Attachment 3
Gur Contract
See Exhibit 10.3 to this Current Report
Attachment 4
Registration Rights Agreement
Incorporated by Reference to Attachment 3 to Exhibit 2.1
to the Current Report on Form 8-K, filed with the Commission on March 10, 2005
Exhibit 10.2
AGREEMENT
This Agreement (the "Agreement") is entered into as of the 25th day of
April, 2005, among The Frost National Bank ("Frost"), Contemporary Constructors,
Inc. ("Constructors"), CCI Telecom, Inc. ("CCI"), CCI Integrated Solutions, Inc.
("CCIIS"), Berkshire Wireless, Inc. ("Berkshire"), Xxxxxxx X. Xxxxx ("Xxxxx"),
and Charys Holding Company, Inc. ("Charys").
Xxxxx, Constructors, CCI, Xxxxxx and Xxxxx have entered into that certain
term sheet entitled Principal Terms Relating to Disposition of Existing Frost
Credit Facilities (the "Term Sheet"), a copy of which is attached hereto as
Exhibit A.
Simultaneously with entering into this Agreement, certain of the parties
hereto are entering into the following:
1. Third Modification, Renewal and Extension Agreement dated effective
February 1, 2005, between Frost and Constructors, acknowledged and
agreed to by CCI, CCIIS, Berkshire and Xxxxx, related to the term loan
by Xxxxx to Constructors (the "Term Modification").
2. Third Modification, Renewal and Extension Agreement dated effective
February 1, 2005, between Frost and Constructors, acknowledged and
agreed to by CCI, CCIIS, Berkshire and Xxxxx, related to a line of
credit by Xxxxx to Constructors (the "Line of Credit Modification").
3. Sixth Amendment to Business Loan Agreement dated effective February 1,
2005, between Frost and Constructors related to the line of credit by
Xxxxx to Constructors (the "Line of Credit Amendment").
4. Arbitration and Notice of Final Agreement by Xxxxx and Constructors,
acknowledged and agreed to by CCI, CCIIS, Berkshire and Xxxxx.
The parties hereto wish to enter into this Agreement to set forth their
agreement as to documentation that will implement the remaining provisions of
the Term Sheet.
1. The Documentation to Implement the Term Sheet Paragraph 1.
Xxxxx agrees that the terms of the Designations of Charys Series B
Convertible Preferred Stock set forth as Exhibit B hereto and the Registration
Rights Agreement, set forth as Exhibit C hereto, are satisfactory to it.
If on or before August 1, 2005 there is simultaneously delivered to Frost
(i) a certificate representing Four Hundred Thousand (400,000) shares of Charys
Series B Convertible Preferred Stock, having the preferences and rights set
forth in Exhibit B hereto, and (ii) a Registration Rights Agreement by Xxxxxx in
the form of Exhibit C hereto, then in exchange therefor Frost will deliver to
Charys the original common stock purchase warrant issued by CCI to Frost and
1
will deliver to Xxxxxx the original term note (being the term note evidencing
the term loan described in the Term Sheet), in each case, without
representation, warranty, or recourse, and, thereafter, Frost shall no longer
have any right, title or interest in or to such common stock purchase warrant or
such term note and the indebtedness evidenced thereby and, further, any
guarantees of third parties relating to such term note then held by Frost shall
terminate insofar, but only insofar, as they relate to such term note and the
indebtedness evidenced thereby, but not otherwise.
The parties agree that the obligation of Constructors to continue to make
monthly interest payment on the term loan through the date that Frost obtains
its Series B Convertible Preferred Stock is evidenced by the Term Modification.
2. Documentation to Implement Term Sheet Paragraph 2.
The parties agree that the provisions of the Line of Credit Modification
implement this paragraph.
3. Documentation to Implement Term Sheet Paragraph 3.
The parties agree that the Line of Credit Amendment carries forward the
reporting requirements that are to be complied with by Constructors.
4. Documentation to Implement Term Sheet Paragraph 4.
The parties agree that this paragraph is self-implementing. No additional
documentation is needed.
5. Documentation to Implement Term Sheet Paragraph 5.
The parties agree that the Promissory Note in the form of Exhibit D hereto,
with the blanks appropriately completed, the guarantees by Constructors, CCI,
CCIIS, Berkshire and Xxxxx in the forms of Exhibit E-l, E-2, E-3, E-4, and E-5,
attached hereto, and the Arbitration and Notice of Final Agreement in the Form
of Exhibit F attached hereto are satisfactory to implement the provisions of the
second bullet point of Term Sheet paragraph 5.
Xxxxx agrees that the terms of the Designation of Series C Convertible
Preferred Stock set forth as Exhibit G hereto and Redemption Rights Agreement
set forth as Exhibit H hereto are satisfactory to it.
Xxxxx and Xxxxx agree that the Put Agreement set forth as Exhibit I hereto
is satisfactory.
If on or before August 1, 2005, there is simultaneously delivered to Frost
(i) $2,500,000.00 in cash, reduced by any paydown on the line of credit after
the date hereof, (ii) a $300,000.00 Promissory Note by Xxxxxx in the form of
Exhibit D hereto, (iii) Guarantees by Constructors, CCI, CCIIS, Berkshire and
Xxxxx in the form of Exhibits E-l, E-2, E-3, E-4 and E-5 hereto, (iv) a
certificate representing Five Hundred Thousand (500,000) shares of Charys
2
Series C Convertible Preferred Stock, having the preferences and rights set
forth in Exhibit G hereto, (v) a registration rights agreement by Xxxxxx in the
form of Exhibit H hereto, (vi) a put agreement by Xxxxx in the form of Exhibit I
hereto, (vii) Certificate of Corporate Resolutions from Charys, Constructors,
CCI, CCIIS, and Berkshire in form acceptable to Frost, and (viii) an Arbitration
and Notice of Final Agreement by Charys, Constructors, CCI, CCIIS, Berkshire and
Xxxxx in the form of Exhibit F hereto, then in exchange therefor Frost will
deliver to Charys the original line of credit note (being the line of credit
note evidencing the line of credit described in the Term Sheet), without
representation, warranty or recourse, and, thereafter, Frost shall no longer
have any right, title or interest in or to such line of credit note and the
indebtedness evidenced thereby and, further, any guarantees of third parties
relating to such line of credit note then held by Frost shall terminate. At such
time Xxxxx will also deliver to Charys such other documents as Charys may
reasonably require in order to terminate all of Xxxxx'x rights in or to the
collateral securing such line of credit note.
6. Documentation to Implement Term Sheet Paragraph 6.
The parties agree that the first sentence of Term Sheet paragraph 6 is
self-implementing and does not require any additional documentation. The parties
agree that the second sentence of paragraph 6 are reflected in the Line of
Credit Amendment.
7. Documentation to Implement Term Sheet Paragraph 7.
The parties agree that this paragraph is self-implementing. No additional
documentation is needed.
8. Documentation to Implement Term Sheet Paragraph 8.
The parties agree that this paragraph is self-implementing. No additional
documentation is needed.
9. Documentation to Implement Term Sheet Paragraph 9.
The parties agree that this paragraph is self-implementing. No additional
documentation is needed.
10. Documentation to Implement Term Sheet Paragraph 10.
The parties agree that this paragraph is self-implementing. No additional
documentation is needed.
11. Documentation to Implement Term Sheet Paragraph 11.
The parties agree that this paragraph is self-implementing. No additional
documentation is needed.
12. Documentation to Implement or Modify Term Sheet Paragraph 12.
3
The parties agree that notwithstanding the date of March 31, 2005,
specified in Term Sheet paragraph 12, that the Term Sheet remains in effect, as
supplemented by this Agreement and the documents referenced herein.
13. The provisions of this Agreement, the Term Modification, the Line of
Credit Modification, the Line of Credit Amendment, the Arbitration and Notice of
Final Agreement, and Exhibits B through I control over conflicting provisions of
the Term Sheet. Further, notwithstanding the provisions contained in the Term
Sheet that indicate that the Term Sheet is non-binding, the parties hereto agree
that, subject to the provisions of the preceding sentence, the Term Sheet is now
and shall be binding.
4
Executed as of the date and year first above written.
The Frost National Bank,
a national banking association.
By:_____________________________________
Name:___________________________________
Title:__________________________________
Contemporary Constructors, Inc.
a Texas corporation
By:_____________________________________
Xxxxxxx X. Xxxxx, President
CCI Telecom, Inc.
a Nevada corporation
By:_____________________________________
Xxxxxxx X. Xxxxx, President
CCI Integrated Solutions, Inc.
a Texas corporation
By:_____________________________________
Xxxxxxx X. Xxxxx, President
Berkshire Wireless, Inc.
a Massachusetts corporation
By:_____________________________________
Xxxxxxx X. Xxxxx, President
_____________________________________
Xxxxxxx X. Xxxxx, Individually
Charys Holding Company, Inc.
a Delaware corporation
By:_____________________________________
Xxxxx X. Xxx, Xx.
Chairman and Chief Executive Officer
5
EXHIBIT A
6
CCI TELECOM, INC.
PRINCIPAL TERMS
RELATING TO DISPOSITION OF EXISTING FROST CREDIT FACILITIES
CCI Telecom, Inc. ("CCI") has entered into a transaction (the
"Transaction") with Charys Holding Company, Inc. ("Charys") pursuant to which
Charys issued shares of its common stock to the stockholders of CCI in
cancellation of their shares of CCI common stock and, consequently, CCI has
become a wholly-owned subsidiary of Charys. Contemporary Constructors, Inc.
("Constructors") continues to be a wholly-owned subsidiary of CCI.
Xxxxxx and CCI seek to enter into an agreement with The Frost National Bank
("Frost") and Xxxxxx relating to the credit facilities provided by Frost to CCI.
In furtherance thereof, and subject to the negotiation of a definitive agreement
relating thereto, Xxxxx, CCI, Constructors, Xxxxxx and Xxxxxxx X. Xxxxx
("Xxxxx") have preliminarily agreed upon the following principal terms:
Xxxxx, Xxxxxx, CCI, Constructors, Xxxxxx and Xxxxx would enter into one or
more agreements (whether one or more, the "Forbearance Agreement") providing for
the following:
1. Xxxxxx would issue to Frost 400,000 shares of a new series of Xxxxxx
preferred stock as described below and to be designated as Series B Convertible
Preferred Stock in full payment of the existing term loan made by Frost to
Constructors, and Xxxxx would release any and all third-party guarantees of the
term loan. Such shares of Series B Convertible Preferred Stock would not be
registered under the Securities Act of 1933 (the "Securities Act") or any state
securities laws; however, Xxxxxx would agree to file a registration statement
covering the shares common stock issuable upon conversion of such Series B
Convertible Preferred Stock within three months after the issuance thereof and
to pursue such registration in the same manner as if Frost had demand
registration rights and to the end that such registration would be treated as a
"shelf registration permitting Frost to sell such shares of common stock from
time to time in accordance with the terms set forth in such registration
statement. If such shares were not covered by an effective registration
statement within six months after the issuance thereof, Xxxxxx would pay Frost
liquidated damages in an amount equal to interest that would have accrued under
the term loan from the date of issuance of such Series B Convertible Preferred
Stock until such underlying shares of common stock become saleable in the
trading market pursuant to an effective registration statement. All common stock
purchase warrants that have been issued by CCI to Frost would be terminated.
Until Charys issues to Frost the 400,000 shares of Series B Convertible
Preferred Stock, Constructors would continue to make monthly interest payments
on the term loan and pay interest through the date Frost obtains such Series B
Convertible Preferred Stock. In addition to the registration rights provided for
above in this paragraph 1, the Series B Convertible Preferred Stock will have
the following provisions:
Conversion Rights: Each share of Series B Convertible
Preferred Stock would be convertible into one share of Charys
common stock at any time after the date of issuance thereof.
Voting Rights: None, other than as required by law.
Dividends: None
Other Features: Reasonable and customary adjustments in the
conversion ratio of the Series B Convertible Preferred Stock in
the event of stock splits, stock dividends or similar events.
2. Xxxxx would extend the final maturity of the existing line of credit
(the "Line") made by Xxxxx to Constructors for a period (the "Forbearance
Period") of six months from February 1, 2005. The Line would be renewed for
$4,550,000, with interest being payable monthly and Constructors would be
required to comply with the existing terms and conditions, including but not
limited to, the borrowing base and reporting requirements. All third-party
guarantees of the Line would remain in effect.
3. Constructors would continue to comply with existing reporting
requirements, including but not limited to, weekly borrowing base reports and
the submission of a borrowing base report along with any and all advance
requests. CCI has heretofore provided Xxxxx with a copy of the audited
consolidated financial statements of CCI for the fiscal year ended March 31,
2004.
4. If, during the Forbearance Period, the direct or indirect ownership of
the real property currently owned by CCI Associates ("Associates") is
transferred to CCI or Constructors, Xxxxx would not interfere with the sale of
such property or with obtaining a mortgage loan secured by such property so long
as all mortgage liens, including but not limited to Frost's, on such property
are paid in full at such time. After the payment of the existing mortgage loans
secured by such property, the remaining proceeds from any such sale or new
mortgage loan would be used by Constructors as working capital.
5. At any time during the Forbearance Period and no later than six months
from February 1, 2005, Xxxxx would provide a release of all security interests
and liens upon all collateral presently securing Constructors' debt to Xxxxx, in
consideration of Xxxxx receiving the following:
- $2.5 million in cash, as reduced by any net pay-down during the
Forbearance Period.
- $300,000 in the form of an unsecured promissory note executed by
Xxxxxx, such note to bear interest at the rate of 12.0% per annum
and to become due and payable, both principal and interest in a
single payment, 13 months after the date of issue. This note
would be guaranteed by Constructors and all existing guarantors
of Constructor's debts to Frost, including but not limited to
Xxxxx.
- 500,000 shares of a new series of preferred stock of Charys, to
be designated as Series C Convertible Preferred Stock, with the
following provisions:
Conversion Rights: Each share of Series C Convertible
Preferred Stock would be convertible into one share of Charys
common stock at any time after the expiration of 24 months from
the date of issue.
Redemption Rights: Xxxxxx would have the optional right to
redeem the Series C Convertible Preferred Stock, in whole or in
part, and at any time and from time to time, until the expiration
of 24 months from the date of issuance of the Series C
Convertible Preferred Stock, at a cash price of $3.50 per share.
Registration Rights: The Series C Convertible Preferred
Stock would not be registered under the Securities Act or any
state securities laws. Xxxxxx would agree to file a registration
statement under the Securities Act covering the common stock
issuable upon the conversion of the Series C Convertible
Preferred Stock immediately after the expiration of the put
option described below, and to pursue such registration in the
same manner as if Frost had demand registration rights and to the
end that such registration would be treated as a "shelf
registration permitting Frost to sell such shares of common stock
from time to time in accordance with the terms set forth in such
registration statement.
Voting Rights: None, other than as required by law.
Dividends: None.
Put Option: In the event Xxxxxx does not exercise its
redemption rights at $3.50 per share within 24 months from the
date of the issuance of the Series C Convertible Preferred Stock,
then during the next six months Xxxxx shall be obligated to
purchase Xxxxx'x 500,000 shares of Series C Convertible Preferred
Stock, or the remaining shares thereof, at price of $3.50 per
share, upon receipt of Xxxxx'x written request to purchase such
shares.
Other Features: Reasonable and customary adjustments in the
conversion ratio of the Series C Convertible Preferred Stock in
the event of stock splits, stock dividends or similar events.
6. Regardless of any Forbearance Agreement, Frost would reserve its
existing rights and remedies and may exercise its rights and remedies, at its
sole discretion, if at any time Constructors should fail to: (i) remain in
compliance with the borrowing base, (ii) keep interest current on the term loan
and the Line, (iii) comply with all reporting requirements, (iv) prevent any
liens, other than those for the benefit of Frost, from being filed on its
assets, without Xxxxx'x express written consent, or (v) should Constructors or
CCI become insolvent, seek protection in bankruptcy or be forced into
bankruptcy. The Forbearance Agreement would also provided that if the borrowing
base required a pay-down on the Line and such pay-down were not timely made,
there would be a cure period of seven business days, and if the curing payment
were made during such cure period, then no default would have occurred.
7. Any additional working capital requirements of Constructors provided
by Xxxxxx would be on an unsecured basis during the term of the Forbearance
Agreement.
8. Xxxxx would retain all of its existing security interests and liens on
Constructors assets and would not release or terminate its security interest or
liens until it has received, to its satisfaction: (i) $2,500,000 (as reduced by
any net pay-down) in cash, (ii) $300,000 promissory note from Charys, and (iii)
500,000 shares of Charys Series C Convertible Preferred Stock.
9. Any fees incurred by Xxxxx, including but not limited to attorneys
fees, in regards to review and documentation of the proposed renewals and
Forbearance Agreement would be paid by Constructors.
10. In the opinion of Xxxxx' legal counsel at the time the Forbearance
Agreement is entered into, the proposed transactions, including but not limited
to the proposed issuance of common and preferred stock to Frost, must be in
compliance with all applicable laws, rules and regulations governing Frost and
must not require Frost to issue any additional disclosure statements of any
kind.
11. The proposed issuance of 500,000 shares of Series C Convertible
Preferred Stock, a new $300,000 promissory note from Charys payable to Frost and
the payment of $2,500,000 cash (as reduced by any net pay-down) to Frost must
occur simultaneously within the time period ending six months from February 1,
2005.
12. Documentation of the Forbearance Agreement must be completed on or
before March 31, 2005, otherwise this Term Sheet shall automatically terminate
and become null and void.
The foregoing sets forth the proposed terms that have been discussed among
Frost, CCI, Constructors, Xxxxxx and Xxxxx The foregoing is subject to Xxxxx'x
approval and documentation acceptable to legal counsel to Xxxxx. The foregoing
is intended as an outline only and does not purport to contain all the terms,
conditions, covenants, representations, warranties and other provisions which
may be contained in a definitive agreement. Additional provisions and/or due
diligence may need to be reviewed or performed, in Xxxxx'x sole discretion, to
enable Xxxxx to make a final decision regarding the Forbearance Agreement.
Frost, CCI, Constructors, Xxxxxx and Xxxxx are all executing this NON-BINDING
term sheet in the space provided below in order to evidence their current intent
to proceed to negotiate the definitive terms and conditions of the Forbearance
Agreement.
[SIGNATURE PAGES FOLLOW]
Dated: March 11 , 2005
--
THE FROST NATIONAL BANK CCI TELECOM, INC.
By: [UNREADABLE] By:
------------------------------- -----------------------------------
Title: Senior Vice President Title:
------------------------- -----------------------------
CHARYS HOLDING COMPANY, INC. CONTEMPORARY CONSTRUCTORS, INC.
By: By:
-------------------------------- -----------------------------------
Name: Name:
------------------------------ ---------------------------------
Title: Title:
----------------------------- --------------------------------
XXXXXXX X. XXXXX, individually
-----------------------------------
Dated: March 11, 2005
--
THE FROST NATIONAL BANK CCI TELECOM, INC.
By: By: /s/ Xxxxxxx X. Xxxxx
------------------------------- -----------------------------------
Title: Title: CEO
------------------------- -----------------------------
CHARYS HOLDING COMPANY, INC. CONTEMPORARY CONSTRUCTORS, INC.
By: By: /s/ Xxxxxxx X. Xxxxx
-------------------------------- -----------------------------------
Name: Name: Xxxxxxx X. Xxxxx
------------------------------ ---------------------------------
Title: Title: CEO
----------------------------- --------------------------------
XXXXXXX X. XXXXX, individually
/s/ Xxxxxxx X. Xxxxx
-----------------------------------
Dated: March 11, 2005
--
THE FROST NATIONAL BANK CCI TELECOM, INC.
By: By:
------------------------------- -----------------------------------
Title: Title:
------------------------- -----------------------------
CHARYS HOLDING COMPANY, INC. CONTEMPORARY CONSTRUCTORS, INC,
By: /s/ Xxxxx X. Xxx Xx. By:
-------------------------------- -----------------------------------
Name: Xxxxx X. Xxx Xx. Name:
------------------------------ ---------------------------------
Title: CEO Title:
----------------------------- --------------------------------
XXXXXXX X, XXXXX, individually
-----------------------------------
EXHIBIT B
7
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES B CONVERTIBLE PREFERRED STOCK OF
CHARYS HOLDING COMPANY, INC.
I, Xxxxx X. Xxx, Xx., President of Charys Holding Company, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), in accordance with the provisions of Section 151 of the Delaware
General Corporation Law, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Company (the "Board") by the Certificate of Incorporation of the Company, the
Board on April 28, 2005, adopted the following resolution creating a series of
400,000 preferred shares of the par value of $0.001 per share designated as
"Series B Convertible Preferred Stock":
RESOLVED, that pursuant to the authority granted to and vested in the Board
in accordance with the provisions of the Certificate of Incorporation of the
Company, a series of preferred stock of the Company be, and it hereby is,
created, and that the designation and amount thereof and the relative rights and
preferences of the shares of such series, called the "Series B Convertible
Preferred Stock," are as follows:
1. Dividends. Notwithstanding anything herein to the contrary, and
----------
except as may otherwise be provided in Paragraph 7 hereof, the holders of
outstanding shares of the Series B Convertible Preferred Stock shall not be
entitled to receive any dividends, whether in form of cash, stock, or other
property.
2. Redemption Rights. Notwithstanding anything herein to the contrary,
-------------------
the Company shall not be entitled to redeem the whole or any part of the
outstanding Series B Convertible Preferred Stock.
3. Liquidation Rights. Upon the dissolution, liquidation or winding
--------------------
up of the Company, whether voluntary or involuntary, the holders of the then
outstanding shares of Series B Convertible Preferred Stock shall be entitled to
receive out of the assets of the Company the sum of $0.001 per share (the
"Liquidation Rate") before any payment or distribution shall be made on shares
of the common stock of the Company, par value $0.001 per share (the "Common
Stock"), or any other class of capital stock of the Company ranking junior to
the Series B Convertible Preferred Stock.
(a) The sale, conveyance, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially all the
property and assets of the Company shall be deemed a dissolution, liquidation or
winding up of the Company for purposes of this Paragraph 3, but the merger or
consolidation of the Company into or with any other corporation, or the merger
or consolidation of any other corporation into or with the Company, shall not be
deemed a dissolution, liquidation or winding up, voluntary or involuntary, for
purposes of this Paragraph 3.
(b) After the payment to the holders of shares of the Series B
Convertible Preferred Stock of the full preferential amounts fixed by this
Paragraph 3 for shares of the Series B Convertible Preferred Stock, the holders
of the Series B Convertible Preferred Stock as such shall have no right or claim
to any of the remaining assets of the Company.
(c) In the event the assets of the Company available for
distribution to the holders of the Series B Convertible Preferred Stock upon
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to this
Paragraph 3, no distribution shall be made on account of any shares of a class
or series of capital stock of the Company ranking on a parity with the shares of
the Series B Convertible Preferred Stock, if any, upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of the Series B Convertible Preferred Stock,
ratably, in proportion to the full distributive amounts for which holders of all
such parity shares are respectively entitled upon such dissolution, liquidation
or winding up.
1
4. Conversion of Series B Convertible Preferred Stock. At any time,
----------------------------------------------------
the holder of shares of the Series B Convertible Preferred Stock shall have the
right, at such holder's option, to convert any number of shares of the Series B
Convertible Preferred Stock into shares of the Common Stock. Such right to
convert shall commence as of the date the shares of the Series B Convertible
Preferred Stock are issued to such holder (the "Issue Date") and shall continue
thereafter for a period of 10 years, such period ending on the tenth anniversary
of the Issue Date. In the event that the holder of the Series B Convertible
Preferred Stock elects to convert such shares into Common Stock, the holder
shall deliver to the Company a Conversion Notice in the form of Attachment A and
shall have 60 days from the date of such notice in which to tender the shares of
Series B Convertible Preferred Stock being converted to the Company. Any such
conversion shall be upon the other following terms and conditions:
(a) Conversion Rate. Subject to adjustment as provided herein,
----------------
each share of the Series B Convertible Preferred Stock shall be convertible into
one fully paid and nonassessable share of the Common Stock (the "Conversion
Rate").
(b) Adjustment of Conversion Rate for Dilution and Other Events.
-------------------------------------------------------------
In order to prevent dilution of the rights granted to the holders of shares of
the Series B Convertible Preferred Stock, the Conversion Rate will be subject to
adjustment from time to time as follows:
(i) Adjustment of Conversion Rate upon Subdivision or
-------------------------------------------------------
Combination of the Common Stock. If the Company at any time subdivides (by any
---------------------------------
stock split, stock dividend, recapitalization or otherwise) the issued and
outstanding or authorized Common Stock into a greater number of shares, the
Conversion Rate in effect immediately prior to such subdivision will be
proportionately increased. If the Company at any time combines (by combination,
reverse stock split or otherwise) the issued and outstanding or authorized
Common Stock into a smaller number of shares, the Conversion Rate in effect
immediately prior to such combination will be proportionately decreased.
(ii) Reorganization, Reclassification, Consolidation, Merger,
--------------------------------------------------------
or Sale. Any dividend or distribution payable or to be made in Common Stock or
--------
other shares of stock of the Company or any recapitalization, reorganization,
reclassification, consolidation, merger, or other similar transaction which is
effected in such a way that holders of the Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for the Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the Company
will make appropriate provision, in form and substance satisfactory to the
holders of a majority of the outstanding shares of the Series B Convertible
Preferred Stock, to ensure that each of the holders of shares of the Series B
Convertible Preferred Stock will thereafter have the right to acquire and
receive in lieu of or in addition to, as the case may be, the shares of the
Common Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series B Convertible Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of the Common Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's shares of the
Series B Convertible Preferred Stock had such Organic Change not taken place. In
any such case, the Company will make appropriate provision, in form and
substance satisfactory to the holders of a majority of the outstanding shares of
the Series B Convertible Preferred Stock, with respect to such holders' rights
and interests to ensure that the provisions of this paragraph and paragraph 4(c)
below will thereafter be applicable to the Series B Convertible Preferred Stock.
The Company will not effect any such consolidation or merger, unless prior to
the consummation thereof the successor entity resulting from such consolidation
or merger, if other than the Company, assumes, by written instrument, in form
and substance satisfactory to the holders of a majority of the outstanding
shares of the Series B Convertible Preferred Stock, the obligation to deliver to
each holder of shares of the Series B Convertible Preferred Stock such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
that such holder may be entitled to acquire.
(iii) Notices. Immediately upon any adjustment of the
-------
Conversion Rate, the Company will give written notice of such adjustment to each
holder of shares of the Series B Convertible Preferred Stock, setting forth in
reasonable detail and certifying the calculation of such adjustment. The Company
will give written notice to each holder of shares of the Series B Convertible
Preferred Stock at least 20 days prior to the date on which the Company closes
its books or takes a record with respect to any dividend or distribution upon
the Common Stock, or with respect to any pro rata subscription offer to holders
of the Common Stock. The Company
2
will also give written notice to each holder of shares of the Series B
Convertible Preferred Stock at least 20 days prior to the date on which any
Organic Change, dissolution or liquidation will take place.
(c) Purchase Rights. If at any time the Company grants, issues or
---------------
sells any options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of the Common Stock
(the "Purchase Rights"), then each holder of shares of the Series B Convertible
Preferred Stock will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of the Common Stock
acquirable upon complete conversion of the holder's shares of the Series B
Convertible Preferred Stock immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of the Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights.
(d) Mechanics of Conversion. To convert shares of the Series B
-------------------------
Convertible Preferred Stock into full shares of the Common Stock on any date
(the "Conversion Date"), the holder thereof shall (i) deliver or transmit by
facsimile to the Company, for receipt on or prior to 11:59 p.m., Eastern Time,
on the Conversion Date, a copy of a fully executed notice of conversion in the
form attached hereto as Attachment A (the "Conversion Notice"), and (ii)
-------------
surrender to a common carrier for delivery to the Company as soon as practicable
following such date, the certificates (each a "Preferred Stock Certificate")
representing the shares of the Series B Convertible Preferred Stock being
converted, or an indemnification undertaking with respect to such shares in the
case of the loss, theft or destruction thereof, and the originally executed
Conversion Notice. Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder. Within five
business days of the Company's receipt of the originally executed Conversion
Notice and the holder's Preferred Stock Certificate(s), the Company shall issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of the
holder or its designee, for the number of shares of the Common Stock to which
the holder is entitled.
(e) Record Holder. The person or persons entitled to receive
--------------
shares of the Common Stock issuable upon conversion of shares of the Series B
Convertible Preferred Stock shall be treated for all purposes as the record
holder or holders of such shares of the Common Stock on the Conversion Date.
(f) Fractional Shares. The Company shall not be required to issue
------------------
any fraction of a share of the Common Stock upon any conversion. All shares of
the Common Stock, including fractions thereof, issuable upon conversion of more
than one share of the Series B Convertible Preferred Stock shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of a fraction of a share of the Common Stock. If, after such aggregation, the
issuance would result in the issuance of a fraction of it share of the Common
Stock, the Company shall round such fraction of a share of the Common Stock up
or down to the nearest whole share.
(g) Reissuance of Certificates. In the event of a conversion of
----------------------------
less than all of the shares of the Series B Convertible Preferred Stock
represented by a particular Preferred Stock Certificate, the Company shall
promptly cause to be issued and delivered to the holder of such Series B
Convertible Preferred Stock a new Series B Convertible Preferred Stock
Certificate representing the remaining shares of the Series B Convertible
Preferred Stock which were not corrected.
5. Reservation of Shares. The Company shall, so long as any of the
-----------------------
shares of the Series B Convertible Preferred Stock are outstanding, reserve and
keep available out of its authorized and unissued shares of the Common Stock,
solely for the purpose of effecting the conversion of the shares of the Series B
Convertible Preferred Stock, the number of shares of the Common Stock as shall
from time to time be sufficient to effect the conversion of all of the
outstanding shares of the Series B Convertible Preferred Stock.
6. Seniority. The shares of the Series B Convertible Preferred Stock
---------
shall rank superior to the shares of the Company's Common Stock, and to the
shares of all other series of the Company's preferred stock. The rights of the
shares of the Common Stock and all other series of the Company's preferred stock
shall be subject to the preferences and relative rights of the shares of the
Series B Convertible Preferred Stock. Without the prior
3
written consent of the holders of not less than two-thirds (2/3) of the
outstanding shares of the Series B Convertible Preferred Stock, the Company
shall not hereafter authorize or issue additional or other capital stock that is
of senior or equal rank to the shares of the Series B Convertible Preferred
Stock in respect of the preferences as to distributions and payments upon the
liquidation, dissolution and winding up of the Company described in Paragraph 3
above.
7. Restriction on Dividends. If any shares of the Series B Convertible
-------------------------
Preferred Stock are outstanding, the Company shall not, without the prior
written consent of the holders of not less than two-thirds (2/3) of the then
outstanding shares of the Series B Convertible Preferred Stock, directly or
indirectly declare, pay or make any dividends or other distributions upon any of
the Common Stock or any other series of the Company's preferred stock.
Notwithstanding the foregoing, this paragraph shall not prohibit the Company
from declaring and paying a dividend in cash with respect to the shares of the
Common Stock or any other series of the Company's preferred stock so long as the
Company simultaneously pays each holder of shares of the Series B Convertible
Preferred Stock an amount in cash equal to the amount such holder would have
received had all of such holder's shares of the Series B Convertible Preferred
Stock been converted to shares of the Common Stock on the business day prior to
the record date for any such dividend.
8. Vote to Change the Terms of the Series B Convertible Preferred
--------------------------------------------------------------------
Stock. Without the prior written consent of the holders of not less than
-----
two-thirds (2/3) of the outstanding shares of the Series B Convertible Preferred
Stock, the Company shall not amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Series B Convertible Preferred
Stock.
9. Lost or Stolen Certificates. Upon receipt by the Company of
------------------------------
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing shares of the Series
B Convertible Preferred Stock, and, in the case of loss, theft or destruction,
of any indemnification undertaking or bond, in the Company's discretion, by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of the Preferred Stock certificate(s), the Company shall execute
and deliver new Series B Convertible Preferred Stock certificate(s) of like
tenor and date; provided, however, the Company shall not be obligated to
re-issue Series B Convertible Preferred Stock certificates if the holder thereof
contemporaneously requests the Company to convert such shares of the Series B
Convertible Preferred Stock into the Common Stock.
10. Voting. The holders of the Series B Convertible Preferred Stock
------
shall have no voting rights on any matter submitted to the stockholders of the
Company for their vote, waiver, release or other action, or be considered in
connection with the establishment of a quorum, except as may otherwise be
expressly required by law or by the applicable stock exchange rules.
The Resolution was duly adopted by all of the directors of the Company as
required by Section 151 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation, Preferences and Rights on behalf of the Company this 29th day of
April, 2005.
CHARYS HOLDING COMPANY, INC.
By /s/ Xxxxx X. Xxx, Xx.
------------------------------------------
Xxxxx X. Xxx, Xx., Chief Executive Officer
4
THE STATE OF GEORGIA *
*
COUNTY OF XXXXXX *
On this 29th day of April, 2005, before me, the undersigned authority,
personally appeared Xxxxx X. Xxx, Xx., the President of Charys Holding Company,
Inc., a Delaware corporation, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for the purposes and consideration therein expressed, and as the act and deed of
said corporation, and who also upon oath swore that the statements therein
contained are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
---------------------------------------------
Notary Public for the State of Georgia
Printed Name:
-------------------------------
My Commission Expires:
---------------------
5
ATTACHMENT A
CHARYS HOLDING COMPANY, INC.
CONVERSION NOTICE
In accordance with and pursuant to the provisions of the Certificate of
Designation Establishing Series B Convertible Preferred Stock of Charys Holding
Company, Inc., the undersigned hereby elects to convert the number of shares of
Series B Convertible Preferred Stock, par value $0.001 per share, of Charys
Holding Company, Inc. (the "Company") indicated below into shares of the common
stock, par value $0.001 per share (the "Common Stock"), of the Company, by
tendering the stock certificate(s) representing the share(s) of the Series B
Convertible Preferred Stock hereinafter described as of the date specified
below.
The undersigned acknowledges that the securities issuable to the
undersigned upon conversion of shares of the Series B Convertible Preferred
Stock may not be sold, pledged, hypothecated or otherwise transferred unless
such securities are registered under the Securities Act of 1933, as amended, and
any other applicable securities law, or the Company has received an opinion of
counsel satisfactory to it that registration is not required. A legend in
substantially the following form will be placed on any certificates or other
documents evidencing the securities to be issued upon any conversion of the
shares of the Series B Convertible Preferred Stock:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAW OF ANY STATE. WITHOUT SUCH REGISTRATION,
SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE COMPANY OF
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH
TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
1933, AS AMENDED, THE SECURITIES LAW OF ANY STATE, OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER.
Date of Conversion:
--------------------------
Number of shares of the Series B Convertible Preferred Stock to be converted:
----------------------------------------
Stock certificate no(s). of the shares of the Series B Convertible Preferred
Stock to be converted:
--------------------
Conversion Rate:
-----------------------------
Number of shares of the Common Stock to be issued:
---------------------------------------------
Name in which shares of the Common Stock are to be issued:
---------------------------------------------
---------------------------------------------
Signature
---------------------------------------------
Printed Name and Address
---------------------------------------------
EXHIBIT C
8
FROST REGISTRATION RIGHTS AGREEMENT NO. 1
THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of April
25, 2005 by and among CHARYS HOLDING COMPANY, INC., a Delaware corporation
("Charys") and THE FROST NATIONAL BANK, a national banking corporation located
in San Antonio, Texas ("Frost").
WHEREAS, Xxxxxx has issued to Frost 400,000 shares of its Series B
Convertible Preferred Stock, par value $0.001, per share (the Charys Series B
Convertible Preferred Stock"), which is convertible into shares of the Charys
common stock, par value $0.001 per share (the "Charys Common Stock"); and
WHEREAS, a copy of the Certificate of Designation of the Charys Series B
Convertible Preferred Stock is attached hereto as Attachment A:
--------------
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements, and subject to the terms and conditions herein
contained, the parties hereto hereby agree as follows:
ARTICLE I
REGISTRATION RIGHTS
1.1 Registrable Shares. "Registrable Shares" means and includes the
--------------------
shares of the Charys Common Stock issued pursuant to any conversion of the
Charys Series B Convertible Preferred Stock, plus all other securities of Charys
issued with respect to such Charys Common Stock by way of a stock split, stock
dividend, recapitalization, merger or consolidation or otherwise. As to any
particular Registrable Shares, such securities will cease to be Registrable
Shares when:
(a) They have been effectively registered under the Securities Act
of 1933, as amended (the "Securities Act") and disposed of in accordance with
the Registration Statement covering them; or
(b) A Registration Statement with respect thereto shall have been
effective for a period of two years.
1.2 Registration of Registrable Shares. Charys shall, within 90 days
-------------------------------------
after demand therefor by Xxxxx, file a registration statement (the "Registration
Statement") pursuant to Rule 415 under the Securities Act, or any similar rule
that may be adopted by the Securities and Exchange Commission (the "SEC"),
covering the resale of the Registrable Shares. Charys shall use its best efforts
to cause the Registration Statement to be declared effective by the SEC (the
"Required Effectiveness Date") on the earlier of:
(a) 180 days following such demand by Xxxxx;
(b) Ten days following the receipt of a "No Review" or similar
letter from the SEC; or
(c) The first day following the day the SEC determines the
Registration Statement is eligible to be declared effective.
1.3 Registration Statement Form. Registration under Paragraph 1.2
------------------------------
shall be on Form SB-2 or such other appropriate registration form of the SEC as
shall permit the disposition of the Registrable Shares in accordance with the
intended method or methods of disposition specified by Frost to be included in
the Registration Statement; provided, however, such intended method of
disposition shall not include more than one underwritten offering of not less
than all Registrable Shares, the underwriter of which shall be selected by
Xxxxxx and reasonably acceptable to Xxxxx.
1.4 Expenses. Xxxxxx will pay all registration expenses in connection
--------
with any registration required by Paragraph 1.2 herein.
1.5 Effective Registration Statement. A registration requested pursuant
--------------------------------
to Paragraph 1.2 shall not be deemed to have been effected:
(a) Unless a Registration Statement with respect thereto has
become effective within the time period specified herein, provided that a
registration which does not become effective after Charys files a Registration
Statement with respect thereto solely by reason of the refusal to proceed by
Xxxxx (other than a refusal to proceed based upon the advice of counsel in the
form of a letter signed by such counsel and provided to Xxxxxx relating to a
disclosure matter unrelated to Frost) shall be deemed to have been effected by
Charys unless Xxxxx shall have elected to pay all registration expenses in
connection with such registration,
(b) If, after it has become effective, such Registration Statement
becomes subject to any stop order, injunction or other order or extraordinary
requirement of the SEC or other governmental agency or court for any reason; or
(c) If, after it has become effective, such Registration Statement
ceases to be effective or it or the prospectus forming a part thereof are not
usable by Frost, other than during the allowable Black-Out Periods (as defined
herein), to permit the disposition thereunder of the Registrable Shares in
compliance with the Securities Act and the SEC regulations during the period the
Registration Statement is required to be effective.
1.6 Plan of Distribution. Xxxxxx xxxxxx agrees that the Registration
----------------------
Statement shall include a plan of distribution section reasonably acceptable to
Frost.
1.7 Liquidated Damages. If (a) Charys shall not cause the
-------------------
Registration Statement to be declared effective pursuant to the requirements of
Paragraph 1.2 herein, then Charys shall pay Frost, as liquidated damages and not
as a penalty, an amount equal to interest on $1,709,201.51 computed at a per
annum rate equal to the lesser of (i) a rate equal to the Prime Rate of Frost,
plus three percent per annum, with said rate to be adjusted to reflect any
change in said Prime Rate at the time of any such change or (ii) the highest
rate permitted by applicable law from the date hereof until the date the
Registration Statement shall be declared effective and (b) if, after the
Registration Statement is declared effective and until two years after it
becomes effective, the Registration Statement or the related prospectus is not
usable by Xxxxx as a result of any of the conditions specified in Paragraph
1.5(b) or (c) hereof, then Charys shall pay Frost, as liquidated damages and not
as a penalty, an amount equal to the interest on $1,709,201.51 computed at a per
annum rate equal to the lesser of (i) a rate equal to the Prime Rate of Frost,
plus three percent per annum, with said rate to be adjusted to reflect any
change in said Prime Rate at the time of any such change or (ii) the highest
rate permitted by applicable law for each such day that the Registration
Statement or the related prospectus is not so usable by Xxxxx.
The "Prime Rate" shall mean the prime rate of interest charged by Xxxxx as
established from time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer.
Interest shall be computed on a per annum basis of a year of 360 days and
for the actual number of days elapsed, unless such calculation would result in a
rate greater than the highest rate permitted by applicable law, in which case
interest shall be computed on a per annum basis of a year of 365 days or 366
days in a leap year, as the case may be.
The parties agree that the only damages payable for a violation of the
terms of this Agreement with respect to which liquidated damages are expressly
provided shall be such liquidated damages. Nothing shall preclude Xxxxx from
pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement.
The parties hereto agree that the liquidated damages provided for in this
Paragraph 1.7 constitute a reasonable estimate of the damages that may be
incurred by Xxxxx by reason of the failure of the Registration Statement to be
filed, or declared effective, or cease to be effective, in accordance with the
provisions hereof.
2
ARTICLE II
INCIDENTAL REGISTRATION RIGHTS
2.1 Right to Include ("Piggy-Back") Registrable Shares. If at any
------------------------------------------------------
time Xxxxxx proposes to register any of its securities under the Securities Act
(other than by a registration in connection with an acquisition in a manner
which would not permit registration of Registrable Shares for sale to the
public, on Form S-8, or any successor form thereto, on Form S-4, or any
successor form thereto and other than pursuant to Article I hereof), on an
underwritten basis (either "best-efforts" or "firm-commitment"), and Xxxxx
continues to own Charys Series B Convertible Preferred Stock or any shares of
Charys Common Stock issued pursuant to the conversion of the Charys Series B
Convertible Preferred Stock, or any other securities of Charys issued with
respect to such Charys Common Stock by way of stock split, stock divided,
recapitalization, merger, consolidation or otherwise, then, Charys will each
such time give prompt written notice to Frost of its intention to do so and of
Frost's rights under this Paragraph 2.1. Upon the written request of Xxxxx made
within 10 days after the receipt of any such notice (which request shall specify
the Registrable Shares intended to be disposed of by Xxxxx and the intended
method of disposition thereof), Charys will, subject to the terms of this
Agreement, use its commercially reasonable best efforts to effect the
registration under the Securities Act of the Registrable Shares, to the extent
requisite to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Shares so to be registered, by
inclusion of the Registrable Shares in the Registration Statement which covers
the securities which Xxxxxx proposes to register; provided that if, at any time
after written notice of its intention to register any securities and prior to
the effective date of the Registration Statement filed in connection with such
registration, Xxxxxx shall determine for any reason either not to register or to
delay registration of such securities, Charys may, at its election, give written
notice of such determination to Frost and, thereupon:
(a) In the case of a determination not to register, shall be
relieved of this obligation to register any of the Registrable Shares in
connection with such registration (but not from its obligation to pay the
registration expenses in connection therewith), without prejudice, however, to
the rights of Xxxxx entitled to do so to request that such registration be
effected as a registration under Article I hereof; and
(b) In the case of a determination to delay registering, shall be
permitted to delay registering any of the Registrable Shares, for the same
period as the delay in registering such other securities.
No registration effected under this Paragraph 2.1 shall relieve Charys of
its obligation to effect any registration upon request under Article I hereof.
Xxxxxx will pay all registration expenses in connection with each registration
of the Registrable Shares requested pursuant to this Paragraph 2.1. The right
provided Xxxxx pursuant to this paragraph shall be exercisable at its sole
discretion and will in no way limit any of Xxxxxx' obligations hereunder.
2.2 Priority in Incidental Registrations. If the managing underwriter
------------------------------------
of the underwritten offering contemplated by this Article II shall inform Xxxxxx
and Frost by letter of its belief that the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering, then Charys will include in such registration, to the extent of the
number which Charys is so advised can be sold in such offering:
(a) First, securities proposed by Xxxxxx to be sold for its own
account; and
(b) Second, the Registrable Shares and securities of other selling
security holders requested to be included in such registration pro rata on the
basis of the number of shares of such securities so proposed to be sold and so
requested to be included; provided, however, Xxxxx shall have pro rata rights of
registration with all shares sought to be included by officers and directors of
Charys as well as holders of 10 percent or more of the Charys Common Stock.
3
ARTICLE III
REGISTRATION PROCEDURES
3.1 Registration Procedures. If and whenever Charys is required to
-------------------------
effect the registration of any of the Registrable Shares under the Securities
Act as provided in Paragraph 1.2 hereof, Charys shall, as expeditiously as
possible:
(a) Prepare and file with the SEC the Registration Statement, or
amendments thereto, to effect such registration (including such audited
financial statements as may be required by the Securities Act or the rules and
regulations promulgated thereunder) and thereafter use its commercially
reasonable best efforts to cause the Registration Statement to be declared
effective by the SEC, as soon as practicable, but in any event no later than the
Required Effectiveness Date (with respect to a registration pursuant to
Paragraph 1.2 hereof); provided, however, that before filing the Registration
Statement or any amendments thereto, Xxxxxx will furnish to the counsel selected
by Xxxxx, copies of all such documents proposed to be filed;
(b) With respect to any Registration Statement pursuant to
Paragraph 1.2 hereof, prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Shares covered by the Registration
Statement (subject to the right of Charys to suspend the use thereof for not
more than 10 consecutive trading days or an aggregate of 40 trading days during
each year (each a "Black-Out Period") until two (2) years after such
Registration Statement became effective;
(c) Furnish to Frost such number of conformed copies of the
Registration Statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the prospectus
contained in the Registration Statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as Frost and the underwriter, if any, may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Shares owned by Xxxxx;
(d) Use its commercially reasonable best efforts to register or
qualify all of the Registrable Shares and other securities covered by the
Registration Statement under such other securities laws or blue sky laws of such
states as Frost shall reasonably request, to keep such registrations or
qualifications in effect for so long as the Registration Statement remains in
effect, and take any other action which may be reasonably necessary to enable
Frost to consummate the disposition in such jurisdictions of the securities
owned by Frost, except that Charys shall not for any such purpose be required to
qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this subdivision (d) be
obligated to be so qualified or to consent to general service of process in any
such jurisdiction;
(e) Use its commercially reasonable best efforts to cause all of
the Registrable Shares covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable Frost thereof to consummate the disposition of the
Registrable Shares;
(f) Furnish to Frost a signed counterpart, addressed to Xxxxx, and
the underwriters, if any, of an opinion of counsel for Xxxxxx, dated the
effective date of the Registration Statement (or, if such registration includes
an underwritten public offering, an opinion dated the date of the closing under
the underwriting agreement), reasonably satisfactory in form and substance to
Frost) including that the prospectus and any prospectus supplement forming a
part of the Registration Statement does not contain an untrue statement of a
material fact or omits a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(g) Notify Frost and its counsel promptly and confirm such advice
in writing promptly after Xxxxxx has knowledge thereof:
4
(i) When the Registration Statement, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
Registration Statement has been filed, and, with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective;
(ii) Of any request by the SEC for amendments or supplements
to the Registration Statement or the prospectus or for additional information;
(iii) Of the issuance by the SEC of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings by any person for that purpose; and
(iv) Of the receipt by Xxxxxx of any notification with
respect to the suspension of the qualification of any Registrable Shares for
sale under the securities or blue sky laws of any jurisdiction or the initiation
or threat of any proceeding for such purpose;
(h) Notify Frost, at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery that, or
upon the happening of any event as a result of which, the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material facts required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances then existing, and at the request of Xxxxx promptly prepare and
furnish to Frost a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing;
(i) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(j) Otherwise use its commercially reasonable best efforts to
comply with all applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least 12 months, but not more than 18
months, beginning with the first full calendar month after the effective date of
the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) Enter into such agreements and take such other actions as
Xxxxx shall reasonably request in writing (at the expense of Xxxxx) in order to
expedite or facilitate the disposition of the Registrable Shares; and
(l) Use its commercially reasonable best efforts to list all of
the Registrable Shares covered by the Registration Statement on any securities
exchange on which any of the Registrable Shares are then listed.
Charys may require Frost to furnish Charys such information regarding Frost
and the distribution of such securities as Xxxxxx may from time to time
reasonably request in writing.
3.2 Charys will not file any Registration Statement pursuant to
Paragraph 1.2 hereof, or amendment thereto or any prospectus or any supplement
thereto to which Frost shall reasonably object, provided that Charys may file
such documents in a form required by law or upon the advice of its counsel.
3.3 Xxxxxx represents and warrants to Frost that it has obtained all
necessary waivers, consents and authorizations necessary to execute this
Agreement and consummate the transactions contemplated hereby.
3.4 Frost agrees that, upon receipt of any notice from Xxxxxx of the
occurrence of any event of the kind described in subdivision (h) of Paragraph
3.1 hereof, Xxxxx will forthwith discontinue its disposition of the Registrable
Shares pursuant to the Registration Statement relating to the Registrable Shares
until Xxxxx'x receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (h) of Paragraph 3.1 and, if so directed by Xxxxxx,
will deliver to Xxxxxx (at Xxxxxx' expense) all copies, other than permanent
file copies, then in Xxxxx'x possession of the prospectus relating to the
Registrable Shares current at the time of receipt of such notice.
5
ARTICLE IV
UNDERWRITTEN OFFERINGS
4.1 Underwritten Offerings. If Xxxxxx at any time proposes to register
------------------------
any of its securities under the Securities Act as contemplated by Paragraph 2.1
hereof and such securities are to be distributed by or through one or more
underwriters, and if requested by Xxxxx as provided in Paragraph 2.1 and subject
to the provisions of Paragraph 2.2, or if requested by Xxxxx for the disposition
of Registrable Shares under Article I hereof in an underwritten offering, Xxxxxx
will use its commercially reasonable best efforts to arrange for underwriters to
distribute all of the Registrable Shares to be offered and sold by Xxxxx.
4.2 Holdback Agreements. Subject to such other reasonable requirements
--------------------
as may be imposed by the underwriter as a condition of inclusion of the
Registrable Shares in an underwritten offering, Xxxxx agrees, if so required by
the managing underwriter, not to sell, make any short sale of, loan, grant any
option for the purchase of, effect any public sale or distribution of or
otherwise dispose of, except as part of such underwritten offering, any equity
securities of Charys, during such reasonable period of time requested by the
underwriter; provided however:
(a) If the offering is a secondary offering by Xxxxxx, the
offering is intended to raise a minimum of $2,000,000 on behalf of Charys; and
(b) Such period shall not exceed 90 days commencing with the
completion of the underwritten offering.
Xxxxxx agrees and acknowledges that during any holdback period, Frost may
sell, in the holdback period, the Registrable Shares in the amount of up to one
percent per week of the shares of the Charys Common Stock held by Xxxxx as long
as this Agreement remains effective.
4.3 Participation in Underwritten Offerings. Frost may not
-------------------------------------------
participate in any underwritten offering under Paragraph 2.1 unless Frost:
(a) Agrees to sell its Registrable Shares on the basis provided in
any underwriting arrangements approved by Xxxxx; and
(b) Completes and executes all questionnaires, indemnities,
underwriting agreements and other documents (other than powers of attorney)
required under the terms of such underwriting arrangements.
Notwithstanding the foregoing, no underwriting agreement (or other
agreement in connection with such offering) shall require Frost to make a
representation or warranty to or agreements with Charys or the underwriters
other than representations and warranties contained in a writing furnished by
Frost expressly for use in the related Registration Statement or
representations, warranties or agreements regarding Frost, its Registrable
Shares, and its intended method of distribution and any other representation
required by law.
4.4 Preparation; Reasonable Investigation. In connection with the
----------------------------------------
preparation and filing of each Registration Statement under the Securities Act
pursuant to this Agreement, Charys will give Frost, and its counsel and
accountants, the opportunity to participate in the preparation of the
Registration Statement, each prospectus included therein or filed with the SEC,
and each amendment thereof or supplement thereto, and will give each of them
such access to its books and records and such opportunities to discuss the
business of Xxxxxx with its officers and the independent public accountants who
have certified its financial statements as shall be necessary, in the reasonable
opinion of Xxxxx and its counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification by Xxxxxx. In the event of any registration of any
---------------------------
securities of Charys under the Securities Act, Charys will, and hereby does
agree to indemnify and hold harmless Frost, its directors and officers,
6
each other person who participates as an underwriter in the offering or sale of
such securities and each other person, if any, who controls Frost or any such
underwriter within the meaning of the Securities Act against any losses, claims,
damages or liabilities, joint or several, to which Frost or any such director or
officer or underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and Xxxxxx will
reimburse Frost and each such director, officer, underwriter and controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, liability,
action or proceeding, provided that Xxxxxx shall not be liable in any such case
to the extent that any such loss, claim, damage, liability, (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to Charys by Xxxxx or underwriter
stating that it is for use in the preparation thereof and, provided further that
Xxxxxx shall not be liable to any person who participates as an underwriter in
the offering or sale of Registrable Shares or to any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such person's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, within the time required by the Securities Act to the
person asserting the existence of an untrue statement or alleged untrue
statement or omission or alleged omission at or prior to the written
confirmation of the sale of the Registrable Shares to such person if such
statement or omission was corrected in such final prospectus or an amendment or
supplement thereto. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Xxxxx or any such
director, officer, underwriter or controlling person and shall survive the
transfer of such securities by Xxxxx.
5.2 Indemnification by Xxxxx. Xxxxxx xxx require, as a condition to
---------------------------
including any of the Registrable Shares in any Registration Statement filed
pursuant to this Agreement, that Xxxxxx shall have received an undertaking
satisfactory to it from Frost, to indemnify and hold harmless (in the same
manner and to the same extent as set forth in Paragraph 5.1 hereof) Xxxxxx, each
director of Charys, each officer of Xxxxxx and each other person, if any, who
controls Xxxxxx within the meaning of the Securities Act, with respect to any
statement or alleged statement in or omission or alleged omission from the
Registration Statement, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, if such
statement or alleged statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to Xxxxxx
through an instrument duly executed by Xxxxx specifically stating that it is for
use in the preparation of the Registration Statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement. Any such
indemnity shall remain in full force and effect, regardless of any investigation
made by or on behalf of Xxxxxx or any such director, officer or controlling
person and shall survive the transfer of such securities by Xxxxx.
5.3 Notices of Claims, etc. Promptly after receipt by an indemnified
-----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in Paragraph 5.1 and Paragraph 5.2 hereof, such indemnified
party will, if claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action,
provided that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under
Paragraph 5.1 and Paragraph 5.2 hereof, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. In
case any such action is brought against an indemnified party, unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, the
indemnifying party shall be entitled to participate in and to assume the defense
thereof, jointly with any other indemnifying party similarly notified, to the
extent that the indemnifying party may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the consent of the
7
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability, or a covenant not to sue, in respect to such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
5.4 Other Indemnification. Indemnification similar to that specified
-----------------------
in Paragraph 5.1 and Paragraph 5.2 hereof (with appropriate modifications) shall
be given by Xxxxxx and Frost (but only if and to the extent required pursuant to
the terms herein) with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority, other than the Securities Act.
5.5 Indemnification Payments. The indemnification required by
--------------------------
Paragraph 5.1 and Paragraph 5.2 hereof shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when
bills are received or expense, loss, damage or liability is incurred.
5.6 Contribution. If the indemnification provided for in Paragraph
-------------
5.1 and Paragraph 5.2 hereof is unavailable to an indemnified party in respect
of any expense, loss, claim, damage or liability referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such expense, loss, claim, damage or liability:
(a) In such proportion as is appropriate to reflect the relative
benefits received by Xxxxxx on the one hand and Xxxxx or the underwriter, as the
case may be, on the other from the distribution of the Registrable Shares; or
(b) If the allocation provided by clause (a) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (a) above but also the relative
fault of Xxxxxx on the one hand and of Frost or the underwriter, as the case may
be, on the other in connection with the statements or omissions which resulted
in such expense, loss, damage or liability, as well as any other relevant
equitable considerations.
The relative benefits received by Xxxxxx on the one hand and Xxxxx or the
underwriter, as the case may be, on the other in connection with the
distribution of the Registrable Shares shall be deemed to be in the same
proportion as the total net proceeds received by Xxxxxx from the initial sale of
the Registrable Shares by Xxxxxx to the purchasers bear to the gain, if any,
realized by Xxxxx, or the underwriting discounts and commissions received by the
underwriter, as the case may be. The relative fault of Xxxxxx on the one hand
and of Frost or the underwriter, as the case may be, on the other, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state a material fact relates
to information supplied by Xxxxxx, by Xxxxx or by the underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission, provided that the foregoing
contribution agreement shall not inure to the benefit of any indemnified party
if indemnification would be unavailable to such indemnified party by reason of
the provisions contained herein, and in no event shall the obligation of any
indemnifying party to contribute under this Paragraph 5.6 exceed the amount that
such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for hereunder had been available
under the circumstances.
Xxxxxx and Xxxxx agree that it would not be just and equitable if
contribution pursuant to this Paragraph 5.6 were determined by pro rata
allocation (even if Frost and any underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
herein, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Paragraph 5.6, Frost and any
underwriter shall not be required to contribute any amount in excess of the
amount by which (i) in the case of Frost, the net proceeds received by Xxxxx
from the sale of the Registrable Shares, or (ii) in the case of an underwriter,
the total price at which the Registrable Shares purchased by it and distributed
to the public were offered to the public exceeds, in any such case, the amount
8
of any damages that Xxxxx or the underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation,
ARTICLE VI
RULE 144
6.1 Rule 144. Charys shall timely file the reports required to be filed
--------
by it under the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including but not limited to the reports under
Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of
Rule 144 adopted by the SEC under the Securities Act, and the rules and
regulations adopted by the SEC thereunder (or, if Charys is not required to file
such reports, will, upon the request of Xxxxx, make publicly available other
information) and will take such further action as Frost may reasonably request,
all to the extent required from time to time to enable Frost to sell the
Registrable Shares without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144, as amended, or (b) any
similar rule or regulation hereafter adopted by the SEC. Upon the request of
Xxxxx, Xxxxxx will deliver to Xxxxx a written statement as to whether it has
complied with the requirements of this Paragraph 6.1.
ARTICLE VII
MISCELLANEOUS
7.1 Amendments and Waivers. This Agreement may be amended and Charys
-------------------------
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if Xxxxxx shall have obtained the written
consent to such amendment, action or omission to act, of Frost.
7.2 Nominees for Beneficial Owners. In the event that any of the
----------------------------------
Registrable Shares are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of the
Registrable Shares for purposes of any request or other action by any holder or
holders of Registrable Shares pursuant to this Agreement or any determination of
any number or percentage of shares of Registrable Shares held by a holder or
holders of Registrable Shares contemplated by this Agreement. If the beneficial
owner of any Registrable Shares so elects, Charys may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of the
Registrable Shares.
7.3 Notices. Except as otherwise provided in this Agreement, all
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notices, requests and other communications to any person provided for hereunder
shall be in writing and shall be given to such person:
(a) In the case of a party hereto other than Xxxxxx, at such
address as such party shall have furnished to Charys in writing; or
(b) In the case of Charys, at 0000 Xxxxxxxxx Xxxxxx Xxxx, Xxxxx
X000, Xxxxxxx, Xxxxxxx 00000, to the attention of its President, or at such
other address, or to the attention of such other officer, as Xxxxxx shall have
furnished to Frost.
Each such notice, request or other communication shall be effective (i) if
given by mail, 72 hours after such communication is deposited in the mail with
first class postage prepaid, addressed as aforesaid or (ii) if given by any
other means (including, without limitation, by fax or air courier), when
delivered at the address specified above, provided that any such notice, request
or communication shall not be effective until received.
7.4 Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of and be enforceable by the parties hereto. In addition, and whether or
not any express assignment shall have been made, the provisions of this
Agreement which are for the benefit of the parties hereto other than Xxxxxx
shall also be for the benefit of and enforceable by any subsequent holder of any
of the Registrable Shares, and the term "Frost" in this Agreement shall be
deemed to include such other holder of Registrable Shares; provided that any
such transferee of Registrable Shares assumes in writing the respective
obligations of Frost under this Agreement.
9
7.5 Descriptive Headings. The descriptive headings of the several
---------------------
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
7.6 Governing Law. This Agreement shall be governed by, and construed
-------------
in accordance with, the laws of the State of Texas, without giving effect to
applicable principles of conflicts of law.
7.7 Jurisdiction. This Agreement shall be exclusively governed by and
------------
construed in accordance with the laws of the State of Texas. If any action is
brought among the parties with respect to this Agreement or otherwise, by way of
a claim or counterclaim, the parties agree that in any such action, and on all
issues, the parties irrevocably waive their right to a trial by jury. Exclusive
jurisdiction and venue for any such action shall be the State Courts of Texas.
In the event suit or action is brought by any party under this Agreement to
enforce any of its terms, or in any appeal therefrom, it is agreed that the
prevailing party shall be entitled to reasonable attorneys fees to be fixed by
the arbitrator, trial court, and/or appellate court.
7.8 Entire Agreement. This Agreement embodies the entire agreement
-----------------
and understanding between Xxxxxx and Frost relating to the subject matter hereof
and supersedes all prior agreements and understandings relating to such subject
matter.
7.9 Severability. If any provision of this Agreement, or the
------------
application of such provisions to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.
7.10 Binding Effect. All the terms and provisions of this Agreement
---------------
shall be binding upon, inure to the benefit of, and be enforceable by the
parties and their respective administrators, executors, legal representatives,
heirs, successors and assignees.
7.11 Preparation of Agreement. This Agreement shall not be construed
--------------------------
more strongly against any party regardless of who is responsible for its
preparation. The parties acknowledge each contributed and is equally
responsible for its preparation.
7.12 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
-----------------------------------------------------
or delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty, covenant or agreement herein, nor
shall any single or partial exercise of any such right preclude other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
7.13 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original, but all of which taken
together shall constitute one and the same agreement. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
10
IN WITNESS WHEREOF, Xxxxx and Xxxxxx have executed this Agreement as of the
date first written above.
CHARYS HOLDING COMPANY, INC.
By
--------------------------------------
Xxxxx X. Xxx, Xx., President
THE FROST NATIONAL BANK
By
--------------------------------------
, Vice President
-------------
Attachment:
-----------
Attachment A Certificate of Designation of the Charys Series B Convertible
Preferred Stock
11
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS OF
SERIES B CONVERTIBLE PREFERRED STOCK OF
CHARYS HOLDING COMPANY, INC.
I, Xxxxx X. Xxx, Xx., President of Charys Holding Company, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), in accordance with the provisions of Section 151 of the Delaware
General Corporation Law, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors of the
Company (the "Board") by the Certificate of Incorporation of the Company, the
Board on April 28th, 2005, adopted the following resolution creating a series of
400,000 preferred shares of the par value of $0.001 per share designated as
"Series B Convertible Preferred Stock":
RESOLVED, that pursuant to the authority granted to and vested in the Board
in accordance with the provisions of the Certificate of Incorporation of the
Company, a series of preferred stock of the Company be, and it hereby is,
created, and that the designation and amount thereof and the relative rights and
preferences of the shares of such series, called the "Series B Convertible
Preferred Stock," are as follows:
1. Dividends. Notwithstanding anything herein to the contrary, and
---------
except as may otherwise be provided in Paragraph 7 hereof, the holders of
outstanding shares of the Series B Convertible Preferred Stock shall not be
entitled to receive any dividends, whether in form of cash, stock, or other
property.
2. Redemption Rights. Notwithstanding anything herein to the contrary,
------------------
the Company shall not be entitled to redeem the whole or any part of the
outstanding Series B Convertible Preferred Stock.
3. Liquidation Rights. Upon the dissolution, liquidation or winding
-------------------
up of the Company, whether voluntary or involuntary, the holders of the then
outstanding shares of Series B Convertible Preferred Stock shall be entitled to
receive out of the assets of the Company the sum of $0.001 per share (the
"Liquidation Rate") before any payment or distribution shall be made on shares
of the common stock of the Company, par value $0.001 per share (the "Common
Stock"), or any other class of capital stock of the Company ranking junior to
the Series B Convertible Preferred Stock.
(a) The sale, conveyance, exchange or transfer (for cash, shares
of stock, securities or other consideration) of all or substantially all the
property and assets of the Company shall be deemed a dissolution, liquidation or
winding up of the Company for purposes of this Paragraph 3, but the merger or
consolidation of the Company into or with any other corporation, or the merger
or consolidation of any other corporation into or with the Company, shall not be
deemed a dissolution, liquidation or winding up, voluntary or involuntary, for
purposes of this Paragraph 3.
(b) After the payment to the holders of shares of the Series B
Convertible Preferred Stock of the full preferential amounts fixed by this
Paragraph 3 for shares of the Series B Convertible Preferred Stock, the holders
of the Series B Convertible Preferred Stock as such shall have no right or claim
to any of the remaining assets of the Company.
(c) In the event the assets of the Company available for
distribution to the holders of the Series B Convertible Preferred Stock upon
dissolution, liquidation or winding up of the Company shall be insufficient to
pay in full all amounts to which such holders are entitled pursuant to this
Paragraph 3, no distribution shall be made on account of any shares of a class
or series of capital stock of the Company ranking on a parity with the shares of
the Series B Convertible Preferred Stock, if any, upon such dissolution,
liquidation or winding up unless proportionate distributive amounts shall be
paid on account of the shares of the Series B Convertible Preferred Stock,
ratably, in proportion to the full distributive amounts for which holders of all
such parity shares are respectively entitled upon such dissolution, liquidation
or winding up.
1
4. Conversion of Series B Convertible Preferred Stock. At any time,
----------------------------------------------------
the holder of shares of the Series B Convertible Preferred Stock shall have the
right, at such holder's option, to convert any number of shares of the Series B
Convertible Preferred Stock into shares of the Common Stock. Such right to
convert shall commence as of the date the shares of the Series B Convertible
Preferred Stock are issued to such holder (the "Issue Date") and shall continue
thereafter for a period of 10 years, such period ending on the tenth anniversary
of the Issue Date. In the event that the holder of the Series B Convertible
Preferred Stock elects to convert such shares into Common Stock, the holder
shall deliver to the Company a Conversion Notice in the form of Attachment A and
shall have 60 days from the date of such notice in which to tender the shares of
Series B Convertible Preferred Stock being converted to the Company. Any such
conversion shall be upon the other following terms and conditions:
(a) Conversion Rate. Subject to adjustment as provided herein,
----------------
each share of the Series B Convertible Preferred Stock shall be convertible into
one fully paid and nonassessable share of the Common Stock (the "Conversion
Rate").
(b) Adjustment of Conversion Rate for Dilution and Other Events.
-------------------------------------------------------------
In order to prevent dilution of the rights granted to the holders of shares of
the Series B Convertible Preferred Stock, the Conversion Rate will be subject to
adjustment from time to time as follows:
(i) Adjustment of Conversion Rate upon Subdivision or
-------------------------------------------------------
Combination of the Common Stock. If the Company at any time subdivides (by any
---------------------------------
stock split, stock dividend, recapitalization or otherwise) the issued and
outstanding or authorized Common Stock into a greater number of shares, the
Conversion Rate in effect immediately prior to such subdivision will be
proportionately increased. If the Company at any time combines (by combination,
reverse stock split or otherwise) the issued and outstanding or authorized
Common Stock into a smaller number of shares, the Conversion Rate in effect
immediately prior to such combination will be proportionately decreased.
(ii) Reorganization, Reclassification, Consolidation, Merger,
--------------------------------------------------------
or Sale. Any dividend or distribution payable or to be made in Common Stock or
--------
other shares of stock of the Company or any recapitalization, reorganization,
reclassification, consolidation, merger, or other similar transaction which is
effected in such a way that holders of the Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock, securities or assets
with respect to or in exchange for the Common Stock is referred to herein as an
"Organic Change." Prior to the consummation of any Organic Change, the Company
will make appropriate provision, in form and substance satisfactory to the
holders of a majority of the outstanding shares of the Series B Convertible
Preferred Stock, to ensure that each of the holders of shares of the Series B
Convertible Preferred Stock will thereafter have the right to acquire and
receive in lieu of or in addition to, as the case may be, the shares of the
Common Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Series B Convertible Preferred Stock, such shares of
stock, securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of the Common Stock immediately theretofore
acquirable and receivable upon the conversion of such holder's shares of the
Series B Convertible Preferred Stock had such Organic Change not taken place. In
any such case, the Company will make appropriate provision, in form and
substance satisfactory to the holders of a majority of the outstanding shares of
the Series B Convertible Preferred Stock, with respect to such holders' rights
and interests to ensure that the provisions of this paragraph and paragraph 4(c)
below will thereafter be applicable to the Series B Convertible Preferred Stock.
The Company will not effect any such consolidation or merger, unless prior to
the consummation thereof the successor entity resulting from such consolidation
or merger, if other than the Company, assumes, by written instrument, in form
and substance satisfactory to the holders of a majority of the outstanding
shares of the Series B Convertible Preferred Stock, the obligation to deliver to
each holder of shares of the Series B Convertible Preferred Stock such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
that such holder may be entitled to acquire.
(iii) Notices. Immediately upon any adjustment of the
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Conversion Rate, the Company will give written notice of such adjustment to each
holder of shares of the Series B Convertible Preferred Stock, setting forth in
reasonable detail and certifying the calculation of such adjustment. The Company
will give written notice to each holder of shares of the Series B Convertible
Preferred Stock at least 20 days prior to the date on which the Company closes
its books or takes a record with respect to any dividend or distribution upon
the Common Stock, or with respect to any pro rata subscription offer to holders
of the Common Stock. The Company
2
will also give written notice to each holder of shares of the Series B
Convertible Preferred Stock at least 20 days prior to the date on which any
Organic Change, dissolution or liquidation will take place.
(c) Purchase Rights. If at any time the Company grants, issues or
---------------
sells any options, convertible securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of the Common Stock
(the "Purchase Rights"), then each holder of shares of the Series B Convertible
Preferred Stock will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of the Common Stock
acquirable upon complete conversion of the holder's shares of the Series B
Convertible Preferred Stock immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of the Common Stock are
to be determined for the grant, issue or sale of such Purchase Rights.
(d) Mechanics of Conversion. To convert shares of the Series B
-------------------------
Convertible Preferred Stock into full shares of the Common Stock on any date
(the "Conversion Date"), the holder thereof shall (i) deliver or transmit by
facsimile to the Company, for receipt on or prior to 11:59 p.m., Eastern Time,
on the Conversion Date, a copy of a fully executed notice of conversion in the
form attached hereto as Attachment A (the "Conversion Notice"), and (ii)
-------------
surrender to a common carrier for delivery to the Company as soon as practicable
following such date, the certificates (each a "Preferred Stock Certificate")
representing the shares of the Series B Convertible Preferred Stock being
converted, or an indemnification undertaking with respect to such shares in the
case of the loss, theft or destruction thereof, and the originally executed
Conversion Notice. Upon receipt by the Company of a facsimile copy of a
Conversion Notice, the Company shall immediately send, via facsimile, a
confirmation of receipt of such Conversion Notice to such holder. Within five
business days of the Company's receipt of the originally executed Conversion
Notice and the holder's Preferred Stock Certificate(s), the Company shall issue
and surrender to a common carrier for overnight delivery to the address as
specified in the Conversion Notice, a certificate, registered in the name of the
holder or its designee, for the number of shares of the Common Stock to which
the holder is entitled.
(e) Record Holder. The person or persons entitled to receive
--------------
shares of the Common Stock issuable upon conversion of shares of the Series B
Convertible Preferred Stock shall be treated for all purposes as the record
holder or holders of such shares of the Common Stock on the Conversion Date.
(f) Fractional Shares. The Company shall not be required to issue
------------------
any fraction of a share of the Common Stock upon any conversion. All shares of
the Common Stock, including fractions thereof, issuable upon conversion of more
than one share of the Series B Convertible Preferred Stock shall be aggregated
for purposes of determining whether the conversion would result in the issuance
of a fraction of a share of the Common Stock. If, after such aggregation, the
issuance would result in the issuance of a fraction of it share of the Common
Stock, the Company shall round such fraction of a share of the Common Stock up
or down to the nearest whole share.
(g) Reissuance of Certificates. In the event of a conversion of
----------------------------
less than all of the shares of the Series B Convertible Preferred Stock
represented by a particular Preferred Stock Certificate, the Company shall
promptly cause to be issued and delivered to the holder of such Series B
Convertible Preferred Stock a new Series B Convertible Preferred Stock
Certificate representing the remaining shares of the Series B Convertible
Preferred Stock which were not corrected.
5. Reservation of Shares. The Company shall, so long as any of the
------------------------
shares of the Series B Convertible Preferred Stock are outstanding, reserve and
keep available out of its authorized and unissued shares of the Common Stock,
solely for the purpose of effecting the conversion of the shares of the Series B
Convertible Preferred Stock, the number of shares of the Common Stock as shall
from time to time be sufficient to effect the conversion of all of the
outstanding shares of the Series B Convertible Preferred Stock.
6. Seniority. The shares of the Series B Convertible Preferred Stock
----------
shall rank superior to the shares of the Company's Common Stock, and to the
shares of all other series of the Company's preferred stock. The rights of the
shares of the Common Stock and all other series of the Company's preferred stock
shall be subject to the preferences and relative rights of the shares of the
Series B Convertible Preferred Stock. Without the prior
3
written consent of the holders of not less than two-thirds (2/3) of the
outstanding shares of the Series B Convertible Preferred Stock, the Company
shall not hereafter authorize or issue additional or other capital stock that is
of senior or equal rank to the shares of the Series B Convertible Preferred
Stock in respect of the preferences as to distributions and payments upon the
liquidation, dissolution and winding up of the Company described in Paragraph 3
above.
7. Restriction on Dividends. If any shares of the Series B Convertible
-------------------------
Preferred Stock are outstanding, the Company shall not, without the prior
written consent of the holders of not less than two-thirds (2/3) of the then
outstanding shares of the Series B Convertible Preferred Stock, directly or
indirectly declare, pay or make any dividends or other distributions upon any of
the Common Stock or any other series of the Company's preferred stock.
Notwithstanding the foregoing, this paragraph shall not prohibit the Company
from declaring and paying a dividend in cash with respect to the shares of the
Common Stock or any other series of the Company's preferred stock so long as the
Company simultaneously pays each holder of shares of the Series B Convertible
Preferred Stock an amount in cash equal to the amount such holder would have
received had all of such holder's shares of the Series B Convertible Preferred
Stock been converted to shares of the Common Stock on the business day prior to
the record date for any such dividend.
8. Vote to Change the Terms of the Series B Convertible Preferred
--------------------------------------------------------------------
Stock. Without the prior written consent of the holders of not less than
-----
two-thirds (2/3) of the outstanding shares of the Series B Convertible Preferred
Stock, the Company shall not amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Series B Convertible Preferred
Stock.
9. Lost or Stolen Certificates. Upon receipt by the Company of
------------------------------
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Preferred Stock Certificates representing shares of the Series
B Convertible Preferred Stock, and, in the case of loss, theft or destruction,
of any indemnification undertaking or bond, in the Company's discretion, by the
holder to the Company and, in the case of mutilation, upon surrender and
cancellation of the Preferred Stock certificate(s), the Company shall execute
and deliver new Series B Convertible Preferred Stock certificate(s) of like
tenor and date; provided, however, the Company shall not be obligated to
re-issue Series B Convertible Preferred Stock certificates if the holder thereof
contemporaneously requests the Company to convert such shares of the Series B
Convertible Preferred Stock into the Common Stock.
10. Voting. The holders of the Series B Convertible Preferred Stock
------
shall have no voting rights on any matter submitted to the stockholders of the
Company for their vote, waiver, release or other action, or be considered in
connection with the establishment of a quorum, except as may otherwise be
expressly required by law or by the applicable stock exchange rules.
The Resolution was duly adopted by all of the directors of the Company as
required by Section 151 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Designation, Preferences and Rights on behalf of the Company this 29th day of
April, 2005.
CHARYS HOLDING COMPANY, INC.
By /s/ Xxxxx X. Xxx, Xx.
-------------------------------------------
Xxxxx X. Xxx, Xx., Chief Executive Officer
4
THE STATE OF GEORGIA *
*
COUNTY OF XXXXXX *
On this 29th day of April, 2005, before me, the undersigned authority,
personally appeared Xxxxx X. Xxx, Xx., the President of Charys Holding Company,
Inc., a Delaware corporation, known to me to be the person whose name is
subscribed to the within instrument, and acknowledged that he executed the same
for the purposes and consideration therein expressed, and as the act and deed of
said corporation, and who also upon oath swore that the statements therein
contained are true and correct.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
----------------------------------------
Notary Public for the State of Georgia
Printed Name:
---------------------------
My Commission Expires:
------------------
5
ATTACHMENT A
CHARYS HOLDING COMPANY, INC. CONVERSION NOTICE
In accordance with and pursuant to the provisions of the Certificate of
Designation Establishing Series B Convertible Preferred Stock of Charys Holding
Company, Inc., the undersigned hereby elects to convert the number of shares of
Series B Convertible Preferred Stock, par value $0.001 per share, of Charys
Holding Company, Inc. (the "Company") indicated below into shares of the common
stock, par value $0.001 per share (the "Common Stock"), of the Company, by
tendering the stock certificate(s) representing the share(s) of the Series B
Convertible Preferred Stock hereinafter described as of the date specified
below.
The undersigned acknowledges that the securities issuable to the
undersigned upon conversion of shares of the Series B Convertible Preferred
Stock may not be sold, pledged, hypothecated or otherwise transferred unless
such securities are registered under the Securities Act of 1933, as amended, and
any other applicable securities law, or the Company has received an opinion of
counsel satisfactory to it that registration is not required. A legend in
substantially the following form will be placed on any certificates or other
documents evidencing the securities to be issued upon any conversion of the
shares of the Series B Convertible Preferred Stock:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT OR DOCUMENT
HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAW OF ANY STATE. WITHOUT SUCH REGISTRATION,
SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED EXCEPT UPON DELIVERY TO THE COMPANY OF
AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH
TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
1933, AS AMENDED, THE SECURITIES LAW OF ANY STATE, OR ANY
RULE OR REGULATION PROMULGATED THEREUNDER.
Date of Conversion:
--------------------------
Number of shares of the Series B Convertible Preferred Stock to be converted:
----------------------------------------
Stock certificate no(s). of the shares of the Series B Convertible Preferred
Stock to be converted:
--------------------
Conversion Rate:
-----------------------------
Number of shares of the Common Stock to be issued:
---------------------------------------------
Name in which shares of the Common Stock are to be issued:
---------------------------------------------
---------------------------------------------
Signature
---------------------------------------------
Printed Name and Address
---------------------------------------------
EXHIBIT D
9
[GRAPHIC OMITTED]
PROMISSORY NOTE
---------------
(Fixed Rate)
$300,000.00 April 25, 2005
For value received, CHARYS HOLDING COMPANY, INC., a Delaware corporation, as
principal ("Borrower"), promises to pay to the order of THE FROST NATIONAL BANK,
a national banking association ("Lender") at P.O. Box 1600, San Antonio, Texas
78296, or at such other address as Lender shall from time to time specify in
writing, the principal sum of THREE HUNDRED THOUSAND AND NO/100 DOLLARS
($300,000.00), in legal and lawful money of the United States of America, with
interest on the outstanding principal from the date advanced until paid at the
rate set out below. Interest shall be computed on a per annum basis of a year of
360 days and for the actual number of days elapsed, unless such calculation
would result in a rate greater than the highest rate permitted by applicable
law, in which case interest shall be computed on a per annum basis of a year of
365 days or 366 days in a leap year, as the case may be.
1. Payment Terms.
-------------
The entire amount hereof, principal and interest then remaining unpaid,
shall be then due and payable on _______, 2006 [thirteen months after date];
interest being calculated on the unpaid principal each day principal is
outstanding and all payments made credited to any collection costs and late
charges, to the discharge of the interest accrued and to the reduction of the
principal, in such order as Lender shall determine.
2. Late Charge. If a payment is made 10 days or more late, Borrower
------------
will be charged, in addition to interest, a delinquency charge of (i) 5% of the
unpaid portion of the regularly scheduled payment, or (ii) $250.00, whichever is
less. Additionally, upon maturity of this Note, if the outstanding principal
balance (plus all accrued but unpaid interest) is not paid within 10 days of the
maturity date, Borrower will be charged a delinquency charge of (i) 5% of the
sum of the outstanding principal balance (plus all accrued but unpaid interest),
or (ii) $250.00, whichever is less. Xxxxxxxx agrees with Lender that the charges
set forth herein are reasonable compensation to Lender for the handling of such
late payments.
3. Interest Rate. The unpaid principal balance of this Note shall
--------------
bear interest prior to maturity (however such maturity is brought about) at a
fixed rate of twelve percent (12%) per annum.
4. Default Rate. Matured unpaid principal and interest shall bear
-------------
interest from date of maturity until paid at (a) the highest rate permitted by
applicable law, or (b) if no such maximum rate is established by applicable law,
at the rate stated above plus five percent (5%) per annum.
5. Prepayment. Borrower reserves the right to prepay, prior to
----------
maturity, all or any part of the principal of this Note without penalty. Any
prepayments shall be applied first to accrued interest and then to principal.
Borrower will provide written notice to the holder of this Note of any such
prepayment of all or any part of the principal at the time thereof. All payments
and prepayments of principal or interest on this Note shall be made in lawful
money of the United States of America in immediately available funds, at the
address of Lender indicated above, or such other
place as the holder of this Note shall designate in writing to Borrower. All
partial prepayments of principal shall be applied to the last installments
payable in their inverse order of maturity.
6. Default. It is expressly provided that upon default in the
-------
punctual payment of this Note or any part hereof, principal or interest, as the
same shall become due and payable, or upon the occurrence of an event of default
specified in any of the other Loan Documents (as defined below), the holder of
this Note may, at its option, without further notice or demand, (i) declare the
outstanding principal balance of and accrued but unpaid interest on this Note at
once due and payable, (ii) refuse to advance any additional amounts under this
Note, (iii) foreclose all liens securing payment hereof, (iv) pursue any and all
other rights, remedies and recourses available to the holder hereof, including
but not limited to any such rights, remedies or recourses under the Loan
Documents, at law or in equity, or (v) pursue any combination of the foregoing;
and in the event default is made in the prompt payment of this Note when due or
declared due, and the same is placed in the hands of an attorney for collection,
or suit is brought on same, or the same is collected through probate, bankruptcy
or other judicial proceedings, then the Borrower agrees and promises to pay all
costs of collection, including reasonable attorney's fees.
7. Joint and Several Liability; Waiver. Each maker, signer, surety and
------------------------------------
endorser hereof, as well as all heirs, successors and legal representatives of
said parties, shall be directly and primarily, jointly and severally, liable for
the payment of all indebtedness hereunder. Lender may release or modify the
obligations of any of the foregoing persons or entities, or guarantors hereof,
in connection with this loan without affecting the obligations of the others.
All such persons or entities expressly waive presentment and demand for payment,
notice of default, notice of intent to accelerate maturity, notice of
acceleration of maturity, protest, notice of protest, notice of dishonor, and
all other notices and demands for which waiver is not prohibited by law, and
diligence in the collection hereof; and agree to all renewals, extensions,
indulgences, partial payments, releases or exchanges of collateral, or taking of
additional collateral, with or without notice, before or after maturity. No
delay or omission of Lender in exercising any right hereunder shall be a waiver
of such right or any other right under this Note.
8. No Usury Intended; Usury Savings Clause. In no event shall interest
---------------------------------------
contracted for, charged or received hereunder, plus any other charges in
connection herewith which constitute interest, exceed the maximum interest
permitted by applicable law. The amounts of such interest or other charges
previously paid to the holder of the Note in excess of the amounts permitted by
applicable law shall be applied by the holder of the Note to reduce the
principal of the indebtedness evidenced by the Note, or, at the option of the
holder of the Note, be refunded. To the extent permitted by applicable law,
determination of the legal maximum amount of interest shall at all times be made
by amortizing, prorating, allocating and spreading in equal parts during the
period of the full stated term of the loan and indebtedness, all interest at any
time contracted for, charged or received from the Borrower hereof in connection
with the loan and indebtedness evidenced hereby, so that the actual rate of
interest on account of such indebtedness is uniform throughout the term hereof.
9. Security. This Note is secured by, inter alia, the following:
-------- ----- ----
(a) a separate Guaranty Agreement from each of Contemporary
Constructors, Inc., CCI Telecon, Inc., CCI Integrated Solutions, Inc.,
Berkshire Wireless, Inc. and Xxxxxxx X. Xxxxx.
2
This Note and all other documents evidencing, securing, governing, guaranteeing
and/or pertaining to this Note, including but not limited to those documents
described above, are hereinafter collectively referred to as the "Loan
Documents." The holder of this Note is entitled to the benefits and security
provided in the Loan Documents.
10. Texas Finance Code. In no event shall Chapter 346 of the Texas
---------------------
Finance Code (which regulates certain revolving loan accounts and revolving
tri-party accounts) apply to this Note. To the extent that Chapter 303 of the
Texas Finance Code is applicable to this Note, the "weekly ceiling" specified in
such article is the applicable ceiling; provided that, if any applicable law
permits greater interest, the law permitting the greatest interest shall apply.
11. Governing Law, Venue. This Note is being executed and delivered,
-----------------------
and is intended to be performed in the State of Texas. Except to the extent that
the laws of the United States may apply to the terms hereof, the substantive
laws of the State of Texas shall govern the validity, construction, enforcement
and interpretation of this Note. In the event of a dispute involving this Note
or any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Bexar County, Texas.
12. Purpose of Loan. Xxxxxxxx agrees that no advances under this Note
------------------
shall be used for personal, family or household purposes, and that all advances
hereunder shall be used solely for business, commercial, investment, or other
similar purposes.
13. Captions. The captions in this Note are inserted for convenience
---------
only and are not to be used to limit the terms herein.
14. Financial Information. Borrower agrees to promptly furnish such
-----------------------
financial information and statements, including financial statements in a format
acceptable to Lender, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition and business operations
as Lender may request from time to time. This provision shall not alter the
obligation of Borrower to deliver to Lender any other financial statements or
reports pursuant to the terms of any other loan documents executed in connection
with this Note.
BORROWER:
---------
CHARYS HOLDING COMPANY, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxx, Xx.
-------------------------------------
Xxxxx X. Xxx, Xx.
Chairman and Chief Executive Officer
3
EXHIBIT E-1
10
[GRAPHIC OMITTED]
GUARANTY AGREEMENT
------------------
THIS GUARANTY AGREEMENT ("Guaranty") is made as of the __ day of
April 25, 2005, by Guarantor (as hereinafter defined) for the benefit of
Lender (as hereinafter defined).
1. Definitions. As used in this Guaranty, the following terms shall
------------
have the meanings indicated below:
(a) The term "Lender" shall mean THE FROST NATIONAL BANK, a national
banking association, whose address for notice purposes is the following:
P.O. Box 1600, San Antonio, Texas 78296
Attn: Xxxx Xxxxxx
(b) The term "Borrower" (whether one or more) shall mean the following:
Charys Holding Company, Inc., a Delaware corporation
(c) The term "Guarantor" shall mean Contemporary Constructors, Inc., a
Texas corporation, whose address for notice purposes is the following:
00000 Xxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx
(d) The term "Guaranteed Indebtedness" shall mean (i) all principal
--------------------------
indebtedness owing by Borrower to Lender now existing or hereafter arising under
or evidenced by that one certain Promissory Note dated April 25, 2005, in the
original principal amount of $300,000.00, executed by Xxxxxxxx and payable to
the order of Lender and, (ii) all accrued but unpaid interest on any of the
indebtedness described in (i) above, (iii) all obligations of Borrower to Lender
under any documents evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) and (ii) above (collectively, the
"Loan Documents"), (iv) all costs and expenses incurred by Lender in
connection with the collection and administration of all or any part of the
indebtedness and obligations described in (i), (ii) and (iii) above or the
protection or preservation of, or realization upon, the collateral securing all
or any part of such indebtedness and obligations, including without limitation
all reasonable attorneys' fees, and (v) all renewals, extensions, modifications
and rearrangements of the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above.
2. Obligations. As an inducement to Lender to extend or continue to
------------
extend credit and other financial accommodations to Borrower, Guarantor, for
value received, does hereby unconditionally and absolutely guarantee the prompt
and full payment and performance of the Guaranteed Indebtedness when due or
declared to be due and at all tunes thereafter.
3. Character of Obligations.
-------------------------
(a) This is an absolute, continuing and unconditional guaranty of
payment and not of collection and if at any time or from time to time there is
no outstanding Guaranteed Indebtedness, the obligations of Guarantor with
respect to any and all Guaranteed Indebtedness incurred thereafter shall not be
affected. This Guaranty and the Guarantor's obligations hereunder are
irrevocable and, in the event of Guarantor's death, shall be binding upon
Guarantor's estate. All of the Guaranteed Indebtedness shall be conclusively
presumed to have been made or acquired in acceptance hereof. Guarantor shall be
liable, jointly and severally, with Borrower and any other guarantor of all or
any part of the Guaranteed Indebtedness.
(b) Lender may, at its sole discretion and without impairing its rights
hereunder, (i) apply any payments on the Guaranteed Indebtedness that Lender
receives from Borrower or any other source other than Guarantor to that portion
of the Guaranteed Indebtedness, if any, not guaranteed hereunder, and (ii) apply
any proceeds it receives as a result of the foreclosure or other realization on
any collateral for the Guaranteed Indebtedness to that portion, if any, of the
Guaranteed Indebtedness not guaranteed hereunder or to any other indebtedness
secured by such collateral.
(c) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the existence of any
other guaranty or the payment by any other guarantor of all or any part of the
Guaranteed Indebtedness and, in the event Paragraph 2 above partially limits
-----------
Guarantor's obligations under this Guaranty, Guarantor's obligations hereunder
shall continue until Xxxxxx has received payment in full of the Guaranteed
Indebtedness.
(d) Guarantor's obligations hereunder shall not be released,
diminished, impaired, reduced or affected by, nor shall any provision contained
herein be deemed to be a limitation upon, the amount of credit which Lender may
extend to Borrower, the number of transactions between Lender and Borrower,
payments by Borrower to Lender or Xxxxxx's allocation of payments by Borrower.
(e) Without further authorization from or notice to Guarantor,
Lender may compromise, accelerate, or otherwise alter the time or manner for
the payment of the Guaranteed Indebtedness, increase or reduce the rate of
interest thereon, or release or add any one or more guarantors or endorsers, or
allow substitution of or withdrawal of collateral or other security and release
collateral and other security or subordinate the same.
4. Representations and Warranties. Guarantor hereby represents and
---------------------------------
warrants the following to Lender:
(a) This Guaranty may reasonably be expected to benefit, directly or
indirectly, Guarantor, and (i) if Guarantor is a corporation, the Board of
Directors of Guarantor has determined that this Guaranty may reasonably be
expected to benefit, directly or indirectly, Guarantor, or (ii) if Guarantor is
a partnership, the requisite number of its partners have determined that this
Guaranty may reasonably be expected to benefit, directly or indirectly,
Guarantor; and
2
(b) Guarantor is familiar with, and has independently reviewed the
books and records regarding, the financial condition of Xxxxxxxx and is familiar
with the value of any and all collateral intended to be security for the payment
of all or any part of the Guaranteed Indebtedness; provided, however, Guarantor
is not relying on such financial condition or collateral as an inducement to
enter into this Guaranty; and
(c) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition of Borrower and
Guarantor is not relying on Lender to provide such information to Guarantor
either now or in the future; and
(d) Guarantor has the power and authority to execute, deliver and
perform this Guaranty and any other agreements executed by Guarantor
contemporaneously herewith, and the execution, delivery and performance of this
Guaranty and any other agreements executed by Guarantor contemporaneously
herewith do not and will not violate (i) any agreement or instrument to which
Guarantor is a party, (ii) any law, rule, regulation or order of any
governmental authority to which Guarantor is subject, or (iii) its articles or
certificate of incorporation or bylaws, if Guarantor is a corporation, or its
partnership agreement, if Guarantor is a partnership; and
(e) Neither Lender nor any other party has made any representation,
warranty or statement to Guarantor in order to induce Guarantor to execute this
Guaranty; and
(f) The financial statements and other financial information regarding
Guarantor heretofore and hereafter delivered to Lender are and shall be true and
correct in all material respects and fairly present the financial position of
Guarantor as of the dates thereof, and no material adverse change has occurred
in the financial condition of Guarantor reflected in the financial statements
and other financial information regarding Guarantor heretofore delivered to
Lender since the date of the last statement thereof; and
(g) As of the date hereof, and after giving effect to this Guaranty and
the obligations evidenced hereby, (i) Guarantor is and will be solvent, (ii) the
fair saleable value of Guarantor's assets exceeds and will continue to exceed
its liabilities (both fixed and contingent), (iii) Guarantor is and will
continue to be able to pay its debts as they mature, and (iv) if Guarantor is
not an individual, Guarantor has and will continue to have sufficient capital to
carry on its business and all businesses in which it is about to engage.
5. Covenants. Guarantor hereby covenants and agrees with Xxxxxx as
----------
follows:
(a) Guarantor shall not, so long as its obligations under this Guaranty
continue, transfer or pledge any material portion of its assets for less than
full and adequate consideration; and
3
(b) Guarantor shall promptly furnish to Lender at any time and from
time to time such financial statements and other financial information of
Guarantor as the Lender may require, in form and substance satisfactory to
Lender; and
(c) Guarantor shall comply with all terms and provisions of the Loan
Documents that apply to Guarantor; and
(d) Guarantor shall promptly inform Lender of (i) any litigation or
governmental investigation against Guarantor or affecting any security for all
or any part of the Guaranteed Indebtedness or this Guaranty which, if determined
adversely, might have a material adverse effect upon the financial condition of
Guarantor or upon such security or might cause a default under any of the Loan
Documents, (ii) any claim or controversy which might become the subject of such
litigation or governmental investigation, and (iii) any material adverse change
in the financial condition of Guarantor.
6. Consent and Waiver.
---------------------
(a) Guarantor waives (i) promptness, diligence and notice of acceptance
of this Guaranty and notice of the incurring of any obligation, indebtedness or
liability to which this Guaranty applies or may apply and waives presentment for
payment, notice of nonpayment, protest, demand, notice of protest, notice of
intent to accelerate, notice of acceleration, notice of dishonor, diligence in
enforcement and indulgences of every kind, and (ii) the taking of any other
action by Xxxxxx, including without limitation giving any notice of default or
any other notice to, or making any demand on, Borrower, any other guarantor of
all or any part of the Guaranteed Indebtedness or any other party.
(b) Guarantor waives any rights Guarantor has under, or any
requirements imposed by, Chapter 34 of the Texas Business and Commerce Code, as
in effect on the date of this Guaranty or as it may be amended from time to
time.
(c) Lender may at any time, without the consent of or notice to
Guarantor, without incurring responsibility to Guarantor and without impairing,
releasing, reducing or affecting the obligations of Guarantor hereunder: (i)
change the manner, place or terms of payment of all or any part of the
Guaranteed Indebtedness, or renew, extend, modify, rearrange or alter all or any
part of the Guaranteed Indebtedness; (ii) change the interest rate accruing on
any of the Guaranteed Indebtedness (including, without limitation, any periodic
change in such interest rate that occurs because such Guaranteed Indebtedness
accrues interest at a variable rate which may fluctuate from time to time);
(iii) sell, exchange, release, surrender, subordinate, realize upon or otherwise
deal with in any manner and in any order any collateral for all or any part of
the Guaranteed Indebtedness or this Guaranty or setoff against all or any part
of the Guaranteed Indebtedness; (iv) neglect, delay, omit, fail or refuse to
take or prosecute any action for the collection of all or any part of the
Guaranteed Indebtedness or this Guaranty or to take or prosecute any action in
connection with any of the Loan Documents; (v) exercise or refrain from
4
exercising any rights against Borrower or others, or otherwise act or refrain
from acting; (vi) settle or compromise all or any part of the Guaranteed
Indebtedness and subordinate the payment of all or any part of the Guaranteed
Indebtedness to the payment of any obligations, indebtedness or liabilities
which may be due or become due to Lender or others; (vii) apply any deposit
balance, fund, payment, collections through process of law or otherwise or other
collateral of Borrower to the satisfaction and liquidation of the indebtedness
or obligations of Borrower to Lender not guaranteed under this Guaranty; and
(viii) apply any sums paid to Lender by Guarantor, Borrower or others to the
Guaranteed Indebtedness in such order and manner as Lender, in its sole
discretion, may determine.
(d) Should Lender seek to enforce the obligations of Guarantor
hereunder by action in any court or otherwise, Guarantor waives any requirement,
substantive or procedural, that (i) Lender first enforce any rights or remedies
against Borrower or any other person or entity liable to Lender for all or any
part of the Guaranteed Indebtedness, including without limitation that a
judgment first be rendered against Borrower or any other person or entity, or
that Borrower or any other person or entity should be joined in such cause, or
(ii) Lender first enforce rights against any collateral which shall ever have
been given to secure all or any part of the Guaranteed Indebtedness or this
Guaranty. Such waiver shall be without prejudice to Xxxxxx's right, at its
option, to proceed against Borrower or any other person or entity, whether by
separate action or by joinder.
(e) In addition to any other waivers, agreements and covenants of
Guarantor set forth herein, Guarantor hereby further waives and releases all
claims, causes of action, defenses and offsets for any act or omission of
Lender, its directors, officers, employees, representatives or agents in
connection with Xxxxxx's administration of the Guaranteed Indebtedness, except
for Xxxxxx's willful misconduct and gross negligence.
(f) Guarantor grants to Lender a contractual security interest in, and
hereby assigns, conveys, delivers, pledges and transfers to Lender all
Guarantor's right, title and interest in and to Guarantor's accounts with Lender
(whether checking, savings or some other account), including without limitation
all accounts held jointly with someone else and all accounts Guarantor may open
in the future, excluding however all IRA and Xxxxx accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Guarantor authorizes Xxxxxx, to the extent permitted by applicable law, to
charge or setoff all sums owing on the Guaranteed Indebtedness against any and
all such accounts.
7. Obligations Not Impaired.
---------------------------
(a) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the occurrence of any one
or more of the following events: (i) the death, disability or lack of corporate
power of Borrower, Guarantor (except as provided in Paragraph 10 herein) or any
------------
other guarantor of all or any part of the Guaranteed Indebtedness, (ii) any
receivership, insolvency, bankruptcy or other proceedings affecting Borrower,
Guarantor or any other guarantor of all or any part of the Guaranteed
Indebtedness, or any of their respective property; (iii) the partial or total
release or discharge of Borrower or any other guarantor of all or
5
any part of the Guaranteed Indebtedness, or any other person or entity from the
performance of any obligation contained in any instrument or agreement
evidencing, governing or securing all or any part of the Guaranteed
Indebtedness, whether occurring by reason of law or otherwise; (iv) the taking
or accepting of any collateral for all or any part of the Guaranteed
Indebtedness or this Guaranty; (v) the taking or accepting of any other guaranty
for all or any part of the Guaranteed Indebtedness; (vi) any failure by Lender
to acquire, perfect or continue any lien or security interest on collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty; (vii)
the impairment of any collateral securing all or any part of the Guaranteed
Indebtedness or this Guaranty; (viii) any failure by Lender to sell any
collateral securing all or any part of the Guaranteed Indebtedness or this
Guaranty in a commercially reasonable manner or as otherwise required by law;
(ix) any invalidity or unenforceability of or defect or deficiency in any of the
Loan Documents; or (x) any other circumstance which might otherwise constitute a
defense available to, or discharge of, Borrower or any other guarantor of all or
any part of the Guaranteed Indebtedness.
(b) This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of all or any part of the Guaranteed
Indebtedness is rescinded or must otherwise be returned by Lender upon the
insolvency, bankruptcy or reorganization of Borrower, Guarantor, any other
guarantor of all or any part of the Guaranteed Indebtedness, or otherwise, all
as though such payment had not been made.
(c) In the event Borrower is a corporation, joint stock association or
partnership, or is hereafter incorporated, none of the following shall affect
Guarantor's liability hereunder: (i) the unenforceability of all or any part of
the Guaranteed Indebtedness against Borrower by reason of the fact that the
Guaranteed Indebtedness exceeds the amount permitted by law; (ii) the act of
creating all or any part of the Guaranteed Indebtedness is ultra xxxxx; or (iii)
the officers or partners creating all or any part of the Guaranteed Indebtedness
acted in excess of their authority. Guarantor hereby acknowledges that
withdrawal from, or termination of, any ownership interest in Borrower now or
hereafter owned or held by Guarantor shall not alter, affect or in any way limit
the obligations of Guarantor hereunder.
8. Actions Against Guarantor. In the event of a default in the payment
---------------------------
or performance of all or any part of the Guaranteed Indebtedness when such
Guaranteed Indebtedness becomes due, whether by its terms, by acceleration or
otherwise, Guarantor shall, without notice or demand, promptly pay the amount
due thereon to Lender, in lawful money of the United States, at Xxxxxx's address
set forth in Subparagraph l(a) above. One or more successive or concurrent
------------------
actions may be brought against Guarantor, either in the same action in which
Borrower is sued or in separate actions, as often as Lender deems advisable. The
exercise by Lender of any right or remedy under this Guaranty or under any other
agreement or instrument, at law, in equity or otherwise, shall not preclude
concurrent or subsequent exercise of any other right or remedy. The books and
records of Lender shall be admissible as evidence in any action or proceeding
involving this Guaranty and shall be prima facie evidence of the payments made
----- -----
on, and the outstanding balance of, the Guaranteed Indebtedness.
6
9. Payment by Guarantor. Whenever Guarantor pays any sum which is or
----------------------
may become due under this Guaranty, written notice must be delivered to Lender
contemporaneously with such payment. Such notice shall be effective for
purposes of this paragraph when contemporaneously with such payment Lender
receives such notice either by: (a) personal delivery to the address and
designated department of Lender identified in Subparagraph l(a) above, or (b)
-----------------
United States mail, certified or registered, return receipt requested, postage
prepaid, addressed to Lender at the address shown in Subparagraph l(a) above.
-----------------
In the absence of such notice to Lender by Guarantor in compliance with the
provisions hereof, any sum received by Lender on account of the Guaranteed
Indebtedness shall be conclusively deemed paid by Xxxxxxxx.
10. Death of Guarantor. In the event of the death of Guarantor, the
---------------------
obligations of the deceased Guarantor under this Guaranty shall continue as an
obligation against his estate as to (a) all of the Guaranteed Indebtedness that
is outstanding on the date of Guarantor's death, and any renewals or extensions
thereof, and (b) all loans, advances and other extensions of credit made to or
for the account of Borrower on or after the date of Guarantor's death pursuant
to an obligation of Lender under a commitment or agreement described in
Subparagraph l(d) above and made to or with Borrower prior to the date of
------------------
Guarantor's death. The terms and conditions of this Guaranty, including
without limitation the consents and waivers set forth in Paragraph 6 hereof,
-----------
shall remain in effect with respect to the Guaranteed Indebtedness described in
the preceding sentence in the same manner as if Guarantor had not died.
11. Notice of Sale. In the event that Guarantor is entitled to receive
----------------
any notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty,
reasonable notice shall be deemed given when such notice is deposited in the
United States mail, postage prepaid, at the address for Guarantor set forth in
Subparagraph l(c) above, ten (10) days prior to the date any public sale, or
------------------
after which any private sale, of any such collateral is to be held; provided,
---------
however, that notice given in any other reasonable manner or at any other
--------
reasonable time shall be sufficient.
12. Waiver by Xxxxxx. No delay on the part of Lender in exercising
-------------------
any right hereunder or failure to exercise the same shall operate as a waiver of
such right. In no event shall any waiver of the provisions of this Guaranty be
effective unless the same be in writing and signed by an officer of Lender, and
then only in the specific instance and for the purpose given.
13. Successors and Assigns. This Guaranty is for the benefit of Lender,
-----------------------
its successors and assigns. This Guaranty is binding upon Guarantor and
Guarantor's heirs, executors, administrators, personal representatives and
successors, including without limitation any person or entity obligated by
operation of law upon the reorganization, merger, consolidation or other change
in the organizational structure of Guarantor.
14. Costs and Expenses. Guarantor shall pay on demand by Lender all
---------------------
costs and expenses, including without limitation all reasonable attorneys' fees,
incurred by Xxxxxx in
7
connection with the preparation, administration, enforcement and/or collection
of this Guaranty. This covenant shall survive the payment of the Guaranteed
Indebtedness.
15. Severability. If any provision of this Guaranty is held by a
-------------
court of competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall not
impair or invalidate the remainder of this Guaranty and the effect thereof shall
be confined to the provision held to be illegal, invalid or unenforceable.
16. No Obligation. Nothing contained herein shall be construed as an
---------------
obligation on the part of Lender to extend or continue to extend credit to
Borrower.
17. Amendment. No modification or amendment of any provision of this
----------
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by an officer of
Lender, and then shall be effective only in the specific instance and for the
purpose for which given.
18. Cumulative Rights. All rights and remedies of Xxxxxx xxxxxxxxx are
------------------
cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any instrument or agreement, and the
exercise of one or more of such rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of any other rights or remedies.
19. Governing Law, Venue. This Guaranty is intended to be performed in
----------------------
the State of Texas. Except to the extent that the laws of the United States may
apply to the terms hereof, the substantive laws of the State of Texas shall
govern the validity, construction, enforcement and interpretation of this
Guaranty. In the event of a dispute involving this Guaranty or any other
instruments executed in connection herewith, the undersigned irrevocably agrees
that venue for such dispute shall lie in any court of competent jurisdiction in
Bexar County, Texas.
20. Compliance with Applicable Usury Laws. Notwithstanding any other
-----------------------------------------
provision of this Guaranty or of any instrument or agreement evidencing,
governing or securing all or any part of the Guaranteed Indebtedness, Guarantor
and Lender by its acceptance hereof agree that Guarantor shall never be required
or obligated to pay interest in excess of the maximum non- usurious interest
rate as may be authorized by applicable law for the written contracts which
constitute the Guaranteed Indebtedness. It is the intention of Guarantor and
Lender to conform strictly to the applicable laws which limit interest rates,
and any of the aforesaid contracts for interest, if and to the extent payable by
Guarantor, shall be held to be subject to reduction to the maximum non-usurious
interest rate allowed under said law.
21. Gender. Within this Guaranty, words of any gender shall be held and
-------
construed to include the other gender.
22. Captions. The headings in this Guaranty are for convenience only
---------
and shall not define or limit the provisions hereof.
8
EXECUTED as of the date first above written.
GUARANTOR:
----------
CONTEMPORARY CONSTRUCTORS, INC.,
a Texas corporation
By:
-------------------------------------
Xxxxxxx X. Xxxxx, President
9
EXHIBIT E-2
11
[GRAPHIC OMITTED]
GUARANTY AGREEMENT
------------------
THIS GUARANTY AGREEMENT ("Guaranty") is made as of the 25th day of April,
2005, by Guarantor (as hereinafter defined) for the benefit of Lender (as
hereinafter defined).
1. Definitions. As used in this Guaranty, the following terms shall
------------
have the meanings indicated below:
(a) The term "Lender" shall mean THE FROST NATIONAL BANK, a national
banking association, whose address for notice purposes is the following:
P.O. Box 1600, San Antonio, Texas 78296
Attn: Xxxx Xxxxxx
(b) The term "Borrower" (whether one or more) shall mean the following:
Charys Holding Company, Inc., a Delaware corporation
(c) The term "Guarantor" shall mean CCI Telecom, Inc., a Nevada
corporation, whose address for notice purposes is the following:
00000 Xxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X, Xxxxx
(d) The term "Guaranteed Indebtedness" shall mean (i) all principal
--------------------------
indebtedness owing by Borrower to Lender now existing or hereafter arising under
or evidenced by that one certain Promissory Note dated April 25, 2005, in the
original principal amount of $300,000.00, executed by Xxxxxxxx and payable to
the order of Lender and, (ii) all accrued but unpaid interest on any of the
indebtedness described in (i) above, (iii) all obligations of Borrower to Lender
under any documents evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) and (ii) above (collectively, the
"Loan Documents"), (iv) all costs and expenses incurred by Lender in
connection with the collection and administration of all or any part of the
indebtedness and obligations described in (i), (ii) and (iii) above or the
protection or preservation of, or realization upon, the collateral securing all
or any part of such indebtedness and obligations, including without limitation
all reasonable attorneys' fees, and (v) all renewals, extensions, modifications
and rearrangements of the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above.
2. Obligations, As an inducement to Lender to extend or continue to
------------
extend credit and other financial accommodations to Borrower, Guarantor, for
value received, does hereby unconditionally and absolutely guarantee the prompt
and full payment and performance of the Guaranteed Indebtedness when due or
declared to be due and at all times thereafter.
3. Character of Obligations.
-------------------------
(a) This is an absolute, continuing and unconditional guaranty of
payment and not of collection and if at any time or from time to time there is
no outstanding Guaranteed Indebtedness, the obligations of Guarantor with
respect to any and all Guaranteed Indebtedness incurred thereafter shall not be
affected. This Guaranty and the Guarantor's obligations hereunder are
irrevocable and, in the event of Guarantor's death, shall be binding upon
Guarantor's estate. All of the Guaranteed Indebtedness shall be conclusively
presumed to have been made or acquired in acceptance hereof. Guarantor shall be
liable, jointly and severally, with Borrower and any other guarantor of all or
any part of the Guaranteed Indebtedness.
(b) Lender may, at its sole discretion and without impairing its rights
hereunder, (i) apply any payments on the Guaranteed Indebtedness that Lender
receives from Borrower or any other source other than Guarantor to that portion
of the Guaranteed Indebtedness, if any, not guaranteed hereunder, and (ii) apply
any proceeds it receives as a result of the foreclosure or other realization on
any collateral for the Guaranteed Indebtedness to that portion, if any, of the
Guaranteed Indebtedness not guaranteed hereunder or to any other indebtedness
secured by such collateral.
(c) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the existence of any
other guaranty or the payment by any other guarantor of all or any part of the
Guaranteed Indebtedness and, in the event Paragraph 2 above partially limits
-----------
Guarantor's obligations under this Guaranty, Guarantor's obligations hereunder
shall continue until Xxxxxx has received payment in full of the Guaranteed
Indebtedness.
(d) Guarantor's obligations hereunder shall not be released,
diminished, impaired, reduced or affected by, nor shall any provision contained
herein be deemed to be a limitation upon, the amount of credit which Lender may
extend to Borrower, the number of transactions between Lender and Borrower,
payments by Borrower to Lender or Xxxxxx's allocation of payments by Borrower.
(e) Without further authorization from or notice to Guarantor,
Lender may compromise, accelerate, or otherwise alter the time or manner for the
payment of the Guaranteed Indebtedness, increase or reduce the rate of interest
thereon, or release or add any one or more guarantors or endorsers, or allow
substitution of or withdrawal of collateral or other security and release
collateral and other security or subordinate the same.
4. Representations and Warranties. Guarantor hereby represents and
---------------------------------
warrants the following to Lender:
(a) This Guaranty may reasonably be expected to benefit, directly or
indirectly, Guarantor, and (i) if Guarantor is a corporation, the Board of
Directors of Guarantor has determined that this Guaranty may reasonably be
expected to benefit, directly or indirectly, Guarantor, or (ii) if Guarantor is
a partnership, the requisite number of its partners have
2
determined that this Guaranty may reasonably be expected to benefit, directly or
indirectly, Guarantor; and
(b) Guarantor is familiar with, and has independently reviewed the
books and records regarding, the financial condition of Xxxxxxxx and is familiar
with the value of any and all collateral intended to be security for the payment
of all or any part of the Guaranteed Indebtedness; provided, however, Guarantor
is not relying on such financial condition or collateral as an inducement to
enter into this Guaranty; and
(c) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition of Borrower and
Guarantor is not relying on Lender to provide such information to Guarantor
either now or in the future; and
(d) Guarantor has the power and authority to execute, deliver and
perform this Guaranty and any other agreements executed by Guarantor
contemporaneously herewith, and the execution, delivery and performance of this
Guaranty and any other agreements executed by Guarantor contemporaneously
herewith do not and will not violate (i) any agreement or instrument to which
Guarantor is a party, (ii) any law, rale, regulation or order of any
governmental authority to which Guarantor is subject, or (iii) its articles or
certificate of incorporation or bylaws, if Guarantor is a corporation, or its
partnership agreement, if Guarantor is a partnership; and
(e) Neither Lender nor any other party has made any representation,
warranty or statement to Guarantor in order to induce Guarantor to execute this
Guaranty; and
(f) The financial statements and other financial information regarding
Guarantor heretofore and hereafter delivered to Lender are and shall be true and
correct in all material respects and fairly present the financial position of
Guarantor as of the dates thereof, and no material adverse change has occurred
in the financial condition of Guarantor reflected in the financial statements
and other financial information regarding Guarantor heretofore delivered to
Lender since the date of the last statement thereof; and
(g) As of the date hereof, and after giving effect to this Guaranty and
the obligations evidenced hereby, (i) Guarantor is and will be solvent, (ii) the
fair saleable value of Guarantor's assets exceeds and will continue to exceed
its liabilities (both fixed and contingent), (iii) Guarantor is and will
continue to be able to pay its debts as they mature, and (iv) if Guarantor is
not an individual, Guarantor has and will continue to have sufficient capital to
carry on its business and all businesses in which it is about to engage.
5. Covenants. Guarantor hereby covenants and agrees with Xxxxxx as
----------
follows:
(a) Guarantor shall not, so long as its obligations under this Guaranty
continue, transfer or pledge any material portion of its assets for less than
full and adequate consideration; and
3
(b) Guarantor shall promptly furnish to Lender at any time and from
time to time such financial statements and other financial information of
Guarantor as the Lender may require, in form and substance satisfactory to
Lender; and
(c) Guarantor shall comply with all terms and provisions of the Loan
Documents that apply to Guarantor; and
(d) Guarantor shall promptly inform Lender of (i) any litigation or
governmental investigation against Guarantor or affecting any security for all
or any part of the Guaranteed Indebtedness or this Guaranty which, if determined
adversely, might have a material adverse effect upon the financial condition of
Guarantor or upon such security or might cause a default under any of the Loan
Documents, (ii) any claim or controversy which might become the subject of such
litigation or governmental investigation, and (iii) any material adverse change
in the financial condition of Guarantor.
6. Consent and Waiver.
---------------------
(a) Guarantor waives (i) promptness, diligence and notice of acceptance
of this Guaranty and notice of the incurring of any obligation, indebtedness or
liability to which this Guaranty applies or may apply and waives presentment for
payment, notice of nonpayment, protest, demand, notice of protest, notice of
intent to accelerate, notice of acceleration, notice of dishonor, diligence in
enforcement and indulgences of every kind, and (ii) the taking of any other
action by Xxxxxx, including without limitation giving any notice of default or
any other notice to, or making any demand on, Borrower, any other guarantor of
all or any part of the Guaranteed Indebtedness or any other party.
(b) Guarantor waives any rights Guarantor has under, or any
requirements imposed by, Chapter 34 of the Texas Business and Commerce Code, as
in effect on the date of this Guaranty or as it may be amended from time to
time.
(c) Lender may at any time, without the consent of or notice to
Guarantor, without incurring responsibility to Guarantor and without impairing,
releasing, reducing or affecting the obligations of Guarantor hereunder: (i)
change the manner, place or terms of payment of all or any part of the
Guaranteed Indebtedness, or renew, extend, modify, rearrange or alter all or any
part of the Guaranteed Indebtedness; (ii) change the interest rate accruing on
any of the Guaranteed Indebtedness (including, without limitation, any periodic
change in such interest rate that occurs because such Guaranteed Indebtedness
accrues interest at a variable rate which may fluctuate from time to time);
(iii) sell, exchange, release, surrender, subordinate, realize upon or otherwise
deal with in any manner and in any order any collateral for all or any part of
the Guaranteed Indebtedness or this Guaranty or setoff against all or any part
of the Guaranteed Indebtedness; (iv) neglect, delay, omit, fail or refuse to
take or prosecute any action for the
4
collection of all or any part of the Guaranteed Indebtedness or this Guaranty or
to take or prosecute any action in connection with any of the Loan Documents;
(v) exercise or refrain from exercising any rights against Borrower or others,
or otherwise act or refrain from acting; (vi) settle or compromise all or any
part of the Guaranteed Indebtedness and subordinate the payment of all or any
part of the Guaranteed Indebtedness to the payment of any obligations,
indebtedness or liabilities which may be due or become due to Lender or others;
(vii) apply any deposit balance, fund, payment, collections through process of
law or otherwise or other collateral of Borrower to the satisfaction and
liquidation of the indebtedness or obligations of Borrower to Lender not
guaranteed under this Guaranty; and (viii) apply any sums paid to Lender by
Guarantor, Borrower or others to the Guaranteed Indebtedness in such order and
manner as Lender, in its sole discretion, may determine.
(d) Should Lender seek to enforce the obligations of Guarantor
hereunder by action in any court or otherwise, Guarantor waives any requirement,
substantive or procedural, that (i) Lender first enforce any rights or remedies
against Borrower or any other person or entity liable to Lender for all or any
part of the Guaranteed Indebtedness, including without limitation that a
judgment first be rendered against Borrower or any other person or entity, or
that Borrower or any other person or entity should be joined in such cause, or
(ii) Lender first enforce rights against any collateral which shall ever have
been given to secure all or any part of the Guaranteed Indebtedness or this
Guaranty. Such waiver shall be without prejudice to Xxxxxx's right, at its
option, to proceed against Borrower or any other person or entity, whether by
separate action or by joinder.
(e) In addition to any other waivers, agreements and covenants of
Guarantor set forth herein, Guarantor hereby further waives and releases all
claims, causes of action, defenses and offsets for any act or omission of
Lender, its directors, officers, employees, representatives or agents in
connection with Xxxxxx's administration of the Guaranteed Indebtedness, except
for Xxxxxx's willful misconduct and gross negligence.
(f) Guarantor grants to Lender a contractual security interest in, and
hereby assigns, conveys, delivers, pledges and transfers to Lender all
Guarantor's right, title and interest in and to Guarantor's accounts with Lender
(whether checking, savings or some other account), including without limitation
all accounts held jointly with someone else and all accounts Guarantor may open
in the future, excluding however all IRA and Xxxxx accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Guarantor authorizes Xxxxxx, to the extent permitted by applicable law, to
charge or setoff all sums owing on the Guaranteed Indebtedness against any and
all such accounts.
7. Obligations Not Impaired.
---------------------------
(a) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the occurrence of any one
or more of the following events: (i) the death, disability or lack of corporate
power of Borrower, Guarantor (except as provided in Paragraph 10 herein) or any
------------
other guarantor of all or any part of the Guaranteed Indebtedness, (ii)
5
any receivership, insolvency, bankruptcy or other proceedings affecting
Borrower, Guarantor or any other guarantor of all or any part of the Guaranteed
Indebtedness, or any of their respective property; (iii) the partial or total
release or discharge of Borrower or any other guarantor of all or any part of
the Guaranteed Indebtedness, or any other person or entity from the performance
of any obligation contained in any instrument or agreement evidencing, governing
or securing all or any part of the Guaranteed Indebtedness, whether occurring by
reason of law or otherwise; (iv) the taking or accepting of any collateral for
all or any part of the Guaranteed Indebtedness or this Guaranty; (v) the taking
or accepting of any other guaranty for all or any part of the Guaranteed
Indebtedness; (vi) any failure by Lender to acquire, perfect or continue any
lien or security interest on collateral securing all or any part of the
Guaranteed Indebtedness or this Guaranty; (vii) the impairment of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty; (viii)
any failure by Lender to sell any collateral securing all or any part of the
Guaranteed Indebtedness or this Guaranty in a commercially reasonable manner or
as otherwise required by law; (ix) any invalidity or unenforceability of or
defect or deficiency in any of the Loan Documents; or (x) any other circumstance
which might otherwise constitute a defense available to, or discharge of,
Borrower or any other guarantor of all or any part of the Guaranteed
Indebtedness.
(b) This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of all or any part of the Guaranteed
Indebtedness is rescinded or must otherwise be returned by Lender upon the
insolvency, bankruptcy or reorganization of Borrower, Guarantor, any other
guarantor of all or any part of the Guaranteed Indebtedness, or otherwise, all
as though such payment had not been made.
(c) In the event Borrower is a corporation, joint stock association or
partnership, or is hereafter incorporated, none of the following shall affect
Guarantor's liability hereunder: (i) the unenforceability of all or any part of
the Guaranteed Indebtedness against Borrower by reason of the fact that the
Guaranteed Indebtedness exceeds the amount permitted by law; (ii) the act of
creating all or any part of the Guaranteed Indebtedness is ultra xxxxx; or (iii)
the officers or partners creating all or any part of the Guaranteed Indebtedness
acted in excess of their authority. Guarantor hereby acknowledges that
withdrawal from, or termination of, any ownership interest in Borrower now or
hereafter owned or held by Guarantor shall not alter, affect or in any way limit
the obligations of Guarantor hereunder.
8. Actions Against Guarantor. In the event of a default in the payment
---------------------------
or performance of all or any part of the Guaranteed Indebtedness when such
Guaranteed Indebtedness becomes due, whether by its terms, by acceleration or
otherwise, Guarantor shall, without notice or demand, promptly pay the amount
due thereon to Lender, in lawful money of the United States, at Xxxxxx's address
set forth in Subparagraph l(a) above. One or more successive or concurrent
------------------
actions may be brought against Guarantor, either in the same action in which
Borrower is sued or in separate actions, as often as Lender deems advisable. The
exercise by Lender of any right or remedy under this Guaranty or under any other
agreement or instrument, at law, in equity or otherwise, shall not preclude
concurrent or subsequent exercise of any other right or remedy. The books and
records of Lender shall be admissible as evidence in any action or
6
proceeding involving this Guaranty and shall be prima facie evidence of the
----- -----
payments made on, and the outstanding balance of, the Guaranteed Indebtedness.
9. Payment by Guarantor. Whenever Guarantor pays any sum which is or
-----------------------
may become due under this Guaranty, written notice must be delivered to Lender
contemporaneously with such payment. Such notice shall be effective for purposes
of this paragraph when contemporaneously with such payment Lender receives such
notice either by: (a) personal delivery to the address and designated
department of Lender identified in Subparagraph l(a) above, or (b) United States
-----------------
mail, certified or registered, return receipt requested, postage prepaid,
addressed to Lender at the address shown in Subparagraph l(a) above. In the
-----------------
absence of such notice to Lender by Guarantor in compliance with the provisions
hereof, any sum received by Lender on account of the Guaranteed Indebtedness
shall be conclusively deemed paid by Xxxxxxxx.
10. Death of Guarantor. In the event of the death of Guarantor, the
--------------------
obligations of the deceased Guarantor under this Guaranty shall continue as an
obligation against his estate as to (a) all of the Guaranteed Indebtedness that
is outstanding on the date of Guarantor's death, and any renewals or extensions
thereof, and (b) all loans, advances and other extensions of credit made to or
for the account of Borrower on or after the date of Guarantor's death pursuant
to an obligation of Lender under a commitment or agreement described in
Subparagraph l(d) above and made to or with Borrower prior to the date of
------------------
Guarantor's death. The terms and conditions of this Guaranty, including
without limitation the consents and waivers set forth in Paragraph 6 hereof,
-----------
shall remain in effect with respect to the Guaranteed Indebtedness described in
the preceding sentence in the same manner as if Guarantor had not died.
11. Notice of Sale. In the event that Guarantor is entitled to receive
---------------
any notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty,
reasonable notice shall be deemed given when such notice is deposited in the
United States mail, postage prepaid, at the address for Guarantor set forth in
Subparagraph l(c) above, ten (10) days prior to the date any public sale, or
------------------
after which any private sale, of any such collateral is to be held; provided,
--------
however, that notice given in any other reasonable manner or at any other
-------
reasonable time shall be sufficient.
12. Waiver by Xxxxxx. No delay on the part of Lender in exercising
------------------
any right hereunder or failure to exercise the same shall operate as a waiver of
such right. In no event shall any waiver of the provisions of this Guaranty be
effective unless the same be in writing and signed by an officer of Lender, and
then only in the specific instance and for the purpose given.
13. Successors and Assigns. This Guaranty is for the benefit of Lender,
----------------------
its successors and assigns. This Guaranty is binding upon Guarantor and
Guarantor's heirs, executors, administrators, personal representatives and
successors, including without limitation any person or entity obligated by
operation of law upon the reorganization, merger, consolidation or other change
in the organizational structure of Guarantor.
7
14. Costs and Expenses. Guarantor shall pay on demand by Lender all
--------------------
costs and expenses, including without limitation all reasonable attorneys' fees,
incurred by Lender in connection with the preparation, administration,
enforcement and/or collection of this Guaranty. This covenant shall survive the
payment of the Guaranteed Indebtedness.
15. Severability. If any provision of this Guaranty is held by a
------------
court of competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall not
impair or invalidate the remainder of this Guaranty and the effect thereof shall
be confined to the provision held to be illegal, invalid or unenforceable.
16. No Obligation. Nothing contained herein shall be construed as an
--------------
obligation on the part of Lender to extend or continue to extend credit to
Borrower.
17. Amendment. No modification or amendment of any provision of this
---------
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by an officer of
Lender, and then shall be effective only in the specific instance and for the
purpose for which given.
18. Cumulative Rights. All rights and remedies of Xxxxxx xxxxxxxxx are
------------------
cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any instrument or agreement, and the
exercise of one or more of such rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of any other rights or remedies.
19. Governing Law, Venue. This Guaranty is intended to be performed in
---------------------
the State of Texas. Except to the extent that the laws of the United States may
apply to the terms hereof, the substantive laws of the State of Texas shall
govern the validity, construction, enforcement and interpretation of this
Guaranty. In the event of a dispute involving this Guaranty or any other
instruments executed in connection herewith, the undersigned irrevocably agrees
that venue for such dispute shall lie in any court of competent jurisdiction in
Bexar County, Texas.
20. Compliance with Applicable Usury Laws. Notwithstanding any other
----------------------------------------
provision of this Guaranty or of any instrument or agreement evidencing,
governing or securing all or any part of the Guaranteed Indebtedness, Guarantor
and Lender by its acceptance hereof agree that Guarantor shall never be required
or obligated to pay interest in excess of the maximum non- usurious interest
rate as may be authorized by applicable law for the written contracts which
constitute the Guaranteed Indebtedness. It is the intention of Guarantor and
Lender to conform strictly to the applicable laws which limit interest rates,
and any of the aforesaid contracts for interest, if and to the extent payable by
Guarantor, shall be held to be subject to reduction to the maximum non-usurious
interest rate allowed under said law.
21. Gender. Within this Guaranty, words of any gender shall be held and
------
construed to include the other gender.
8
22. Captions. The headings in this Guaranty are for convenience only
--------
and shall not define or limit the provisions hereof.
EXECUTED as of the date first above written.
GUARANTOR:
----------
CCI TELECOM, INC.,
a Nevada corporation
By:
-------------------------------------
Xxxxxxx X. Xxxxx, President
9
EXHIBIT E-3
12
[GRAPHIC OMITTED]
GUARANTY AGREEMENT
-------------------
THIS GUARANTY AGREEMENT ("Guaranty") is made as of the 25th day of April,
2005, by Guarantor (as hereinafter defined) for the benefit of Lender (as
hereinafter defined).
1. Definitions. As used in this Guaranty, the following terms shall
-----------
have the meanings indicated below:
(a) The term "Lender" shall mean THE FROST NATIONAL BANK, a national
banking association, whose address for notice purposes is the following:
P.O. Box 1600, San Antonio, Texas 78296
Attn: Xxxx Xxxxxx
(b) The term "Borrower" (whether one or more) shall mean the following:
Charys Holding Company, Inc., a Delaware corporation
(c) The term "Guarantor" shall mean CCI Integrated Solutions, Inc., a
Texas corporation, whose address for notice purposes is the following:
00000 Xxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxx
(d) The term "Guaranteed Indebtedness" shall mean (i) all principal
-----------------------
indebtedness owing by Borrower to Lender now existing or hereafter arising under
or evidenced by that one certain Promissory Note dated April 25, 2005, in the
original principal amount of $300,000.00, executed by Borrower and payable to
the order of Lender and, (ii) all accrued but unpaid interest on any of the
indebtedness described in (i) above, (iii) all obligations of Borrower to Lender
under any documents evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) and (ii) above (collectively, the
"Loan Documents"), (iv) all costs and expenses incurred by Lender in
connection with the collection and administration of all or any part of the
indebtedness and obligations described in (i), (ii) and (iii) above or the
protection or preservation of, or realization upon, the collateral securing all
or any part of such indebtedness and obligations, including without limitation
all reasonable attorneys' fees, and (v) all renewals, extensions, modifications
and rearrangements of the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above.
2. Obligations. As an inducement to Lender to extend or continue to
-----------
extend credit and other financial accommodations to Borrower, Guarantor, for
value received, does hereby unconditionally and absolutely guarantee the prompt
and full payment and performance of the Guaranteed Indebtedness when due or
declared to be due and at all times thereafter.
3. Character of Obligations.
------------------------
(a) This is an absolute, continuing and unconditional guaranty of
payment and not of collection and if at any time or from time to time there is
no outstanding Guaranteed Indebtedness, the obligations of Guarantor with
respect to any and all Guaranteed Indebtedness incurred thereafter shall not be
affected. This Guaranty and the Guarantor's obligations hereunder are
irrevocable and, in the event of Guarantor's death, shall be binding upon
Guarantor's estate. All of the Guaranteed Indebtedness shall be conclusively
presumed to have been made or acquired in acceptance hereof. Guarantor shall be
liable, jointly and severally, with Borrower and any other guarantor of all or
any part of the Guaranteed Indebtedness.
(b) Lender may, at its sole discretion and without impairing its rights
hereunder, (i) apply any payments on the Guaranteed Indebtedness that Lender
receives from Borrower or any other source other than Guarantor to that portion
of the Guaranteed Indebtedness, if any, not guaranteed hereunder, and (ii) apply
any proceeds it receives as a result of the foreclosure or other realization on
any collateral for the Guaranteed Indebtedness to that portion, if any, of the
Guaranteed Indebtedness not guaranteed hereunder or to any other indebtedness
secured by such collateral.
(c) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the existence of any
other guaranty or the payment by any other guarantor of all or any part of the
Guaranteed Indebtedness and, in the event Paragraph 2 above partially limits
-----------
Guarantor's obligations under this Guaranty, Guarantor's obligations hereunder
shall continue until Xxxxxx has received payment in full of the Guaranteed
Indebtedness.
(d) Guarantor's obligations hereunder shall not be released,
diminished, impaired, reduced or affected by, nor shall any provision contained
herein be deemed to be a limitation upon, the amount of credit which Lender may
extend to Borrower, the number of transactions between Lender and Borrower,
payments by Borrower to Lender or Xxxxxx's allocation of payments by Borrower.
(e) Without further authorization from or notice to Guarantor,
Lender may compromise, accelerate, or otherwise alter the time or manner for
the payment of the Guaranteed Indebtedness, increase or reduce the rate of
interest thereon, or release or add any one or more guarantors or endorsers, or
allow substitution of or withdrawal of collateral or other security and release
collateral and other security or subordinate the same.
4. Representations and Warranties. Guarantor hereby represents and
--------------------------------
warrants the following to Lender:
(a) This Guaranty may reasonably be expected to benefit, directly or
indirectly, Guarantor, and (i) if Guarantor is a corporation, the Board of
Directors of Guarantor has determined that this Guaranty may reasonably be
expected to benefit, directly or indirectly, Guarantor, or (ii) if Guarantor is
a partnership, the requisite number of its partners have
2
determined that this Guaranty may reasonably be expected to benefit, directly or
indirectly, Guarantor; and
(b) Guarantor is familiar with, and has independently reviewed the
books and records regarding, the financial condition of Xxxxxxxx and is familiar
with the value of any and all collateral intended to be security for the payment
of all or any part of the Guaranteed Indebtedness; provided, however, Guarantor
is not relying on such financial condition or collateral as an inducement to
enter into this Guaranty; and
(c) Guarantor has adequate means to obtain from Borrower on a
continuing basis information concerning the financial condition of Borrower and
Guarantor is not relying on Lender to provide such information to Guarantor
either now or in the future; and
(d) Guarantor has the power and authority to execute, deliver and
perform this Guaranty and any other agreements executed by Guarantor
contemporaneously herewith, and the execution, delivery and performance of this
Guaranty and any other agreements executed by Guarantor contemporaneously
herewith do not and will not violate (i) any agreement or instrument to which
Guarantor is a party, (ii) any law, rule, regulation or order of any
governmental authority to which Guarantor is subject, or (iii) its articles or
certificate of incorporation or bylaws, if Guarantor is a corporation, or its
partnership agreement, if Guarantor is a partnership; and
(e) Neither Lender nor any other party has made any representation,
warranty or statement to Guarantor in order to induce Guarantor to execute this
Guaranty; and
(f) The financial statements and other financial information regarding
Guarantor heretofore and hereafter delivered to Lender are and shall be true and
correct in all material respects and fairly present the financial position of
Guarantor as of the dates thereof, and no material adverse change has occurred
in the financial condition of Guarantor reflected in the financial statements
and other financial information regarding Guarantor heretofore delivered to
Lender since the date of the last statement thereof; and
(g) As of the date hereof, and after giving effect to this Guaranty and
the obligations evidenced hereby, (i) Guarantor is and will be solvent, (ii) the
fair saleable value of Guarantor's assets exceeds and will continue to exceed
its liabilities (both fixed and contingent), (iii) Guarantor is and will
continue to be able to pay its debts as they mature, and (iv) if Guarantor is
not an individual, Guarantor has and will continue to have sufficient capital to
carry on its business and all businesses in which it is about to engage.
5. Covenants. Guarantor hereby covenants and agrees with Xxxxxx as
---------
follows:
(a) Guarantor shall not, so long as its obligations under this Guaranty
continue, transfer or pledge any material portion of its assets for less than
full and adequate consideration; and
3
(b) Guarantor shall promptly furnish to Lender at any time and from
time to time such financial statements and other financial information of
Guarantor as the Lender may require, in form and substance satisfactory to
Lender; and
(c) Guarantor shall comply with all terms and provisions of the Loan
Documents that apply to Guarantor; and
(d) Guarantor shall promptly inform Lender of (i) any litigation or
governmental investigation against Guarantor or affecting any security for all
or any part of the Guaranteed Indebtedness or this Guaranty which, if determined
adversely, might have a material adverse effect upon the financial condition of
Guarantor or upon such security or might cause a default under any of the Loan
Documents, (ii) any claim or controversy which might become the subject of such
litigation or governmental investigation, and (iii) any material adverse change
in the financial condition of Guarantor.
6. Consent and Waiver.
--------------------
(a) Guarantor waives (i) promptness, diligence and notice of acceptance
of this Guaranty and notice of the incurring of any obligation, indebtedness or
liability to which this Guaranty applies or may apply and waives presentment for
payment, notice of nonpayment, protest, demand, notice of protest, notice of
intent to accelerate, notice of acceleration, notice of dishonor, diligence in
enforcement and indulgences of every kind, and (ii) the taking of any other
action by Xxxxxx, including without limitation giving any notice of default or
any other notice to, or making any demand on, Borrower, any other guarantor of
all or any part of the Guaranteed Indebtedness or any other party.
(b) Guarantor waives any rights Guarantor has under, or any
requirements imposed by, Chapter 34 of the Texas Business and Commerce Code, as
in effect on the date of this Guaranty or as it may be amended from time to
time.
(c) Lender may at any time, without the consent of or notice to
Guarantor, without incurring responsibility to Guarantor and without impairing,
releasing, reducing or affecting the obligations of Guarantor hereunder: (i)
change the manner, place or terms of payment of all or any part of the
Guaranteed Indebtedness, or renew, extend, modify, rearrange or alter all or any
part of the Guaranteed Indebtedness; (ii) change the interest rate accruing on
any of the Guaranteed Indebtedness (including, without limitation, any periodic
change in such interest rate that occurs because such Guaranteed Indebtedness
accrues interest at a variable rate which may fluctuate from time to time);
(iii) sell, exchange, release, surrender, subordinate, realize upon or otherwise
deal with in any manner and in any order any collateral for all or any part of
the Guaranteed Indebtedness or this Guaranty or setoff against all or any part
of the Guaranteed Indebtedness; (iv) neglect, delay, omit, fail or refuse to
take or prosecute any action for the
4
collection of all or any part of the Guaranteed Indebtedness or this Guaranty or
to take or prosecute any action in connection with any of the Loan Documents;
(v) exercise or refrain from exercising any rights against Borrower or others,
or otherwise act or refrain from acting; (vi) settle or compromise all or any
part of the Guaranteed Indebtedness and subordinate the payment of all or any
part of the Guaranteed Indebtedness to the payment of any obligations,
indebtedness or liabilities which may be due or become due to Lender or others;
(vii) apply any deposit balance, fund, payment, collections through process of
law or otherwise or other collateral of Borrower to the satisfaction and
liquidation of the indebtedness or obligations of Borrower to Lender not
guaranteed under this Guaranty; and (viii) apply any sums paid to Lender by
Guarantor, Borrower or others to the Guaranteed Indebtedness in such order and
manner as Lender, in its sole discretion, may determine.
(d) Should Lender seek to enforce the obligations of Guarantor
hereunder by action in any court or otherwise, Guarantor waives any requirement,
substantive or procedural, that (i) Lender first enforce any rights or remedies
against Borrower or any other person or entity liable to Lender for all or any
part of the Guaranteed Indebtedness, including without limitation that a
judgment first be rendered against Borrower or any other person or entity, or
that Borrower or any other person or entity should be joined in such cause, or
(ii) Lender first enforce rights against any collateral which shall ever have
been given to secure all or any part of the Guaranteed Indebtedness or this
Guaranty. Such waiver shall be without prejudice to Xxxxxx's right, at its
option, to proceed against Borrower or any other person or entity, whether by
separate action or by joinder.
(e) In addition to any other waivers, agreements and covenants of
Guarantor set forth herein, Guarantor hereby further waives and releases all
claims, causes of action, defenses and offsets for any act or omission of
Lender, its directors, officers, employees, representatives or agents in
connection with Xxxxxx's administration of the Guaranteed Indebtedness, except
for Xxxxxx's willful misconduct and gross negligence.
(f) Guarantor grants to Lender a contractual security interest in, and
hereby assigns, conveys, delivers, pledges and transfers to Lender all
Guarantor's right, title and interest in and to Guarantor's accounts with Lender
(whether checking, savings or some other account), including without limitation
all accounts held jointly with someone else and all accounts Guarantor may open
in the future, excluding however all IRA and Xxxxx accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Guarantor authorizes Xxxxxx, to the extent permitted by applicable law, to
charge or setoff all sums owing on the Guaranteed Indebtedness against any and
all such accounts.
7. Obligations Not Impaired.
--------------------------
(a) Guarantor agrees that its obligations hereunder shall not be
released, diminished, impaired, reduced or affected by the occurrence of any one
or more of the following events: (i) the death, disability or lack of corporate
power of Borrower, Guarantor (except as provided in Paragraph 10 herein) or any
------------
other guarantor of all or any part of the Guaranteed Indebtedness, (ii)
5
any receivership, insolvency, bankruptcy or other proceedings affecting
Borrower, Guarantor or any other guarantor of all or any part of the Guaranteed
Indebtedness, or any of their respective property; (iii) the partial or total
release or discharge of Borrower or any other guarantor of all or any part of
the Guaranteed Indebtedness, or any other person or entity from the performance
of any obligation contained in any instrument or agreement evidencing, governing
or securing all or any part of the Guaranteed Indebtedness, whether occurring by
reason of law or otherwise; (iv) the taking or accepting of any collateral for
all or any part of the Guaranteed Indebtedness or this Guaranty; (v) the taking
or accepting of any other guaranty for all or any part of the Guaranteed
Indebtedness; (vi) any failure by Lender to acquire, perfect or continue any
lien or security interest on collateral securing all or any part of the
Guaranteed Indebtedness or this Guaranty; (vii) the impairment of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty; (viii)
any failure by Lender to sell any collateral securing all or any part of the
Guaranteed Indebtedness or this Guaranty in a commercially reasonable manner or
as otherwise required by law; (ix) any invalidity or unenforceability of or
defect or deficiency in any of the Loan Documents; or (x) any other circumstance
which might otherwise constitute a defense available to, or discharge of,
Borrower or any other guarantor of all or any part of the Guaranteed
Indebtedness.
(b) This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of all or any part of the Guaranteed
Indebtedness is rescinded or must otherwise be returned by Lender upon the
insolvency, bankruptcy or reorganization of Borrower, Guarantor, any other
guarantor of all or any part of the Guaranteed Indebtedness, or otherwise, all
as though such payment had not been made.
(c) In the event Borrower is a corporation, joint stock association or
partnership, or is hereafter incorporated, none of the following shall affect
Guarantor's liability hereunder: (i) the unenforceability of all or any part of
the Guaranteed Indebtedness against Borrower by reason of the fact that the
Guaranteed Indebtedness exceeds the amount permitted by law; (ii) the act of
creating all or any part of the Guaranteed Indebtedness is ultra xxxxx; or (iii)
the officers or partners creating all or any part of the Guaranteed Indebtedness
acted in excess of their authority. Guarantor hereby acknowledges that
withdrawal from, or termination of, any ownership interest in Borrower now or
hereafter owned or held by Guarantor shall not alter, affect or in any way limit
the obligations of Guarantor hereunder.
8. Actions Against Guarantor. In the event of a default in the payment
--------------------------
or performance of all or any part of the Guaranteed Indebtedness when such
Guaranteed Indebtedness becomes due, whether by its terms, by acceleration or
otherwise, Guarantor shall, without notice or demand, promptly pay the amount
due thereon to Lender, in lawful money of the United States, at Lender's address
set forth in Subparagraph l(a) above. One or more successive or concurrent
------------------
actions may be brought against Guarantor, either in the same action in which
Borrower is sued or in separate actions, as often as Lender deems advisable. The
exercise by Lender of any right or remedy under this Guaranty or under any other
agreement or instrument, at law, in equity or otherwise, shall not preclude
concurrent or subsequent exercise of any other right or remedy. The books and
records of Lender shall be admissible as evidence in any action or
6
proceeding involving this Guaranty and shall be prima facie evidence of the
----- -----
payments made on, and the outstanding balance of, the Guaranteed Indebtedness.
9. Payment by Guarantor. Whenever Guarantor pays any sum which is or
---------------------
may become due under this Guaranty, written notice must be delivered to Lender
contemporaneously with such payment. Such notice shall be effective for
purposes of this paragraph when contemporaneously with such payment Lender
receives such notice either by: (a) personal delivery to the address and
designated department of Lender identified in Subparagraph l(a) above, or (b)
-----------------
United States mail, certified or registered, return receipt requested, postage
prepaid, addressed to Lender at the address shown in Subparagraph l(a) above.
-----------------
In the absence of such notice to Lender by Guarantor in compliance with the
provisions hereof, any sum received by Lender on account of the Guaranteed
Indebtedness shall be conclusively deemed paid by Xxxxxxxx.
10. Death of Guarantor. In the event of the death of Guarantor, the
--------------------
obligations of the deceased Guarantor under this Guaranty shall continue as an
obligation against his estate as to (a) all of the Guaranteed Indebtedness that
is outstanding on the date of Guarantor's death, and any renewals or extensions
thereof, and (b) all loans, advances and other extensions of credit made to or
for the account of Borrower on or after the date of Guarantor's death pursuant
to an obligation of Lender under a commitment or agreement described in
Subparagraph l(d) above and made to or with Borrower prior to the date of
------------------
Guarantor's death. The terms and conditions of this Guaranty, including
without limitation the consents and waivers set forth in Paragraph 6 hereof,
-----------
shall remain in effect with respect to the Guaranteed Indebtedness described in
the preceding sentence in the same manner as if Guarantor had not died.
11. Notice of Sale. In the event that Guarantor is entitled to receive
---------------
any notice under the Uniform Commercial Code, as it exists in the state
governing any such notice, of the sale or other disposition of any collateral
securing all or any part of the Guaranteed Indebtedness or this Guaranty,
reasonable notice shall be deemed given when such notice is deposited in the
United States mail, postage prepaid, at the address for Guarantor set forth in
Subparagraph l(c) above, ten (10) days prior to the date any public sale, or
------------------
after which any private sale, of any such collateral is to be held; provided,
--------
however, that notice given in any other reasonable manner or at any other
-------
reasonable time shall be sufficient.
12. Waiver by Xxxxxx. No delay on the part of Lender in exercising any
-----------------
right hereunder or failure to exercise the same shall operate as a waiver of
such right. In no event shall any waiver of the provisions of this Guaranty be
effective unless the same be in writing and signed by an officer of Lender, and
then only in the specific instance and for the purpose given.
13. Successors and Assigns. This Guaranty is for the benefit of Lender,
----------------------
its successors and assigns. This Guaranty is binding upon Guarantor and
Guarantor's heirs, executors, administrators, personal representatives and
successors, including without limitation any person or entity obligated by
operation of law upon the reorganization, merger, consolidation or other change
in the organizational structure of Guarantor.
7
14. Costs and Expenses. Guarantor shall pay on demand by Lender all
--------------------
costs and expenses, including without limitation all reasonable attorneys' fees,
incurred by Lender in connection with the preparation, administration,
enforcement and/or collection of this Guaranty. This covenant shall survive the
payment of the Guaranteed Indebtedness.
15. Severability. If any provision of this Guaranty is held by a
------------
court of competent jurisdiction to be illegal, invalid or unenforceable under
present or future laws, such provision shall be fully severable, shall not
impair or invalidate the remainder of this Guaranty and the effect thereof shall
be confined to the provision held to be illegal, invalid or unenforceable.
16. No Obligation. Nothing contained herein shall be construed as an
--------------
obligation on the part of Lender to extend or continue to extend credit to
Borrower.
17. Amendment. No modification or amendment of any provision of this
---------
Guaranty, nor consent to any departure by Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by an officer of
Lender, and then shall be effective only in the specific instance and for the
purpose for which given.
18. Cumulative Rights. All rights and remedies of Xxxxxx xxxxxxxxx are
------------------
cumulative of each other and of every other right or remedy which Lender may
otherwise have at law or in equity or under any instrument or agreement, and the
exercise of one or more of such rights or remedies shall not prejudice or impair
the concurrent or subsequent exercise of any other rights or remedies.
19. Governing Law, Venue. This Guaranty is intended to be performed in
---------------------
the State of Texas. Except to the extent that the laws of the United States may
apply to the terms hereof, the substantive laws of the State of Texas shall
govern the validity, construction, enforcement and interpretation of this
Guaranty. In the event of a dispute involving this Guaranty or any other
instruments executed in connection herewith, the undersigned irrevocably agrees
that venue for such dispute shall lie in any court of competent jurisdiction in
Bexar County, Texas.
20. Compliance with Applicable Usury Laws. Notwithstanding any other
----------------------------------------
provision of this Guaranty or of any instrument or agreement evidencing,
governing or securing all or any part of the Guaranteed Indebtedness, Guarantor
and Lender by its acceptance hereof agree that Guarantor shall never be required
or obligated to pay interest in excess of the maximum non- usurious interest
rate as may be authorized by applicable law for the written contracts which
constitute the Guaranteed Indebtedness. It is the intention of Guarantor and
Lender to conform strictly to the applicable laws which limit interest rates,
and any of the aforesaid contracts for interest, if and to the extent payable by
Guarantor, shall be held to be subject to reduction to the maximum non-usurious
interest rate allowed under said law.
21. Gender. Within this Guaranty, words of any gender shall be held and
------
construed to include the other gender.
8
22. Captions. The headings in this Guaranty are for convenience only
--------
and shall not define or limit the provisions hereof.
EXECUTED as of the date first above written.
GUARANTOR:
----------
CCI INTEGRATED SOLUTIONS, INC.,
a Texas corporation
By:
-------------------------------------
Xxxxxxx X. Xxxxx, President
9
EXHIBIT E-4
13
