IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
August 30, 2006
Fidelity Transfer Company
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
RE: CHARYS HOLDING CO., INC.
Ladies and Gentlemen:
Reference is made to that certain Securities Purchase Agreement, dated
as of August 30, 2006 (the "AGREEMENT"), by and among Charys Holding Company,
Inc., a Delaware corporation (the "COMPANY"), and the investors named on the
Schedule of Buyers attached thereto (collectively, the "HOLDERS"), pursuant to
which the Company (x) is issuing to the Holders (i) convertible notes (the "
NOTES"), which are convertible into shares of the common stock of the Company,
par value $0.001 per share (the "COMMON STOCK"), and (ii) warrants (the
"WARRANTS"), which are exercisable to purchase shares of Common Stock.
This letter shall serve as our authorization and direction to you
(provided that you are the transfer agent of the Company at such time):
(i) to issue shares of Common Stock upon conversion of the Notes
(the "CONVERSION SHARES") to or upon the order of a Holder from time to time
upon delivery to you of a properly completed and duly executed Conversion
Notice; and
(ii) to issue shares of Common Stock upon exercise of the Warrants
(the "WARRANT SHARES") to or upon the order of a Holder from time to time upon
delivery to you of a properly completed and duly executed Exercise Notice.
This letter shall serve as our irrevocable authorization and direction to
Fidelity Transfer Company (the "Transfer Agent") to do the following:
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1. Conversion Shares and Warrant Shares.
a. Instructions Applicable to Transfer Agent. With respect to the
Conversion Shares and the Warrant Shares, the Transfer Agent
shall issue the Conversion Shares or the Warrant Shares to the
Holder from time to time upon delivery to the Transfer Agent of a
properly completed and duly executed Conversion Notice (the
"CONVERSION NOTICE"), in the form attached hereto as Exhibit I,
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delivered on behalf of the Company to the Transfer Agent by the
Holder or a properly
completed and duly executed notice of exercise substantially
in the form attached to the Warrant (the "EXERCISE NOTICE"),
respectively. Upon receipt of a Conversion Notice or Exercise
Notice, the Transfer Agent shall within one (1) Trading Day
thereafter (i) issue and surrender to a common carrier for
overnight delivery to the address as specified in the Conversion
Notice or Exercise Notice, a certificate or certificates,
registered in the name of the Holder or its designees, for the
number of shares of Common Stock to which the Holder shall be
entitled as set forth in the Conversion Notice or Exercise Notice
or (ii) provided that the Transfer Agent is participating in The
Depository Trust Company ("DTC") Fast Automated Securities
Transfer Program, upon the request of the Holder, credit such
aggregate number of shares of Common Stock to which the Holder
shall be entitled to the Holder's or its designees' balance
account with DTC through their Deposit Withdrawal At Custodian
("DWAC") system provided the Holder cause its bank or broker to
initiate the DWAC transaction. For purposes hereof "TRADING DAY"
shall mean any day on which the American Stock Exchange is open
for customary trading.
b. The Company hereby confirms to the Transfer Agent and the Holder
that certificates representing the Conversion Shares and
Warrant Shares shall not bear any legend restricting transfer and
should not be subject to any stop-transfer restrictions and shall
otherwise be freely transferable on the books and records of the
Company; provided that counsel to the Company delivers (i) the
Notice of Effectiveness set forth in Exhibit II attached hereto
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and (ii) an opinion of counsel in the form set forth in Exhibit
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III attached hereto, and that if the Conversion Shares and the
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Warrant Shares are not registered for resale under the Securities
Act of 1933, as amended, then the provisions of paragraph
1(a)(ii), above, shall not be applicable until such shares are
registered, and the certificates for the Conversion Shares and
Warrant Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR
AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SAID ACT."
c. In the event that counsel to the Company fails or refuses to
render an opinion as required to issue the Conversion Shares
or Warrant Shares in accordance with the preceding paragraph
(either with or without restrictive legends, as applicable), then
the Company irrevocably and expressly authorizes counsel to the
Holder to render such opinion. The Transfer Agent shall accept
and be entitled to rely on
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such opinion for the purposes of issuing the Conversion
Shares and Warrant Shares.
2. All Shares.
a. The Transfer Agent shall reserve for issuance to the Holder the
Conversion Shares and Warrant Shares. All such shares shall
remain in reserve with the Transfer Agent until the Holder
provides the Transfer Agent instructions that the shares or any
part of them shall be taken out of reserve and shall no longer be
subject to the terms of these instructions.
b. The Transfer Agent shall rely exclusively on the Conversion
Notice and Exercise Notice and shall have no liability for
relying on such instructions. Any Conversion Notice delivered
hereunder shall constitute an irrevocable instruction to the
Transfer Agent to process such notice or notices in accordance
with the terms thereof. Such notice or notices may be transmitted
to the Transfer Agent by facsimile or any commercially reasonable
method.
c. The Company hereby confirms to the Transfer Agent and the Holder
that no instructions other than as contemplated herein will
be given to Transfer Agent by the Company with respect to the
matters referenced herein. The Company hereby authorizes the
Transfer Agent, and the Transfer Agent shall be obligated, to
disregard any contrary instructions received by or on behalf of
the Company.
The Company hereby agrees that it shall not replace the Transfer Agent as
the Company's Transfer Agent without the prior written consent of the Holder.
Any attempt by Transfer Agent to resign as the Company's transfer agent
hereunder shall not be effective until such time as the Company provides to the
Transfer Agent written notice that a suitable replacement has agreed to serve as
transfer agent and to be bound by the terms and conditions of these Irrevocable
Transfer Agent Instructions.
The Company and the Transfer Agent hereby acknowledge and confirm that
complying with the terms of this Agreement does not and shall not prohibit the
Transfer Agent from satisfying any and all fiduciary responsibilities and duties
it may owe to the Company.
The Company and the Transfer Agent acknowledge that the Holder is relying
on the representations and covenants made by the Company and the Transfer Agent
hereunder and are a material inducement to the Holder purchasing Notes under the
Securities Purchase Agreement. The Company and the Transfer Agent further
acknowledge that without such representations and covenants of the Company and
the Transfer Agent made hereunder, the Holder would not purchase the Notes.
Each party hereto specifically acknowledges and agrees that in the event of
a breach or threatened breach by a party hereto of any provision hereof, the
Holder will be irreparably damaged and that damages at law would be an
inadequate remedy if these Irrevocable Transfer Agent Instructions were not
specifically enforced. Therefore, in the event of a breach or threatened breach
by a party hereto, including, without limitation, the attempted termination of
the agency relationship
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created by this instrument, the Holder shall be entitled, in addition to all
other rights or remedies, to an injunction restraining such breach, without
being required to show any actual damage or to post any bond or other security,
and/or to a decree for specific performance of the provisions of these
Irrevocable Transfer Agent Instructions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this letter agreement regarding
Irrevocable Transfer Agent Instructions to be duly executed and delivered as of
the date first written above.
COMPANY:
CHARYS HOLDING CO., INC.
By:
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Name: Xxxxx Xxx, Xx.
Title: Chief Executive Officer
FIDELITY TRANSFER COMPANY
By:
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Name:
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Title:
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SCHEDULE I
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SCHEDULE OF BUYERS
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ADDRESS AND
BUYER SIGNATURE FACSIMILE NUMBER
------------------------------------- ------------------------------- ---------------------------
Gottbetter Capital Finance, LLC By ____________________ 000 Xxxxxxx Xxxxxx
Name: Xxxxxxx X. Xxxxxxx 12th Floor
Title: President New York, NY 10022
Facsimile: 212.400.6999
PCM II, LLC By ____________________ 000 Xxxxx Xxxxxx, 00xx Xx.
By: Prentice Capital Management, LP Name: Xxxxxxx Xxxxx New York, NY 10022
Title: Chief Financial Officer Xxxxxxxxx: (000) 000-0000
Four Embarcadero Center,
Fort Xxxxx Master, LP Suite 2050
By : Fort Xxxxx Capital, LLC By ____________________ San Francisco, CA
Name: Xxx Xxxxxx 94111
Title: Managing Partner Facsimile: 000.000.0000
Xxx Xxxxx Xxxxxx Xxxxx,
UBS X'Xxxxxx LLC, By ____________________ 32nd Floor
FBO X'Xxxxxx PIPES Corporate Name: Xxxx Xxxxxxxx Chicago, IL 60606
Strategies Master Limited Title: Facsimile: 000-000-0000
Four Embarcadero Center,
Suite 2050
Fort Xxxxx Partners, LP By ____________________ San Francisco, CA
By : Fort Xxxxx Capital, LLC Name: Xxx Xxxxxx 94111
Title: Managing Partner Facsimile: 000.000.0000
GCA Strategic Investment
GCA Strategic Investment Fund Limited By ____________________ Fund Limited
Name: Xxxxx X. Xxxxxx c/o Prime Management
Title: Director Limited
Mechanics Building
00 Xxxxxx Xxxxxx
Xxxxxxxx XX XX, Xxxxxxx
Facsimile: 000-000-0000
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SCHEDULE I-1
EXHIBIT I
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF CONVERSION NOTICE
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Reference is made to the Securities Purchase Agreement (the "Securities Purchase
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Agreement") between Charys Holding Co., Inc., (the "Company"), and the Buyers
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set forth on Schedule I attached thereto dated August 30, 2006. In accordance
with and pursuant to the Securities Purchase Agreement, the undersigned hereby
elects to convert notes into shares of common stock, par value $0.001 per share
(the "Common Stock"), of the Company for the amount indicated below as of the
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date specified below.
Conversion Date:
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Amount to be converted: $
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Conversion Price: $
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Shares of Common Stock Issuable:
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Amount of Note unconverted: $
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Amount of Interest Converted: $
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Conversion Price of Interest: $
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Shares of Common Stock Issuable:
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Shares of Common Stock Issuable:
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Total Number of shares of Common Stock to be issued:
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Please issue the shares of Common Stock in the following name and to the
following address:
Issue to:
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Authorized Signature:
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Name:
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Title:
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EXHIBIT I-1
Phone #:
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Broker DTC Participant Code:
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Account Number*:
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* NOTE THAT RECEIVING BROKER MUST INITIATE TRANSACTION ON DWAC SYSTEM.
EXHIBIT I-2
EXHIBIT II
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF NOTICE OF EFFECTIVENESS
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OF REGISTRATION STATEMENT
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____________, 2006
Fidelity Transfer Company
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
RE: CHARYS HOLDING COMPANY, INC.
Ladies and Gentlemen:
We are counsel to Charys Holding Company, Inc., (the "Company"), and have
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represented the Company in connection with that certain Securities Purchase
Agreement, dated as of August 30, 2006 (the "Securities Purchase Agreement"),
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entered into by and among the Company and the Buyers set forth on Schedule I
attached thereto (the "Buyer") pursuant to which the Company has agreed to sell
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to the Buyers (i) Dollars ($ )] of secured
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convertible notes, which shall be convertible into shares (the "Conversion
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Shares") of the Company's common stock, par value $0.001 per share (the "Common
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Stock"), and (ii) [ ] shares of common stock pursuant to a warrant in
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accordance with the terms of the Securities Purchase Agreement (the "Warrant
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Shares"). Pursuant to the Securities Purchase Agreement, the Company has
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entered into a Registration Rights Agreement, dated as of August 30, 2006, with
the Buyer (the "Investor Registration Rights Agreement") pursuant to which the
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Company agreed, among other things, to register the Conversion Shares and the
Warrant Shares under the Securities Act of 1933, as amended (the "1933 Act").
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In connection with the Company's obligations under the Securities Purchase
Agreement and the Registration Rights Agreement, on , 2006, the Company
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filed a Registration Statement (File No. - ) (the "Registration
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Statement") with the Securities and Exchange Commission (the "SEC") relating to
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the sale of the Conversion Shares and the Warrant Shares.
In connection with the foregoing, we advise the Transfer Agent that a
member of the SEC's staff has advised us by telephone that the SEC has entered
an order declaring the Registration Statement effective under the 1933 Act at
P.M. on , 2006 and we have no knowledge, after telephonic inquiry
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of a member of the SEC's staff, that any stop order suspending its effectiveness
has been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Conversion Shares and the Warrant Shares are
available for sale under the 1933 Act pursuant to the Registration Statement.
EXHIBIT II-1
The Buyers have confirmed they shall comply with all securities laws and
regulations applicable to it including applicable prospectus delivery
requirements upon sale of the Conversion Shares, and the Warrant Shares.
Very truly yours,
By:
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EXHIBIT II-2
EXHIBIT III
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TO IRREVOCABLE TRANSFER AGENT INSTRUCTIONS
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FORM OF OPINION
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[ ], 2006
VIA FACSIMILE AND REGULAR MAIL
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Fidelity Transfer Company
0000 X. Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention:
RE: CHARYS HOLDING COMPANY, INC.
Ladies and Gentlemen:
We have acted as special counsel to Charys Holding Company, Inc. (the
"Company"), in connection with the registration of shares (the
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"Shares") of its common stock with the Securities and Exchange Commission (the
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"SEC"). We have not acted as your counsel. This opinion is given at the
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request and with the consent of the Company.
In rendering this opinion we have relied on the accuracy of the Company's
Registration Statement on Form SB-2, as amended (the "Registration Statement"),
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filed by the Company with the SEC on , 2006. The Company filed the
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Registration Statement on behalf of certain selling stockholders (the "Selling
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Stockholders"). This opinion relates solely to the Selling Stockholders listed
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on Exhibit "A" hereto and number of Shares set forth opposite such Selling
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Stockholders' names. The SEC declared the Registration Statement effective on
, 2006.
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We understand that the Selling Stockholders acquired the Shares in a private
offering exempt from registration under the Securities Act of 1933, as amended.
Information regarding the Shares to be resold by the Selling Stockholders is
contained under the heading "Selling Stockholders" in the Registration
Statement, which information is incorporated herein by reference. This opinion
does not relate to the issuance of the Shares to the Selling Stockholders. The
opinions set forth herein relate solely to the resale or transfer by the Selling
Stockholders pursuant to the Registration Statement under the Federal laws of
the United States of America. We do not express any opinion concerning any law
of any state or other jurisdiction.
In rendering this opinion we have relied upon the accuracy of the foregoing
statements.
Based on the foregoing, it is our opinion that the Shares have been registered
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, and that the Transfer
EXHIBIT III-1
Agent may issue the Shares without restrictive legends or the Transfer Agent may
remove the restrictive legends contained on the Shares. This opinion relates
solely to the number of Shares set forth opposite the Selling Stockholders
listed on Exhibit "A" hereto.
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This opinion is furnished to Transfer Agent specifically in connection with the
issuance of the Shares, and solely for your information and benefit. This
letter may not be relied upon by Transfer Agent in any other connection, and it
may not be relied upon by any other person or entity for any purpose without our
prior written consent. This opinion may not be assigned, quoted or used without
our prior written consent. The opinions set forth herein are rendered as of the
date hereof and we will not supplement this opinion with respect to changes in
the law or factual matters subsequent to the date hereof.
Very truly yours,
EXHIBIT III-2
EXHIBIT "A"
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(LIST OF SELLING STOCKHOLDERS)
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NAME: NO. OF SHARES:
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