STOCK PURCHASE AGREEMENT
PROMISSORY NOTE
$5,400,000.00 Atlanta, Georgia
August 15, 2006
FOR VALUE RECEIVED, the undersigned, Ayin Holding Company Inc., a
Delaware corporation ("Maker"), hereby promises to pay to the order of ▇▇▇▇▇▇▇
-----
▇. ▇▇▇▇▇▇▇▇, an individual resident of the State of Louisiana ("Seller"), at
------
, or such other place as Holder shall designate in writing,
--------------------
in lawful money of the United States of America, the principal sum of Five
Million Four Hundred Thousand and no/100 Dollars ($5,400,000.00), subject to
adjustment pursuant to Section IV below, together with interest thereon, at the
rate hereinafter set forth below, with such principal sum and interest being
payable as set forth below.
Section I. Definitions
-----------
All capitalized terms not otherwise defined herein shall have the
meaning given to them in the Stock Purchase Agreement, dated as of June 20,
2006, among ▇▇▇▇▇▇▇▇ Site Acq, Inc., Maker, Seller, and certain other parties
identified therein (the "Stock Purchase Agreement").
--------------------------
For the purposes of this Note, the terms set forth below shall be
defined as follows:
(a) Holder shall mean Seller, or any subsequent holder hereof.
------
(b) Maturity Date shall mean the third anniversary of this Note.
--------------
(c) Company shall mean ▇▇▇▇▇▇▇▇ Site Acq, Inc.
-------
(d) Senior Lender shall mean , or any
-------------- --------------------
replacement lender or lenders providing, directly or
indirectly, senior debt to Company.
(e) EBITDA means, for any period, the net income (or loss) of
------
Company, for such period, adjusted (i) to add thereto (to
the extent deducted from revenues in determining net income),
without duplication, (A) interest expense, (B) depreciation and
amortization expense, and (C) the annual salary paid to Seller by
Company, and (D) the accrual of the 2005 profit distribution,
including any provisions or payments made for payroll and benefit
Taxes associated therewith, and (ii) to subtract therefrom (to
the extent included in determining net income) (A) consolidated
interest income, (B) income not related to the Company's
Business, and (C) any extraordinary, unusual or non-recurring
income or gain, including gain on the sale of any asset, business
or subsidiary outside the ordinary course of business, in each
case determined on a basis consistent with United States
generally accepted accounting principals (applied on a basis
constituent
with the Audited Financial Statements) utilizing the
percentage completion method of accounting.
Section II. Rate of Interest
------------------
From and after the date hereof through the Maturity Date, interest
shall accrue on the outstanding principal balance hereof at a rate equal to nine
percent (9%) per annum, calculated on the basis of 365 days per year and actual
days elapsed.
Section III. Payment of Principal and Interest
-------------------------------------
The principal amount evidenced by this Note shall be payable by Maker
in three equal annual installments of $1,800,000, plus accrued interest, subject
to adjustment pursuant to Section IV below (the "Annual Note Payment"), not
-------------------
later than the fifth (5th) business day following the Final Calculation Date (as
defined below) for each of the three Calculation Periods (as defined below)
ending in 2007, 2008, and 2009 (each a "Note Payment Date"); provided, however,
----------------- -------- -------
that any cash payments due hereunder shall be subject to the terms of the loan
agreements to which Parent and Company are parties.
Section IV. Annual Note Payment Adjustment.
----------------------------------
At the end of each of the first three twelve-month periods following
Closing (each, a "Calculation Period", and collectively, the "Calculation
------------------- -----------
Periods"), Maker and Holder shall compare the audited EBITDA of Company to the
-------
projected EBITDA of Company, and the Annual Note Payment shall be subject to
adjustment as follows:
(a) Within 120 days after each Calculation Period, Maker shall
cause to be prepared and delivered to Holder an audited statement of Company's
EBITDA for the preceding twelve-month period (the "Audited EBITDA"). The
--------------
Audited EBITDA shall be prepared in accordance with GAAP.
(b) If, during a Calculation Period, Company shall achieve or
exceed eighty-five percent (85%) of the projected EBITDA as set forth below (the
"Minimum EBITDA Target"), as evidenced by Company's Audited EBITDA for such
-----------------------
Calculation Period, the Annual Note Payment for the corresponding Calculation
Period shall not be subject to adjustment. If, during a Calculation Period,
Company shall not achieve or exceed the Minimum EBITDA Target, as evidenced by
the Company's Audited EBITDA for such Calculation Period, the Annual Note
Payment for such Calculation Period shall be reduced (i) by ten (10%) percent,
plus (ii) an additional two percent (2%) for each one percent (1%) the Audited
EBITDA for such Calculation Period is below the Minimum EBITDA Target, provided
that in no event shall any Annual Note Payment be reduced more than
fifty-percent (50%).
-------------------------------------------------------------
CALCULATION PERIOD PROJECTED EBITDA MINIMUM EBITDA TARGET
------------------ ----------------- ----------------------
1 $ 4,953,000 $ 4,210,050
------------------ ----------------- ----------------------
2 $ 5,456,000 $ 4,637,600
------------------ ----------------- ----------------------
3 $ 6,005,000 $ 5,104,250
-------------------------------------------------------------
For purposes of this Section IV, if Holder has any objection to the
Audited EBITDA, as calculated by Maker for any Calculation Period, Holder shall
deliver to Maker a detailed statement describing Holder's objections within 30
days after receiving the Audited EBITDA (and if Holder does not object within
such 30-day period, then Holder shall be deemed to have accepted the Audited
EBITDA as calculated by Maker for such Calculation Period). Maker and Holder
shall use their reasonable best efforts to resolve any such objections. If a
final resolution is not obtained within 30 days after Maker has received
Holder's statement of objections, Maker and Holder shall appoint a
nationally-recognized accounting firm as is mutually acceptable to them, to
resolve any remaining objections. The decision of such accounting firm shall be
final and binding on all parties. If any unresolved objections are submitted to
an accounting firm for resolution as provided above, the fees and expenses shall
be borne (i) by Maker, in the event such accounting firm determines that the
Audited EBITDA is 100% or more of the amount calculated by Maker, or (ii) by
Holder, in the event such accounting firm determines that the Audited EBITDA is
less than 100% of the amount calculated by Maker. The date upon which the
Audited EBITDA is finally determined pursuant to this subsection (b) shall be
deemed the "Final Calculation Date".
------------------------
Section V. Subordination
-------------
Holder acknowledges and agrees that the entire outstanding principal
balance of the indebtedness evidenced by this Note, together with all accrued
and unpaid interest, shall be expressly subordinate and junior in right of
payment and exercise of remedies to the prior payment in full of all amounts
owed to Senior Lender. Holder hereby acknowledges and agrees that all rights
and privileges vested in it as the legal holder of this Note shall be and are
subordinate and inferior to the rights, liens, and privileges vested in Senior
Lender.
Section VI. Holder's Right of First Refusal
-----------------------------------
Prior to Senior Lender exercising any right to accelerate the
indebtedness owed to it by Maker, Holder shall have the right to pay in full all
outstanding principal and interest any other amounts owing by Maker and Company
to Senior Lender (the "Right of First Refusal"). If Holder exercises the Right
----------------------
of First Refusal, then Maker hereby acknowledges and agrees that it shall tender
to Holder, for no additional consideration, all of the issued and outstanding
capital stock of Company. Maker agrees to cause Senior Lender to agree to the
foregoing, and shall provide a copy of such agreement to Holder.
Section VII. Prepayments
-----------
Maker shall have the right to prepay the indebtedness evidenced by
this Note, in full or in part, at any time, without penalty, fee or charge. All
prepayments shall be applied first to interest accrued hereunder, then to
principal.
Section VIII. Events of Default
-------------------
For purposes of this Note, the occurrence of any of the following
events or conditions shall constitute an event of default hereunder:
(a) Maker shall fail to pay in full any Annual Note Payment under
this Note when due;
(b) Any representation or warranty of Maker contained in this Note
shall prove to have been untrue in any material respect when made;
(c) Maker shall default in the observance or performance of any
material covenant or agreement contained in this Note, and such default shall
continue uncured for a period of 45 days after Holder notifies Maker of such
default;
(d) Maker shall: (i) file a voluntary petition or assignment in
bankruptcy or a voluntary petition or assignment or answer seeking liquidation,
reorganization, arrangement, readjustment of its debts, or any other relief
under the Bankruptcy Reform Act of 1978, as amended (the "Bankruptcy Code"), or
---------------
under any other act or law pertaining to insolvency or debtor relief, whether
State, Federal, or foreign, now or hereafter existing; (ii) enter into any
agreement indicating consent to, approval of, or acquiescence in, any such
petition or proceeding; (iii) apply for or permit the appointment, by consent or
acquiescence, of a receiver, custodian or trustee of all or a substantial part
of its property; (iv) make an assignment for the benefit of creditors; (v) be
unable or shall fail to pay its debts generally as such debts become due, or
(vi) admit in writing its inability or failure to pay its debts generally as
such debts become due; and
(e) There occurs (i) a filing or issuance against Maker of an
involuntary petition in bankruptcy or seeking liquidation, reorganization,
arrangement, readjustment of its debts or any other relief under the Bankruptcy
Code, or under any other act or law pertaining to insolvency or debtor relief,
whether State, Federal or foreign, now or hereafter existing; (ii) the
involuntary appointment of a receiver, liquidator, custodian or trustee of Maker
or for all or a substantial part of its property; or (iii) the issuance of a
warrant of attachment, execution or similar process against all or any
substantial part of the property of Maker and such shall not have been
discharged (or provision shall not have been made for such discharge), or stay
of execution thereof shall not have been procured, within sixty (60) days from
the date of entry thereof.
Upon any such event of default, the total outstanding principal and
accrued, unpaid interest shall become immediately due and payable, and the
entire unpaid principal of this Note shall bear interest until paid at a rate of
interest equal to twelve percent (12%), computed on the basis of 365 days per
year for the actual number of days elapsed. Forbearance by Holder to exercise
its rights with respect to any failure or breach of Maker shall not constitute a
waiver of the right as to any subsequent failure or breach.
Section IX. Guaranty
--------
Charys Holding Company, Inc., a Delaware corporation ("Guarantor")
---------
guarantees and promises to and for the benefit of Holder that Maker shall
perform its payment obligations under this Note (the "Obligations"). If Maker
-----------
defaults in its Obligations, Holder shall provide Guarantor and Maker notice of
such default within fifteen (15) days after the occurrence of such default. If
Maker has not cured such default within thirty (30) business days after receipt
of the
notice, Holder may proceed to enforce against Guarantor or Maker any rights that
Holder may have under this Note or pursuant to applicable laws. For the
avoidance of doubt, the guaranty set forth in this Section IX requires Guarantor
to perform the Obligations to the same extent, and only to such extent, that
Maker is obligated to do so. Any dispute between Guarantor and Holder shall be
subject to the dispute resolution requirements of the Stock Purchase Agreement.
Holder acknowledges and agrees that the guaranty provisions under this Section
IX shall be subject to the terms of all loan agreements to which Guarantor and
Maker are a party to, and that this guaranty is subordinate to any guarantee
that Guarantor must provide to a lender providing financing in connection with
the Stock Purchase Agreement and the transactions contemplated thereby.
Section X. General Provisions
-------------------
In no event shall the amount of interest due or payable hereunder
exceed the maximum rate of interest allowed by applicable law, and in the event
any such payment is inadvertently paid by Maker or inadvertently received by
Holder, then such excess sum shall be credited as a payment of principal, unless
Maker shall notify Holder, in writing, that Maker elects to have such excess sum
returned to it forthwith. It is the express intent hereof that Maker not pay and
Holder not receive, directly or indirectly in any manner whatsoever, interest in
excess of that which may be legally paid by Maker under applicable law.
Time is of the essence of this Note and, in case this Note is
collected by law or through an attorney at law, or under advice herefrom, Maker
agrees to pay all costs of collection, including reasonable attorneys' fees and
expenses.
Maker hereby waives presentment, demand for payment, notice of protest
and notice of non-payment.
This Note is non-negotiable and the obligations of Maker hereunder are
subject in all respects to Maker's rights under the Stock Purchase Agreement and
Section 5 of that certain Employment Agreement ("Employment Agreement"), dated
--------------------
the date hereof, by and between Seller and ▇▇▇▇▇▇▇▇ Site Acq, Inc. Seller
acknowledges that Maker is a third party beneficiary of the Employment
Agreement.
THIS NOTE, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER,
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE (WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS). ANY DISPUTE
HEREUNDER SHALL BE SUBJECT TO THE DISPUTE RESOLUTION REQUIREMENTS OF THE STOCK
PURCHASE AGREEMENT.
(THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK)
IN WITNESS WHEREOF, the undersigned Maker has hereunto executed and
sealed this instrument as of the day and year first above written.
MAKER:
AYIN HOLDING COMPANY INC.
By:
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
President
AGREED AND ACKNOWLEDGED BY:
SELLER:
-------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
CHARYS HOLDING COMPANY, INC.
FOR PURPOSES OF SECTION IX ONLY:
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
(SIGNATURE PAGE TO SPA PROMISSORY NOTE)
