
SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION
STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND
ANY
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION
FROM
REGISTRATION UNDER THE SECURITIES ACT.
16. Directors and Officers. The officers and directors of
CCI
------------------------
following the Merger shall be Michael J. Novak, as chief
executive officer and
as a director, Roger Benavides, as chief financial officer, Dale
Ponder, as
chief operating officer, Jimmy Taylor, as executive vice
president of business
development, and each of Billy Ray, Ben Holcomb and Ray Smith,
as directors. If
a vacancy shall exist on the Board of Directors of the Surviving
Corporation on
the Effective Date, such vacancy may be filled by the Board of
Directors as
provided in the Bylaws
8
<PAGE>
of the Surviving Corporation. The Board of Directors of the
Surviving
Corporation may elect or appoint such additional officers as it
may deem
necessary or appropriate. Michael J. Novak, Jimmy Taylor, Dale
Ponder, and Roger
Benavides will at the Effective Date execute and deliver the
Employment
Agreements in substantially the same form as Attachment E
attached hereto.
------------
17. Articles of Incorporation. The Articles of Incorporation of
CCI
---------------------------
existing on the Effective Date, a copy of which is attached
hereto as
Attachment F shall continue in full force as the Articles of
Incorporation of
------------
the Surviving Corporation until altered, amended, or repealed as
provided
therein or as provided by law.
18. Bylaws. The Bylaws of CCI existing on the Effective Date, a
copy
------
of which is attached hereto as Attachment G shall continue in
full force as the
------------
Bylaws of the Surviving Corporation until altered, amended, or
repealed as
provided therein or as provided by law.
19. Copies of the Plan of Merger. A copy of this Plan of Merger
is on
-----------------------------
file at 19240 Red Land Road, San Antonio, Texas 78259, the
principal offices of
CCI, and at 1117 Perimeter Center West, Suite N415, Atlanta,
Georgia 30338, the
principal offices of Charys and the Subsidiary. A copy of this
Plan of Merger
will be furnished to any shareholder of CCI, Charys, or the
Subsidiary, on
written request and without cost.
20. Representations and Warranties of CCI. Where a
representation
-----------------------------------------
contained in this Agreement is qualified by the phrase "to the
best knowledge of
CCI" (or words of similar import), such expression means that,
after having
conducted a due diligence review, CCI believes the statement to
be true,
accurate, and complete in all material respects. The disclosure
of any fact or
matter in a Schedule identified in any subparagraph of this
Paragraph 20
constitutes disclosure for purposes of all other subparagraphs
of this Paragraph
20. CCI represents and warrants to Charys as follows:
(a) Power and Authority. CCI has full power and authority to
---------------------
execute, deliver, and perform this Agreement and all other
agreements,
certificates or documents to be delivered in connection
herewith, including,
without limitation, the other agreements, certificates and
documents
contemplated hereby (collectively the "Other Agreements").
(b) Binding Effect. Upon execution and delivery by CCI, this
---------------
Agreement and the Other Agreements shall be and constitute the
valid, binding
and legal obligations of CCI, enforceable against CCI in
accordance with the
terms hereof and thereof, except as the enforceability hereof or
thereof may be
subject to the effect of (i) any applicable bankruptcy,
insolvency,
reorganization, moratorium or similar laws relating to or
affecting creditors'
rights generally, and (ii) general principles of equity
(regardless of whether
such enforceability is considered in a proceeding in equity or
at law).
(c) No Violation. Neither the execution and delivery of this
-------------
Agreement or the Other Agreements nor full performance by CCI of
its obligations
hereunder or thereunder will violate or breach, or otherwise
constitute or give
rise to a default under, the terms or provisions of the Articles
of
Incorporation or Bylaws of CCI or, subject to obtaining any and
all necessary
consents, of any contract, commitment or other obligation of CCI
or necessary
for the operation of CCI's business (the "Business") following
the Merger or any
other material contract, commitment, or other obligation to
which CCI is a
party, or create or result in the creation of any encumbrance on
any of the
property of CCI. Except with respect to those companies and
individuals
disclosed to Charys before the date of this Agreement or as
disclosed on
Schedule 20(c) attached hereto, CCI is not in violation of its
Articles of
---------------
Incorporation, its Bylaws, or of any indebtedness, mortgage,
contract, lease, or
other agreement or commitment.
(d) No Consents. Except as disclosed on Schedule 20(d)
attached
------------
hereto, no consent, approval or authorization of, or
registration, declaration
or filing with any third party, including, but not limited to,
any governmental
department, agency, commission or other instrumentality, will,
except such
consents, if any, delivered or obtained on or prior to the
Effective Date, be
obtained or made by CCI prior to the Effective Date to authorize
the execution,
delivery and performance by CCI of this Agreement or the Other
Agreements.
(e) Capitalization. CCI is authorized by its Articles of
--------------
Incorporation to issue 25,000,000 shares of the CCI Common
Stock, of which
20,100,000 shares are issued and outstanding, and 25,000,000
shares of preferred
stock, par value $0.01 per share, none of which have been
issued. All issued and
outstanding shares
9
<PAGE>
having been validly issued and are fully paid and
non-assessable, with no
personal liability or preemptive rights attaching to the
ownership thereof.
Except as set forth on Schedule 20(e) attached hereto, no
instruments or
---------------
securities of any kind exist which are convertible into
additional shares of the
capital stock of CCI, nor do any outstanding options, warrants,
rights, calls,
commitments, plans, or other arrangements or agreements of any
character exist
providing for the purchase or issuance of any additional shares
of CCI.
(f) Stock Ownership. Attachment A hereto sets forth a true
and
---------------- -------------
accurate list of the holders of record of all of the issued and
outstanding
shares of CCI Common Stock as of the Effective Date.
(g) Organization and Standing of CCI. CCI is a duly organized
and
--------------------------------
validly existing Nevada corporation in good standing, with all
requisite
corporate power and authority to carry on the Business as
presently conducted in
each of the jurisdictions where it is currently doing business.
CCI has
qualified to do business in the States listed in Schedule 20(g)
attached hereto.
--------------
(h) CCI Subsidiaries. CCI has eight subsidiaries as listed
in
-----------------
Schedule 20(h) attached hereto, each of which is a duly
organized and validly
---------------
existing corporation in the jurisdiction of its incorporation,
and is in good
standing, with all requisite corporate power and authority to
carry on its
business as presently conducted in each of the jurisdictions
where it is
currently doing business. As used herein, the term "CCI" shall
mean CCI and all
of its subsidiaries, unless the context requires otherwise.
(i) Employees. On the date of this Agreement, CCI has
---------
approximately 130 employees. All employees of CCI whose annual
base salary
exceeds $50,000 per year are described in Schedule 20(i)
attached hereto. To
--------------
the best knowledge of CCI, it has been for the past four years,
and currently
is, in material compliance with all federal, state and local
regulations or
orders affecting employment and employment practices (including
those
regulations promulgated by the Equal Employment Opportunity
Commission),
including terms and conditions of employment and wages and
hours. At the
Effective Date, CCI will have no obligation to make any payment
to any past or
present employees, officers or directors or independent
contractors except as to
those individuals described in Schedule 20(i), other than
compensation paid in
--------------
the ordinary course of business. Except as disclosed in Schedule
20(i) attached
--------------
hereto, CCI has no employment contract, written or otherwise,
with any employee
or former employee.
(j) Financial Statements. CCI has furnished Charys and the
---------------------
Subsidiary audited year-end balance sheets and statements of
operations,
shareholders equity and cash flow of CCI and its consolidated
subsidiaries as of
March 31, 2003, and March 31, 2004 and unaudited statements
(collectively, the
"Financial Statements") for the period commencing April 1, 2004
and ending
December 31, 2004 (the "Financial Statement Date") all of which
are attached
hereto as Schedule 20(j). The Financial Statements (i) are in
accordance with
--------------
the books and records of CCI; (ii) fairly present the financial
condition of CCI
at such dates and the results of its operations for the periods
therein
specified; (iii) were prepared in accordance with generally
accepted accounting
principles applied upon a basis consistent with prior accounting
periods, except
that the unaudited statements are subject to normal year-end
adjustments and do
not contain the footnotes required by generally accepted
accounting principles ;
and (iv) with respect to all contracts and commitments of CCI,
reflect adequate
reserves for all reasonably anticipated losses and costs in
excess of
anticipated income. Specifically, but not by way of limitation,
the Financial
Statements disclose all of the debts, liabilities, and
obligations of any nature
(whether absolute, accrued, contingent, or otherwise and whether
due or to
become due) of CCI on the dates therein specified (except such
debts,
liabilities, and obligations as are not required to be reflected
therein in
accordance with generally accepted accounting principles).
(k) Present Status. Except as disclosed in Schedule 20(k)
--------------- ---------------
attached hereto, since the dates reflected on the Financial
Statements, CCI has
not (i) incurred any material obligations or material
liabilities, absolute,
accrued, contingent, or otherwise, except current trade
payables; (ii)
discharged or satisfied any liens or encumbrances, or paid any
obligations or
liabilities, except current Financial Statements liabilities and
current
liabilities incurred since the dates reflected on the Financial
Statements, in
each case, in the ordinary course of business; (iii) declared or
made any
shareholder payment or distribution or purchased or redeemed any
of its
securities or agreed to do so; (iv) mortgaged, pledged, or
subjected to lien,
encumbrance, or charge any of its material assets except as
shall be removed
prior to or at the Effective Date; (v) canceled any material
debt or claim; (vi)
sold or transferred any assets of a material value except sales
from inventory
in the ordinary course of business; (vii) suffered any damage,
destruction, or
loss (whether or not covered by insurance) materially affecting
its
10
<PAGE>
properties, business, or prospects; (viii) waived any rights of
a material
value; (ix) entered into any transaction other than in the
ordinary course of
business. Further, except as disclosed in Schedule 20(k)
attached hereto, since
the Financial Statement Date, there has not been any change in
or any event or
condition (financial or otherwise) affecting the property,
assets, liabilities,
operations, or prospects of CCI, other than changes in the
ordinary course of
its business, none of which has (either when taken by itself or
taken in
conjunction with all other such changes) been materially
adverse.
(l) Tax Returns and Audits. CCI has delivered to Charys copies
of
----------------------
all federal and state income tax and franchise tax returns for
CCI for the
fiscal years ended March 31, 2002, 2003 and 2004 (collectively
the "Primary Tax
Returns"), all of which are described in Schedule 20(l) attached
hereto. CCI
--------------
has paid all taxes (the "Primary Taxes") required to be paid as
provided in the
Primary Tax Returns.
(i) As of the Effective Date, CCI has filed all of the other
tax returns (the "Other Tax Returns," and together with the
Primary Tax Returns,
collectively, the "Tax Returns") required to be filed and has
duly paid or
accrued on the Financial Statements all taxes (the "Other
Taxes," and together
with the Primary Taxes, collectively, the "Taxes") required to
be paid as
provided in the Other Tax Returns, including without limitation,
premium, gross
receipts, net proceeds, alternative or add-on minimum, ad
valorem, value added,
turnover, sales, use, property, personal property (tangible and
intangible),
stamp, leasing, lease, user, excise, duty, transfer, license,
withholding,
payroll, employment, fuel, excess profits, occupational and
interest
equalization, windfall profits, severance and other charges
(including interest
and penalties) due or claimed to be due by federal, state, or
local authorities
(collectively, the "Taxing Authorities"). All Taxes required or
anticipated to
be paid for all periods prior to and including the Effective
Date have been paid
or fully reserved against in accordance with generally accepted
accounting
principles applied upon a basis consistent with prior accounting
periods, except
as provided in Schedule 20(l) attached hereto. All Taxes which
are required to
--------------
be withheld or collected by CCI have been duly withheld or
collected, and to the
extent required, have been paid to the proper Taxing Authority
or properly
segregated or deposited as required by applicable laws. There
are no liens for
Taxes upon any property or assets of CCI except for liens for
Taxes not yet due
and payable. CCI has not executed a waiver of the statute of
limitations on the
right of the Internal Revenue Service or any other Taxing
Authority to assess
additional Taxes or to contest the income or loss with respect
to any Tax
Return. The basis of any depreciable assets, and the methods
used in
determining allowable depreciation (including cost recovery) of
CCI is
substantially correct and in compliance with the Code, and the
regulations
thereunder.
(ii) Except as disclosed in Schedule 20(l) attached hereto,
--------------
no issues have been raised that are currently pending by any
Taxing Authority in
connection with any of the Tax Returns. No material issues have
been raised in
any examination by any Taxing Authority with respect to CCI
which, by
application of similar principles, reasonably could be expected
to result in a
proposed deficiency for any other period not so examined. There
are no
unresolved issues or unpaid deficiencies relating to such
examinations.
(iii) Except as disclosed in Schedule 20(l) attached hereto,
--------------
CCI is not subject to any joint venture, partnership or other
arrangement or
contract which is treated as a partnership for federal income
tax purposes.
(iv) CCI is not a "consenting corporation" within the
meaning
of Section 341(f)(1) of the Code, or comparable provisions of
any state
statutes, and none of the assets of CCI is subject to an
election under Section
341(f) of the Code or comparable provisions of any state
statutes.
(v) CCI is not and will not be required to recognize after
the Effective Date any taxable income in respect of accounting
method
adjustments required to be made under the Tax Reform Act of 1986
or the Revenue
Act of 1987.
(vi) None of the assets of CCI constitutes tax-exempt bond
financed property or tax-exempt use property within the meaning
of Section 168
of the Code, and none of the assets of CCI are subject to a safe
harbor lease
or other similar arrangement as a result of which CCI is not
treated as the
owner for federal income tax purposes.
11
<PAGE>
(vii) CCI has not made or become obligated to make, and will
as a result of any event connected with the Effective Date
become obligated to
make, any "excess parachute payment" as defined in Section 280G
of the Code
(without regard to subsection (b)(4) thereof).
(viii) CCI and its domestic subsidiaries file a consolidated
tax return. Otherwise, CCI is not a party to any tax sharing
agreement.
(ix) CCI shall file all Tax Returns and reports with respect
to Taxes which are equired to be filed for Tax periods ending on
or before the
Effective Date (a "Pre-Effective Date Tax Return") and shall pay
all amounts
shown to be due on such Pre-Effective Date Tax Returns to the
appropriate taxing
authority.
(x) CCI shall furnish or cause to be furnished, upon
request,
as promptly as practicable, such information (including access
of books and
records) and assistance relating to CCI as is reasonably
necessary for the
filing of any return or report, for the preparation for any
audit, and for the
prosecution or defense of any claim relating to any proposed
adjustment or
refund claim.
(m) Litigation. Other than as reflected on Schedule 20(m)
---------- ---------------
attached hereto, to the knowledge of CCI, no material
litigation, arbitrations,
claims, governmental or other proceedings (formal or informal),
or
investigations pending, threatened, or in prospect (or any basis
therefor known
to CCI) with respect to CCI, or any of the Business, properties,
or assets
existing as of the date of this Agreement.
(n) Compliance with Laws and Regulations. Except as
otherwise
----------------------------------------
disclosed in Schedule 20(n) attached hereto, to the best
knowledge of CCI, it is
--------------
in material compliance with all laws, ordinances, codes,
restrictions,
regulations (environmental and otherwise) and other legal
requirements
applicable to the conduct of the Business, the noncompliance
with which would be
likely to have a material adverse effect on the Business; and
there are no
lawsuits or proceedings pending or, to their knowledge,
threatened with respect
to the foregoing.
(o) No Defaults. Other than as reflected on Schedule 20(o)
------------ ---------------
attached hereto, to the best knowledge of CCI, it is not in
default under any
provision, of any lease, contract, commitment, obligation, note,
bond,
debenture, mortgage, indenture, security agreement, guaranty, or
other
instrument of indebtedness, and no existing condition exists
which, with the
giving of notice or the passage of time, or both, would
constitute such a
default, in either case, which default is or would be likely to
have a material
adverse effect on the Business.
(p) Permits and Approvals. Except as otherwise disclosed on
-----------------------
Schedule 20(p) attached hereto, to the best knowledge of CCI,
(i) it has all
---------------
permits and approvals required for the conduct of the Business
and is not in
material default under any permit, approval or qualification,
which default is
likely to have a material adverse effect on CCI or the Business,
nor is there
any existing condition which, with the giving of notice or the
passage of time,
or both, would constitute such a material default; (ii) no
permit, approval or
qualification of any government or governmental unit, agency,
board, body or
instrumentality, whether federal, state or local, is necessary
for the conduct
of the Business as same has been and is being conducted; and
(iii) there is no
lawsuit or proceeding pending or threatened with respect to any
of the
foregoing.
(q) Properties. CCI does not own any real property. However,
CCI
----------
has good and marketable title to all other properties and assets
used in the
Business or owned by it (except real and other properties and
assets as are held
pursuant to leases or licenses), free and clear of all liens,
mortgages,
security interests, pledges, charges, and encumbrances, other
than as shown on
the Financial Statements, including, but not limited to a tax
lien for unpaid
real estate taxes other than real estate taxes not yet due and
payable. The
properties and assets owned, leased, or licensed by CCI
constitute all such
properties and assets which are necessary to the Business as
presently conducted
or as CCI contemplates conducting.
(r) Patents and Trademarks. To the best knowledge of CCI, it
------------------------
owns, possesses and has good title to all of the copyrights,
trademarks,
trademark rights, patents, patent rights, and licenses necessary
in the conduct
of the Business, all of which are described in Schedule 20(r)
hereto. To the
--------------
best knowledge of CCI, it is not infringing upon or otherwise
acting adversely
to the rights of any person, under, or in respect to, any
copyrights,
trademarks, trademark rights, patents, patent rights, or
licenses owned by any
person or entity, and there is no claim or pending or threatened
action with
respect thereto.
12
<PAGE>
(s) Compliance with Environmental Laws. Except as otherwise
-------------------------------------
disclosed on Schedule 20(s) attached hereto, to the best
knowledge of CCI, it
---------------
has not violated and is not in violation of the Federal Clean
Air Act (42 U.S.C.
7401, et seq.), Federal Water Pollution Control Act (33 U.S.C.
1251, et seq.),
the Federal Resource Conservation and Recovery Act of 1976 (42
U.S.C. 6901, et
seq.), the Federal Comprehensive Environmental Responsibility,
Clean Up and
Liability Act of 1980 (42 U.S.C. 9601, et seq.), the Federal
Toxic Substance
Control Act of 1976 (15 U.S.C. 2601, et seq.) or any state or
local laws or
ordinances regulating the subjects covered by the federal
statutes identified
above, including rules and regulations thereunder. Prior to the
Effective Date,
CCI either directed, participated in and/or authorized that
studies of the
environmental status of CCI's properties and operations of the
Business be
prepared, which studies are listed or otherwise described in
Schedule 20(s)
--------------
hereto (collectively the "Studies"). The Studies, as well as
those other
matters, correspondence, reports and the like disclosed in
Schedule 20(s)
--------------
hereto, have been delivered to Charys and Charys' counsel and
environmental
consultants and are incorporated herein by reference as though
set out herein.
(t) Purchase and Outstanding Bids. No purchase commitments of
CCI
-----------------------------
are in excess of normal, ordinary, and usual requirements of its
business, or
were made at any price in excess of then current Market Price or
contained terms
and conditions more onerous than those usual and customary in
the industry.
(u) Insurance Policies. CCI currently has insurance contracts
or
-------------------
policies (the "Policies") in full force and effect which provide
for coverage
that are usual and customary as to amount and scope in the
business of CCI.
Schedule 20(u) attached hereto sets forth a summary of all
insurance contracts
---------------
or policies that relate to liability or excess liability
insurance
(collectively, the "Liability Policies") and all other Policies,
including the
name of the insurer, the types, dates and amounts of coverage
and any material
coverage exclusions. Except as set forth in Schedule 20(u)
attached hereto, all
--------------
of the Policies and Liability Policies remain in full force and
effect. CCI has
not breached or otherwise failed to perform, in any material
respect, its
obligations under any of the Policies or the Liability Policies
nor has CCI
received any adverse notice or communication from any of the
insurers under the
Policies or the Liability Policies with respect to any such
alleged breach or
failure in connection with any of the Policies or the Liability
Policies. All
Policies are sufficient for compliance with all regulations,
orders and all
contracts to which CCI is subject; are valid, outstanding,
collectible and
enforceable policies; and will not in any way be affected by, or
terminate or
lapse by reason of, the execution and delivery of this Agreement
or the
consummation of the Merger.
(v) Compensation of Officers and Others. Except as disclosed
in
-------------------------------------
Schedule 20(v) attached hereto, as of the Financial Statement
Date, there has
not been any change in any compensation, commission, bonus, or
other
remuneration payable to any officer, director, agent, employee,
or consultant of
CCI, other than in the ordinary course of business.
(w) Inventory. The inventory of CCI which is reflected on
the
---------
Financial Statements and all inventory items which have been
acquired since the
Financial Statement Date consists of goods of such quality and
in such
quantities as are salable in the ordinary course of the Business
with normal
markup at prevailing market prices. Each item of the inventory
was valued in
accordance with generally accepted accounting principles applied
upon a basis
consistent with prior accounting periods.
(x) Status on the Effective Date. CCI shall deliver to Charys
at
-----------------------------
the Effective Date a schedule prepared by the chief financial
officer of CCI
stating the amount of CCI's (i) cash balances, plus certificates
o deposit, (ii)
accounts receivable and (iii) accounts payable, in each case as
of the Effective
Date.
(y) Labor Matters. Except as disclosed in Schedule 20(y)
hereto,
-------------- --------------
to the best knowledge of CCI, it is in material compliance with
all applicable
laws, rules or regulations respecting employment and employment
practices, terms
and conditions of employment and wages and hours, and CCI has
not engaged in any
unfair or illegal labor practice which has not been remedied as
of the date
hereof. There is no unfair labor practices complaint or charge
of employment
discrimination pending or, to the best knowledge of CCI,
threatened in writing
against CCI with respect to any of the employees before the
National Labor
Relations Board, if applicable, the Equal Employment Opportunity
Commission, or
any other state, federal or local court or governmental board,
agency or
commission. There is no labor strike, dispute, work slowdown,
work stoppage or
other job action pending or, to the best knowledge of CCI,
threatened against
CCI.
13
<PAGE>
(z) Compliance with Law and Other Instruments. The business
and
-------------------------------------------
operations of CCI have been and are being conducted in
accordance with all
applicable laws, rules and regulations of all authorities,
except those which do
not (either individually or in the aggregate) materially and
adversely affect
CCI.
(aa) Contracts. All relevant and/or significant contracts to
---------
which CCI is a party have been provided to Charys directly
and/or indirectly as
a result of Charys due diligence request or other written
requests. Other than
as disclosed on Schedule 20(aa) attached hereto or otherwise
heretofore
----------------
disclosed to Charys in writing, to the best knowledge of CCI, it
has in all
respects performed all obligations required to be performed to
date, and is not
in material default in any respect under any of the contracts,
agreements,
leases, documents, or other commitments to which it is a party
or otherwise
bound or affected. All parties having material contracts with
CCI are in
material compliance therewith, and are not in material default
thereunder.
(bb) Banks, Brokers and Proxies. Schedule 20(bb) attached
hereto
--------------------------- ---------------
sets forth (i) the name of each bank, trust company, securities
or other broker
or other financial institution with which CCI has an account,
credit line or
safe deposit box or vault, or otherwise maintains relations;
(ii) the name of
each person authorized by CCI to draw thereon or to have access
to any such safe
deposit box or vault; (iii) the purpose of each such account,
safe deposit box
or vault; and (iv) the names of all persons authorized by
proxies, powers of
attorney or other instruments to act on behalf of CCI in matters
concerning its
business or affairs. All such accounts, credit lines, safe
deposit boxes and
vaults are maintained by CCI for normal business purposes, and
no such proxies,
powers of attorney or other like instruments are irrevocable.
The account
statements previously provided to Charys are true and complete
in all respects.
(cc) Dealings with Affiliates. Schedule 20(cc) attached
hereto
-------------------------- ----------------
sets forth a complete list, including the parties, of all oral
or written
agreements and arrangements to which CCI is, will be or has been
a party, at any
time from December 31, 2003 to the Effective Date, by and among
CCI and any
entity which it controls, by which it is controlled or with
which it is under
control.
(dd) Corporate Records, etc. CCI has delivered or made
available
-----------------------
to Charys copies of the Articles of Incorporation, Bylaws,
minute books, and
other corporate governance materials used since the inception of
CCI. The books
of account and minute books of CCI are complete and correct, and
reflect all
those transactions involving its business which properly should
have been set
forth in such books.
(ee) Brokerage. No broker, agent or finder has rendered
services
---------
to CCI in connection with the Merger except as shown in Schedule
20(ee) attached
---------------
hereto.
(ff) Representations and Warranties True and Complete. All
-----------------------------------------------------
representations and warranties of CCI in this Agreement and the
Other Agreements
will be true, accurate and complete in all material respects as
of the Effective
Date.
(gg) No Knowledge of Default. CCI has no knowledge that any
--------------------------
representations and warranties of Charys and the Subsidiary
contained in this
Agreement or the Other Agreements are untrue, inaccurate or
incomplete or that
Charys or the Subsidiary is in default under any term or
provision of this
Agreement or the Other Agreements.
(hh) No Untrue Statements. No representation or warranty by
CCI
----------------------
in this Agreement or in any writing furnished or to be furnished
pursuant
hereto, contains or will contain any untrue statement of a
material fact, or
omits, or will omit to state any material fact required to make
the statements
herein or therein contained, in light of the circumstances under
which they were
made, not misleading.
(ii) Reliance. The foregoing representations and warranties
are
--------
made by CCI with the knowledge and expectation that Charys and
the Subsidiary
are placing complete reliance thereon.
21. Representations and Warranties of Charys. Where a
representation
------------------------------------------
contained in this Agreement is qualified by the phrase "to the
best knowledge of
Charys" (or words of similar import), such expression means
that, after having
conducted a due diligence review, Charys believes the statement
to be true,
accurate, and complete in all material respects. Knowledge shall
not be imputed
nor shall it include any matters which such person should
14
<PAGE>
have known or should have been reasonably expected to have
known. Charys
represents and warrants to CCI as follows:
(a) Power and Authority. Charys and the Subsidiary have full
---------------------
power and authority to execute, deliver, and perform this
Agreement and the
Other Agreements.
(b) Corporate Organization of Charys. Charys is a
corporation
-----------------------------------
duly organized, validly existing and in good standing under the
laws of Delaware
with full corporate power and authority to carry on its business
as it is now
being conducted and to own, operate and lease its properties and
assets.
(c) Corporate Organization of the Subsidiary. The Subsidiary is
a
----------------------------------------
corporation duly organized, validly existing and in good
standing under the laws
of Nevada with full corporate power and authority to carry on
its business as it
is now being conducted and to own, operate and lease its
properties and assets.
(d) Capital Stock of Charys. As of the date of this
Agreement,
--------------------------
the entire authorized capital stock of Charys consists of
300,000,000 shares of
the Charys Common Stock, of which 5,112,767 shares are issued
and outstanding,
and 5,000,000 shares of preferred stock, par value $0.001 per
share, of which
1,000,000 shares are designated as Series A preferred stock (the
"Charys Series
A Preferred Stock") and are issued and outstanding. All issued
and outstanding
shares of the Charys Common Stock and the Charys Series A
Preferred Stock have
been validly issued and are fully paid and non-assessable, with
no personal
liability or preemptive rights attaching to the ownership
thereof. Except as
set forth on Schedule 21(d) attached hereto, no instruments or
securities of any
--------------
kind exist which are convertible into additional shares of the
capital stock of
Charys, nor do any outstanding options, warrants, rights, calls,
commitments,
plans or other arrangements or agreements of any character exist
providing for
the purchase or issuance of any additional shares of Charys. The
Charys Common
Stock to be received by the CCI Shareholders in the Merger,
including Charys
Common Stock, if any, received pursuant to Sections 7 and 11
hereof, is duly
authorized, and upon issuance to any CCI Shareholder as
contemplated by this
Agreement, will be validly issued, fully paid and
non-assessable. The delivery
of a certificate or certificates to any CCI Shareholder pursuant
to this
Agreement representing shares of Charys Common Stock in the
manner provided
herein will transfer to such CCI Stockholder good and valid
title to such shares
of Charys Common Stock, free and clear of all liens.
(e) Capital Stock of the Subsidiary. As of the date of this
-----------------------------------
Agreement, the entire authorized capital stock of the Subsidiary
consists of
10,000 shares of the Subsidiary Common Stock, of which 1,000 are
issued and
outstanding. All issued and outstanding shares of the Subsidiary
Common Stock
have been validly issued and are fully paid and non-assessable,
with no personal
liability or preemptive rights attaching to the ownership
thereof. Except as
set forth on Schedule 21(e) attached hereto, no instruments or
securities of any
--------------
kind exist which are convertible into additional shares of the
capital stock of
the Subsidiary, nor do any outstanding options, warrants,
rights, calls,
commitments, plans or other arrangements or agreements of any
character exist
providing for the purchase or issuance of any additional shares
of the
Subsidiary.
(f) Binding Effect. Upon execution and delivery by Charys and
the
--------------
Subsidiary, this Agreement and the Other Agreements shall be and
constitute the
valid, binding and legal obligations of Charys and the
Subsidiary, enforceable
against Charys and the Subsidiary in accordance with the terms
hereof and
thereof, except as the enforceability hereof or thereof may be
subject to the
effect of (i) any applicable bankruptcy, insolvency,
reorganization, moratorium
or similar laws relating to or affecting creditors' rights
generally, and (ii)
general principles of equity (regardless of whether such
enforceability is
considered in a proceeding in equity or at law).
(g) No Violation. Other than as set forth in Schedule 21(g)
------------- --------------
attached hereto, the execution and delivery by Charys of this
Agreement, and all
of the Other Agreements, and the fulfillment of and compliance
with the
respective terms hereof and thereof by Charys do not and will
not (i) conflict
with or result in a breach of the terms, conditions or
provisions of or
constitute a default or event of default under (with due notice,
lapse of time
or both) of any contract to which Charys is a party; (ii) result
in the creation
of any lien upon any of Charys' capital stock or assets; (iii)
give any third
party the right to accelerate any obligations of Charys; or (iv)
result in a
violation of or require any authorization, consent, approval,
exemption or other
action by or notice to any court or authority pursuant to, the
charter or bylaws
of Charys, or any regulation, order or contract to which Charys
or its
properties are subject. Charys and the Subsidiary will comply
with all
applicable regulations and orders in connection with the
execution, delivery and
performance of this Agreement and the Merger.
15
<PAGE>
(h) Governmental Consents. Except for the filing of the
Articles
----------------------
of Merger and other appropriate merger documents required by the
NRS to be filed
with the Secretary of State of Nevada and the documents required
to be filed
with the relevant authorities of other states in which the
constituent
corporations are qualified to do business, no consent, approval,
order or
authorization of, or registration, qualification, designation,
declaration, or
filing with any governmental body is required on the part of
Charys or the
Subsidiary in connection with the transactions contemplated by
this Agreement
and the Other Agreements.
(i) Investment Intent. The Subsidiary is acquiring the shares
of
------------------
the CCI Common Stock for its own account and not with a view to
their
distribution within the meaning of the Securities Act.
(j) No Untrue Statements. No representation or warranty by
Charys
--------------------
in this Agreement or in any writing furnished or to be furnished
pursuant
hereto, contains or will contain any untrue statement of a
material fact, or
omits, or will omit to state any material fact required to make
the statements
herein or therein contained, in light of the circumstances under
which they were
made, not misleading.
(k) SEC Filings. Since April 30, 2004, Charys has filed all
------------
required documents with the SEC since it first became a
registered public
company (the "SEC Documents"). As of their respective dates, the
SEC Documents,
when taken together with any amendment thereto filed prior to
the date hereof,
complied in all material respects with the requirements of the
Securities Act or
the Securities Exchange Act of 1934, as amended, as the case may
be, and, at the
respective times they were filed, none of the Charys SEC
Documents contained any
untrue statement of a material fact or omitted to state a
material fact required
to be stated therein or necessary to make the statements
therein, in light of
the circumstances under which they were made, not misleading,
except as set
forth in subsequent SEC Documents filed prior to the Effective
Date or in this
Agreement.
22. Actions of CCI Pending the Effective Date. CCI agrees that
from
--------------------------------------------
the date hereof until the Effective Date:
(a) Operations. CCI will use its commercially reasonable
best
----------
efforts to (i) be operated in keeping with its customary
practices and in
compliance with all applicable laws, rules and regulations; and
(ii) not engage
in any transaction or make any commitment or expenditure, not
made in the
ordinary course of business.
(b) No Change in Corporate Charter. No change will be made in
the
------------------------------
Articles of Incorporation or Bylaws of CCI, or any of its
subsidiaries, except
as may be first approved in writing by Charys.
(c) No Change in Compensation. Except as disclosed in
Schedule
----------------------------
20(v), no increase will be made in the compensation payable to
or to become
payable by CCI to any officer, employee, or agent, nor will any
bonus payment or
arrangement be made by CCI to or with any officer, employee, or
agent thereof,
except as may be first approved in writing by Charys.
(d) No Default. CCI shall timely pay and/or not suffer any
-----------
default with respect to any of its contracts, commitments or
obligations. CCI
shall also continue to pay as they become due all accounts
payable of CCI except
as disclosed on Schedule 22(d) attached hereto.
---------------
(e) Banking Relations. No change will be made affecting the
------------------
banking and safe deposit arrangements of CCI, except as may be
first approved in
writing by Charys.
(f) Insurance. CCI shall keep all of its property and assets
---------
covered hereby insured in accordance with the present practice,
and maintain,
preserve and keep all improvements on its properties, all
equipment, machinery
and other personal property covered hereby in reasonably good
condition and
state of repair, reasonable wear excepted.
(g) No Liabilities or Stock Issuances. Except as disclosed
in
-------------------------------------
Schedule 20(v),CCI shall not issue nor sell any of its stock,
bonds, notes, or
other corporate securities, nor incur any obligation or
liability except current
liabilities incurred in the ordinary course of business, nor
mortgage, pledge,
grant security interests covering, or additionally subject to
lien or
encumbrance any of its properties except as may be first
approved in writing by
Charys.
16
<PAGE>
(h) Reduction of Assets. CCI shall not dispose of any
material
---------------------
assets other than in the normal course of business.
(i) Access to Records. CCI shall afford Charys and the
Subsidiary
-----------------
and their attorneys, accountants, investment bankers and other
representatives,
access, during normal business, to all of its business
operations, properties,
books, files, and records, and will cooperate in their
examination thereof. No
such examination, however, shall constitute a waiver or
relinquishment by Charys
and the Subsidiary of their right to rely upon covenants,
representations, and
warranties of CCI made herein or pursuant hereto.
(j) Compliance. CCI shall cause its officers and employees
to
----------
comply with all applicable provisions of this Agreement.
(k) Consents. CCI shall use its commercially reasonable
efforts
--------
to obtain on or prior to the Effective Date, all consents
necessary to the
consummation of the transactions contemplated hereby.
(l) Breach of Agreement. CCI shall not take any action which
---------------------
would constitute a breach of this Agreement.
(m) Confidentiality. CCI shall hold in confidence, and shall
---------------
cause each of its principals, officers, directors, employees and
other personnel
and authorized representatives, to hold in confidence, and not
disclose to any
other party without Charys' prior consent, all confidential and
proprietary
information received by it from Charys or its officers,
directors, employees,
agents, counsel and auditors in connection with the transactions
contemplated
hereby except as may be required by applicable law or as
otherwise contemplated
herein.
23. Actions of Charys Pending the Effective Date. Charys agrees
that
----------------------------------------------
from the date hereof until the Effective Date:
(a) Consents. It will use its commercially reasonable best
--------
efforts to obtain on or prior to the Effective Date all consents
necessary to
the consummation of the transactions contemplated hereby.
(b) Breach of Agreement. It will not take any action which,
if
---------------------
taken prior to the Effective Date, would constitute a breach of
this Agreement.
(c) Confidentiality. Charys shall hold in confidence, and
shall
---------------
cause each of its principals, officers, directors, employees and
other personnel
and authorized representatives to, hold in confidence, and not
disclose to any
other party without CCI's prior consent, all confidential and
proprietary
information received by it from CCI or CCI's officers,
directors, employees,
agents, counsel and auditors in connection with the transactions
contemplated
hereby except as may be required by applicable law or as
otherwise contemplated
herein.
24. Conditions Precedent to Obligations of Charys and the
Subsidiary.
------------------------------------------------------------------
All obligations of Charys and the Subsidiary under this
Agreement are subject to
the fulfillment of the following conditions (or waiver in
writing by Charys and
the Subsidiary of any such condition) prior to or at the
Effective Date:
(a) Representations and Warranties True at the Effective
Date.
-------------------------------------------------------------
The representations and warranties of CCI herein shall be deemed
to have been
made again as of the Effective Date (other than any
representation or warranty
that is expressly made as of a specified date, which shall be
true and corrects
as of such specified date only) and then be true and correct,
subject to any
changes contemplated by this Agreement. CCI shall have performed
all of the
obligations to be performed by it hereunder on or prior to the
Effective Date.
(b) Consents and Approvals. CCI has obtained any and all
material
----------------------
consents, approvals, orders, qualifications, licenses, permits
or other
authorizations, required by all applicable regulations, orders
and contracts of
CCI or binding on its respective properties and assets, with
respect to the
execution, delivery and performance of this Agreement and the
consummation of
the Merger, including, without limitation, any consents of the
CCI Shareholders
and the consent required from Frost National Bank, unless waived
by Charys.
(c) No Material Adverse Change. There shall have been no
material
--------------------------
adverse change since the date of this Agreement. As used herein,
the term
"material adverse change," means any circumstances, state of
17
<PAGE>
facts or matters which might reasonably be expected to have a
material adverse
effect on the business, operations, properties, assets,
condition (financial or
otherwise), results, plans, strategies or prospects of CCI.
(d) Secretary's Certificate. Charys has received a
certificate,
------------------------
substantially in the form of Schedule 24(d) attached hereto, of
the secretary of
--------------
CCI, as to the Articles of Incorporation and Bylaws of CCI, the
resolutions
adopted by the Board of Directors of CCI and the CCI
Shareholders in connection
with this Agreement and the incumbency of CCI's officers.
(e) Other Documents. CCI has furnished Charys with such other
and
---------------
further documents and certificates including certificates of CCI
officers and
others as Charys has reasonably requested to evidence compliance
with the
conditions set forth in this Agreement.
(f) No Orders. There has not been issued, and there is not
in
----------
effect, any injunction or similar legal order prohibiting or
restraining
consummation of any of the transactions herein contemplated, and
no legal or
governmental action, proceeding or investigation which might
reasonably be
expected to result in any such injunction or order is
pending.
(g) Deliveries at the Effective Date. CCI shall have delivered
to
--------------------------------
Charys and the Subsidiary at the Effective Date all of the
documents required to
be delivered hereunder.
(h) Inventory. CCI shall, upon Charys' written request, take
a
---------
physical inventory for each item on the perpetual inventory
system of CCI in
order to determine the value of each item in the books and
records of CCI and
that each item so priced in accordance with generally accepted
accounting
principles applied upon a basis consistent with prior accounting
periods.
Charys, or any of its representatives, shall have the right to
observe the
taking of such inventory and to test the results thereof. Upon
completion of
such inventory, a schedule of inventory results will be prepared
by the chief
financial officer of CCI and delivered to Charys. If such
inventory is not
satisfactory to Charys, then Charys shall have the option to
terminate this
Agreement.
(i) Environmental Matters. Before the Effective Date, Charys
----------------------
shall have access to the properties of CCI and the Business to
perform the
environmental studies that it deems reasonably necessary. In the
event that
Charys shall not be reasonably satisfied with any such
environmental studies,
CCI shall have the right, but not the obligation, to remedy any
condition noted
by Charys within a reasonable time after written notice from
Charys. If such
noted condition has not been corrected by the Effective Date,
Charys shall have
the option to terminate this Agreement, whereupon no party shall
have any
liability to any other party hereunder or in connection with any
other
instrument executed in relation to the transactions contemplated
herein.
(j) Certificates of Good Standing. CCI shall have delivered
to
--------------------------------
Charys certificates or telegrams issued by appropriate
governmental authorities
evidencing the good standing of CCI and its subsidiaries as of a
date not more
than 10 days prior to the Effective Date, in the State of Nevada
or any such
state of incorporation, or certificates of authority to transact
business.
(k) Resolutions. Charys' counsel shall have received
certified
-----------
resolutions of a meeting of the Board of Directors of CCI
pursuant to which this
Agreement and the transactions contemplated hereby were duly and
validly
approved, adopted and ratified by the CCI Shareholders, all in
form and content
satisfactory to such counsel, authorizing (i) the execution,
delivery and
performance of this Agreement, (ii) such other documents and
instruments as
shall be necessary to consummate the transactions contemplated
hereby and
thereby, and (iii) all actions to be taken by CCI hereunder.
(l) Status of Litigation. With respect to any matters
affecting
----------------------
CCI and in litigation as described in Schedule 20(m) attached
hereto, Charys
--------------
shall have the right to make an independent review of such
matters. If Charys
is not satisfied with such review, then Charys shall have the
option to
terminate this Agreement.
(m) Certification. CCI shall have delivered to Charys at the
-------------
Effective Date a certificate dated as of the Effective Date,
executed by the
Chief Executive Officer of CCI, certifying that the conditions
specified in this
Paragraph 24 have been fulfilled.
18
<PAGE>
(n) CCI Associates Matters. CCI, CCI Associates, Ltd.
("Associates") and Charys shall have entered into an agreement
providing for the
sale by Associates to CCI of the real property which is the
subject of the lease
of CCI's principal offices in San Antonio, Texas upon such terms
and conditions
as are acceptable to Charys, such agreement to provide for the
closing of the
sale thereunder as such time as Charys shall determine but in no
event more than
twelve months after the Closing Date.
(o) Other Matters. All corporate and other proceedings and
--------------
actions taken in connection with the transactions contemplated
hereby and all
certificates, opinions, agreements, instruments and documents
mentioned herein
or incident to any such transaction shall be satisfactory in
form and substance
to Charys and its counsel, whose approval shall not be
unreasonably withheld.
25. Conditions Precedent to Obligations of CCI. All obligations
of CCI
------------------------------------------
under this Agreement are subject to the fulfillment of the
following conditions
(or waiver in writing by CCI of any such condition) prior to or
at the Effective
Date:
(a) Representations and Warranties True at Effective Date.
The
--------------------------------------------------------
representations and warranties of Charys and the Subsidiary
herein shall be
deemed to have been made again at the Effective Date, and then
be true and
correct, subject to any changes contemplated by this Agreement.
Charys and the
Subsidiary shall have performed all of the obligations to be
performed by Charys
and the Subsidiary hereunder on or prior to the Effective
Date.
(b) Proof of Authority. Counsel for CCI shall have received
--------------------
evidence reasonably sufficient to such counsel that Charys and
the Subsidiary
have all requisite authorizations necessary for consummation by
Charys and the
Subsidiary of the transactions contemplated hereby, and there
has not been
issued, and there is not in effect, any injunction or similar
legal order
prohibiting or restraining consummation of any of the
transactions herein
contemplated, and no legal or governmental action, proceeding or
investigation
that might reasonably be expected to result in any such
injunction or order is
pending.
(c) No Orders. There has not been issued, and there is not
in
----------
effect, any injunction or similar legal order prohibiting or
restraining
consummation of any of the transactions herein contemplated, and
no legal or
governmental action, proceeding or investigation which might
reasonably be
expected to result in any such injunction or order is
pending.
(d) Deliveries at the Effective Date. Charys shall have
delivered
--------------------------------
to the CCI Shareholders at the Effective Date all of the
documents required to
be delivered hereunder.
(e) Other Matters. All corporate and other proceedings and
--------------
actions taken in connection with the transactions contemplated
hereby and all
certificates, opinions, agreements, instruments and documents
mentioned herein
or incident to any such transaction shall be satisfactory in
form and substance
to CCI and their counsel, whose approval shall not be
unreasonably withheld.
26. The Nature and Survival of Representations, Covenants
and
----------------------------------------------------------------
Warranties. All statements and facts contained in any
memorandum, certificate,
----------
instrument, or other document delivered by or on behalf of the
parties hereto
for information or reliance pursuant to this Agreement, shall be
deemed
representations, covenants and warranties by the parties hereto
under this
Agreement. All representations, covenants and warranties of the
parties shall
survive the Effective Date and all inspections, examinations, or
audits on
behalf of the parties, shall expire 24 months following the
Effective Date.
27. Records of CCI. For a period of five years following the
Effective
--------------
Date, the books of account and records of CCI pertaining to all
periods prior to
the Effective Date shall be available for inspection by the CCI
Shareholders for
use in connection with tax audits.
28. Destruction of Property. If, on or before the Effective
Date, any
------------------------
substantial portion of the fixed assets of CCI shall suffer a
loss of fire,
flood, tornado, hurricane, acts of terrorists, riot, accident or
other calamity,
whether or not insured, to such an extent that in the opinion of
Charys there
will be such a delay in repairing or replacing said assets so as
to materially
affect the future operations of CCI, then Charys may, at its
sole option,
terminate this Agreement without cost, expense, or liability to
either party.
19
<PAGE>
29. Default by Charys or the Subsidiary. If CCI does not
default
----------------------------------------
hereunder and either of Charys or the Subsidiary defaults
hereunder, CCI may
assert any remedy, including specific performance, which CCI may
have by reason
of any such default. From and after the Effective Date, subject
to the terms
and provisions hereof, in the event of a breach by any party of
the terms of
this Agreement or any obligation of a party which survives the
Effective Date,
the non-defaulting party may assert any remedy, either at law or
in equity to
which such non-defaulting party may be entitled.
30. Default by CCI. If Charys and the Subsidiary do not
default
----------------
hereunder and CCI, including CCI Associates, Inc., defaults
hereunder, Charys
may elect to terminate this Agreement as well as any other
agreement executed by
Charys and the Subsidiary in connection with the transactions
contemplated by
this Agreement, including but not limited to any independent
nondisclosure
agreement or any other independent agreements, whereupon no
party shall be
liable to the others hereunder, or Charys and the Subsidiary may
assert any
remedy, including specific performance, which Charys and the
Subsidiary may have
by reason of any such default of CCI or the CCI Shareholders.
From and after
the Effective Date, subject to the terms and provisions hereof,
in the event of
a breach by any party of the terms of this Agreement or any
obligation of a
party which survives the Effective Date, the non-defaulting
party may assert any
remedy, either at law or in equity, to which such non-defaulting
party may be
entitled.
31. Termination. In the event of the termination of this
Agreement
-----------
prior to the Effective Date, no party shall have any obligation
to any other in
connection herewith or in connection with any other documents
which may have
been executed by any party with respect to the transactions
contemplated by this
Agreement whether or not such documents are described
herein.
32. Cooperation. The parties hereto will each cooperate with
the
-----------
other, at the other's request and expense, in furnishing
information, testimony,
and other assistance in connection with any actions,
proceedings, arrangements,
disputes with other persons or governmental inquiries or
investigations
involving the parties hereto or the transactions contemplated
hereby.
33. Further Conveyances and Assurances. After the Effective
Date, CCI,
----------------------------------
Charys, and the Subsidiary each, will, without further cost or
expense to, or
consideration of any nature from the other, execute and deliver,
or cause to be
executed and delivered, to the other, such additional
documentation and
instruments of transfer and conveyance, and will take such other
and further
actions, as the other may reasonably request as more completely
to consummate
the transactions contemplated hereby.
34. Effective Date. The Effective Date of the Merger
contemplated
---------------
hereunder shall be on or before March 4, 2005, subject to
acceleration or
postponement from time to time as the parties hereto may
mutually agree. The
closing of the Merger shall be at 19240 Red Land Road, San
Antonio, Texas 78259
at 8:00 a.m., Central time, on the Effective Date, unless
another hour or place
is mutually agreed upon by the parties hereto, at which time
Articles of Merger
for the Subsidiary and CCI shall be filed with the State of
Nevada as described
herein
35. Deliveries on the Effective Date by CCI. Following the
filing of
-----------------------------------------
Articles of Merger for the Subsidiary and CCI as described
herein, on the
Effective Date:
(a) The CCI Shareholders shall deliver to Charys (or shall
deliver
to Charys subsequent to the Effective Date) certificates
representing 20,100,000
shares of the CCI Common Stock, duly endorsed by the CCI
Shareholders, free and
clear of all liens, claims, encumbrances, and restrictions of
every kind except
for the restrictive legend required by Rule 144.
(b) CCI shall deliver the certificate as described in
Paragraph
24(d) hereof.
(c) CCI shall deliver the schedule of inventory described in
Paragraph 24(h) hereof.
(d) CCI shall deliver the certificates of good standing as
described in Paragraph 24(j) hereof.
(e) CCI shall deliver copies of the resolutions as described
in
Paragraph 24(k) hereof.
(f) CCI shall deliver the certificate described in Paragraph
24(m)
hereof.
20
<PAGE>
(g) CCI shall deliver the agreement referred to in Paragraph
24(n).
(h) CCI shall deliver the Employment Agreement for Michael
J.
Novak described in Attachment E hereto.
-------------
(i) CCI shall deliver the Employment Agreement for Roger
Benavides
described in Attachment E hereto.
-------------
(j) CCI shall deliver the Employment Agreement for Dale
Ponder
described in Attachment E hereto.
-------------
(k) CCI shall deliver the Employment Agreement for Jimmy
Taylor
described in Attachment E hereto.
-------------
(l) CCI shall deliver any other document which may be necessary
to
carry out the intent of this Agreement.
All documents reflecting any actions taken, received or
delivered by
CCI pursuant to this Paragraph 35 shall be reasonably
satisfactory in form and
substance to Charys and the Subsidiary and their counsel.
36. Deliveries on the Effective Date by Charys. Following the
filing
--------------------------------------------
of Articles of Merger for the Subsidiary and CCI as described
herein, on the
Effective Date, Charys shall deliver the following:
(a) To the CCI Shareholders, 747,700 shares of the Charys
Common
Stock free and clear of all liens, claims, encumbrances, and
restrictions of
every kind except for the restrictive legend required by Rule
144.
(b) The Registration Rights Agreement described in Attachment
C
------------
hereto.
(c) The agreement referred to in Paragraph 24(n)
(d) The Employment Agreement for Michael J. Novak described
in
Attachment E hereto.
-------------
(e) The Employment Agreement for Roger Benavides described
in
Attachment E hereto.
-------------
(f) The Employment Agreement for Dale Ponder described in
Attachment E hereto.
-------------
(g) The Employment Agreement for Jimmy Taylor described in
Attachment E hereto.
-------------
(h) To the CCI Shareholders, the proof of authority described
in
Paragraph 25(b) hereof.
(i) To the CCI Shareholders, any other document which may be
necessary to carry out the intent of this Agreement.
All documents reflecting any actions taken, received or
delivered by Charys
pursuant to this Paragraph 36 shall be reasonably satisfactory
in form and
substance to CCI and its counsel.
37. Certain Indemnification Matters. From and after the
Effective
----------------------------------
Date, Charys shall cause (a) the Articles of Incorporation and
Bylaws of the
Surviving Corporation to contain provisions no less favorable to
the individuals
who at or prior to the Effective Date were directors, officers,
employees or
agents of CCI or any of its subsidiaries (collectively, the
"Indemnitees") with
respect to limitation of certain liabilities of directors,
officers, employees
and agents and indemnification than are set forth as of the
Effective Date in
the Articles of Incorporation and Bylaws of CCI and (b) the
Articles of
Incorporation and Bylaws of each subsidiary of the Surviving
Corporation to
contain the current provisions regarding indemnification of
directors, officers,
employees and agents, which provisions, in each case, shall not
be amended,
repealed or otherwise modified in a manner that would adversely
affect the
rights thereunder of the Indemnitees.
21
<PAGE>
38. Expenses. Except as otherwise set forth herein, Charys and
CCI
--------
shall each bear its own expenses, including without limitation,
legal fees and
expenses, with respect to this Agreement and the transactions
contemplated
hereby.
39. No Assignment. This Agreement shall not be assignable by any
party
-------------
without the prior written consent of the other parties, which
consent shall be
subject to such party's sole, absolute and unfettered
discretion.
40. Brokerage. The parties hereto agree to indemnify and hold
harmless
---------
each other against, and in respect of, any claim for brokerage
or other
commissions relative to this Agreement, or the transactions
contemplated hereby,
based in any way on agreements, arrangements, understandings or
contracts made
by either party with a third party or parties whatsoever.
41. Dispute Resolution. Any action or proceeding seeking to
enforce
-------------------
any provision of, or based on any right arising out of, this
Agreement, whether
before or after the Effective Date, shall be brought in the
courts of the State
of Georgia, County of Fulton, or in the United States District
Court for the
Northern District of Georgia, and each of the parties consents
to the
jurisdiction of such courts (and the appropriate appellate
courts) in any such
action or proceeding and waives any objection to venue laid
therein. Process in
any action or proceeding referred to in the preceding sentence
may be served on
any party anywhere in the world. Each party to this Agreement
hereby knowingly,
voluntarily and intentionally waives any rights it may have to a
trial by jury
in respect of any litigation (whether as a claim, counter-claim,
affirmative
defense, or otherwise) in connection with this Agreement and the
transactions
contemplated hereby.
42. Attorneys' Fees. In the event that it should become
necessary for
----------------
any party entitled hereunder to bring suit against any other
party to this
Agreement for a breach of this Agreement each party shall bear
its own costs and
expenses (including any fees or disbursements of its counsel,
accountants,
brokers, investment bankers, and finder's fees).
43. Benefit. All the terms and provisions of this Agreement
shall be
-------
binding upon and inure to the benefit of and be enforceable by
the parties
hereto, and their respective heirs, executors, administrators,
personal
representatives, successors and permitted assigns, including but
not limited to
the CCI Shareholders.
44. Notices. All notices, requests, demands, and other
communications
-------
hereunder shall be in writing and delivered personally or sent
by registered or
certified United States mail, return receipt requested with
postage prepaid, or
by telecopy or e-mail, if to CCI, addressed to Mr. Michael J.
Novak at 19240 Red
Land Road, San Antonio, Texas 78259, telecopier (210) 491-0932,
and e-mail
mnovak@ccitele.com, with a copy (which will not constitute
notice) to James A.
O'Donnell, 5949 Sherry Lane, Suite 1450, Dallas, Texas 75225,
telecopier: (214)
962-6233, and e-mail jaodonnell@firstcapitalgroup.com; and if to
Charys and the
Subsidiary, addressed to Mr. Billy V. Ray, Jr. at 1117 Perimeter
Center West,
Suite N415, Atlanta, Georgia 30338, telephone (678) 443-2300,
telecopier (678)
443-2320, and e-mail bray@charys.com; with a copy (which will
not constitute
notice) to Norman T. Reynolds, Esq., Glast, Phillips &
Murray, 815 Walker
Street, Suite 1250, Houston, Texas 77002, telephone (713)
237-3135, telecopier
(713) 237-3202, and e-mail nreynolds@gpm-law.com. Any party
hereto may change
its address upon 10 days' written notice to any other party
hereto.
45. Construction. Words of any gender used in this Agreement
shall be
------------
held and construed to include any other gender, and words in the
singular number
shall be held to include the plural, and vice versa, unless the
context requires
otherwise.
46. Waiver. No course of dealing on the part of any party hereto
or
------
its agents, or any failure or delay by any such party with
respect to exercising
any right, power or privilege of such party under this Agreement
or any
ins
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