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EXHIBIT 10.1
MUTUAL RELEASE AND SETTLEMENT AGREEMENT
This is a Mutual Release and Settlement Agreement ("Settlement")
dated as of September 29, 2006, between Charys Holding
Company, Inc., a Delaware Corporation ("Charys") and its affiliated
and related companies and entities Viasys Services Inc., Viasys
Network Services Inc. (hereinafter collectively referred to as the
"Company") and New Viasys Holdings LLC, a Delaware limited
liability company and its affiliated and related companies and
entities (hereinafter referred to as "New Viasys").
WHEREAS , disputes (referred to collectively as the
"Disputes") have arisen involving the Company and New Viasys
related to that certain Stock Purchase Agreement dated
November 1, 2005 between the Company and New Viasys (the
"Agreement") and the agreements and other documents associated with
the Agreement (referred to collectively as the "Transaction
Documents");
WHEREAS , the Company and New Viasys desire to settle and
resolve the Disputes.
THEREFORE , for the consideration and mutual promises
listed below, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows (Capitalized terms not
defined herein but defined in the Transaction Documents shall have
the definitions given in the Transaction Documents):
1.
Payment Price
(a)
The Agreement called for part of the Base Purchase Price to be a
subordinated secured promissory note in the original principal
amount of $3,500,000.00. The Note was secured by a Security
Agreement giving New Viasys a security interest in the
Collateral described in Schedule 1.3.1(a) to the
Agreement (the "Security Agreement").
(b)
As a condition precedent to the Company’s obligations under
this Settlement, at the closing of this Settlement (the "Closing"):
(i) New Viasys shall cancel the Note and return the original Note
to Charys, and (ii) Section 1.5 of the Agreement shall be of no
further force and effect, and (iii) Charys shall have completed a
financing transaction in the approximate amount of $20,000,000.
(c)
As a condition precedent to New Viasys’s obligations under
this Settlement, Charys: (i) shall pay to New Viasys at Closing, in
immediately available funds the sum of $372,424.00; (ii) shall
agree to pay within 60 days after Closing the amount of
$426,333.00, $333,333.00 as Adjusted Base Purchase Price plus
$93,000.00 in interest (collectively, $372,424.00 and $426,333.00,
the "Settlement Amount"); and (iii) shall have completed a
financing transaction in the approximate amount of $20,000,000.
(d)
The Company and New Viasys shall terminate the Security Agreement
at the Closing, which Security Agreement shall be of no further
force and effect. The Company and New Viasys shall take such
steps as are reasonably necessary to put the Collateral in such
condition (with respect to its custody and possession only) as it
was prior to the Security Agreement. New Viasys shall have no
further interest in the Collateral. For the avoidance of
doubt, the security agreement entered into by the parties with
respect to the VA Job (as defined in Section 5(a) below) shall
remain in full force and effect.
2.
Escrowed Shares and Additional Shares of Charys Stock; Promissory
Note
(a)
Pursuant to the Agreement, Charys deposited 500,000 shares of
unregistered Charys common stock in Escrow (the "Escrow Shares")
with the law firm of Brown
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Raysman Millstein Felder & Steiner LLP, with
offices at 900 Third Avenue, New York, NY 10022 (the "Escrow
Agent").
(b)
At the Closing, Charys shall direct the Escrow Agent to release the
Escrow Shares pursuant to the provisions of the Escrow Agreement,
and Charys will issue an additional 225,000 shares of unregistered
Charys common stock (the "Additional Shares"), all as follows:
(i)
To Mel Harris, 367,305 shares of the Escrow Shares and 112,500 of
the Additional Shares; and
(ii)
To Steven Posner, 132,695 shares of the Escrow Shares and 112,500
of the Additional Shares.
(c)
The Escrow Shares and the Additional Shares shall have the
registration rights set forth in the Registration Rights Agreement
attached hereto as Exhibit 2(c) and made a part hereof.
(d)
As of the date that is one year after the Closing date (the "Put
Date"), Mel Harris or Steven Posner or both will have the right to
require Charys to repurchase at a purchase price of $6.50 per share
that number of shares designated in the notice to Charys stating
the intention to exercise the put (the "Shareholder Put
Right"). The Shareholder Put Right shall expire 90 days after
the Put Date (the "Put Expiration Date") if the exercise of the
Shareholder Put Right is not initiated by the Put Expiration
Date. Mel Harris or Steven Posner or both, as the case may
be, shall initiate the Shareholder Put Right by sending written
notice to Charys indicating his intent to exercise the Shareholder
Put Right not later than the Put Expiration Date. Promptly
after receipt of a timely notice of intent to exercise the
Shareholder Put Right, Charys and Mel Harris or Steven Posner or
both, as the case may be, shall take such steps as are
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necessary to consummate the repurchase of the
Escrow Shares and the Additional Shares. Charys may pay for
some or all of the shares put to Charys pursuant to this provision
by means of a promissory note bearing interest at a rate equal to
10% per annum with a term of not more than six months, which
promissory note shall be secured by the Charys shares.
(e)
At the Closing, Charys shall issue promissory notes (the
"Promissory Notes") to Mel Harris and Steven Posner, in amounts
determined by the difference between $3.5 million and the value of
the Escrow Shares and the Additional Shares as determined by the
average closing price of those shares for the ten trading days
ending on September 29, 2006 (the per share price as co computed,
the "Computed Value") allocated between Mel Harris and Steven
Posner as follows:
(i)
To Mel Harris, the difference between $2,316,300 and the Computed
Value of 479,805 shares of Charys common stock; and
(ii)
To Steven Posner, the difference between $1,183,700 and the
Computed Value of 245,195 shares of Charys common stock.
The Promissory Notes shall be substantially in the form of
Exhibit 2(e).
3.
Standby Letters of Credit.
(a)
Section 5.2 of the Agreement called for Charys to put an
irrevocable standby letter of credit in place to replace New
Viasys’ standby letter of credit #11171 securing an
irrevocable letter of credit for the Policies in the amount of
$1,350,000. This obligation has been extended by letter
agreement three times.
(b)
As a condition precedent to the Company’s obligations under
this Settlement, Charys’ obligation to establish such standby
letter of credit shall be extended to December 31, 2006; provided,
however, that such extension shall not result in the requirement
of
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additional amounts to be paid by New Viasys under
its standby letter of credit, and provided, further, that the
Company is not in default under the terms of New Viasys’
standby letter of credit. Upon replacement of the standby
letter of credit, Charys will return the original Standby letter of
credit and any associated collateral to New Viasys.
(c)
Charys herby warrants and covenants that it shall indemnify and
hold New Viasys harmless from and against any liability or
obligation arising from the obligation to secure the irrevocable
letter of credit and any associated collateral for the
Policies.
4.
Security Bond.
(a)
Section 5.9 of the Agreement called for Charys to secure the
release of New Viasys, as principal, from the Liberty Mutual
Insurance Company surety Bond no. 964-001-334 in the amount of
$375,000.
(b)
As a condition precedent to the Company’s obligations under
this Settlement, Charys’ obligation to secure the release of
New Viasys, as principal, from the Liberty Mutual Insurance Company
surety Bond no. 964-001-334 in the amount of $375,000 shall be
extended t
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