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 to Decemb
