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.
------------
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.
-------------------
(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
--------------
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
------------------------
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
-------------------
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
instrument referred to herein shall operate
as a waiver thereof, and any single
or partial exercise of any such right,
power or privilege shall not preclude any
later exercise thereof or any exercise of any othe
