PLAN AND AGREEMENT OF TRIANGULAR MERGER
BETWEEN
CHARYS HOLDING COMPANY, INC.,
CHARYS ACQUISITION COMPANY, INC.
AND
CCI TELECOM, INC.
CHARYS HOLDING COMPANY, INC., a Delaware corporation ("Charys"), CHARYS
ACQUISITION COMPANY, INC., a Nevada corporation (the "Subsidiary"), and CCI
TELECOM, INC., a Nevada corporation ("CCI"), hereby agree as follows:
WHEREAS, the Subsidiary is a wholly-owned subsidiary of Charys; and
WHEREAS, Charys desires to cause the merger of the Subsidiary with and into
CCI (the "Merger"); and
WHEREAS, the holders (the "CCI Shareholders") of all of the common stock of
CCI, par value $0.01 per share (the "CCI Common Stock") are described in
Attachment A hereto; and
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WHEREAS, as a result of the Merger, the CCI Shareholders will receive
shares of the common stock of Charys, par value $0.001 per share (the "Charys
Common Stock") in exchange for all of their shares of the CCI Common Stock; and
WHEREAS, it is intended that the Merger shall constitute a reorganization
under the provisions of Section 368(a)(1)(A) of the Internal Revenue Code of
1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties agree as follows:
1. Plan Adopted. A plan of merger whereby the Subsidiary merges with
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and into CCI (this "Plan of Merger"), pursuant to the provisions of Chapter 92A
of the Nevada Revised Statutes (the "NRS") and Section 368(a)(1)(A) of the Code
is adopted as follows:
(a) The Subsidiary shall be merged with and into CCI, to exist and
be governed by the laws of the State of Nevada.
(b) CCI shall be the Surviving Corporation (the "Surviving
Corporation") and will be a wholly-owned subsidiary of Charys.
(c) When this Plan of Merger shall become effective, the separate
existence of the Subsidiary shall cease and the Surviving Corporation shall
succeed, without other transfer, to all the rights and properties of the
Subsidiary and shall be subject to all the debts and liabilities of such
corporation in the same manner as if the Surviving Corporation had itself
incurred them. All rights of creditors and all liens upon the property of each
constituent entity shall be preserved unimpaired, limited in lien to the
property affected by such liens immediately prior to the Merger.
(d) The Surviving Corporation will be responsible for the payment
of all fees and franchise taxes of the constituent entities payable to the State
of Nevada, if any.
(e) The Surviving Corporation will carry on business with the
assets of the Subsidiary, as well as the assets of CCI.
(f) The Surviving Corporation will be responsible for the payment
of the fair value of shares, if any, required under Chapter 92A of the NRS.
(g) The CCI Shareholders will surrender all of their shares of the
CCI Common Stock in the manner hereinafter set forth.
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(h) In exchange for the shares of the CCI Common Stock surrendered
by the CCI Shareholders, Charys will issue and transfer to them on the basis
hereinafter set forth, shares of the Charys Common Stock.
(i) A copy of this Plan of Merger will be furnished by the
Surviving Corporation, on request and without cost, to any shareholder of any
constituent corporation.
(j) The authorized capital stock of the Subsidiary is 10,000
shares of common stock, par value $0.001 per share (the "Subsidiary Common
Stock"), of which 1,000 shares are issued and outstanding.
(k) The authorized capital stock of CCI is 25,000,000 shares of
the CCI Common Stock, of which 18,000,000 shares are issued and outstanding, all
of which are held by the CCI Shareholders as described on Attachment A hereto.
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2. Effective Date. The effective date of the Merger (the "Effective
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Date") shall be the date of the filing of Articles of Merger for the Subsidiary
and CCI in the State of Nevada.
3. Submission to Stockholders. This Plan of Merger shall be submitted
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for approval separately to the CCI Shareholders and the shareholders of the
Subsidiary in the manner provided by the laws of the State of Nevada.
4. Manner of Exchange. As soon as practicable after the Effective
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Date, the CCI Shareholders shall surrender to Charys their stock certificates
representing the CCI Common Stock in exchange for certificates representing the
shares of the Charys Common Stock to which they are entitled pursuant to the
provisions of Section 5 hereof. All shares of the Charys Common Stock, when
issued and delivered to the CCI Shareholders in accordance with the terms
hereof, will be duly authorized, validly issued, fully-paid and non-assessable.
The issued and outstanding shares of the Subsidiary Common Stock will be
cancelled. In furtherance of the foregoing, as soon as practicable after the
Effective Date, Charys shall mail to each CCI Shareholder, a letter of
transmittal in form reasonably acceptable to CCI and Charys (which shall specify
that delivery shall be effected, and risk of loss and title to any certificates
that immediately prior to the Effective Date represented outstanding shares of
CCI Common Stock shall pass, only upon actual delivery of the certificates to
Charys, and shall contain instructions for use in effecting the surrender of the
certificate in exchange for certificates representing shares of Charys Common
Stock). Upon surrender for cancellation to Charys by a CCI Shareholder of any
certificate(s) held by such CCI Shareholder representing shares of CCI Common
Stock, together with the letter of transmittal, duly executed by such CCI
Shareholder, the surrendering CCI Shareholder shall be entitled to receive in
exchange therefore a certificate representing that number of shares of Charys
Common Stock into which the shares represented by the surrendered certificate
shall have been converted upon the Merger pursuant to Section 5 of this
Agreement, and any certificate so surrendered shall immediately be cancelled by
Charys.
5. Basis of Exchange.
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(a) The CCI Shareholders currently own 20,100,000 shares of the
CCI Common Stock, which shares constitute all of the issued and outstanding
shares of the capital stock of CCI. As a result of the Merger, each share of
CCI Common Stock held by the CCI Shareholders shall be converted into (i)
0.037199 of a share of Charys Common Stock adjusted up to the next whole share
in the case of fractional shares and (ii) if a CCI Shareholder shall make the
election provided for in Section 5(b) hereof within thirty (30) days after the
Effective Date, as to each share of CCI Common Stock held by such electing CCI
Shareholder the right to receive an additional 0.030712 of a share of Charys
Common Stock adjusted up to the next whole share in the case of fractional
shares (such number of shares described in clause (ii) equaling 85% of the
minimum number of shares that may be issued on account of each share of Charys
Common Stock in connection with the earn-out payments provided for in Section 11
hereof and being in lieu of receiving any additional shares of Common Stock
pursuant to Section 11 hereof on account of any shares of Charys Common Stock
received by such CCI Shareholder in the Merger). Therefore, as a result of the
Merger, each CCI Shareholder shall be entitled to receive one share of Charys
Common Stock for each 26.882453 shares of CCI Common Stock converted in the
Merger and an additional 0.030712 share of Charys Common Stock adjusted up to
the next whole share in the case of fractional shares on account thereof if such
CCI Shareholder makes the election provided for in Section 5(b). By virtue of
the Merger, all shares of CCI Common Stock, when so converted, shall no longer
be outstanding and shall automatically cease to exist and each CCI Shareholder
shall cease to have any rights with respect thereto, except the right to receive
the
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certificates representing the shares of Charys Common Stock into which such
shares are converted, and the right to receive the additional consideration
provided for in Sections 7 and 11 hereof. As a result of the Merger, 747,710
shares adjusted for fractional shares of the Charys Common Stock shall be issued
to the CCI Shareholders (including an adjustment for fractional shares). For
purposes of the calculations of the number of shares of Charys Common Stock to
be issued in the Merger, the parties have assumed a value of $4.00 per share, or
an aggregate value of $2,990,798.53.
(b) Except as limited in accordance with the last sentence of this
Section 5(b), a CCI Shareholder may elect at any time within thirty (30) days
after the Effective Date, to receive 0.030712 of a share of Charys Common Stock
on account of each share of CCI Common Stock held by such CCI Shareholder
immediately prior to the Effective Time, the right to receive the same being in
lieu of receving any shares of Charys Common Stock pursuant to Section 11 hereof
on account of any shares of Charys Common Stock received by such CCI Shareholder
in the Merger. Such an election shall be made on the letter of transmittal form
to be provided by Charys to the CCI Shareholders pursuant to Setion 4 hereof
promplty after the Effective Date, which letter of transmittal form shall be
returned by such CCI Shareholders to Charys in accordance with the instructions
set forth therein. Notwithstanding the foregoing, no holder of more than five
percent (5%) of outstanding shares of the CCI Common Stock immediately prior to
the Effective Date nor any executive officer of CCI may make such an election,
and each of them have heretofore entered into separate agreements with Charys to
such effect.
6. Existing Debt. Charys anticipates that the debt of CCI will
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continue as before the Merger on substantially similar terms as are currently in
force, subject to the approval and written waiver of any "Due on Sale" clauses
by the holders of the indebtedness. CCI will use its best efforts to secure
such approvals, waivers, and "Change of Control" provisions as are necessary to
facilitate the Merger.
7. Make Whole Provision. The shares of the Charys Common Stock held by
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a Qualified Holder (as defined herein) will be subject to a "Make Whole
Calculation" defined below where if the average "Market Price" per share defined
below of the Charys Common Stock is less than $4.00 over a period of time
described hereinafter, then additional shares and/or cash will be delivered to
the CCI Shareholders. The Make Whole Calculation will not apply if (a) the
average Market Price per share for the Charys Common Stock for the 20 trading
days ending on the date which is 24 months from the Effective Date is equal to
or greater than $4.00 per share, or (b) the average Market Price per share for
the Charys Common Stock for any 20 consecutive trading days during the period
commencing after the first anniversary of the Effective Date and ending on the
second anniversary of the Effective Date is equal to or greater than $4.25 per
share. Under either circumstance, the shares of the Charys Common Stock issued
at the Effective Date would not be adjusted, and that portion of the
consideration for the Merger would be deemed to have been paid in full.
Otherwise, the Make Whole Calculation will apply. The Make Whole Amount shall
be payable within ten (10) days after the second anniversary of the Effective
Date.
8. Make Whole Calculation. If the average Market Price per share of
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Charys Common Stock for the twenty (20) consecutive trading days ending on the
date which is the second anniversary of the Effective Date is not equal to or
greater than $4.00 per share at the time, then the difference between such
average Market Price per share and $4.00 per share, if any, multiplied by the
number of shares of the Charys Common Stock initially issued at the Effective
Date, and still held on such second anniversary of the Effective Date, would be
the "Make Whole Amount." The portion of the Make Whole Amount payable on
account of each share entitled to receive the same would be an amount equal to
the quotient of the Make Whole Amount divided by the number of shares of Charys
Common Stock initially issued on the Effective Date and still held on such
second anniversary of the Effective Date, excluding any shares issued pursuant
to Section 5(b) hereof. For example, if the average Market Price per share is
$3.70 per share, then the Make Whole Amount per share would be $0.30 per share
and would be payable by Charys in cash and/or in shares of the Charys Common
Stock, at the discretion of Charys, based upon the average Market Price per
share, unless otherwise agreed by Charys and each former CCI Shareholder
entitled to receive the Make Whole Amount. The Make Whole Amount would not be
payable on the additional Charys shares paid at the Effective Date to those of
the CCI Shareholders who elected to take such additional shares pursuant to
Section 5(b) hereof. Further, the Make Whole Amount would be payable only on
shares of the Charys Common Stock issued in the Merger that are held by
Qualified Holders.
9. Make Whole Adjustment. If CCI, on the second anniversary date of
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the Effective Date has reported EBITDA (as defined in Section 11) equal to or
less than 75 percent of the EBITDA Target (the "EBITDA Target" being EBITDA
equal to 7% CCI's of revenue for the two year period ending on April 30, 2007),
then the
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Make Whole Amount related to the Charys Common Stock issued in connection with
the Merger will be adjusted proportionately in relation to the short fall in the
reported EBITDA to the EBITDA Target. If, for example, CCI reaches 75 percent
of the EBITDA Target, then 75 percent of the Make Whole Amount shall be paid.
In the event CCI has reported EBITDA of 50 percent or less of the EBITDA Target,
there shall be no Make Whole Amount. If CCI reaches more than 75 percent of the
EBITDA Target, then the entire Make Whole amount shall be paid.
10. Certain Definitions. For purposes of this Agreement, the following
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terms have the respective meanings set forth below:
(a) "Market Price" means the market price of Charys Common Stock
determined on the basis of:
(i) The closing sale price (or the closing bid price, if no
sales were reported) of the Charys Common Stock on the principal stock exchange,
or the National Association of Securities Dealers' Automated Quotation National
Market System ("NASDAQ/NMS"), as the case may be, on which the Charys Common
Stock is then listed or admitted to trading;
(ii) If the Charys Common Stock is not then listed or
admitted to trading on any stock exchange or the NASDAQ/NMS, then the average of
the closing bid and ask prices (if the bid price is 50 percent or less of the
ask then only the ask price shall be used) on such day in the over-the-counter
market, as furnished by the NASDAQ OTC Bulletin Board Service or the National
Quotation Bureau, Inc.;
(iii) If neither the NASDAQ Bulletin Board Service nor the
National Quotation Bureau, Inc. then reports such prices, then as furnished by
any comparable service then engaged in providing price quotations; or
(iv) If there is no such comparable service, as furnished by
any member of the National Association of Securities Dealers ("NASD") selected
by Charys, with the consent of the two former CCI Shareholders who, at the
Effective Date, held the largest number of outstanding shares of the CCI Common
Stock, which consent shall not be unreasonably refused or delayed, and so long
as such NASD member is not an affiliate of Charys.
(b) "Qualified Holder" has the meaning set forth in Section
11(a)(x) hereof.
(c) "Permitted Transferee," with respect to any Qualified Holder,
means any other Qualified Holder;
(i) any member of an individual Qualified Holder's family
(including ancestors, descendants and siblings) or any trust primarily for the
benefit of an individual Qualified Holder or the benefit of any member of an
individual Qualified Holder's family;
(ii) any transferee pursuant to a testamentary disposition
upon the death of an individual Qualified Holder;
(iii) any spouse or former spouse of a Qualified Holder
pursuant to an agreement for division of community property or other property
settlement agreement in the event of a marital dissolution or legal separation;
(iv) any successor in interest upon the sale of all assets or
the merger, consolidation or dissolution of any Qualified Holder that is itself
a partnership, limited liability company or corporation;
(v) to any entity that controls, is controlled by or is under
common control with a Qualified Holder that is a partnership, limited liability
company or corporation;
(vi) by court order to any trustee, receiver or creditor upon
the bankruptcy of a Qualified Holder;
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(vii) to any guardian or conservator appointed by court order
upon an adjudication of incompetency of an individual Qualified Holder;
(viii) any successor trustees or fiduciaries of any trust
that is a Qualified Holder; or
(ix) one or more of the partners of a partnership or members
of a limited liability company that, in either case, is a Qualified Holder, upon
distribution in kind of such Qualified Holder's shares of Charys Common Stock to
such partner(s) or member(s).
11. Earn-Out Payments.
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(a) For purposes of this Section 11, the following terms have the
respective meanings set forth below:
(i) "CCI" means CCI and its consolidated subsidiaries.
(ii) "EBITDA" means, for any Earn-Out Period, the net income
of CCI for such Earn-Out Period determined in accordance with GAAP, (A) before
the deduction of interest expenses paid or accrued by CCI with respect to such
period, (B) before deduction of income taxes and other taxes based upon the
income of CCI for such period, (C) before the deduction of depreciation, (D)
before the amortization of goodwill and other amortizable assets, (E) before any
deductions for extraordinary or nonrecurring losses or charges of CCI (as such
terms are used under GAAP) for such period and before any increases due to
extraordinary or nonrecurring items of income of CCI (as such terms are used
under GAAP) for such period, (F) before a deduction with respect to any Excess
Payments, (G) before any deductions for financing costs, accounting fees, legal
fees or any other fees and expenses incurred in connection with the Merger or
any acquisition or business combination transactions, whether or not
consummated, pursued by CCI following the Merger, and (H) before any costs and
expenses incurred in order to comply with the provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act of 2002 and the regulations promulgated thereunder, with all items referred
to in subsections (A) through (H) in this definition determined in accordance
with GAAP.
(iii) "GAAP" means generally accepted accounting principles,
applied on a basis consistent with CCI's past practices.
(iv) "Eligible Charys Stock" means the Charys Common Stock
issued to the CCI Stockholders upon the effectiveness of the Merger, excluding,
however, those shares issued pursuant to Section 5(b) hereof.
(v) "Excess Payments" means the amount by which (i) any
corporate overhead of Charys allocated to CCI, management fees paid by CCI to
Charys or other payments made by CCI to Charys which are not directly
attributable or related to CCI's operation of its business exceeds (ii) the
lower of (A) the actual internal cost to Charys of providing such service or (B)
the aggregate costs that CCI would have incurred for the services to which such
payments or allocations relate if CCI had acquired such services from a third
party on an arm's length basis.
(vi) "Triggering Change of Control" means (A) any sale or
transfer of all or substantially all of the assets of Charys and its
subsidiaries on a consolidated basis, or (B) any sale of stock, merger,
consolidation, share exchange, business combination, or other similar
transaction which results in persons other than holders of shares of the Charys
Common Stock prior to any such transaction holding a number of shares of Charys
Common Stock possessing the power, under ordinary circumstances, to elect a
majority of the board of directors of Charys or the surviving entity of such
transaction.
(vii) "First Earn-Out Period" means the 12-month period
commencing on May 1, 2005 and ending April 30, 2006.
(viii) "Second Earn-Out Period" means the 12-month period
commencing on May 1, 2006 and ending April 30, 2007.
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(ix) "Earn-Out Periods" means the First Earn-Out Period and
the Second Earn-Out Period.
(x) "Qualified Holder" means a former CCI Shareholder that
received shares of Charys Stock in the Merger and any Permitted Transferee of
such CCI Shareholder that received any of such Charys Common Stock.
(xi) "2006 Revenue Growth" means the amount, expressed as a
percentage, that the total revenues of CCI for the First Earn-Out Period exceed
the total revenues of CCI for the twelve months ending April 30, 2005.
(xii) "2007 Revenue Growth" means the amount, expressed as a
percentage, that the total revenues of CCI for the Second Earn-Out Period exceed
the total revenues of CCI for the First Earn-Out Period.
(xiii) "2006 Earn-Out Threshold" means that the 2006 Revenue
Growth is at least 7.5%, and EBITDA for the First Earn-Out Period, expressed as
a percentage of total revenues of CCI for the First Earn-Out Period, is at least
4.0%.
(xiv) "2007 Earn-Out Threshold" means that the 2007 Revenue
Growth is at least 7.5%, and EBITDA for the Second Earn-Out Period, expressed as
a percentage of total revenues of CCI for the Second Earn-Out Period, is at
least 6.0%.
(xv) "2006 Earn-Out Amount Shortfall" means the amount by
which $2,233,000 exceeds the 2006 Earn-Out Amount.
(xvi) "2006 Earn-Out AmounT" means, but only in the case that
the 2006 Earn-Out Threshold is achieved, and subject to any Share Reduction
Amount, the amount calculated as follows:
First, 2006 Revenue Growth shall be divided by 0.15, then
the quotient thereof shall be multiplied by 0.35, and the product thereof is
being the "2006 Revenue Component."
Next, EBITDA for the First Earn-Out Period, expressed as a
percentage of total revenues for CCI for the First Earn-Out Period, shall be
divided by .06, then the quotient thereof shall be multiplied by 0.65, and the
product thereof is the "2006 EBITDA Component."
Last, the amount of $1,540,000 shall be multiplied by an
amount equal to the sum of the 2006 Revenue Component and the 2006 EBITDA
Component, and the product thereof is the 2006 Earn-Out Amount; provided,
however, the 2006 Earn-Out Amount shall not exceed $2,233,000.
(xvii) "2007 Earn-Out Amount" means, but only in the case
that the 2007 Earn-Out Threshold is achieved, and subject to any Share Reduction
Amount, the amount calculated as follows:
First, 2007 Revenue Growth shall be divided by 0.15, then
the quotient thereof shall be multiplied by 0.35, and the product thereof is the
"2007 Revenue Component."
Next, EBITDA for the Second Earn-Out Period, expressed as a
percentage of total revenues of CCI for the Second Earn-Out Period, shall be
divided by 0.08, then the quotient thereof shall be multiplied by 0.65, and the
product thereof is the "2007 EBITDA Component."
Last, the amount of $2,970,000 shall be multiplied by an
amount equal to the sum of the 2007 Revenue Component and the 2007 EBITDA
Component, and the product thereof is the 2007 Earn-Out Amount; provided,
however, the 2007 Earn-Out Amount shall not exceed $4,146,000 unless there is a
2006 Earn-Out Amount Shortfall, in which event the 2007 Earn-Out Amount shall
not exceed the sum of $4,146,000 and the 2006 Earn-Out Amount Shortfall.
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(xviii) "2006 Earn-Out Payment" means an amount payable upon
each share of Eligible Charys Stock then held by a Qualified Holder equal to
quotient of the 2006 Earn-Out Amount divided by the number of shares of Eligible
Charys Shares issued upon the effectiveness of the Merger.
(xix) "2007 Earn-Out Payment" means an amount payable upon
each share of Eligible Charys Stock then held by a Qualified Holder equal to the
quotient of the 2007 Earn-Out Amount divided by the number of shares of Eligible
Charys Stock issued upon the effectiveness of the Merger.
(xx) "Share Reduction Amount" means with respect to each of
(i) the amounts of $1,540,000 and $2,233,000 appearing in the definition of 2006
Earn-Out Amount, (ii) the amounts of $2,970,000 and $4,146,000 appearing in the
definition of 2007 Earn-Out Amount, and (iii) and the amount of $2,233,000
appearing in the definition of 2006 Earn-Out Amount Shortfall, the reduction of
each such amount to a fraction thereof, the numerator of which is the number of
shares of Eligible Charys Stock issued to CCI Stockholders in the Merger and the
denominator of which is the total number of shares of Charys Common Stock issued
to CCI Stockholders in the Merger.
(b) Not later than thirty (30) days after the completion of the
audit of CCI's financial statements for each Earn-Out Period, Charys shall
prepare and deliver to the Qualified Holders entitled to receive the payment of
an Earn-Out Amount for such Earn-Out Period a statement (the "Earn-Out
Statement") setting forth for such Earn-Out Period the total revenues of CCI,
the Revenue Growth, EBITDA of CCI, EBITDA expressed as a percentage of CCI's
total revenues, the Earn-Out Amount and the amount of the Earn-Out Payment, and
a reasonably detailed description of the calculations of all of such items .
The amount of the Earn-Out Payment reflected on such Earn-Out Statement shall be
paid to the Qualified Holders on account of each share of Eligible Charys Stock
issued in the Merger not later than the twentieth day following the date the
Earn-Out Statement is required to be delivered to such Qualified Holders (the
"Earn-Out Payment Date"). Any objections made to the calculation of the set
forth in the Earn-Out Statement shall be resolved in accordance with Section 11
d.
(c) The Earn-Out Payment shall be paid to each Qualified Holder on
account of each share of Eligible Charys Stock issued in the Merger held of
record by such Qualified Holder at the close of business on the date that is the
last day of the Earn-Out Period in cash and/or in shares of the Charys Common
Stock, the method of payment to be at the discretion of Charys. The value of
the shares of Charys Common Stock paid on account of the Earn-Out Payment shall
be the average Market Price Per Share of the Charys Common Stock for the twenty
(20) trading days ending on the last day of the Earn-Out Period, unless
otherwise agreed upon by Charys and such Qualified Holder entitled to receive
the Earn-out Payment.
(d) If a Qualified Holder entitled to receive payment of an
Earn-Out Amount shall have any objections to an Earn-Out Statement, such
Qualified Holder shall deliver a reasonably detailed statement describing such
objections to Charys within fifteen (15) days after receiving such Earn-Out
Statement (the "Objection Period"). In the event such statement is not
delivered to Charys within such 15-day period, Charys' calculations set forth
therein shall be conclusive as to such Qualified Holder. The Qualified Holders
entitled to receive payment and Charys will use reasonable efforts to resolve
any objections raised with respect to such calculations which are timely raised
by such Qualified Holders. If the parties do not obtain a final resolution
within twenty (20) days after the expiration of the Objection Period, the
Qualified Holder's entitled to receive payment and Charys will select an
accounting firm mutually acceptable to them to resolve any remaining objections.
If such Qualified Holders and Charys are unable to agree on the choice of an
accounting firm within ten (10) days, then Charys' then current regular outside
accounting firm and ▇▇▇▇▇▇▇, Stratemann & Co., L.L.P., San Antonio. Texas, shall
select a reputable accounting firm to resolve such objections. The
determination of such accounting firm so selected will be set forth in writing
and will be conclusive and binding upon the parties. If such accounting firm
determines that the Qualified Holders are entitled, under this Section 11, to an
additional payment from Charys, Charys shall pay such amount on the fifth
business day following the date of the determination by such accounting firm.
In the event that the parties submit any unresolved objections to an accounting
firm for resolution as provided in this Section 11(d), the fees and expenses of
the accounting firm shall (i) be borne by the objecting Qualified Holders if
such accounting firm determines that no additional payment is due to such
Qualified Holders, (ii) be borne equally by Charys and such Qualified Holders if
the payment which such accounting firm determines to be due to such Qualified
Holders does not exceed the Earn-Out Payment reflected on the Earn-Out Statement
by more than $25,000, or (iii) be borne by Charys if the payment which such
accounting firm determines to be due to such Qualified Holders exceeds the
Earn-Out Payment reflected on the Earn-Out Statement by more than $25,000.
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(e) Charys agrees, so long as CCI operations are achieving the
minimum performance levels outlined in the earn-out matrix set forth in
Attachment B, that Charys will (i) make reasonable commercial efforts to
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preserve the structure, assets, business and operations of CCI during the
two-year period following the Effective Date in such a manner as to permit the
Qualified Holders to attain the benefits of the provisions of this Section 11
through the achievement of Earn-Out Payments for both of the Earn-Out Periods
and (ii) to refrain from taking any significant action, or permitting any
significant action to be taken, respecting the structure, assets, business or
operations of CCI that would frustrate the purpose and intent of this Section
11. Charys further agrees that in carrying out any transaction(s) that may
affect CCI, Charys will make, or cause to be made, all practical provisions to
ensure CCI's ability to account for and determine Revenue Growth and EBITDA to
the end that the objectives set forth in the preceding sentence are attained.
Further, in the event that a Triggering Change of Control occurs prior to the
end of the Second Earn-Out Period, Charys agrees that, prior to or at the time
of such Triggering Change of Control, it will make reasonable provision or cause
reasonable provision to be made so that (A) the Earn-Out Payments, if any, can
be calculated and made following the Triggering Change of Control at the times
and in the manner set forth in this Section 11 and (B) Charys' obligations under
this Section 11 are expressly assumed by the acquiring person; provided,
however, no such assumption by the acquiring person shall relieve Charys from
its obligations respecting the provisions of this Section 11.
(f) The right to receive payment of an Earn-Out Amount is personal
to Qualified Holder and shall not be transferable other than together with
shares of Eligible Charys Shares to another Qualified Holder. Any attempted
transfer of the right to receive payment of an Earn-Out Amount shall be null and
void.
(g) In the event Charys effects any stock split, stock dividend,
recapitalization or other similar event after the date of this Agreement and
prior to the Earn-Out final payment of any Earn-Out Payment hereunder,
appropriate adjustments to will be made to the number of shares of Charys Common
Stock which are subject to the foregoing provisions of this Section 11 in order
to carry out the purposes and intent thereof.
12. No Fractional Shares. No fractional shares of the Charys Common
----------------------
Stock shall be issued in connection with the Merger, including shares issued
pursuant to Sections 7 and 11 hereof. In the event that any fractional shares
of the Charys Common Stock would be issued to a CCI Shareholder, the number of
shares of the Charys Common Stock to be issued shall be rounded up to the
nearest whole share.
13. Registration Rights. Upon the effectiveness of the Merger, each of
-------------------
the CCI Shareholders shall have the registration rights specified in
Attachment C hereto with respect to all of the shares of Charys Common Stock
------------
received by such CCI Shareholder in the Merger, including shares received by
such CCI Stockholder pursuant to Sections 7 and 11 hereof.
14. [RESERVED]
----------
15. Restricted Shares. All shares of the Charys Common Stock to be
------------------
received by the CCI Shareholders hereunder shall be restricted in their resale
as provided in the Securities Act of 1933, as amended (the "Securities Act"),
and shall contain a legend as required by Rule 144 promulgated under the
Securities Act ("Rule 144"), which shall read as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH
SHARES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR OTHERWISE TRANSFERRED UNLESS A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT.
16. Directors and Officers. The officers and directors of CCI
------------------------
following the Merger shall be ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, as chief executive officer and
as a director, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, as chief financial officer, ▇▇▇▇ ▇▇▇▇▇▇, as
chief operating officer, ▇▇▇▇▇ ▇▇▇▇▇▇, as executive vice president of business
development, and each of ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇, as directors. If
a vacancy shall exist on the Board of Directors of the Surviving Corporation on
the Effective Date, such vacancy may be filled by the Board of Directors as
provided in the Bylaws
8
of the Surviving Corporation. The Board of Directors of the Surviving
Corporation may elect or appoint such additional officers as it may deem
necessary or appropriate. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ will at the Effective Date execute and deliver the Employment
Agreements in substantially the same form as Attachment E attached hereto.
------------
17. Articles of Incorporation. The Articles of Incorporation of CCI
---------------------------
existing on the Effective Date, a copy of which is attached hereto as
Attachment F shall continue in full force as the Articles of Incorporation of
------------
the Surviving Corporation until altered, amended, or repealed as provided
therein or as provided by law.
18. Bylaws. The Bylaws of CCI existing on the Effective Date, a copy
------
of which is attached hereto as Attachment G shall continue in full force as the
------------
Bylaws of the Surviving Corporation until altered, amended, or repealed as
provided therein or as provided by law.
19. Copies of the Plan of Merger. A copy of this Plan of Merger is on
-----------------------------
file at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, the principal offices of
CCI, and at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, the
principal offices of Charys and the Subsidiary. A copy of this Plan of Merger
will be furnished to any shareholder of CCI, Charys, or the Subsidiary, on
written request and without cost.
20. Representations and Warranties of CCI. Where a representation
-----------------------------------------
contained in this Agreement is qualified by the phrase "to the best knowledge of
CCI" (or words of similar import), such expression means that, after having
conducted a due diligence review, CCI believes the statement to be true,
accurate, and complete in all material respects. The disclosure of any fact or
matter in a Schedule identified in any subparagraph of this Paragraph 20
constitutes disclosure for purposes of all other subparagraphs of this Paragraph
20. CCI represents and warrants to Charys as follows:
(a) Power and Authority. CCI has full power and authority to
---------------------
execute, deliver, and perform this Agreement and all other agreements,
certificates or documents to be delivered in connection herewith, including,
without limitation, the other agreements, certificates and documents
contemplated hereby (collectively the "Other Agreements").
(b) Binding Effect. Upon execution and delivery by CCI, this
---------------
Agreement and the Other Agreements shall be and constitute the valid, binding
and legal obligations of CCI, enforceable against CCI in accordance with the
terms hereof and thereof, except as the enforceability hereof or thereof may be
subject to the effect of (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting creditors'
rights generally, and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(c) No Violation. Neither the execution and delivery of this
-------------
Agreement or the Other Agreements nor full performance by CCI of its obligations
hereunder or thereunder will violate or breach, or otherwise constitute or give
rise to a default under, the terms or provisions of the Articles of
Incorporation or Bylaws of CCI or, subject to obtaining any and all necessary
consents, of any contract, commitment or other obligation of CCI or necessary
for the operation of CCI's business (the "Business") following the Merger or any
other material contract, commitment, or other obligation to which CCI is a
party, or create or result in the creation of any encumbrance on any of the
property of CCI. Except with respect to those companies and individuals
disclosed to Charys before the date of this Agreement or as disclosed on
Schedule 20(c) attached hereto, CCI is not in violation of its Articles of
---------------
Incorporation, its Bylaws, or of any indebtedness, mortgage, contract, lease, or
other agreement or commitment.
(d) No Consents. Except as disclosed on Schedule 20(d) attached
------------
hereto, no consent, approval or authorization of, or registration, declaration
or filing with any third party, including, but not limited to, any governmental
department, agency, commission or other instrumentality, will, except such
consents, if any, delivered or obtained on or prior to the Effective Date, be
obtained or made by CCI prior to the Effective Date to authorize the execution,
delivery and performance by CCI of this Agreement or the Other Agreements.
(e) Capitalization. CCI is authorized by its Articles of
--------------
Incorporation to issue 25,000,000 shares of the CCI Common Stock, of which
20,100,000 shares are issued and outstanding, and 25,000,000 shares of preferred
stock, par value $0.01 per share, none of which have been issued. All issued and
outstanding shares
9
having been validly issued and are fully paid and non-assessable, with no
personal liability or preemptive rights attaching to the ownership thereof.
Except as set forth on Schedule 20(e) attached hereto, no instruments or
---------------
securities of any kind exist which are convertible into additional shares of the
capital stock of CCI, nor do any outstanding options, warrants, rights, calls,
commitments, plans, or other arrangements or agreements of any character exist
providing for the purchase or issuance of any additional shares of CCI.
(f) Stock Ownership. Attachment A hereto sets forth a true and
---------------- -------------
accurate list of the holders of record of all of the issued and outstanding
shares of CCI Common Stock as of the Effective Date.
(g) Organization and Standing of CCI. CCI is a duly organized and
--------------------------------
validly existing Nevada corporation in good standing, with all requisite
corporate power and authority to carry on the Business as presently conducted in
each of the jurisdictions where it is currently doing business. CCI has
qualified to do business in the States listed in Schedule 20(g) attached hereto.
--------------
(h) CCI Subsidiaries. CCI has eight subsidiaries as listed in
-----------------
Schedule 20(h) attached hereto, each of which is a duly organized and validly
---------------
existing corporation in the jurisdiction of its incorporation, and is in good
standing, with all requisite corporate power and authority to carry on its
business as presently conducted in each of the jurisdictions where it is
currently doing business. As used herein, the term "CCI" shall mean CCI and all
of its subsidiaries, unless the context requires otherwise.
(i) Employees. On the date of this Agreement, CCI has
---------
approximately 130 employees. All employees of CCI whose annual base salary
exceeds $50,000 per year are described in Schedule 20(i) attached hereto. To
--------------
the best knowledge of CCI, it has been for the past four years, and currently
is, in material compliance with all federal, state and local regulations or
orders affecting employment and employment practices (including those
regulations promulgated by the Equal Employment Opportunity Commission),
including terms and conditions of employment and wages and hours. At the
Effective Date, CCI will have no obligation to make any payment to any past or
present employees, officers or directors or independent contractors except as to
those individuals described in Schedule 20(i), other than compensation paid in
--------------
the ordinary course of business. Except as disclosed in Schedule 20(i) attached
--------------
hereto, CCI has no employment contract, written or otherwise, with any employee
or former employee.
(j) Financial Statements. CCI has furnished Charys and the
---------------------
Subsidiary audited year-end balance sheets and statements of operations,
shareholders equity and cash flow of CCI and its consolidated subsidiaries as of
March 31, 2003, and March 31, 2004 and unaudited statements (collectively, the
"Financial Statements") for the period commencing April 1, 2004 and ending
December 31, 2004 (the "Financial Statement Date") all of which are attached
hereto as Schedule 20(j). The Financial Statements (i) are in accordance with
--------------
the books and records of CCI; (ii) fairly present the financial condition of CCI
at such dates and the results of its operations for the periods therein
specified; (iii) were prepared in accordance with generally accepted accounting
principles applied upon a basis consistent with prior accounting periods, except
that the unaudited statements are subject to normal year-end adjustments and do
not contain the footnotes required by generally accepted accounting principles ;
and (iv) with respect to all contracts and commitments of CCI, reflect adequate
reserves for all reasonably anticipated losses and costs in excess of
anticipated income. Specifically, but not by way of limitation, the Financial
Statements disclose all of the debts, liabilities, and obligations of any nature
(whether absolute, accrued, contingent, or otherwise and whether due or to
become due) of CCI on the dates therein specified (except such debts,
liabilities, and obligations as are not required to be reflected therein in
accordance with generally accepted accounting principles).
(k) Present Status. Except as disclosed in Schedule 20(k)
--------------- ---------------
attached hereto, since the dates reflected on the Financial Statements, CCI has
not (i) incurred any material obligations or material liabilities, absolute,
accrued, contingent, or otherwise, except current trade payables; (ii)
discharged or satisfied any liens or encumbrances, or paid any obligations or
liabilities, except current Financial Statements liabilities and current
liabilities incurred since the dates reflected on the Financial Statements, in
each case, in the ordinary course of business; (iii) declared or made any
shareholder payment or distribution or purchased or redeemed any of its
securities or agreed to do so; (iv) mortgaged, pledged, or subjected to lien,
encumbrance, or charge any of its material assets except as shall be removed
prior to or at the Effective Date; (v) canceled any material debt or claim; (vi)
sold or transferred any assets of a material value except sales from inventory
in the ordinary course of business; (vii) suffered any damage, destruction, or
loss (whether or not covered by insurance) materially affecting its
10
properties, business, or prospects; (viii) waived any rights of a material
value; (ix) entered into any transaction other than in the ordinary course of
business. Further, except as disclosed in Schedule 20(k) attached hereto, since
the Financial Statement Date, there has not been any change in or any event or
condition (financial or otherwise) affecting the property, assets, liabilities,
operations, or prospects of CCI, other than changes in the ordinary course of
its business, none of which has (either when taken by itself or taken in
conjunction with all other such changes) been materially adverse.
(l) Tax Returns and Audits. CCI has delivered to Charys copies of
----------------------
all federal and state income tax and franchise tax returns for CCI for the
fiscal years ended March 31, 2002, 2003 and 2004 (collectively the "Primary Tax
Returns"), all of which are described in Schedule 20(l) attached hereto. CCI
--------------
has paid all taxes (the "Primary Taxes") required to be paid as provided in the
Primary Tax Returns.
(i) As of the Effective Date, CCI has filed all of the other
tax returns (the "Other Tax Returns," and together with the Primary Tax Returns,
collectively, the "Tax Returns") required to be filed and has duly paid or
accrued on the Financial Statements all taxes (the "Other Taxes," and together
with the Primary Taxes, collectively, the "Taxes") required to be paid as
provided in the Other Tax Returns, including without limitation, premium, gross
receipts, net proceeds, alternative or add-on minimum, ad valorem, value added,
turnover, sales, use, property, personal property (tangible and intangible),
stamp, leasing, lease, user, excise, duty, transfer, license, withholding,
payroll, employment, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and other charges (including interest
and penalties) due or claimed to be due by federal, state, or local authorities
(collectively, the "Taxing Authorities"). All Taxes required or anticipated to
be paid for all periods prior to and including the Effective Date have been paid
or fully reserved against in accordance with generally accepted accounting
principles applied upon a basis consistent with prior accounting periods, except
as provided in Schedule 20(l) attached hereto. All Taxes which are required to
--------------
be withheld or collected by CCI have been duly withheld or collected, and to the
extent required, have been paid to the proper Taxing Authority or properly
segregated or deposited as required by applicable laws. There are no liens for
Taxes upon any property or assets of CCI except for liens for Taxes not yet due
and payable. CCI has not executed a waiver of the statute of limitations on the
right of the Internal Revenue Service or any other Taxing Authority to assess
additional Taxes or to contest the income or loss with respect to any Tax
Return. The basis of any depreciable assets, and the methods used in
determining allowable depreciation (including cost recovery) of CCI is
substantially correct and in compliance with the Code, and the regulations
thereunder.
(ii) Except as disclosed in Schedule 20(l) attached hereto,
--------------
no issues have been raised that are currently pending by any Taxing Authority in
connection with any of the Tax Returns. No material issues have been raised in
any examination by any Taxing Authority with respect to CCI which, by
application of similar principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined. There are no
unresolved issues or unpaid deficiencies relating to such examinations.
(iii) Except as disclosed in Schedule 20(l) attached hereto,
--------------
CCI is not subject to any joint venture, partnership or other arrangement or
contract which is treated as a partnership for federal income tax purposes.
(iv) CCI is not a "consenting corporation" within the meaning
of Section 341(f)(1) of the Code, or comparable provisions of any state
statutes, and none of the assets of CCI is subject to an election under Section
341(f) of the Code or comparable provisions of any state statutes.
(v) CCI is not and will not be required to recognize after
the Effective Date any taxable income in respect of accounting method
adjustments required to be made under the Tax Reform Act of 1986 or the Revenue
Act of 1987.
(vi) None of the assets of CCI constitutes tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code, and none of the assets of CCI are subject to a safe harbor lease
or other similar arrangement as a result of which CCI is not treated as the
owner for federal income tax purposes.
11
(vii) CCI has not made or become obligated to make, and will
as a result of any event connected with the Effective Date become obligated to
make, any "excess parachute payment" as defined in Section 280G of the Code
(without regard to subsection (b)(4) thereof).
(viii) CCI and its domestic subsidiaries file a consolidated
tax return. Otherwise, CCI is not a party to any tax sharing agreement.
(ix) CCI shall file all Tax Returns and reports with respect
to Taxes which are equired to be filed for Tax periods ending on or before the
Effective Date (a "Pre-Effective Date Tax Return") and shall pay all amounts
shown to be due on such Pre-Effective Date Tax Returns to the appropriate taxing
authority.
(x) CCI shall furnish or cause to be furnished, upon request,
as promptly as practicable, such information (including access of books and
records) and assistance relating to CCI as is reasonably necessary for the
filing of any return or report, for the preparation for any audit, and for the
prosecution or defense of any claim relating to any proposed adjustment or
refund claim.
(m) Litigation. Other than as reflected on Schedule 20(m)
---------- ---------------
attached hereto, to the knowledge of CCI, no material litigation, arbitrations,
claims, governmental or other proceedings (formal or informal), or
investigations pending, threatened, or in prospect (or any basis therefor known
to CCI) with respect to CCI, or any of the Business, properties, or assets
existing as of the date of this Agreement.
(n) Compliance with Laws and Regulations. Except as otherwise
----------------------------------------
disclosed in Schedule 20(n) attached hereto, to the best knowledge of CCI, it is
--------------
in material compliance with all laws, ordinances, codes, restrictions,
regulations (environmental and otherwise) and other legal requirements
applicable to the conduct of the Business, the noncompliance with which would be
likely to have a material adverse effect on the Business; and there are no
lawsuits or proceedings pending or, to their knowledge, threatened with respect
to the foregoing.
(o) No Defaults. Other than as reflected on Schedule 20(o)
------------ ---------------
attached hereto, to the best knowledge of CCI, it is not in default under any
provision, of any lease, contract, commitment, obligation, note, bond,
debenture, mortgage, indenture, security agreement, guaranty, or other
instrument of indebtedness, and no existing condition exists which, with the
giving of notice or the passage of time, or both, would constitute such a
default, in either case, which default is or would be likely to have a material
adverse effect on the Business.
(p) Permits and Approvals. Except as otherwise disclosed on
-----------------------
Schedule 20(p) attached hereto, to the best knowledge of CCI, (i) it has all
---------------
permits and approvals required for the conduct of the Business and is not in
material default under any permit, approval or qualification, which default is
likely to have a material adverse effect on CCI or the Business, nor is there
any existing condition which, with the giving of notice or the passage of time,
or both, would constitute such a material default; (ii) no permit, approval or
qualification of any government or governmental unit, agency, board, body or
instrumentality, whether federal, state or local, is necessary for the conduct
of the Business as same has been and is being conducted; and (iii) there is no
lawsuit or proceeding pending or threatened with respect to any of the
foregoing.
(q) Properties. CCI does not own any real property. However, CCI
----------
has good and marketable title to all other properties and assets used in the
Business or owned by it (except real and other properties and assets as are held
pursuant to leases or licenses), free and clear of all liens, mortgages,
security interests, pledges, charges, and encumbrances, other than as shown on
the Financial Statements, including, but not limited to a tax lien for unpaid
real estate taxes other than real estate taxes not yet due and payable. The
properties and assets owned, leased, or licensed by CCI constitute all such
properties and assets which are necessary to the Business as presently conducted
or as CCI contemplates conducting.
(r) Patents and Trademarks. To the best knowledge of CCI, it
------------------------
owns, possesses and has good title to all of the copyrights, trademarks,
trademark rights, patents, patent rights, and licenses necessary in the conduct
of the Business, all of which are described in Schedule 20(r) hereto. To the
--------------
best knowledge of CCI, it is not infringing upon or otherwise acting adversely
to the rights of any person, under, or in respect to, any copyrights,
trademarks, trademark rights, patents, patent rights, or licenses owned by any
person or entity, and there is no claim or pending or threatened action with
respect thereto.
12
(s) Compliance with Environmental Laws. Except as otherwise
-------------------------------------
disclosed on Schedule 20(s) attached hereto, to the best knowledge of CCI, it
---------------
has not violated and is not in violation of the Federal Clean Air Act (42 U.S.C.
7401, et seq.), Federal Water Pollution Control Act (33 U.S.C. 1251, et seq.),
the Federal Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901, et
seq.), the Federal Comprehensive Environmental Responsibility, Clean Up and
Liability Act of 1980 (42 U.S.C. 9601, et seq.), the Federal Toxic Substance
Control Act of 1976 (15 U.S.C. 2601, et seq.) or any state or local laws or
ordinances regulating the subjects covered by the federal statutes identified
above, including rules and regulations thereunder. Prior to the Effective Date,
CCI either directed, participated in and/or authorized that studies of the
environmental status of CCI's properties and operations of the Business be
prepared, which studies are listed or otherwise described in Schedule 20(s)
--------------
hereto (collectively the "Studies"). The Studies, as well as those other
matters, correspondence, reports and the like disclosed in Schedule 20(s)
--------------
hereto, have been delivered to Charys and Charys' counsel and environmental
consultants and are incorporated herein by reference as though set out herein.
(t) Purchase and Outstanding Bids. No purchase commitments of CCI
-----------------------------
are in excess of normal, ordinary, and usual requirements of its business, or
were made at any price in excess of then current Market Price or contained terms
and conditions more onerous than those usual and customary in the industry.
(u) Insurance Policies. CCI currently has insurance contracts or
-------------------
policies (the "Policies") in full force and effect which provide for coverage
that are usual and customary as to amount and scope in the business of CCI.
Schedule 20(u) attached hereto sets forth a summary of all insurance contracts
---------------
or policies that relate to liability or excess liability insurance
(collectively, the "Liability Policies") and all other Policies, including the
name of the insurer, the types, dates and amounts of coverage and any material
coverage exclusions. Except as set forth in Schedule 20(u) attached hereto, all
--------------
of the Policies and Liability Policies remain in full force and effect. CCI has
not breached or otherwise failed to perform, in any material respect, its
obligations under any of the Policies or the Liability Policies nor has CCI
received any adverse notice or communication from any of the insurers under the
Policies or the Liability Policies with respect to any such alleged breach or
failure in connection with any of the Policies or the Liability Policies. All
Policies are sufficient for compliance with all regulations, orders and all
contracts to which CCI is subject; are valid, outstanding, collectible and
enforceable policies; and will not in any way be affected by, or terminate or
lapse by reason of, the execution and delivery of this Agreement or the
consummation of the Merger.
(v) Compensation of Officers and Others. Except as disclosed in
-------------------------------------
Schedule 20(v) attached hereto, as of the Financial Statement Date, there has
not been any change in any compensation, commission, bonus, or other
remuneration payable to any officer, director, agent, employee, or consultant of
CCI, other than in the ordinary course of business.
(w) Inventory. The inventory of CCI which is reflected on the
---------
Financial Statements and all inventory items which have been acquired since the
Financial Statement Date consists of goods of such quality and in such
quantities as are salable in the ordinary course of the Business with normal
markup at prevailing market prices. Each item of the inventory was valued in
accordance with generally accepted accounting principles applied upon a basis
consistent with prior accounting periods.
(x) Status on the Effective Date. CCI shall deliver to Charys at
-----------------------------
the Effective Date a schedule prepared by the chief financial officer of CCI
stating the amount of CCI's (i) cash balances, plus certificates o deposit, (ii)
accounts receivable and (iii) accounts payable, in each case as of the Effective
Date.
(y) Labor Matters. Except as disclosed in Schedule 20(y) hereto,
-------------- --------------
to the best knowledge of CCI, it is in material compliance with all applicable
laws, rules or regulations respecting employment and employment practices, terms
and conditions of employment and wages and hours, and CCI has not engaged in any
unfair or illegal labor practice which has not been remedied as of the date
hereof. There is no unfair labor practices complaint or charge of employment
discrimination pending or, to the best knowledge of CCI, threatened in writing
against CCI with respect to any of the employees before the National Labor
Relations Board, if applicable, the Equal Employment Opportunity Commission, or
any other state, federal or local court or governmental board, agency or
commission. There is no labor strike, dispute, work slowdown, work stoppage or
other job action pending or, to the best knowledge of CCI, threatened against
CCI.
13
(z) Compliance with Law and Other Instruments. The business and
-------------------------------------------
operations of CCI have been and are being conducted in accordance with all
applicable laws, rules and regulations of all authorities, except those which do
not (either individually or in the aggregate) materially and adversely affect
CCI.
(aa) Contracts. All relevant and/or significant contracts to
---------
which CCI is a party have been provided to Charys directly and/or indirectly as
a result of Charys due diligence request or other written requests. Other than
as disclosed on Schedule 20(aa) attached hereto or otherwise heretofore
----------------
disclosed to Charys in writing, to the best knowledge of CCI, it has in all
respects performed all obligations required to be performed to date, and is not
in material default in any respect under any of the contracts, agreements,
leases, documents, or other commitments to which it is a party or otherwise
bound or affected. All parties having material contracts with CCI are in
material compliance therewith, and are not in material default thereunder.
(bb) Banks, Brokers and Proxies. Schedule 20(bb) attached hereto
--------------------------- ---------------
sets forth (i) the name of each bank, trust company, securities or other broker
or other financial institution with which CCI has an account, credit line or
safe deposit box or vault, or otherwise maintains relations; (ii) the name of
each person authorized by CCI to draw thereon or to have access to any such safe
deposit box or vault; (iii) the purpose of each such account, safe deposit box
or vault; and (iv) the names of all persons authorized by proxies, powers of
attorney or other instruments to act on behalf of CCI in matters concerning its
business or affairs. All such accounts, credit lines, safe deposit boxes and
vaults are maintained by CCI for normal business purposes, and no such proxies,
powers of attorney or other like instruments are irrevocable. The account
statements previously provided to Charys are true and complete in all respects.
(cc) Dealings with Affiliates. Schedule 20(cc) attached hereto
-------------------------- ----------------
sets forth a complete list, including the parties, of all oral or written
agreements and arrangements to which CCI is, will be or has been a party, at any
time from December 31, 2003 to the Effective Date, by and among CCI and any
entity which it controls, by which it is controlled or with which it is under
control.
(dd) Corporate Records, etc. CCI has delivered or made available
-----------------------
to Charys copies of the Articles of Incorporation, Bylaws, minute books, and
other corporate governance materials used since the inception of CCI. The books
of account and minute books of CCI are complete and correct, and reflect all
those transactions involving its business which properly should have been set
forth in such books.
(ee) Brokerage. No broker, agent or finder has rendered services
---------
to CCI in connection with the Merger except as shown in Schedule 20(ee) attached
---------------
hereto.
(ff) Representations and Warranties True and Complete. All
-----------------------------------------------------
representations and warranties of CCI in this Agreement and the Other Agreements
will be true, accurate and complete in all material respects as of the Effective
Date.
(gg) No Knowledge of Default. CCI has no knowledge that any
--------------------------
representations and warranties of Charys and the Subsidiary contained in this
Agreement or the Other Agreements are untrue, inaccurate or incomplete or that
Charys or the Subsidiary is in default under any term or provision of this
Agreement or the Other Agreements.
(hh) No Untrue Statements. No representation or warranty by CCI
----------------------
in this Agreement or in any writing furnished or to be furnished pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits, or will omit to state any material fact required to make the statements
herein or therein contained, in light of the circumstances under which they were
made, not misleading.
(ii) Reliance. The foregoing representations and warranties are
--------
made by CCI with the knowledge and expectation that Charys and the Subsidiary
are placing complete reliance thereon.
21. Representations and Warranties of Charys. Where a representation
------------------------------------------
contained in this Agreement is qualified by the phrase "to the best knowledge of
Charys" (or words of similar import), such expression means that, after having
conducted a due diligence review, Charys believes the statement to be true,
accurate, and complete in all material respects. Knowledge shall not be imputed
nor shall it include any matters which such person should
14
have known or should have been reasonably expected to have known. Charys
represents and warrants to CCI as follows:
(a) Power and Authority. Charys and the Subsidiary have full
---------------------
power and authority to execute, deliver, and perform this Agreement and the
Other Agreements.
(b) Corporate Organization of Charys. Charys is a corporation
-----------------------------------
duly organized, validly existing and in good standing under the laws of Delaware
with full corporate power and authority to carry on its business as it is now
being conducted and to own, operate and lease its properties and assets.
(c) Corporate Organization of the Subsidiary. The Subsidiary is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of Nevada with full corporate power and authority to carry on its business as it
is now being conducted and to own, operate and lease its properties and assets.
(d) Capital Stock of Charys. As of the date of this Agreement,
--------------------------
the entire authorized capital stock of Charys consists of 300,000,000 shares of
the Charys Common Stock, of which 5,112,767 shares are issued and outstanding,
and 5,000,000 shares of preferred stock, par value $0.001 per share, of which
1,000,000 shares are designated as Series A preferred stock (the "Charys Series
A Preferred Stock") and are issued and outstanding. All issued and outstanding
shares of the Charys Common Stock and the Charys Series A Preferred Stock have
been validly issued and are fully paid and non-assessable, with no personal
liability or preemptive rights attaching to the ownership thereof. Except as
set forth on Schedule 21(d) attached hereto, no instruments or securities of any
--------------
kind exist which are convertible into additional shares of the capital stock of
Charys, nor do any outstanding options, warrants, rights, calls, commitments,
plans or other arrangements or agreements of any character exist providing for
the purchase or issuance of any additional shares of Charys. The Charys Common
Stock to be received by the CCI Shareholders in the Merger, including Charys
Common Stock, if any, received pursuant to Sections 7 and 11 hereof, is duly
authorized, and upon issuance to any CCI Shareholder as contemplated by this
Agreement, will be validly issued, fully paid and non-assessable. The delivery
of a certificate or certificates to any CCI Shareholder pursuant to this
Agreement representing shares of Charys Common Stock in the manner provided
herein will transfer to such CCI Stockholder good and valid title to such shares
of Charys Common Stock, free and clear of all liens.
(e) Capital Stock of the Subsidiary. As of the date of this
-----------------------------------
Agreement, the entire authorized capital stock of the Subsidiary consists of
10,000 shares of the Subsidiary Common Stock, of which 1,000 are issued and
outstanding. All issued and outstanding shares of the Subsidiary Common Stock
have been validly issued and are fully paid and non-assessable, with no personal
liability or preemptive rights attaching to the ownership thereof. Except as
set forth on Schedule 21(e) attached hereto, no instruments or securities of any
--------------
kind exist which are convertible into additional shares of the capital stock of
the Subsidiary, nor do any outstanding options, warrants, rights, calls,
commitments, plans or other arrangements or agreements of any character exist
providing for the purchase or issuance of any additional shares of the
Subsidiary.
(f) Binding Effect. Upon execution and delivery by Charys and the
--------------
Subsidiary, this Agreement and the Other Agreements shall be and constitute the
valid, binding and legal obligations of Charys and the Subsidiary, enforceable
against Charys and the Subsidiary in accordance with the terms hereof and
thereof, except as the enforceability hereof or thereof may be subject to the
effect of (i) any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally, and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(g) No Violation. Other than as set forth in Schedule 21(g)
------------- --------------
attached hereto, the execution and delivery by Charys of this Agreement, and all
of the Other Agreements, and the fulfillment of and compliance with the
respective terms hereof and thereof by Charys do not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of or
constitute a default or event of default under (with due notice, lapse of time
or both) of any contract to which Charys is a party; (ii) result in the creation
of any lien upon any of Charys' capital stock or assets; (iii) give any third
party the right to accelerate any obligations of Charys; or (iv) result in a
violation of or require any authorization, consent, approval, exemption or other
action by or notice to any court or authority pursuant to, the charter or bylaws
of Charys, or any regulation, order or contract to which Charys or its
properties are subject. Charys and the Subsidiary will comply with all
applicable regulations and orders in connection with the execution, delivery and
performance of this Agreement and the Merger.
15
(h) Governmental Consents. Except for the filing of the Articles
----------------------
of Merger and other appropriate merger documents required by the NRS to be filed
with the Secretary of State of Nevada and the documents required to be filed
with the relevant authorities of other states in which the constituent
corporations are qualified to do business, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration, or
filing with any governmental body is required on the part of Charys or the
Subsidiary in connection with the transactions contemplated by this Agreement
and the Other Agreements.
(i) Investment Intent. The Subsidiary is acquiring the shares of
------------------
the CCI Common Stock for its own account and not with a view to their
distribution within the meaning of the Securities Act.
(j) No Untrue Statements. No representation or warranty by Charys
--------------------
in this Agreement or in any writing furnished or to be furnished pursuant
hereto, contains or will contain any untrue statement of a material fact, or
omits, or will omit to state any material fact required to make the statements
herein or therein contained, in light of the circumstances under which they were
made, not misleading.
(k) SEC Filings. Since April 30, 2004, Charys has filed all
------------
required documents with the SEC since it first became a registered public
company (the "SEC Documents"). As of their respective dates, the SEC Documents,
when taken together with any amendment thereto filed prior to the date hereof,
complied in all material respects with the requirements of the Securities Act or
the Securities Exchange Act of 1934, as amended, as the case may be, and, at the
respective times they were filed, none of the Charys SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except as set
forth in subsequent SEC Documents filed prior to the Effective Date or in this
Agreement.
22. Actions of CCI Pending the Effective Date. CCI agrees that from
--------------------------------------------
the date hereof until the Effective Date:
(a) Operations. CCI will use its commercially reasonable best
----------
efforts to (i) be operated in keeping with its customary practices and in
compliance with all applicable laws, rules and regulations; and (ii) not engage
in any transaction or make any commitment or expenditure, not made in the
ordinary course of business.
(b) No Change in Corporate Charter. No change will be made in the
------------------------------
Articles of Incorporation or Bylaws of CCI, or any of its subsidiaries, except
as may be first approved in writing by Charys.
(c) No Change in Compensation. Except as disclosed in Schedule
----------------------------
20(v), no increase will be made in the compensation payable to or to become
payable by CCI to any officer, employee, or agent, nor will any bonus payment or
arrangement be made by CCI to or with any officer, employee, or agent thereof,
except as may be first approved in writing by Charys.
(d) No Default. CCI shall timely pay and/or not suffer any
-----------
default with respect to any of its contracts, commitments or obligations. CCI
shall also continue to pay as they become due all accounts payable of CCI except
as disclosed on Schedule 22(d) attached hereto.
---------------
(e) Banking Relations. No change will be made affecting the
------------------
banking and safe deposit arrangements of CCI, except as may be first approved in
writing by Charys.
(f) Insurance. CCI shall keep all of its property and assets
---------
covered hereby insured in accordance with the present practice, and maintain,
preserve and keep all improvements on its properties, all equipment, machinery
and other personal property covered hereby in reasonably good condition and
state of repair, reasonable wear excepted.
(g) No Liabilities or Stock Issuances. Except as disclosed in
-------------------------------------
Schedule 20(v),CCI shall not issue nor sell any of its stock, bonds, notes, or
other corporate securities, nor incur any obligation or liability except current
liabilities incurred in the ordinary course of business, nor mortgage, pledge,
grant security interests covering, or additionally subject to lien or
encumbrance any of its properties except as may be first approved in writing by
Charys.
16
(h) Reduction of Assets. CCI shall not dispose of any material
---------------------
assets other than in the normal course of business.
(i) Access to Records. CCI shall afford Charys and the Subsidiary
-----------------
and their attorneys, accountants, investment bankers and other representatives,
access, during normal business, to all of its business operations, properties,
books, files, and records, and will cooperate in their examination thereof. No
such examination, however, shall constitute a waiver or relinquishment by Charys
and the Subsidiary of their right to rely upon covenants, representations, and
warranties of CCI made herein or pursuant hereto.
(j) Compliance. CCI shall cause its officers and employees to
----------
comply with all applicable provisions of this Agreement.
(k) Consents. CCI shall use its commercially reasonable efforts
--------
to obtain on or prior to the Effective Date, all consents necessary to the
consummation of the transactions contemplated hereby.
(l) Breach of Agreement. CCI shall not take any action which
---------------------
would constitute a breach of this Agreement.
(m) Confidentiality. CCI shall hold in confidence, and shall
---------------
cause each of its principals, officers, directors, employees and other personnel
and authorized representatives, to hold in confidence, and not disclose to any
other party without Charys' prior consent, all confidential and proprietary
information received by it from Charys or its officers, directors, employees,
agents, counsel and auditors in connection with the transactions contemplated
hereby except as may be required by applicable law or as otherwise contemplated
herein.
23. Actions of Charys Pending the Effective Date. Charys agrees that
----------------------------------------------
from the date hereof until the Effective Date:
(a) Consents. It will use its commercially reasonable best
--------
efforts to obtain on or prior to the Effective Date all consents necessary to
the consummation of the transactions contemplated hereby.
(b) Breach of Agreement. It will not take any action which, if
---------------------
taken prior to the Effective Date, would constitute a breach of this Agreement.
(c) Confidentiality. Charys shall hold in confidence, and shall
---------------
cause each of its principals, officers, directors, employees and other personnel
and authorized representatives to, hold in confidence, and not disclose to any
other party without CCI's prior consent, all confidential and proprietary
information received by it from CCI or CCI's officers, directors, employees,
agents, counsel and auditors in connection with the transactions contemplated
hereby except as may be required by applicable law or as otherwise contemplated
herein.
24. Conditions Precedent to Obligations of Charys and the Subsidiary.
------------------------------------------------------------------
All obligations of Charys and the Subsidiary under this Agreement are subject to
the fulfillment of the following conditions (or waiver in writing by Charys and
the Subsidiary of any such condition) prior to or at the Effective Date:
(a) Representations and Warranties True at the Effective Date.
-------------------------------------------------------------
The representations and warranties of CCI herein shall be deemed to have been
made again as of the Effective Date (other than any representation or warranty
that is expressly made as of a specified date, which shall be true and corrects
as of such specified date only) and then be true and correct, subject to any
changes contemplated by this Agreement. CCI shall have performed all of the
obligations to be performed by it hereunder on or prior to the Effective Date.
(b) Consents and Approvals. CCI has obtained any and all material
----------------------
consents, approvals, orders, qualifications, licenses, permits or other
authorizations, required by all applicable regulations, orders and contracts of
CCI or binding on its respective properties and assets, with respect to the
execution, delivery and performance of this Agreement and the consummation of
the Merger, including, without limitation, any consents of the CCI Shareholders
and the consent required from Frost National Bank, unless waived by Charys.
(c) No Material Adverse Change. There shall have been no material
--------------------------
adverse change since the date of this Agreement. As used herein, the term
"material adverse change," means any circumstances, state of
17
facts or matters which might reasonably be expected to have a material adverse
effect on the business, operations, properties, assets, condition (financial or
otherwise), results, plans, strategies or prospects of CCI.
(d) Secretary's Certificate. Charys has received a certificate,
------------------------
substantially in the form of Schedule 24(d) attached hereto, of the secretary of
--------------
CCI, as to the Articles of Incorporation and Bylaws of CCI, the resolutions
adopted by the Board of Directors of CCI and the CCI Shareholders in connection
with this Agreement and the incumbency of CCI's officers.
(e) Other Documents. CCI has furnished Charys with such other and
---------------
further documents and certificates including certificates of CCI officers and
others as Charys has reasonably requested to evidence compliance with the
conditions set forth in this Agreement.
(f) No Orders. There has not been issued, and there is not in
----------
effect, any injunction or similar legal order prohibiting or restraining
consummation of any of the transactions herein contemplated, and no legal or
governmental action, proceeding or investigation which might reasonably be
expected to result in any such injunction or order is pending.
(g) Deliveries at the Effective Date. CCI shall have delivered to
--------------------------------
Charys and the Subsidiary at the Effective Date all of the documents required to
be delivered hereunder.
(h) Inventory. CCI shall, upon Charys' written request, take a
---------
physical inventory for each item on the perpetual inventory system of CCI in
order to determine the value of each item in the books and records of CCI and
that each item so priced in accordance with generally accepted accounting
principles applied upon a basis consistent with prior accounting periods.
Charys, or any of its representatives, shall have the right to observe the
taking of such inventory and to test the results thereof. Upon completion of
such inventory, a schedule of inventory results will be prepared by the chief
financial officer of CCI and delivered to Charys. If such inventory is not
satisfactory to Charys, then Charys shall have the option to terminate this
Agreement.
(i) Environmental Matters. Before the Effective Date, Charys
----------------------
shall have access to the properties of CCI and the Business to perform the
environmental studies that it deems reasonably necessary. In the event that
Charys shall not be reasonably satisfied with any such environmental studies,
CCI shall have the right, but not the obligation, to remedy any condition noted
by Charys within a reasonable time after written notice from Charys. If such
noted condition has not been corrected by the Effective Date, Charys shall have
the option to terminate this Agreement, whereupon no party shall have any
liability to any other party hereunder or in connection with any other
instrument executed in relation to the transactions contemplated herein.
(j) Certificates of Good Standing. CCI shall have delivered to
--------------------------------
Charys certificates or telegrams issued by appropriate governmental authorities
evidencing the good standing of CCI and its subsidiaries as of a date not more
than 10 days prior to the Effective Date, in the State of Nevada or any such
state of incorporation, or certificates of authority to transact business.
(k) Resolutions. Charys' counsel shall have received certified
-----------
resolutions of a meeting of the Board of Directors of CCI pursuant to which this
Agreement and the transactions contemplated hereby were duly and validly
approved, adopted and ratified by the CCI Shareholders, all in form and content
satisfactory to such counsel, authorizing (i) the execution, delivery and
performance of this Agreement, (ii) such other documents and instruments as
shall be necessary to consummate the transactions contemplated hereby and
thereby, and (iii) all actions to be taken by CCI hereunder.
(l) Status of Litigation. With respect to any matters affecting
----------------------
CCI and in litigation as described in Schedule 20(m) attached hereto, Charys
--------------
shall have the right to make an independent review of such matters. If Charys
is not satisfied with such review, then Charys shall have the option to
terminate this Agreement.
(m) Certification. CCI shall have delivered to Charys at the
-------------
Effective Date a certificate dated as of the Effective Date, executed by the
Chief Executive Officer of CCI, certifying that the conditions specified in this
Paragraph 24 have been fulfilled.
18
(n) CCI Associates Matters. CCI, CCI Associates, Ltd.
("Associates") and Charys shall have entered into an agreement providing for the
sale by Associates to CCI of the real property which is the subject of the lease
of CCI's principal offices in San Antonio, Texas upon such terms and conditions
as are acceptable to Charys, such agreement to provide for the closing of the
sale thereunder as such time as Charys shall determine but in no event more than
twelve months after the Closing Date.
(o) Other Matters. All corporate and other proceedings and
--------------
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be satisfactory in form and substance
to Charys and its counsel, whose approval shall not be unreasonably withheld.
25. Conditions Precedent to Obligations of CCI. All obligations of CCI
------------------------------------------
under this Agreement are subject to the fulfillment of the following conditions
(or waiver in writing by CCI of any such condition) prior to or at the Effective
Date:
(a) Representations and Warranties True at Effective Date. The
--------------------------------------------------------
representations and warranties of Charys and the Subsidiary herein shall be
deemed to have been made again at the Effective Date, and then be true and
correct, subject to any changes contemplated by this Agreement. Charys and the
Subsidiary shall have performed all of the obligations to be performed by Charys
and the Subsidiary hereunder on or prior to the Effective Date.
(b) Proof of Authority. Counsel for CCI shall have received
--------------------
evidence reasonably sufficient to such counsel that Charys and the Subsidiary
have all requisite authorizations necessary for consummation by Charys and the
Subsidiary of the transactions contemplated hereby, and there has not been
issued, and there is not in effect, any injunction or similar legal order
prohibiting or restraining consummation of any of the transactions herein
contemplated, and no legal or governmental action, proceeding or investigation
that might reasonably be expected to result in any such injunction or order is
pending.
(c) No Orders. There has not been issued, and there is not in
----------
effect, any injunction or similar legal order prohibiting or restraining
consummation of any of the transactions herein contemplated, and no legal or
governmental action, proceeding or investigation which might reasonably be
expected to result in any such injunction or order is pending.
(d) Deliveries at the Effective Date. Charys shall have delivered
--------------------------------
to the CCI Shareholders at the Effective Date all of the documents required to
be delivered hereunder.
(e) Other Matters. All corporate and other proceedings and
--------------
actions taken in connection with the transactions contemplated hereby and all
certificates, opinions, agreements, instruments and documents mentioned herein
or incident to any such transaction shall be satisfactory in form and substance
to CCI and their counsel, whose approval shall not be unreasonably withheld.
26. The Nature and Survival of Representations, Covenants and
----------------------------------------------------------------
Warranties. All statements and facts contained in any memorandum, certificate,
----------
instrument, or other document delivered by or on behalf of the parties hereto
for information or reliance pursuant to this Agreement, shall be deemed
representations, covenants and warranties by the parties hereto under this
Agreement. All representations, covenants and warranties of the parties shall
survive the Effective Date and all inspections, examinations, or audits on
behalf of the parties, shall expire 24 months following the Effective Date.
27. Records of CCI. For a period of five years following the Effective
--------------
Date, the books of account and records of CCI pertaining to all periods prior to
the Effective Date shall be available for inspection by the CCI Shareholders for
use in connection with tax audits.
28. Destruction of Property. If, on or before the Effective Date, any
------------------------
substantial portion of the fixed assets of CCI shall suffer a loss of fire,
flood, tornado, hurricane, acts of terrorists, riot, accident or other calamity,
whether or not insured, to such an extent that in the opinion of Charys there
will be such a delay in repairing or replacing said assets so as to materially
affect the future operations of CCI, then Charys may, at its sole option,
terminate this Agreement without cost, expense, or liability to either party.
19
29. Default by Charys or the Subsidiary. If CCI does not default
----------------------------------------
hereunder and either of Charys or the Subsidiary defaults hereunder, CCI may
assert any remedy, including specific performance, which CCI may have by reason
of any such default. From and after the Effective Date, subject to the terms
and provisions hereof, in the event of a breach by any party of the terms of
this Agreement or any obligation of a party which survives the Effective Date,
the non-defaulting party may assert any remedy, either at law or in equity to
which such non-defaulting party may be entitled.
30. Default by CCI. If Charys and the Subsidiary do not default
----------------
hereunder and CCI, including CCI Associates, Inc., defaults hereunder, Charys
may elect to terminate this Agreement as well as any other agreement executed by
Charys and the Subsidiary in connection with the transactions contemplated by
this Agreement, including but not limited to any independent nondisclosure
agreement or any other independent agreements, whereupon no party shall be
liable to the others hereunder, or Charys and the Subsidiary may assert any
remedy, including specific performance, which Charys and the Subsidiary may have
by reason of any such default of CCI or the CCI Shareholders. From and after
the Effective Date, subject to the terms and provisions hereof, in the event of
a breach by any party of the terms of this Agreement or any obligation of a
party which survives the Effective Date, the non-defaulting party may assert any
remedy, either at law or in equity, to which such non-defaulting party may be
entitled.
31. Termination. In the event of the termination of this Agreement
-----------
prior to the Effective Date, no party shall have any obligation to any other in
connection herewith or in connection with any other documents which may have
been executed by any party with respect to the transactions contemplated by this
Agreement whether or not such documents are described herein.
32. Cooperation. The parties hereto will each cooperate with the
-----------
other, at the other's request and expense, in furnishing information, testimony,
and other assistance in connection with any actions, proceedings, arrangements,
disputes with other persons or governmental inquiries or investigations
involving the parties hereto or the transactions contemplated hereby.
33. Further Conveyances and Assurances. After the Effective Date, CCI,
----------------------------------
Charys, and the Subsidiary each, will, without further cost or expense to, or
consideration of any nature from the other, execute and deliver, or cause to be
executed and delivered, to the other, such additional documentation and
instruments of transfer and conveyance, and will take such other and further
actions, as the other may reasonably request as more completely to consummate
the transactions contemplated hereby.
34. Effective Date. The Effective Date of the Merger contemplated
---------------
hereunder shall be on or before March 4, 2005, subject to acceleration or
postponement from time to time as the parties hereto may mutually agree. The
closing of the Merger shall be at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
at 8:00 a.m., Central time, on the Effective Date, unless another hour or place
is mutually agreed upon by the parties hereto, at which time Articles of Merger
for the Subsidiary and CCI shall be filed with the State of Nevada as described
herein
35. Deliveries on the Effective Date by CCI. Following the filing of
-----------------------------------------
Articles of Merger for the Subsidiary and CCI as described herein, on the
Effective Date:
(a) The CCI Shareholders shall deliver to Charys (or shall deliver
to Charys subsequent to the Effective Date) certificates representing 20,100,000
shares of the CCI Common Stock, duly endorsed by the CCI Shareholders, free and
clear of all liens, claims, encumbrances, and restrictions of every kind except
for the restrictive legend required by Rule 144.
(b) CCI shall deliver the certificate as described in Paragraph
24(d) hereof.
(c) CCI shall deliver the schedule of inventory described in
Paragraph 24(h) hereof.
(d) CCI shall deliver the certificates of good standing as
described in Paragraph 24(j) hereof.
(e) CCI shall deliver copies of the resolutions as described in
Paragraph 24(k) hereof.
(f) CCI shall deliver the certificate described in Paragraph 24(m)
hereof.
20
(g) CCI shall deliver the agreement referred to in Paragraph
24(n).
(h) CCI shall deliver the Employment Agreement for ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ described in Attachment E hereto.
-------------
(i) CCI shall deliver the Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
described in Attachment E hereto.
-------------
(j) CCI shall deliver the Employment Agreement for ▇▇▇▇ ▇▇▇▇▇▇
described in Attachment E hereto.
-------------
(k) CCI shall deliver the Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇
described in Attachment E hereto.
-------------
(l) CCI shall deliver any other document which may be necessary to
carry out the intent of this Agreement.
All documents reflecting any actions taken, received or delivered by
CCI pursuant to this Paragraph 35 shall be reasonably satisfactory in form and
substance to Charys and the Subsidiary and their counsel.
36. Deliveries on the Effective Date by Charys. Following the filing
--------------------------------------------
of Articles of Merger for the Subsidiary and CCI as described herein, on the
Effective Date, Charys shall deliver the following:
(a) To the CCI Shareholders, 747,700 shares of the Charys Common
Stock free and clear of all liens, claims, encumbrances, and restrictions of
every kind except for the restrictive legend required by Rule 144.
(b) The Registration Rights Agreement described in Attachment C
------------
hereto.
(c) The agreement referred to in Paragraph 24(n)
(d) The Employment Agreement for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ described in
Attachment E hereto.
-------------
(e) The Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ described in
Attachment E hereto.
-------------
(f) The Employment Agreement for ▇▇▇▇ ▇▇▇▇▇▇ described in
Attachment E hereto.
-------------
(g) The Employment Agreement for ▇▇▇▇▇ ▇▇▇▇▇▇ described in
Attachment E hereto.
-------------
(h) To the CCI Shareholders, the proof of authority described in
Paragraph 25(b) hereof.
(i) To the CCI Shareholders, any other document which may be
necessary to carry out the intent of this Agreement.
All documents reflecting any actions taken, received or delivered by Charys
pursuant to this Paragraph 36 shall be reasonably satisfactory in form and
substance to CCI and its counsel.
37. Certain Indemnification Matters. From and after the Effective
----------------------------------
Date, Charys shall cause (a) the Articles of Incorporation and Bylaws of the
Surviving Corporation to contain provisions no less favorable to the individuals
who at or prior to the Effective Date were directors, officers, employees or
agents of CCI or any of its subsidiaries (collectively, the "Indemnitees") with
respect to limitation of certain liabilities of directors, officers, employees
and agents and indemnification than are set forth as of the Effective Date in
the Articles of Incorporation and Bylaws of CCI and (b) the Articles of
Incorporation and Bylaws of each subsidiary of the Surviving Corporation to
contain the current provisions regarding indemnification of directors, officers,
employees and agents, which provisions, in each case, shall not be amended,
repealed or otherwise modified in a manner that would adversely affect the
rights thereunder of the Indemnitees.
21
38. Expenses. Except as otherwise set forth herein, Charys and CCI
--------
shall each bear its own expenses, including without limitation, legal fees and
expenses, with respect to this Agreement and the transactions contemplated
hereby.
39. No Assignment. This Agreement shall not be assignable by any party
-------------
without the prior written consent of the other parties, which consent shall be
subject to such party's sole, absolute and unfettered discretion.
40. Brokerage. The parties hereto agree to indemnify and hold harmless
---------
each other against, and in respect of, any claim for brokerage or other
commissions relative to this Agreement, or the transactions contemplated hereby,
based in any way on agreements, arrangements, understandings or contracts made
by either party with a third party or parties whatsoever.
41. Dispute Resolution. Any action or proceeding seeking to enforce
-------------------
any provision of, or based on any right arising out of, this Agreement, whether
before or after the Effective Date, shall be brought in the courts of the State
of Georgia, County of ▇▇▇▇▇▇, or in the United States District Court for the
Northern District of Georgia, and each of the parties consents to the
jurisdiction of such courts (and the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid therein. Process in
any action or proceeding referred to in the preceding sentence may be served on
any party anywhere in the world. Each party to this Agreement hereby knowingly,
voluntarily and intentionally waives any rights it may have to a trial by jury
in respect of any litigation (whether as a claim, counter-claim, affirmative
defense, or otherwise) in connection with this Agreement and the transactions
contemplated hereby.
42. Attorneys' Fees. In the event that it should become necessary for
----------------
any party entitled hereunder to bring suit against any other party to this
Agreement for a breach of this Agreement each party shall bear its own costs and
expenses (including any fees or disbursements of its counsel, accountants,
brokers, investment bankers, and finder's fees).
43. Benefit. All the terms and provisions of this Agreement shall be
-------
binding upon and inure to the benefit of and be enforceable by the parties
hereto, and their respective heirs, executors, administrators, personal
representatives, successors and permitted assigns, including but not limited to
the CCI Shareholders.
44. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, or
by telecopy or e-mail, if to CCI, addressed to ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ at ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail
▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇, with a copy (which will not constitute notice) to ▇▇▇▇▇ ▇.
▇'▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier: (214)
962-6233, and e-mail ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇; and if to Charys and the
Subsidiary, addressed to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇, ▇▇. at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopier (678)
443-2320, and e-mail ▇▇▇▇@▇▇▇▇▇▇.▇▇▇; with a copy (which will not constitute
notice) to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Glast, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telephone (▇▇▇) ▇▇▇-▇▇▇▇, telecopier
(▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇. Any party hereto may change
its address upon 10 days' written notice to any other party hereto.
45. Construction. Words of any gender used in this Agreement shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise.
46. Waiver. No course of dealing on the part of any party hereto or
------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Agreement or any
instrument referred to herein shall operate as a waiver thereof, and any single
or partial exercise of any such right, power or privilege shall not preclude any
later exercise thereof or any exercise of any other right, power or privilege
hereunder or thereunder.
47. Cumulative Rights. The rights and remedies of any party under this
-----------------
Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be cumulative and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
22
48. Invalidity. In the event any one or more of the provisions
----------
contained in this Agreement or in any instrument referred to herein or executed
in connection herewith shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect the other provisions of this Agreement or any such other
instrument.
49. Time of the Essence. Time is of the essence of this Agreement.
----------------------
50. Incorporation by Reference. The Attachments and Schedules to this
---------------------------
Agreement referred to or included herein constitute integral parts to this
Agreement and are incorporated into this Agreement by this reference.51.
Multiple Counterparts. This Agreement may be executed in one or more
----------------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto.
51. Controlling Agreement. In the event of any conflict between the
----------------------
terms of this Agreement or any of the Other Agreements or Schedules,
Attachments, or exhibits referred to herein, the terms of this Agreement shall
control.
52. Law Governing; Jurisdiction. This Agreement shall be governed by
-----------------------------
and construed in accordance with the laws of the State of Georgia, without
regard to any conflicts of laws provisions thereof. Each party hereby
irrevocably submits to the personal jurisdiction of the United States District
Court for the Northern District of Georgia, as well as of the Distinct Courts of
the State of Georgia in ▇▇▇▇▇▇ County, Georgia over any suit, action or
proceeding arising out of or relating to this Agreement. Each party hereby
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such mediation,
arbitration, suit, action or proceeding brought in any such county and any claim
that any such mediation, arbitration, suit, action or proceeding brought in such
county has been brought in an inconvenient forum.
53. Entire Agreement. This instrument and the attachments hereto
-----------------
contain the entire understanding of the parties and may not be changed orally,
but only by an instrument in writing signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
[SIGNATURE PAGE FOLLOWS]
23
IN WITNESS WHEREOF, the parties have executed this Plan of Merger on March
4, 2005.
CHARYS HOLDING COMPANY, INC.
By:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, ▇▇., Chief Executive Officer
CHARYS ACQUISITION COMPANY, INC.
By:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇, ▇▇., Chief Executive Officer
CCI TELECOM, INC.
By:
----------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Attachments:
-----------
Attachment A CCI Shareholders
Attachment B Earn-Out Calculations
Attachment C Registration Rights Agreement
Attachment D [RESERVED]
Attachment E Form of Employment Agreement
Attachment F Articles of Incorporation of CCI Telecom, Inc.
Attachment G Bylaws of CCI Telecom, Inc.
Schedule 20(c) Violations under Documents
Schedule 20(d) Consents
Schedule 20(e) Capitalization
Schedule 20(g) States Where CCI is Qualified to do Business
Schedule 20(h) Subsidiaries
Schedule 20(i) Employees
Schedule 20(j) Financial Statements
Schedule 20(k) Present Status
Schedule 20(l) Tax Returns
Schedule 20(m) Litigation
Schedule 20(n) Compliance with Laws and Regulations
Schedule 20(o) Defaults
Schedule 20(p) Permits and Approvals
Schedule 20(r) Patents and Trademarks
Schedule 20(s) Compliance with Environmental Laws
Schedule 20(u) Insurance Policies
Schedule 20(v) Compensation of Officers and Others
Schedule 20(y) Labor Matters
Schedule 20(aa) Contracts
Schedule 20(bb) Banks, Etc.
Schedule 20(cc) Dealings with Affiliates
Schedule 20(ee) Brokerage
Schedule 21(d) Capitalization
Schedule 21(e) Stock Ownership of the Subsidiary
Schedule 21(g) Violations under Documents
Schedule 22(d) No Default
Schedule 24(d) Secretary's Certificate
ATTACHMENT A
CCI Shareholders CCI Shares %
---------------------------------------- ------------- ------
▇▇▇▇ ▇▇▇▇▇ 7,395,000.00 36.8%
▇'▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇.▇. 7,395,000.00 36.8%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 510,000.00 2.5%
TSG Equity Fund L.P. 482,514.59 2.4%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 68,546.21 0.3%
T. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 24,554.40 0.1%
The Berkshires Capital Investors . 560,870.65 2.8%
The Berkshires Capital Investors Fund II 508,384.16 2.5%
The Mass Ventures Equity Fund 169,300.21 0.8%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 316,151.16 1.6%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 323,833.27 1.6%
▇▇▇▇▇▇ ▇▇▇▇▇ 1,691.00 0.0%
▇▇▇▇▇▇ ▇▇▇▇▇ 6,764.02 0.0%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 33,820.10 0.2%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 43,379.59 0.2%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 44,642.53 0.2%
▇▇▇▇▇ ▇▇▇▇▇, ▇▇. 115,548.11 0.6%
Frost National Bank 0.00 0.0%
CCI Telecom Stock Option Plan 0.00 0.0%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 700,000.00 3.5%
▇▇▇▇ ▇▇▇▇▇▇ 700,000.00 3.5%
▇▇▇▇▇ ▇▇▇▇▇▇ 700,000.00 3.5%
------------- ------
Total 20,100,000.00 100.0%
============= ------
CCI SHAREHOLDERS
ATTACHMENT B
EARN-OUT CALCULATIONS
2006 PAYOUT MATRIX 35% of revenue at EBITDA
------------------
Revenue Growth 7.50% 10.00% 15.00% 22.60% 25.00%
------------- ----------- ---------- ------------ ---------
EBITDA 4.00% 60.8% 66.7% 78.3% 96.1% 101.7%
5.00% 71.7% 77.5% 89.2% 106.9% 112.5%
6.00% 82.5% 88.3% 100.0% 117.7% 123.3%
7.00% 93.3% 99.2% 110.8% 128.6% 134.2%
8.00% 104.2% 110.0% 121.7% 139.4% 145.0%
Earn-out Amount in Charys Stock or Cash
7.50% 10.00% 15.00% 22.60% 25.00%
------------- ----------- ---------- ------------ ---------
(all numbers in 000s)
4.00% $ 937 $ 1,027 $ 1,206 $ 1,479 $ 1,566
5.00% $ 1,104 $ 1,194 $ 1,373 $ 1,646 $ 1,733
6.00% $ 1,271 $ 1,360 $ 1,540 $ 1,813 $ 1,899
7.00% $ 1,437 $ 1,527 $ 1,707 $ 1,980 $ 2,066
8.00% $ 1,604 $ 1,694 $ 1,874 $ 2,147 $ 2,233
2007 PAYOUT MATRIX 55% of revenue at EBITDA (Assumes 2006 targets meet)
-------------------
Revenue Growth 7.50% 10.00% 15.00% 22.60% 25.00%
------------- ----------- ---------- ------------ ---------
EBITDA Level 6.00% 66.3% 72.1% 83.8% 101.5% 107.1%
7.00% 74.4% 80.2% 91.9% 109.6% 115.2%
8.00% 82.5% 88.3% 100.0% 117.7% 123.3%
9.00% 90.6% 96.5% 108.1% 125.9% 131.5%
10.00% 98.8% 104.6% 116.3% 134.0% 139.6%
Earn-out Amount in Charys Stock or Cash
7.50% 10.00% 15.00% 22.60% 25.00%
------------- ----------- ---------- ------------ ---------
(all numbers in 000s)
6.00% $ 1,968 $ 2,141 $ 2,487 $ 3,014 $ 3,180
7.00% $ 2,209 $ 2,382 $ 2,729 $ 3,255 $ 3,422
8.00% $ 2,450 $ 2,624 $ 2,970 $ 3,497 $ 3,663
9.00% $ 2,692 $ 2,865 $ 3,211 $ 3,738 $ 3,904
10.00% $ 2,933 $ 3,106 $ 3,453 $ 3,979 $ 4,146
ATTACHMENT C
REGISTRATION RIGHTS AGREEMENT
ATTACHMENT C
REGISTRATION RIGHTS
Each capitalized term not otherwise defined in this Attachment C (this
"ATTACHMENT") shall have the meaning ascribed to it in the Agreement and Plan of
Merger (the "AGREEMENT"), by and among Charys Holding Company, Inc., Charys
Acquisition Company, Inc. and CCI Telecom, Inc., to which this Attachment is
attached.
1. "Piggy-Back" Registration Rights.
---------------------------------
(a) For purposes of this Attachment C and the Agreement, the term
"REGISTRABLE SECURITIES" means shares of Charys Common Stock and any other
securities issued or issuable at any time or from time to time in respect of
Charys Common Stock as a result of a merger, consolidation, reorganization,
stock split, stock dividend, recapitalization or other similar event involving
Charys
(b) Pursuant to the terms and conditions contained herein, and in
the Agreement, if at any time, Charys shall determine to prepare and file with
the Securities and Exchange Commission (the "SEC") a registration statement
relating to an offering for its own account or the account of other under the
Securities Act of 1933, as amended (the "SECURITIES ACT") of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, Charys shall promptly send to each Qualified Holder or any
Permitted Transferee of the Qualified Holder (collectively, the "QUALIFIED
HOLDERS") of Registrable Securities written notice of such determination and, if
within thirty (30) days after receipt of such notice, any such Qualified Holder
shall so request in writing, (which request shall specify the Registrable
Securities intended to be disposed of), Charys shall cause the registration
under the Securities Act of all Registrable Securities which Charys has been so
requested to register by such Qualified Holder(s), and to otherwise qualify such
offering under and comply with securities laws or state securities or "blue sky"
laws, to the extent requisite to permit the disposition of the Registrable
Securities. The above-described right to "piggy-back" on a Charys offering
hereinafter called the "REGISTRATION RIGHTS."
(c) In the case of an underwritten public offering, if the
managing underwriter(s) reasonably determine(s) that marketing factors require a
limitation of the number of the Registrable Securities to be underwritten, and
Charys, after consultation with the managing underwriter(s) also reasonably
determines that the inclusion of the Registrable Securities would materially
adversely affect the offering contemplated in such registration statement, and
based on such determination recommends inclusion in the registration statement
of fewer or none of the Registrable Securities of the Qualified Holders, then
the number of the Registrable Securities of the Qualified Holders that may be
included in the registration by the Qualified Holder shall be determined by
multiplying the number of the shares of Charys common stock of all selling
shareholders of Charys which the managing underwriter is willing to include in
such registration multiplied by a fraction, the numerator of which is the number
of the Registrable Securities requested to be included in such registration by
the Qualified Holder, and the denominator of which is the total number of Charys
common stock which all selling shareholders of Charys have requested to be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, Charys may round the number of shares
allocable to any such person to the nearest 100 shares. If the Qualified Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to Charys and the managing underwriter, delivered
not less than seven (7) days before the effective date of the offering. Any of
the Registrable Securities excluded or withdrawn from the offering shall be
withdrawn from such registration, and shall not be transferred in a public
distribution prior to sixty (60) days after the effective date of the
registration statement relating thereto, or such other shorter period of time as
the underwriters may require. In connection with any such underwritten public
offering that includes any of the Registrable Securities, the selling Qualified
Holders shall enter into an underwriting agreement in customary form with the
managing underwriter selected by Charys.
2. Registration Procedure. With respect to the Registration Rights,
-----------------------
the following provisions shall apply:
(a) The Qualified Holder shall be obligated to furnish to Charys
and the underwriters such information regarding the Registrable Securities and
the proposed manner of distribution as Charys and the underwriters may request
in writing and as shall be required in connection with any registration,
qualification or compliance referred to herein and shall otherwise cooperate
with Charys and the underwriters in connection with such registration,
qualification or compliance.
(b) With a view to making available the benefits of certain rules and
regulations of the Securities and Exchange Commission (the "SEC") which may at
any time permit the sale of any Restricted Securities as defined in Rule 144
("Rule 144")
- 1 -
promulgated under the Securities Act of 1933, as amended (the "Securities Act")
to the public without registration, the Company agrees to use its best lawful
efforts to:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144 at all times during which the
Company is subject to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act");
(ii) File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at all times during which the Company is subject to such reporting
requirements); and
(iii) So long as the Holder owns any Restricted Securities,
to furnish to the Holder upon request a written statement from the Company as to
its compliance with the reporting requirements of Rule 144 and with regard to
the Securities Act and the Exchange Act (at all times during which the Company
is subject to such reporting requirements), a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company and other information in the possession of or reasonably obtainable by
the Company as the Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing the Holder to sell any Restricted Securities
without registration.
(c) Charys shall prepare and file with the SEC, the registration
statement, including the prospectus, and any amendments, supplements and
exhibits related to the registration statement or prospectus, to effect such
registration and thereafter use its best lawful efforts to cause the
registration statement to be declared effective by the SEC as soon as
practicable and remain effective; provided, however, that not less than five (5)
business days prior to the filing of the registration statement or any related
prospectus or any amendment or supplement thereto (including any document that
would be incorporated therein by reference), Charys shall (i) furnish to the
Qualified Holders participating in the offering and their legal counsel, copies
of all such documents proposed to be filed, which documents (other than those
incorporated by reference) will be subject to the review of such Qualified
Holders and such counsel.
(d) Charys shall prepare and file with the SEC such additional
registration statements in order to register for resale under the Securities Act
all of the Registrable Securities.
(e) Charys shall notify the Qualified Holders of Registrable
Securities to be sold and their legal counsel as promptly as possible (and, in
the case of (i)(A) below, not less than five (1) business days prior to such
filing) (i)(A) when a prospectus or any prospectus supplement or post-effective
amendment to the registration statement is proposed to be filed; (B) when the
SEC notifies Charys whether there will be a "review" of such registration
statement and whenever the SEC comments in writing on such registration
statement and (C) with respect to the registration statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to the registration statement or prospectus or for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (iv) of the receipt by Charys of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the registration statement or prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
registration statement, prospectus or other documents so that, in the case of
the registration statement or the prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
(f) If requested by the Qualified Holders of a majority in
interest of the Registrable Securities, (i) promptly incorporate in a prospectus
supplement or post-effective amendment to the registration statement such
information as Charys reasonably agrees should be included therein and (ii) make
all required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after Charys has received notification of the
matters to be incorporated in such prospectus supplement or post-effective
amendment.
(g) Charys shall furnish each Qualified Holder and its designated
legal counsel, without charge, at least one conformed copy of each registration
statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such person
- 2 -
promptly after the filing of such documents with the SEC. Charys hereby
consents to the use of such prospectus and each amendment or supplement thereto
by each of the Qualified Holders in connection with the offering and sale of the
Registrable Securities covered by such prospectus and any amendment or
supplement thereto.
(h) Cooperate with the Qualified Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a registration statement, which certificates shall be free
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any Qualified Holder may
request at least two (2) business days prior to any sale of Registrable
Securities.
(i) Upon the occurrence of any event contemplated by Paragraph
2(d)(v), as promptly as possible, Charys shall prepare a supplement or
amendment, including a post-effective amendment, to the registration statement
or a supplement to the related prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the registration statement nor such
prospectus will contain 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, in the light of the circumstances under which they were
made, not misleading.
(j) Charys shall use its best efforts to cause all Registrable
Securities relating to such registration statement to be listed on the Nasdaq
SmallCap Market, Nasdaq National Market, American Stock Exchange, the OTC
Bulletin Board or any other securities exchange, quotation system or market, if
any, on which similar securities issued by Charys are then listed.
(k) Charys shall comply in all material respects with all applicable
rules and regulations of the SEC and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) commencing on the first day of the first fiscal quarter of Charys
after the effective date of the registration statement, which statement shall
conform to the requirements of Rule 158.
(l) All expenses (except for any underwriting and selling discounts and
commissions) of any registrations permitted pursuant to this Attachment and of
all other offerings by Charys (including, but not limited to, the expenses of
any qualifications under the state "blue sky" or other securities laws and
compliance with governmental requirements of preparing and filing any
post-effective amendments required for the lawful distribution of the
Registrable Securities to the public in connection with such registration, of
supplying prospectuses, offering circulars or other documents) will be paid by
Charys.
3. Blackout Period. At any time after the effective date of the
----------------
registration statement, if Charys gives the selling Qualified Holders a notice
pursuant to Paragraph 2(e) hereof and stating that Charys requires the
suspension by the Qualified Holder of the distribution of any of the Registrable
Securities, then the Qualified Holder shall cease distributing the Registrable
Securities for such period of time (the "BLACKOUT PERIOD"), not to exceed 90
days from the time notice is sent until Charys informs the Qualified Holder that
the Blackout Period has been terminated. Upon notice by Charys to the Qualified
Holder of such determination, the Qualified Holder will (a) keep the fact of any
such notice strictly confidential, (b) promptly halt any offer, sale, trading or
transfer of any of the Registrable Securities for the duration of the Blackout
Period, and (c) promptly halt any use, publication, dissemination or
distribution of each prospectus included within the registration statement, and
any amendment or supplement thereto by it and any of its affiliates for the
duration of the Blackout Period.
4. Lock-Up. In connection with any underwritten public offering, each
-------
Qualified Holder, if requested, will execute a lock-up letter addressed to the
managing underwriter in customary form agreeing not to sell or otherwise dispose
of the Registrable Securities owned by such Qualified Holder (other than any
that may be included in the offering) for a period not exceeding 120 days, so
long as Charys' executive officers and other principal stockholders are bound
thereby and are not released from their obligations thereunder prior to the
expiration of the lock-up period without such Qualified Holder being released
therefrom.
5. Delay of Registration. No Qualified Holder shall have any right to
----------------------
obtain or seek an injunction restraining or otherwise delaying any registration
of the Registrable Securities as the result of any controversy that might arise
with respect to the interpretation or implementation of this Attachment.
6. Indemnification by Charys. In the event of any registration of any
--------------------------
securities of Charys under the Securities Act, Charys shall indemnify and hold
harmless each Qualified Holder, its directors and officers, employees, partners,
members, managers, agents, brokers and each other Person ("Person" means an
individual, partnership, firm, limited liability company, trust, joint venture,
- 3 -
association, corporation, or any other legal entity) who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls such Qualified Holder or any such underwriter within the
meaning of the Securities Act, to the fullest extent permitted by applicable
law, against and from any losses, claims, damages or liabilities, joint or
several, to which such Qualified Holder or any such director, officer, employee,
partner, member, manager, agent, broker 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
Charys will reimburse such Qualified Holder and each such director, officer,
employee, partner, member, manager, agent, broker and 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 Charys 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 such Qualified Holder
or underwriter stating that it is for use in the preparation thereof and,
provided further that Charys shall not be liable to any Person who participates
as an underwriter in the offering or sale of the Registrable Securities 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 Securities 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 such Qualified
Holder or any such director, officer, employee, partner, member, manager, agent,
broker, underwriter or controlling person and shall survive the transfer of such
securities by such Qualified Holder.
7. Indemnification by Qualified Holders. Charys may require, as a
---------------------------------------
condition to including any of the Registrable Securities in any Registration
Statement filed pursuant to this Attachment, that Charys shall have received an
undertaking satisfactory to it from a selling Qualified Holder, severally and
not jointly, to indemnify and hold harmless (in the same manner and to the same
extent as set forth in Paragraph 6 hereof) Charys, each director of Charys, each
officer of Charys and each other Person, if any, who controls Charys 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 Charys through an instrument
duly executed by such Qualified Holder 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 Charys or any such director, officer or controlling person and
shall survive the transfer of such securities by such Qualified Holder.
8. 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 6 and Paragraph 7 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 6
and Paragraph 7 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 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
▇▇▇, 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.
- 4 -
9. Other Indemnification. Indemnification similar to that specified in
---------------------
Paragraph 6 and Paragraph 7 hereof (with appropriate modifications) shall be
given by Charys and each selling Qualified Holder (but only if and to the extent
required pursuant to the terms hereof) 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.
10. Indemnification Payments. The indemnification required by
-------------------------
Paragraph 6 and Paragraph 7 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.
11. Contribution. If the indemnification provided for in Paragraph 6
-------------
and Paragraph 7 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 Charys, on the one hand and the Qualified Holder or
underwriter, as the case may be, on the other, from the distribution of the
Registrable Securities; 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
Charys, on the one hand, and of the Qualified Holder or 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 Charys, on the one hand, and the Qualified
Holder or underwriter, as the case may be, on the other, in connection with the
distribution of the Registrable Securities shall be deemed to be in the same
proportion as the total net proceeds received by Charys from the initial sale of
the Registrable Securities by Charys to the purchasers bear to the gain, if any,
realized by all selling holders participating in such offering or the
underwriting discounts and commissions received by the underwriter, as the case
may be. The relative fault of Charys, on the one hand, and of the Holder or
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 Charys, by the Qualified Holder or by the underwriter and the
parties' relative intent, knowledge, access to information supplied by Charys,
by the Qualified Holder 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
hereof, and in no event shall the obligation of any indemnifying party to
contribute under this Paragraph 11 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.
Charys and the Qualified Holders agree that it would not be just and equitable
if contribution pursuant to this Paragraph 11 were determined by pro rata
allocation (even if the Qualified Holder 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.
12. Limitation on Contributions. Notwithstanding the provisions of
-----------------------------
Paragraph 11, the Qualified Holder and an underwriter shall not be required to
contribute any amount in excess of the amount by which (a) in the case of such
Qualified Holder, the net proceeds received by such Qualified Holder from the
sale of Registrable Securities, or (b) in the case of an underwriter, the total
price at which the Registrable Securities purchased by it and distributed to the
public were offered to the public exceeds, in any such case, the amount of any
damages that such Qualified Holder or 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.
13. Indemnification Payments. The indemnification required herein
-------------------------
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 -
14. Assignment of Registration Rights. The rights to cause Charys to
-----------------------------------
register Registrable Securities pursuant hereto may be assigned by the Qualified
Holder to a transferee or assignee of such securities that shall, upon such
transfer or assignment, be deemed a Qualified Holder.
15. Termination of the Rights and Obligations Described Herein. This
------------------------------------------------------------
Attachment and the rights and obligations with respect to the Qualified Holders
will terminate when all of the Registrable Securities of the Qualified Holders
have been registered as provided herein.
16. Arbitration. Any controversy or claim arising out of or relating
-----------
to this Attachment, or the breach, termination, or validity thereof, shall be
settled by final and binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association ("AAA RULES"). The
American Arbitration Association shall be responsible for (a) appointing a sole
arbitrator, and (b) administering the case in accordance with the AAA Rules.
The situs of the arbitration shall be San Antonio, Texas. Upon the application
of any party to the arbitration or pending arbitration, and whether or not an
arbitration proceeding has yet been initiated, all courts having jurisdiction
hereby are authorized to: (x) issue and enforce in any lawful manner, such
temporary restraining orders, preliminary injunctions and other interim measures
of relief as may be necessary to prevent harm to a party's interest or as
otherwise may be appropriate pending the conclusion of arbitration proceedings
pursuant hereto; and (y) enter and enforce in any lawful manner such judgments
for permanent equitable relief as may be necessary to prevent harm to a party's
interest or as otherwise may be appropriate following the issuance of arbitral
awards pursuant hereto. Any order or judgment rendered by the arbitrator may be
entered and enforced by any court having competent jurisdiction.
17. Benefit. All the terms and provisions of this Attachment and of
-------
the Agreement shall be binding upon and inure to the benefit of and be
enforceable by Charys and the Qualified Holders and their respective heirs,
executors, administrators, personal representatives, successors and permitted
assigns. Notwithstanding anything herein contained to the contrary, the Company
shall not have the right to assign its rights and duties under this Attachment
without the written consent of a majority in interest of the Qualified Holders.
18. Conflict. Notwithstanding anything herein contained to the
--------
contrary, in the event of any conflict between the terms of this Attachment and
the Agreement, the terms of this Attachment shall control.
19. Notices. All notices, requests, demands, and other communications
-------
hereunder shall be in writing and delivered personally or sent by registered or
certified United States mail, return receipt requested with postage prepaid, by
facsimile, or by e-mail, if to Charys, addressed to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇, ▇▇. at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax: (678)
▇▇▇-▇▇▇▇, and if to any Qualified Holder to the address for such Qualified
Holder contained in Charys' then current books and records. A change of address
for purposes of receiving notices pursuant hereto may be made by the party to
receive notice upon 10 days written notice.
20. Construction. Words of any gender used in this Attachment shall be
------------
held and construed to include any other gender, and words in the singular number
shall be held to include the plural, and vice versa, unless the context requires
otherwise. In addition, the pronouns used in this Attachment shall be
understood and construed to apply whether the party referred to is an
individual, partnership, joint venture, corporation or an individual or
individuals doing business under a firm or trade name, and the masculine,
feminine and neuter pronouns shall each include the other and may be used
interchangeably with the same meaning.
21. Waiver. No course of dealing on the part of any party hereto or
-------
its agents, or any failure or delay by any such party with respect to exercising
any right, power or privilege of such party under this Attachment, the Agreement
or any instrument referred to herein or therein shall operate as a waiver
thereof, and any single or partial exercise of any such right, power or
privilege shall not preclude any later exercise thereof or any exercise of any
other right, power or privilege hereunder or thereunder. Any waiver must
conform with the requirements of Paragraph 30 hereof.
22. Cumulative Rights. The rights and remedies contained in this
------------------
Attachment shall be cumulative and the exercise or partial exercise of any such
right or remedy hereunder shall not preclude the exercise of any other right or
remedy.
23. Invalidity. In the event any one or more of the provisions
----------
contained in this Attachment shall, for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Attachment C or
any such other instrument.
- 6 -
24. General Assurances. Charys and the Qualified Holders shall
-------------------
execute, acknowledge, and deliver all such further instruments, and do all such
other acts, as may be necessary or appropriate in order to carry out the intent
and purposes of this Attachment.
25. Time of the Essence. Time is of the essence of this Attachment.
----------------------
26. Headings. The headings used in this Agreement are for convenience
--------
and reference only and in no way define, limit, amplify or describe the scope or
intent of this Attachment, and do not effect or constitute a part of this
Attachment.
27. Excusable Delay. The parties shall not be obligated to perform and
---------------
shall not be deemed to be in default hereunder, if the performance of a
non-monetary obligation required hereunder is prevented by the occurrence of any
of the following, other than as the result of the financial inability of the
party obligated to perform: acts of God, strikes, lock-outs, other industrial
disturbances, acts of a public enemy, war or war-like action (whether actual,
impending or expected and whether de jure or de facto), acts of terrorists,
arrest or other restraint of governmental (civil or military), blockades,
insurrections, riots, epidemics, landslides, lightning, earthquakes, fires,
hurricanes, storms, floods, washouts, sink holes, civil disturbances,
explosions, breakage or accident to equipment or machinery, confiscation or
seizure by any government of public authority, nuclear reaction or radiation,
radioactive contamination or other causes, whether of the kind herein enumerated
or otherwise, that are not reasonably within the control of the party claiming
the right to delay performance on account of such occurrence.
28. No Third-Party Beneficiary. Any agreement to pay an amount and any
--------------------------
assumption of liability contained in this Attachment, express or implied, shall
be only for the benefit of Charys and the Qualified Holders and their respective
successors and permitted assigns (as herein expressly permitted), and such
agreements and assumptions shall not inure to the benefit of the obligees or any
other party, whomsoever, it being the intention of the parties hereto that no
one shall be or be deemed to be a third-party beneficiary of this Attachment.
29. Governing law; Jurisdiction. This Attachment shall be governed by
----------------------------
and construed in accordance with the laws of the State of Georgia without regard
to any conflicts of laws provisions thereof. Subject to the provisions of
Paragraph 16 hereof respecting binding arbitration, which provision shall be
controlling, each party hereby irrevocably submits to the personal jurisdiction
of the United States District Court located in Atlanta, GA, as well as of the
District Courts of the State of Georgia in ▇▇▇▇▇▇ County, Georgia over any suit,
action or proceeding arising out of or relating to this Attachment. Charys and
the Qualified Holders each hereby irrevocably waive, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such mediation, arbitration, suit, action or proceeding
brought in any such county and any claim that any such mediation, arbitration,
suit, action or proceeding brought in such county has been brought in an
inconvenient forum.
30. Modification and Waiver. Neither this Attachment, nor any
-------------------------
provision of this Attachment, may be waived, amended, altered or modified,
unless done so in a writing, specifying the provision to be waived, amended,
altered or modified and signed by a duly authorized representative of Charys and
a majority in interest of the Qualified Holders holding Registrable Securities
against whom such waiver, amendment, alteration or modification is sought to be
enforced. No failure or delay to exercise any right, power or privilege
hereunder shall constitute a waiver thereof, and a waiver of any breach or
failure to comply with any provision hereof shall not be construed as or
constitute a continuing waiver of such provision or a waiver of any other breach
of or failure to comply with any other provision hereof.
31. Entire Agreement. This Attachment and the Agreement contain the
entire understanding of the parties with respect to the subject matter hereof,
and may not be changed orally, but only by an instrument in writing entered into
in conformity with the provisions of Paragraph 30 hereof.
- 7 -
[RESERVED]
ATTACHMENT E
FORM OF EMPLOYMENT AGREEMENT
ATTACHMENT E
EMPLOYMENT AGREEMENT
--------------------
This EMPLOYMENT AGREEMENT (this "Agreement") is made this ______ day of
February, 2005 (the "Effective Date"), by and between CCI Telecom, Inc, a Nevada
corporation (the "Company"), and _________________________ ("Executive").
RECITALS
--------
The Company desires to employ Executive and Executive desires to enter into
the employment of the Company.
The Company and Executive are entering into this Agreement in order to set
forth the terms and conditions of Executive's employment.
In consideration of the mutual covenants and agreements set forth herein,
the parties hereto agree as follows:
1. Employment. Subject to the commencement of the term of this
----------
Agreement, the Company hereby employs Executive, and Executive hereby accepts
such employment, upon the terms and conditions set forth herein.
2. Term. The term of this Agreement (the "Term") shall commence on the
----
Effective Date and shall continue for a period of three (3) years, and shall
automatically renew for an additional three (3) year term at the conclusion of
the initial and any successive term, unless earlier terminated by [the CEO or
COO of Charys Holding Company, Inc. ("Charys")/ the Company] upon not less than
six (6) months prior written notice to the Executive, such termination to be
treated as a termination by the Executive under Section 9(d)(i) of this
Agreement for severance purposes, or otherwise terminated in accordance with the
provisions hereof.
3. Duties. During the Term, Executive shall serve as an employee of
------
the Company with such title, duties and responsibilities as a senior executive
officer established from time to time by the Board of Directors of the Company
(the "Board") and [the Chief Executive Officer of the Company (the "Chief
Executive Officer")] and, initially, Executive shall serve as the
___________________________________ of the Company. Executive agrees that he
will devote his full business time, attention and energies to the business of
the Company and its present and future direct and indirect subsidiaries and
affiliates, and to the performance of his duties hereunder, which shall include
such duties on behalf of the Company as from time to time may be assigned to him
by the Board [and/or the Chief Executive Officer]. In the performance of such
duties hereunder, Executive shall report directly to [the Chief Executive
Officer] and will at all times be subject to the direction of [the Chief
Executive Officer] or, in either case, to such other officer specified by the
Board of Directors. Executive will be based at the Company's principal office
in San Antonio, Texas. The parties acknowledge that Executive may be required
to travel in connection with the performance of his duties hereunder.
Notwithstanding the foregoing or any other provisions of this Agreement, it
shall not be a breach or violation of this Agreement for the Executive to (i)
serve on corporate (subject to approval of the Board), civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions, or (iii) manage personal investments, so long
as such activities do not significantly interfere with or significantly detract
from the performance of the Executive's responsibilities to the Company in
accordance with this Agreement. The Executive may continue to serve out the
remaining term as a board member on any corporate board on which he serves as of
the Effective Date.
4. Compensation and Related Matters.
-----------------------------------
(a) Salary. During the Term, the Company shall pay to Executive a
------
base salary at the annual rate as shown on the attached Exhibit A (the "Base
Salary"). The Base Salary shall be payable in substantially equal installments
not less frequently than semi-monthly in accordance with the Company's standard
payroll policy as in effect from time to time and shall be reviewed at least
annually for merit increases.
1
(b) Bonus. In addition to the Base Salary, the Executive shall be
-----
eligible to receive a bonus ("Bonus") payable in such amount and at such times
as may be recommended by the Compensation Committee of the Board of Directors of
[Charys Holding Company, Inc.] (the "Compensation Committee") in its sole
discretion. Attached as Exhibit A is the bonus plan in which the Executive is
entitled to participate for the fiscal years ending April 30, 2005 and 2006, and
which thereafter may be amended by the Compensation Committee.
(c) Automobile Allowance. During the Term, the Company shall, at
---------------------
Charys' election, either (i) pay to the Executive a non-accountable automobile
allowance of $600 per month or (ii) provide the Executive with a Company vehicle
(which initially shall be new and shall be replaced not less frequently than
every three (3) years), and reimburse the Executive for the costs of gasoline,
oil, repairs, maintenance, insurance and other expenses incurred by Executive by
reasonable use of the vehicle.
(d) Expenses. During the Term, the Company shall reimburse
--------
Executive for all reasonable expenses incurred by Executive in the performance
of his duties in accordance with the Company's standard expense reimbursement
policies for the Company's most senior executives [other than the Chief
Executive Officer].
(e) Other Benefits. During the Term, Executive shall be entitled
---------------
to participate in all of the Company's benefit plans made available to the
Company's most senior executive officers; provided, however, that the receipts
of such benefits shall be subject to the Company's eligibility and enrollment
requirements pertaining to such benefit plans.
(f) Vacations. Executive shall be entitled to three (3) weeks of
---------
paid vacation in each calendar year and to all paid holidays given by the
Company to its senior executives [other than the Chief Executive Officer], but
Executive shall otherwise be subject to the Company's standard vacation
policies. Any vacation time not taken by Executive during any calendar year may
be carried forward into any succeeding calendar year.
(g) Services Furnished. The Company shall furnish Executive with
-------------------
such office space, secretarial and support staff assistance reasonably necessary
for the performance of his duties together with such other facilities,
equipment, services and resources as Executive may reasonably require.
(h) Stock Options. During Executive's Term of employment,
-------------
Executive shall be eligible to be granted options (the "Stock Options") to
purchase common stock (the "Common Stock") of Charys under (and therefore
subject to all terms and conditions of) Charys' Employee Stock Incentive Plan
for the Year 2004, dated August 28, 2004 (the "Stock Option Plan") and any
successor plan.
(i) Net Payments. The amount of any gross payments provided for
-------------
in this Agreement shall be paid to Executive net of any applicable payroll or
other withholding under federal, state or local law.
5. No Unauthorized Use. Executive represents and warrants to the
---------------------
Company that to his best knowledge and belief he has not taken any action in
violation of the Economic Espionage Act of 1996. Executive agrees that, in
performing work for the Company and its subsidiaries and affiliates, Executive
will not knowingly use any trade secrets, confidential information or
proprietary information obtained from third parties, including any former
employer or any other organization or individual. Additionally, Executive
agrees that he will not bring into the premises of the Company any unpublished
documents or any other property belonging to any former employer or any other
party to whom Executive has an obligation of confidentiality, unless consented
to in writing by such former employer or party.
6. Inventions. Executive hereby transfers and assigns to the Company
----------
or to any person, or entity designated by the Company, all of the entire right,
title and interest of Executive in and to all inventions, ideas, disclosures and
improvements, whether patented or unpatented, and copyrightable material, made
or conceived by Executive, solely or jointly, or in whole or in part, during
the Term which (i) relate to methods, apparatus, designs, products, processes or
devices sold, leased, used or under construction or development by the Company
or any subsidiary or (ii) otherwise relate to or pertain to the business,
functions or operations of the Company or any subsidiary, or (iii) arise, wholly
or partly, from Executive's efforts during the Term. Executive shall
communicate promptly and disclose to the Company, in such form as the Company
requests, all information, details and data pertaining to the aforementioned
inventions, ideas, disclosures and improvements; and, whether during the Term
or
2
thereafter, Executive shall execute and deliver to the Company such formal
transfers and assignments and such other papers and documents as may be required
of him to permit the Company or any person or entity designated by the Company
to file and prosecute the patent applications and, as to copyrightable material,
to obtain copyright thereon. Any invention by Executive within six (6) months
following the termination of this Agreement shall be deemed to fall within the
provisions of this Section unless proved by Executive to have been first
conceived and made following such termination.
7. Confidentiality and Competitive Activities.
---------------------------------------------
(a) Confidentiality. In view of the fact that Executive's work as
---------------
an employee of the Company, as well as in any other capacities with the Company
and its subsidiaries and affiliates, will bring him into close contact with many
confidential affairs of the Company and its subsidiaries and affiliates,
including matters of a business nature such as information about costs, profits,
markets, sales, trade secrets, business ideas, customer lists, plans for future
developments, and information of any other kind not known within the Company's
industry generally (hereinafter, collectively, "Confidential Matters"),
Executive agrees:
(i) To keep secret all Confidential Matters of the Company
and of any subsidiaries and affiliates of the Company, and not to disclose them
to anyone outside of the Company or its subsidiaries or affiliates, or otherwise
use them or use his knowledge of them for his own benefit, including, without
limitation, use of the trade names or trademarks of the Company or any of its
subsidiaries or affiliates, either during or for two (2) years after the Term,
except with the Company's prior written consent; and
(ii) To deliver promptly to the Company at the termination of
the Term, or at any time the Company may request, all memoranda, notices,
records, reports and other documents (and all copies thereof) relating to the
business of the Company or any of its subsidiaries or affiliates, including, but
not limited to, Confidential Matters, which he may then possess or have under
his control.
(iii) Notwithstanding anything to the contrary herein,
Executive shall have no obligation to preserve the confidential nature of any
Confidential Matters which (a) was previously known to Executive; (b) is
disclosed to third parties by the Company without restriction; (c) is or becomes
available to any member of the public by other than unauthorized disclosure; (d)
was or is independently developed by Executive and is otherwise unrelated to the
performance of his duties hereunder; (e) is released for disclosure by the
Company with its written consent; or (f) is rightfully and legally received by
Executive from a third party without restriction.
(iv) Disclosure of such Confidential Matters shall not be
precluded by Executive if Executive gives prior written notice to the Company of
his intent to disclose Confidential Matters and such disclosure is (a) in
response to a valid Order of a court or other governmental body of the United
States or any political subdivision thereof; (b) otherwise required by law; or,
(c) necessary to establish rights of the parties under this Agreement.
(b) Competitive Activities. During the term of Executive's
-----------------------
employment with the Company and thereafter during the Post-Employment Period (as
hereinafter defined), Executive shall not, directly or indirectly (whether for
compensation or otherwise), alone or as an officer, director, stockholder
(excepting not more than 1% stockholdings for investment purposes in securities
of publicly-held and traded companies), partner, associate, creditor, employee,
agent, principal, trustee, beneficiary of a trust, salesman, consultant,
co-venturer, owner, representative, advisor or in any other capacity whatsoever,
(i) compete with the Company or any of its subsidiaries and affiliates in any
activity engaged in by any of them at any time during the Term or in any
activity that, at the time of the termination of Executive's employment
hereunder, the Company or any of its subsidiaries and affiliates is planning to
engage in, in either case in the State of Texas or in any other state in the
United States, or (ii) participate with or become interested in or associated
with any person, firm, partnership, corporation or other entity whatsoever that,
at the time Executive joins such party, is providing such services to, or is
soliciting business from, such customers or potential customers of the Company
or any of its subsidiaries and affiliates, whether located in the States of
Texas or in any other state of the United States. Notwithstanding the
foregoing, this Section 7(b) shall not apply to the Executive's ownership or
acquisition, solely as an investment, of securities of any issuer that is
registered under Section 12(b) or 12(g) of the Securities Exchange Act of 1934,
as amended, and that are listed or admitted for trading on any United States
National Securities and Exchange or that are recorded on the National
3
Association of Securities Dealers Automated Quotations System, or any similar
system or automated dissemination of quotations of securities prices and common
use, so long as the Executive does not control, acquire a controlling interest
in or become a member of a group which exercises direct or indirect control of,
more than five percent (5%) of any class of Stock entity.
For purposes of this Subsection 7(b), the term "Post-Employment
Period" shall mean, in the case of the termination of Executive's employment
with the Company or any of its subsidiaries and affiliates for Cause as provided
in Section 9(b) of this Agreement or upon the resignation of Executive's
employment hereunder by Executive prior to the expiration of the Term, a period
of one (1) year after such termination. If any covenant contained in this
Subsection 7(b), or any part thereof, is hereafter construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect, without regard to the invalid
portion or portions. If any covenant in this Subsection 7(b), or any part
thereof, is held to be unenforceable because of its duration or its geographic
scope, the parties agree that the court making such determination shall have the
power to reduce the duration and/or area of such covenant to the longest
duration and to the greatest geographical scope which is permitted, and, in said
reduced form, such covenant shall then be enforced.
(c) Soliciting Employees. Executive agrees that during the
---------------------
Term, and for a period of one (1) year thereafter, he will not directly or
indirectly solicit any of the employees of the Company or any of its present or
future subsidiaries or affiliates to leave his or her employment with any of
them to work for any business, individual, partnership, firm, corporation, or
other entity then in competition with the business of the Company or any such
subsidiary or affiliate.
8. Remedies for Breach. If Executive breaches, or threatens to breach,
-------------------
any of the provisions of Section 7 hereof, the Company shall have the following
rights and remedies, in addition to any others, each of which shall be
independent of the other and severally enforceable:
(i) The right to have the provisions of Section 7 of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company;
(ii) The right and remedy to require Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments
or other benefits (hereinafter collectively the "Benefits") derived or received
by Executive as a result of any transactions constituting a breach of any of the
provisions of Section 7, Executive hereby agreeing to account for and pay over
the Benefits to the Company; and
(iii) The right to terminate Executive's employment pursuant to
Section 9(b) hereof.
9. Termination of Agreement.
--------------------------
(a) Death or Disability. This Agreement shall automatically
---------------------
terminate upon the Executive's death and the Company shall have the right to
terminate this Agreement and the Executive's employment upon the Executive's
disability. Under the terms of this Agreement, disability shall mean a physical
or mental infirmity preventing Executive from performing his essential job
function hereunder for more than one hundred eighty (180) consecutive days where
no reasonable accommodation is available or where providing a reasonable
accommodation would create an undue hardship to the Company. The determination
of whether the Executive is and continues to be disabled shall be made in
writing by a physician selected by the Board and reasonably acceptable to the
Executive. If, during the Term, Executive's employment is terminated due to his
death or disability, Executive or Executive's estate, as the case may be, shall
be entitled to receive (i) any unpaid Base Salary through the date of death or
the effective date of termination specified in a notice concerning disability,
(ii) any accrued but unpaid incentive compensation, if any, for any Bonus period
on or before the date of death or determination date provided in the notice
concerning disability, (iii) any bonus due and payable, and (iv) any unpaid
additional bonuses or reimbursements for reasonable business expenses otherwise
due to the Executive, including payment of compensation for unused vacation days
that have accumulated during the calendar year in which termination of
employment occurs.
4
(b) Termination For Cause. The Company shall at all times have
-----------------------
the right, upon written notice to the Executive, to terminate the Term of
employment, for Cause as defined below. For purposes of this Agreement, the
term "Cause" shall mean (i) an action or omission of the Executive which
constitutes a willful and material breach of, or a willful and material failure
or refusal (other than by reason of his disability or incapacity) to perform his
duties under, this Agreement, (ii) fraud, embezzlement, misappropriation of
funds or breach of trust in connection with his services hereunder, or (iii) a
conviction of any crime which involves dishonesty or a breach of trust. Any
termination for Cause shall be made in writing by notice to the Executive, which
notice shall set forth in reasonable detail all acts or omissions upon which the
Company is relying for such termination. The Executive (and his legal
representative) shall have the right to address the Board regarding the acts set
forth in the notice of termination. Upon any termination pursuant to this
Section 9(b), the Company shall (i) pay to the Executive any unpaid Base Salary
through the date of termination, (ii) pay to the Executive accrued but unpaid
incentive compensation, if any, for any Bonus period ending on or before the
date of the termination of Executive's employment with the Company, (iii) any
Bonus due and payable, and (iv) any reimbursements for reasonable business
expenses otherwise due and payable to the Executive, including payment of
compensation for unused vacation days that have accumulated during the calendar
year in which such termination occurs.
(c) Other Termination. The Company shall have the right to
------------------
terminate the Term of employment by written notice not less than thirty (30)
days prior to the termination date, to the Executive. Upon any termination
pursuant to this Section 9(c) (that is not a termination under any of Sections
9(a), (b) or (d), the Company shall (i) pay to the Executive on the termination
date unpaid Base Salary, if any, through the date of termination specified in
such notice, (ii) pay to the Executive the accrued but unpaid incentive
compensation, if any, for any Bonus Period ending on or before the date of the
termination of the Executive's employment with the Company, (iii) pay to the
Executive on the termination date a lump sum payment equal to one (1) year's
Base Salary, and (iv) the accrued but unpaid Bonus for the year in which such
termination occurs. Upon any termination effected and compensated pursuant to
this Section 9(c), the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination and payment of compensation for unused vacation days that
have accumulated during the calendar year in which such termination occurs).
(d) Termination By Executive.
--------------------------
(i) Executive may terminate this Agreement at any time upon
sixty (60) days' prior written notice to the Company. Unless otherwise agreed
to by the Executive and the Company, termination shall be on the date of the
expiration of such sixty (60) day notice. Upon termination of the Term of
employment pursuant to this Section 9(d)(i) by the Executive without good Reason
(as defined below), the Company shall (i) pay to the Executive any unpaid Base
Salary through the date of termination, (ii) pay to the Executive accrued but
unpaid incentive compensation, if any, for any Bonus period ending on or before
the date of the termination of Executive's employment with the Company, (iii)
any Bonus due and payable, and (iv) any reimbursements for reasonable business
expenses otherwise due and payable to the Executive, including payment of
compensation for unused vacation days that have accumulated during the calendar
year in which such termination occurs
(ii) Upon termination of the Term of employment pursuant to
this Section (d)(ii) by the Executive for Good Reason, the Company shall pay to
the Executive the same amounts, and shall continue or compensate for Benefits in
the same amounts, that would have been payable or provided by the Company to the
Executive under Section 9(c) of this Agreement if the Term of employment had
been terminated by the Company without Cause. In addition, if the termination
of the Term of employment occurs after a Change in Control (as defined below),
and as a result of the Change in Control, the Executive would be entitled to a
reduction in the option price for options, if any, granted to the Executive, or
any cash payments from the Company, (other than those provided under this
Agreement) in addition to those specified in Section 9(c), under any plan or
program maintained by the Company (the "Additional Benefits"), then the Company
shall provide the Executive with those Additional Benefits, if and only to the
extent that such Additional Benefits, when added to the amounts payable and the
Benefits provided by the Company to the Executive hereunder, will not constitute
excess parachute payments with the meaning of Section 280G of the Code. Upon
any termination effected and compensated pursuant to this Section 9(d)(ii), the
Company shall have no further liability hereunder (other than for (x)
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however, to the provisions of Section 4.1, and
5
(y) payment of compensation for unused vacation days that have accumulated
during the calendar year in which such termination occurs.)
(iii) For purposes of this Agreement, "Good Reason" shall
mean (i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 1.2 of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive; (ii) any failure by the Company to
comply with any of the provisions of Section 4 of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by the Company promptly after receipt of notice thereof given
by the Executive; (iii) the Company's requiring the Executive to be based at any
office or location, that is not within 50 miles of San Antonio, Texas except for
travel reasonably required in the performance of the Executive's
responsibilities; (iv) any purported termination by the Company of the
Executive's employment other than for Cause pursuant to Section 9(b), or because
of the Executive's disability pursuant to Section 9(a) of this Agreement; or (v)
the occurrence of a Change in Control. For purposes of this Section 9(d)(iii),
the Executive acknowledges that the Company's holding company functions are
headquartered and centralized in Atlanta, Georgia.
(iv) For purposes of this Agreement, the term "Change in
Control" shall mean:
a. Approval by the shareholders of the Company or the
shareholders of Charys of (x) a reorganization, merger, consolidation or other
form of corporate transaction or series of transactions, in each case, with
respect to which persons who were the shareholders of the Company or the
shareholders of Charys immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
fifty percent (50%) of the combined voting power entitled to vote generally in
the election of directors of the reorganized, merged or consolidated company's
then outstanding voting securities, in substantially the same proportions as
their ownership immediately prior to such reorganization, merger, consolidation
or other transaction, or (y) a liquidation or dissolution of the Company or
Charys or (z) the sale of all or substantially all of the assets of Charys or of
the Company (unless such reorganization, merger, consolidation or other
corporate transaction, liquidation, dissolution or sale is subsequently
abandoned);
b. A new board member of Charys is elected without the
approval of at least two of the persons who, as of the Effective Date of this
Agreement, constitute the board of Charys; or
c. the acquisition (other than from the Company) by any
person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act, of beneficial ownership within the meaning of Rule
13-d promulgated under the Securities Exchange Act of more than fifty percent
(50%) of either the then outstanding shares of the Company's common stock or
Charys' common stock or the combined voting power of the Company's or Charys'
then outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a "Controlling Interest")
excluding, for this purpose, any acquisitions by (1) Charys, the Company or
their subsidiaries, (2) any person, entity or "group" that as of the Effective
Date of this Agreement owns beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act) of a Controlling Interest
or (3) any employee benefit plan of Charys, the Company or their subsidiaries;
d. provided that, with respect to this Section 9(d)(iv),
a Change in Control shall not be deemed to have occurred should any of the
contingencies referred to in this Section involve any of those companies,
persons or other legal entities with whom the Company or Charys is negotiating
on or before the Effective Date and which are communicated, in writing, by the
Company to the Executive upon execution of this Agreement.
(e) Certain Additional Payments by the Company. Anything in this
-------------------------------------------
Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment, distribution or other action by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, including
any additional payments required under this Section 9(e) (a
6
"Payment") would be subject to an excise tax imposed by Section 4999 of the
Internal Revenue code of 1986, as amended (the "Code"), or any interest or
penalties are incurred by the Executive with respect to any such excise tax
(such excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Company shall make a payment
to the Executive (a "Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any Excise Tax) imposed upon the Gross-Up
Payment, the Executive retains (or has had paid to the Internal Revenue Service
on his behalf) an amount of the Gross-Up Payment equal to the sum of (x) the
Excise Tax imposed upon the Payments and (y) the product of any deductions
disallowed because of the inclusion of the Gross-Up Payment in the Executive's
adjusted gross income and the highest applicable marginal rate of federal income
taxation for the calendar year in which the Gross-Up Payment is to be made. For
purposes of determining federal income taxes at the highest marginal rates of
federal income taxation for the calendar year in which the Gross-Up Payment is
to be made, and (ii) pay applicable state and local income taxes at the highest
marginal rate of taxation for the calendar year in which the Gross-Up Payment is
to be made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
10. Effect of Termination. Upon the termination of this Agreement,
-----------------------
whether by the expiration of the Term specified in Section 2 hereof or pursuant
to Section 9 hereof, the rights of Executive which shall have accrued prior to
the date of such termination shall not be affected in any way. Except as
provided in Section 9(c), Executive shall not have any rights which have not
previously accrued upon termination of this Agreement. The provisions of
Sections 6, 7 and 8 shall in any event survive the termination of this
Agreement, whether by the expiration of the Term, pursuant to Section 9 or
otherwise.
11. Communications. All notices and other communications under this
--------------
Agreement shall be in writing and shall be deemed to have been given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the respective addresses set forth below,
or to such other addresses as either party may have furnished to the other in
writing in accordance herewith, except that notice of a change of address shall
be effective only upon actual receipt.
If to Executive: _____________________
_____________________
_____________________
If to the Company: _____________________
_____________________
_____________________
12. Indemnification.
----------------
(a) Subject to limitations imposed by law, the Company shall
indemnify and hold harmless the Executive to the fullest extent permitted by law
from and against any and all claims, damages, expenses (including attorneys'
fees), judgments, penalties, fines, settlements, and all other liabilities
incurred or paid by him in connection with the investigation, defense,
prosecution, settlement or appeal or any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and to which the Executive was or is a party or is threatened to
be made a party by reason of the fact that the Executive is or was an officer,
employee or agent of the Company, or by reason of anything done or not done by
the Executive in any such capacity or capacities, provided that the Executive
acted in good faith, in a manner that was not grossly negligent or constituted
willful misconduct and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The Company also shall pay any and all expenses (including attorneys'
fees) incurred by the Executive as a result of the Executive being called as a
witness in connection with any matter involving the Company and/or any of its
officers or directors.
(b) The provisions of this Section 12 shall survive the
termination of this Agreement.
7
13. Amendments. This Agreement may be amended or modified only by a
----------
written instrument executed by the parties hereto.
14. Binding Effect. This Agreement shall be binding upon, and shall
---------------
inure to the benefit of, Executive, the obligations of Executive hereunder are
personal and this Agreement may not be assigned by Executive. This Agreement
shall be binding upon, and shall inure to the benefit of, the Company and shall
also bind and inure to the benefit of any successor of the Company by merger or
consolidation or any assignee of all or substantially all of its business or
properties, but, except to any such successor or assignor of the Company, this
Agreement may not be assigned by the Company.
15. No Waiver. No waiver by either party at any time of any breach by
----------
the other party of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
16. Governing Law. The validity, interpretation, construction and
--------------
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
17. Severability. If any provision of this Agreement shall, to any
------------
extent, be invalid or unenforceable, the remainder of this Agreement shall not
be affected, and each term hereof shall be valid and shall be enforced to the
extent permitted by law.
18. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
19. Entire Agreement. This Agreement is the entire agreement of the
-----------------
parties in respect to this Agreement's subject matter and supersedes all prior
severance or other agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party; and any prior agreement of the
parties in respect to this Agreement's subject matter is terminated and
canceled.
20. Binding Arbitration. Subject to the rights of any party to seek
---------------------
injunctive relief under Section 8 and without waiving the same, the parties
agree that all disputes, controversies or claims that may arise among them
(including their agents and employees), including, without limitation, (i) any
claims arising out of or relating to this Agreement or the breach, termination
or invalidity thereof (ii) any claim arising out of the termination of
Executive's employment, or (iii) any claim for discrimination (e.g., sex, sexual
harassment, race, national origin, age, religion or disability) or retaliation,
whether statutory or otherwise (e.g., claims under the Fair Labor Standards Act,
the Family and Medical Leave Act, Title VII of the Civil Rights Act of 1964 or
any other similar federal, state or local law), shall be submitted to, and
determined by, binding arbitration. Such arbitration shall be conducted
pursuant to the National Rules for the Resolution of Employment Disputes then in
effect of the American Arbitration Association, except to the extent such rules
are inconsistent with this Section 20. The arbitration shall be conducted by a
panel of three (3) neutral arbitrators, which shall be selected from a list of
fifteen (15) potential candidates provided by the American Arbitration
Association. Alternate strikes shall be made to the list, commencing with the
party bringing the claim, until the names of three (3) persons remain. The
parties may, however, by mutual agreement, request the American Arbitration
Association to submit additional panels of possible arbitrators. The persons
remaining shall be the arbitrators for such arbitration. The arbitrators shall
elect a chairperson to preside at all meetings and hearings. The arbitrators
shall have the exclusive authority to determine the arbitrability of any dispute
asserted by and between the parties. Additionally, the arbitrators shall have
the exclusive power to determine all matters relating to the interpretation,
applicability, enforcement or formation of this Agreement including, without
limitation, any claim that all or part of this Agreement is void or voidable.
Likewise, the arbitrators shall have the exclusive power to determine all
matters incident to the conduct of the arbitration, including without limitation
all procedural and evidentiary matters and the scheduling of any prehearing
conference or hearing. The award made by a majority of the arbitrators shall be
final and binding upon the parties thereto and the subject matter, except that
all errors of law shall be subject to appeal in the United States District Court
for the Western District of Texas, San Antonio Division. The arbitration shall
be governed by the United States Arbitration Act, 9 U.S.C. Sec.Sec. 1-16, and
judgment upon the award rendered by the arbitrator(s) may be entered by any
court having jurisdiction thereof. Unless otherwise agreed by the parties, the
arbitration shall be held in San Antonio,
8
Texas. The arbitrator shall apply the laws of the State of Texas (without
regard to conflict of law rules) in determining the substance of the dispute,
controversy or claim and shall decide the same in accordance with applicable
usages and terms of trade. The costs and fees of the arbitration shall be borne
equally by the Company and Executive, except that each party shall be solely
responsible for its own attorneys' fees; provided, however, that the prevailing
party in any such arbitration shall be entitled to recover its reasonable
attorneys' fees, costs and expenses (including, without limitation arbitration
fees) incurred in connection with the arbitration to the extent such recovery is
permitted by the law(s) governing the claim(s) asserted. The parties shall be
allowed to conduct discovery in accordance with the Federal Rules of Civil
Procedure and the arbitrator(s) shall have the power to hear and rule upon
dispositive motions filed by any party. Dispositive motions shall be ruled upon
by the arbitrators at least fifteen (15) business days prior to conducting an
arbitration hearing. This Section 20 shall not prevent either party from
seeking a temporary restraining order or temporary or preliminary injunctive
relief from a court of competent jurisdiction in order to protect its rights
under this Agreement. In the event a party seeks such injunctive relief
pursuant to this Agreement, such action shall not constitute a waiver of the
provisions of this Section 19, which shall continue to govern any and every
dispute between the parties, including without limitation the right to damages,
permanent injunctive relief and any other remedy, at law or in equity. THE
COMPANY AND EXECUTIVE EACH KNOWINGLY AND VOLUNTARILY GIVE UP ANY RIGHT TO A
TRIAL BY JURY IN CONNECTION WITH ANY DISPUTE, CLAIM OR CONTROVERSY WHICH MAY
ARISE BETWEEN THEM. By execution of this Agreement, each of the parties hereto
acknowledges and agrees that such party has had an opportunity to consult with
legal counsel and that such party knowingly and voluntarily waives any right to
a trial by jury of any dispute pertaining to or relating in any way to the
transactions contemplated by this Agreement, the provisions of any federal,
state or local law, regulation or ordinance notwithstanding.
21. Surviving Provisions. The provisions of Section 4(b), 6, 7, 8,
---------------------
9(c), 9(d), 10, 11, 12 and 20 and this Section 21 shall survive the termination
of this Agreement, whether by expiration of the Term, pursuant to Section 9 or
otherwise.
9
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
CCI TELECOM, INC.:
By:
------------------------------------------
Its:
------------------------------------
EXECUTIVE:
---------------------------------------------
10
EXHIBIT A
BASE SALARY:
OTHER BENEFITS DESCRIBED BELOW:
2005 AND 2006 BONUS PLAN
In addition to the Base Salary, Executive shall be entitled to receive an
annual Bonus computed and payable with respect to each fiscal year ending April
30 (a "Fiscal Year") commencing with the Fiscal Year ending April 30, 2005,
based on the Company's EBITDA (as hereinafter defined) for such Fiscal Year and
the Company's Targeted EBITDA (as hereinafter defined) for such Fiscal Year in
accordance with the following:
(i) if the Company's EBITDA is greater than or equal to
ninety percent (90%), but less than one-hundred percent (100%) of Targeted
EBITDA for a Fiscal Year, Executive's Bonus for such Fiscal Year shall be an
amount equal to 15% of Executive's Base Salary for such Fiscal Year;
(ii) if the Company's EBITDA is greater than or equal to one
hundred percent (100%), but less than one-hundred fifteen percent (115%) of
Targeted EBITDA for a Fiscal Year, Executive's Bonus for such Fiscal Year shall
be an amount equal to 20% of Executive's Base Salary for such Fiscal Year;
(iii) if the Company's EBITDA is greater than or equal to
one-hundred fifteen percent (115%), but less than one-hundred thirty percent
(130%) of Targeted EBITDA for a Fiscal Year, Executive's Bonus for such Fiscal
Year shall be an amount equal to 30% of Executive's Base Salary for such Fiscal
Year; and
(iv) if the Company's EBITDA is greater than one hundred
thirty percent (130%) of Targeted EBITDA for a Fiscal Year, Executive's Bonus
for such Fiscal Year shall be an amount equal to 35% of Executive's Base Salary
for such Fiscal Year.
The Bonus will be paid, in the form provided below, within ninety (90) days
after the date the Company receives its audited annual financial statements for
the applicable Fiscal Year or, if the Company does not obtain an audit for such
Fiscal Year, then within fifteen (15) days after the date the Board approves the
consolidated annual financial statements of the Company for the applicable
Fiscal Year[, provided, however, that except under the circumstances set forth
in Sections 9(a) and 9(c) herein, the Bonus for any Fiscal Year shall not be
payable if Executive is not in the employment of the Company for at least six
(6) months during such Fiscal Year]. Subject to the provisions of the preceding
sentence, a Bonus, if any, for any Fiscal Year of Executive's employment
hereunder shall be prorated based upon that portion of such Fiscal Year that
Executive was employed hereunder. Any Bonus to which Executive is entitled under
this Agreement shall be payable on the date specified in this Section 5(b), even
though the Term expires prior to the date such Bonus is payable hereunder. As
used in this Section 5(b), the term "EBITDA" means, for any Fiscal Year, the net
income of the Company for such Fiscal Year determined in accordance with
generally accepted accounting principles applied on a basis consistent with the
Company's past practices ("GAAP"), (A) before the deduction of interest expenses
paid or accrued by the Company with respect to such period, (B) before deduction
of income taxes and other taxes based upon the income of the Company for such
period, (C) before the deduction of depreciation and amortization of goodwill of
the Company, (D) before any deductions for extraordinary or nonrecurring losses
or charges of the Company (as such terms are used under GAAP) for such period
and before any increases due to extraordinary or nonrecurring items of income of
the Company (as such terms are used under GAAP) for such period, (E) before a
deduction with respect to any amounts by which (i) any corporate overhead of
Charys allocated to the Company, management fees paid by the Company to Charys
or other payments made by the Company to Charys which are not directly
attributable or related to the Company's operation of its business exceeds (ii)
the lower of (A) the actual internal cost to Charys of providing such service or
(B) the aggregate costs that the Company would have incurred for the services to
which such
payments or allocations relate if the Company had acquired such services from a
third party on an arm's length basis, and (F) before any deductions for
financing costs, accounting fees, legal fees or any other fees and expenses
incurred in connection with the merger of Charys into the Company, with all
items referred to in subsections (A) through (F) in this definition determined
in accordance with GAAP, and calculated as set forth in the Company's
consolidated annual financial statements for such Fiscal Year, which financial
statements have been approved by the Board, and the term "Targeted EBITDA" shall
be, with respect to each Fiscal Year, an amount determined by the [Chief
Executive Officer or] the Board no later than ninety (90) days after the
commencement of such Fiscal Year. 739382.4 739382.4 The Bonus for any Fiscal
Year may, at the sole discretion of the Board of Directors, be paid in the form
of cash.
12
ATTACHMENT F
ARTICLES OF INCORPORATION OF CCI TELECOM, INC.
FILED
IN THE ▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
JAN 16 2001
NO. C25002-00
---------------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, Secretary of State
RESTATED ARTICLES OF INCORPORATION
OF
CCI TELECOM, INC.
To the Secretary of State
State of Nevada
Pursuant to the provisions of Chapter 78.403 of the Nevada Revised
Statutes, the domestic corporation herein named does hereby adopt the following
Restated Articles of incorporation. A resolution approving these Restated
Articles of Incorporation was unanimously adopted on January 4, 2001, by the
Board of Directors and the stockholders of CCI Telecom, Inc.
FIRST, The name of the corporation is CCI Telecom, Inc. (the
"Corporation").
SECOND. Its registered agent in the State of Nevada is located at ▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇. The name of its resident agent at
that address is Capitol Document Services, Inc. The Corporation may maintain
offices in such other places within or without the State of Nevada as maybe from
time to time designated by the Board of Directors, or by the bylaws of the
Corporation, and the Corporation may conduct all corporate business of every
kind and nature, including the holding of all meetings of directors and
stockholders, outside the State of Nevada, as well as within the State of
Nevada.
THIRD. The objects for which the Corporation is formed are to engage in
any lawful activity for which corporations may be organized under the laws of
the State of Nevada.
FOURTH, The aggregate number of shares which the Corporation shall have
the authority to issue is 50,000,000 shares, consisting of two classes of
capital stock: (i) 25,000,000 shares of Common Stock, $.01 par value per share;
and (ii) 25,000,000 shares of Preferred Stock, $.01 par value per share.
The board of directors may prescribe the powers, designations, preferences
and relative, participating, optional or other special rights, including without
limitation voting rights, and the qualifications, limitations or restrictions
thereof, of each class of capital stock and of each series within any such class
and may increase or decrease the number of shares within each such class or
series; provided, however, the board of directors may not decrease the number of
shares within a class or series to less than the number of shares within such
class or series that are then issued and may not increase the number of shares
within a series above the total number of authorized shares of the applicable
class.
No shareholder shall be entitled to have any preemptive rights to acquire
any new or additional securities issued by the Corporation except as may be set
forth in a separate written agreement to which the Corporation is a party.
Cumulative voting for directors is expressly prohibited.
FIFTH. The governing board of this Corporation shall be known as
directors, and the number of directors may from time to time be increased or
decreased in such manner as shall be provided by the bylaws of this Corporation,
provided that the number of directors shall not be reduced to less than one. The
initial Board of Directors shall be three (3) in number.
The names and addresses of the initial members of the Board of Directors
are as follows:
NAME ADDRESS
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇: ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇▇ Twelve ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇: ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
SIXTH. The Corporation is to have perpetual existence.
SEVENTH. No director or officer of the Corporation shall be personally
liable to the Corporation or any of its stockholders for damages for breach of
fiduciary duty as a director or officer or for any act or omission of any such
director or officer; however, the foregoing provision shall not eliminate or
limit the liability of a director or officer for (a) acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law; or (b) the
payment of dividends in violation of Section 78.300 of the Nevada Revised
Statutes. Any repeal or modification of this Article by the stockholders of the
Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director or officer of the Corporation
for acts or omissions prior to such repeal or modification.
EIGHTH. The Corporation shall indemnify each director or officer of the
Corporation who may be indemnified, to the fullest extent permitted by Section
78.751 of the Nevada Revised Statutes ("Section 78.751"), as it may be amended
from time to time, in each and every situation where the Corporation is
obligated to make such indemnification pursuant to Section 78.751. In addition,
the Corporation shall indemnify each of the Corporation's directors and officers
in each and every situation where, under Section 78.751, the Corporation is not
obligated, but is permitted or empowered, to make such indemnification. The
Corporation may, in the sole discretion of the Board of Directors, indemnify any
other person who may be indemnified pursuant to Section 78.751 to the extent the
Board of Directors deems advisable, as permitted by such section. The
Corporation shall promptly make or cause to be made any determination which
Section 78.751 requires.
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NINTH. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation shall have the power to
adopt, amend or repeal the bylaws of the Corporation.
THE UNDERSIGNED, being the President and Secretary of the Corporation, do
make and file these Restated Articles of Incorporation, having been authorized
to execute such document by resolution of the Board of Directors and the
stockholders of the Corporation which were adopted on January 4, 2001, and
certify that these Restated Articles of Incorporation correctly sets forth the
text of the Articles of Incorporation of the Corporation as restated on this
11th day of January 2001.
CCI TELECOM, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------
Print Title: President
-------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary
3
CERTIFICATE TO ACCOMPANY
▇▇▇▇ ▇▇▇▇▇▇ OFFICE USE ONLY:
Secretary of State RESTATED ARTICLES FILED
(PURSUANT TO NRS IN THE OFFICE OF THE
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇ 78.403 and 82.371) ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ JAN 16 2001
(▇▇▇) ▇▇▇ ▇▇▇▇
IMPORTANT: READ ATTACHED INSTRUCTIONS BEFORE COMPLETING
--------------------------------------------------------------------------------
THIS FORM IS TO ACCOMPANY RESTATED ARTICLES OF INCORPORATION NO. C25002-00
------------------------------------------------------------ ▇▇▇▇ ▇▇▇▇▇▇
(Pursuant to NRS 78.403 or 82.371) ▇▇▇▇ ▇▇▇▇▇▇,
Secretary of State
(THIS FORM MAY ALSO BE USED TO ACCOMPANY RESTATED ARTICLES FOR
LIMITED-LIABILITY COMPANIES AND CERTIFICATES OF LIMITED PARTNERSHIP)
- REMIT IN DUPLICATE -
1. Name of NEVADA entity as last recorded In this office:
CCI TELECOM, INC.
2. Indicate what changes have been made by checking the appropriate spaces.*
[ ] The entity name has been amended.
[ ] The resident agent has been changed.
(attach Certificate of Acceptance from new resident agent)
[ ] The purpose of the entity has been amended.
[ ] The authorized shares have been amended.
[ ] The directors, managers or general partners have been amended.
[ ] The duration of the entity has been amended.
[ ] IRS tax language has been added.
[ ] Articles have been added to the articles or certificate.
[ ] Articles have been deleted from the articles or certificate.
[X] None of the above apply, The articles or certificate have been amended as
follows; (provide article numbers, if available)
ARTICLE FOURTH: ADDITIONAL LANGUAGE HAS BEEN INCLUDED IN THE THIRD PARAGRAPH.
* This form is to accompany Restated Articles which contain newly altered or
amended articles.
The Restated Articles must contain all of the requirements as set forth in the
statutes for amending or altering Articles of Incorporation, Articles of
Organization or Certificates of Limited Partnership.
IMPORTANT: Failure to include any of the above information and remit the proper
fees may cause this filing to be rejected.
ATTACHMENT G
BYLAWS OF CCI TELECOM, INC.
BYLAWS
OF
CCI TELECOM, INC.
A NEVADA CORPORATION (THE "CORPORATION")
ARTICLE I.
OFFICES
Section 1. Registered Office. The Corporation shall have and
------------------
continuously maintain a registered office in the State of Nevada which may be,
but need not be, the same as its place of business (if located within the State
of Nevada). The address of the registered office and the name of the registered
agent at such address shall be as set forth in the Corporation's Articles of
Incorporation.
Section 2. Place of Business. In addition to its registered office, the
-----------------
Corporation may have offices and places of business at such places, both within
and without the State of Nevada, as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meetings. Annual meetings of the shareholders shall
----------------
be held at such times as shall be determined by the Board of Directors. At each
annual meeting, the shareholders shall elect a Board of Directors, and shall
transact such other business as may be properly brought before the meeting.
Section 2. Special Meetings. Unless otherwise provided by the Articles
----------------
of Incorporation, special meetings of the shareholders may be called by the
President, the Board of Directors or the holders of shares representing not less
than 10% of the votes entitled to be cast on any issue at meetings of
shareholders. A special meeting may be called for any purpose or purposes though
business transacted at a special meeting shall be confined to the purposes
stated in the notice of such meeting.
Section 3. Place of Meetings. Meetings of the shareholders of the
-------------------
Corporation shall be held at such places within or without the State of Nevada
as shall be determined by the Board of Directors or, in the absence of such a
determination, meetings of shareholders shall be held at the principal office of
the Corporation.
Section 4. Notice of Meetings. Written notice stating the place, day
--------------------
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary or the person calling the meeting, to each shareholder entitled to
vote at the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his address
as it appears on the stock transfer books of the Corporation, with postage
thereon prepaid.
Section 5. Voting List. At least ten (10) days before each meeting of
------------
the shareholders, a complete list of the shareholders entitled to vote at such
meeting, arranged in alphabetical order, with the residence of each and the
number of voting shares held by each, shall be prepared by the officer or agent
having charge of the stock transfer-books. Such list shall be kept on file at
the registered office or principal place of business of the Corporation for a
period often (10) days prior to such meeting, and shall be subject to inspection
by any shareholder who may be present. The original stock transfer books shall
be prima facie evidence as to who are the shareholders entitled to examine such
----- -----
list or transfer books or to vote at any meeting of shareholders. Failure to
comply with the requirements of this Section shall not affect the validity of
any action taken at such meeting.
Section 6. Quorum of Shareholders: Adjournment. The holders of shares
------------------------------------
representing a majority of the votes entitled to be cast at a meeting, present
in person or represented by proxy, shall be requisite to and shall constitute a
quorum at all meetings of the shareholders for the transaction of business
except as otherwise provided by the Articles of Incorporation or by these
Bylaws. Once a quorum is present at a meeting of shareholders, the shareholders
represented in person or by proxy at the meeting may conduct such business as
may be properly brought before the meeting until it is adjourned, and the
subsequent withdrawal from the meeting of any shareholder or the refusal of any
shareholder represented in person or by proxy to vote shall not affect the
presence of a quorum at the meeting. Upon attainment of representation by a
quorum, subsequent to an adjournment of the meeting, any business may be
transacted which might have been transacted at the meeting as originally
notified.
If a quorum is not present or represented at any meeting of the
shareholders, the shareholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum is
present or represented. When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in these Bylaws, such
determination shall apply to any adjournment thereof except where the
determination has been made through the closing of the share transfer records
and the stated period of closing has expired.
Section 7. Organization; Order of Business. The Chairman of the Board
--------------------------------
or such other person as the Board of Directors may have designated or, in the
absence of such a person, the President of the Corporation or, in his absence
such person as may be chosen by the holders of shares representing a majority of
the votes which could be cast by those present, in person or by proxy, and
entitled to vote shall call to order any meeting of the shareholders and act as
chairman of the meeting. The Secretary of the Corporation, if present, shall act
as secretary of the meeting, but in his absence, the secretary of the meeting
shall be such person as the chairman of the meeting appoints. The chairman of
any meeting of shareholders shall determine the order of business and the
procedure at the meeting, including regulation of the manner of voting and the
conduct of discussion; but the order of business to be followed at any meeting
at which a quorum is present may be changed by the holders of shares of stock
present in person or by proxy and entitled to vote at such meeting (determined
by a majority of the votes cast).
2
Section 8. Required Vote. With respect to matters other than elections
-------------
of directors, except as otherwise required by statute, the Articles of
Incorporation or these Bylaws, the vote of the holders of shares representing a
majority of the votes cast shall decide any question properly brought before
such meeting. Directors shall be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election of directors.
Section 9. Method of Voting: Proxies. Each outstanding share,
----------------------------
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of the shareholders, except to the extent that the voting
rights of the shares of any class or classes are enhanced or limited by statute,
by the Articles of incorporation (including amendments thereto) or by agreement.
At any meeting of the shareholders, each shareholder having the right to vote
shall be entitled to vote in person, or by written proxy appointed by an
instrument executed by such shareholder. No proxy shall be valid after eleven
(11) months from the date of its execution, unless otherwise provided in the
proxy. A proxy shall be revocable unless expressly provided therein to be
irrevocable and unless otherwise made irrevocable by law. Each proxy shall be
filed with the Secretary of the Corporation prior to or at the time of the
meeting. Any vote may be taken by voice or by show of hands unless a
shareholder entitled to vote objects, ha which case written ballots shall be
used.
Section 10. Action Without Meeting. Any action which must or may be
------------------------
taken at any annual or special meeting of shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by (i) the holders
of all the shares entitled to vote with respect to the action that is the
subject of the consent, or (ii) unless the Articles of Incorporation otherwise
provide, the holders of shares of stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote on the action were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those shareholders who did not
consent in writing.
Section 11. Telephone Meeting. Shareholders may participate in and hold
-----------------
a meeting by means of conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each other.
Participation in a meeting pursuant to this Section shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the. meeting is not lawfully called or convened.
ARTICLE III.
DIRECTORS
Section 1. Management of the Corporation. The powers of the Corporation
-----------------------------
shall be exercised by or under the authority of, and the business and affairs of
the Corporation shall be managed under the direction of, the Board of Directors
of the Corporation. Except to the extent otherwise limited by statute, the
Articles of Incorporation, or these Bylaws, the Board of Directors shall have
the broadest powers available under Nevada law.
3
Section 2. Number. The number of directors constituting the Board of
------
Directors shall be determined from time to time by resolution of a majority of
directors then in office, though less than a quorum; provided that at all times
the number of directors shall be at least one (1) and no decrease shall have the
effect of shortening the term of any incumbent director.
Section 3. Qualifications. Election and Term. Directors need not be
------------------------------------
residents of Nevada or shareholders of the Corporation. The directors
constituting the Board of Directors shall be elected at the annual meeting of
shareholders by a plurality of the votes cast by the shareholders entitled to
vote at such election of directors. Each director, upon election to the Board of
Directors, shall hold office until the next annual meeting of shareholders and
until his or her successor is elected and qualified.
Section 4. Chairman of the Board. The Board of Directors may elect a
-----------------------
member from the Board of Directors to serve as Chairman of the Board. The
Chairman of the Board shall preside at meetings of the Board of Directors and
shareholders.
Section 5. Removal. Any director may be removed either for or without
-------
cause at any special or annual meeting of the shareholders by the affirmative
vote of the holders of shares having a majority of the entire number of votes
entitled to be cast for the election of such director, if notice of the
intention to act upon such matter shall have been given in the notice calling
such meeting.
Section 6. Vacancies. Any vacancies occurring in the Board of Directors
---------
for any reason may be filled by a majority vote of the directors then in office,
though less than a quorum, or by election at an annual meeting of shareholders
or at a special meeting of shareholders called for that purpose; provided that,
during the period between any two (2) successive annual meetings of
shareholders, the Board of Directors may not fill more than two (2) vacancies
resulting from an increase in the number of directors. A director elected to
fill a vacancy shall be elected for the unexpired term of his or her predecessor
in office.
Section 7. Place of Meeting. The directors of the Corporation may hold
----------------
their meetings, both regular and special, either within or without the State of
Nevada.
Section 8. Annual Meetings. Each newly elected Board of Directors shall
---------------
hold an annual meeting without further notice immediately following the annual
meeting of shareholders and at the same place, unless such place or time is
changed by a majority vote of the directors then elected and serving.
Section 9. Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held without notice at such times and places as may be fixed from time to
time by resolutions adopted by the Board of Directors and communicated to all
directors at their last known addresses. Except as otherwise provided by
statute, the Articles of Incorporation or these Bylaws, neither the business to
be transacted at, nor the purpose of any regular meeting need be specified in
the notice or waiver of notice of such meeting.
Section 10. Special Meetings. Special meetings of the Board of
-----------------
Directors may be called by the President on twenty-four (24) hours' notice to
each director either personally or by mail or by telegram or by facsimile.
Special meetings shall be called by the President in like manner and on like
4
notice on the written request of two (2) directors, Except as may be otherwise
expressly provided by statute, the Articles of Incorporation or these Bylaws,
neither the business to be transacted at, nor the purpose of, any special
meeting need be specified in the notice or waiver of notice of such meeting.
Section 11. Quorum: Majority Vote. At all meetings of the Board of
-----------------------
Directors, the presence of a majority of the number of directors fixed in
accordance with these Bylaws shall be necessary and sufficient to constitute a
quorum for the transaction of business, and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors, except as may be otherwise specifically required by
statute, the Articles of Incorporation or these Bylaws. If a quorum is not
present at any meeting of the directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum is present. Upon attainment of representation by a
quorum, subsequent to an adjournment of the meeting, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 12. Presumption of Assent. A director of the Corporation who is
---------------------
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless he
shall file Ms written dissent to such action with the person acting as the
Secretary of the meeting before adjournment thereof or shall forward such
dissent by certified mail to the Secretary of the Corporation immediately after
the adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
Section 13. Compensation. The Board of Directors shall have authority
------------
to determine from time to time the amount of compensation, if any, which shall
be paid to its members for their services as directors and as members of
standing or special committees of the Board. The Board shall also have power in
its discretion to provide for and to pay to directors rendering services to the
Corporation not ordinarily rendered by directors as such, special compensation
appropriate to the value of such services as determined by the Board from time
to time. Nothing in these Bylaws shall be construed to preclude any directors
from serving the Corporation in any capacity other than as a director and
receiving compensation therefor.
Section 14. Procedure. The Board of Directors shall keep regular
---------
minutes of its proceedings. The minutes shall be placed in the minute book of
the Corporation.
Section 15. Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of the Board of Directors or any committee thereof may be
taken without a meeting if a consent in writing, setting forth the action so
taken, is signed by all the members of the Board of Directors or such committee,
as the case may be. Such consent shall have the same force and effect as
unanimous vote at a meeting, and may be stated as such in any document or
instrument filed with the Secretary of State. The signed consent or a copy
thereof shall be placed in the minute book of the Corporation.
Section 16. Telephone Meeting. Members of the Board of Directors or of
-----------------
any committee thereof may participate in and hold a meeting of the Board of
Directors of any committee thereof by means of conference telephone or similar
communications equipment by which all persons participating in the meeting can
hear each other. Participation in a meeting pursuant to this Section shall
constitute presence in person at such meeting, except where a person
participates in the meeting
5
for the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE IV.
COMMITTEES OF THE BOARD
Section 1. Designation and Authority. The Board of Directors may, by
---------------------------
resolution adopted by a majority of the full Board of Directors, designate from
among its members one or more committees, each of which, to the extent provided
in such resolution, shall have and may exercise all of the authority of the
Board of Directors in the management of the business and affairs of the
Corporation, except that no such committee shall have the authority of the Board
of Directors to: amend the Articles of Incorporation (other than in connection
with the issuance of shares in series); propose a reduction of the stated
capital of the Corporation; approve a plan of merger or share exchange of the
Corporation; recommend to the shareholders the sale, lease or exchange of all or
substantially all of the property and assets of the Corporation otherwise than
in the usual and regular course of its business; recommend to the shareholders a
voluntary dissolution of the Corporation or a revocation thereof; amend, alter
or repeal the bylaws of the Corporation or adopt new bylaws of the Corporation;
fill vacancies in the Board of Directors; fill vacancies in or designate
alternate members of any committee of the Board of Directors; fill any
directorship to be filled by reason of an increase in the number of directors;
elect or remove officers of the Corporation or members or alternate members of
any committee of the Corporation; fix the compensation of any member or
alternate members of such committee; or alter or repeal any resolution of the
Board of Directors that by its terms provides that it shall not be so amendable
or repealable; and, unless such resolution expressly so provides, no such
committee shall have the authority to authorize a distribution or to authorize
the issuance of shares of the Corporation.
Section 2. Change in Number. The number of members of any committee may
----------------
be increased or decreased from time to time by resolution adopted by the Board
of Directors.
Section 3. Removal and Vacancies. Members of committees may be removed
---------------------
by the Board of Directors. Vacancies in committees may be filled by the Board of
Directors.
Section 4. Transaction of Business. Committees shall transact business
-----------------------
(at meetings or by unanimous consent) in the same manner as the Board of
Directors.
Section 5. Responsibility. The designation of any committee and the
--------------
delegation of authority to it shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed upon it or him
by law.
6
ARTICLE V.
NOTICE
Section 1. Manner of Giving Notice. Unless otherwise required by these
-----------------------
Bylaws, whenever any notice is required to be given under law, the Articles of
Incorporation or these Bylaws, such notice may be given in writing, and
delivered personally, through the United States mail, by a recognized express
delivery service (such as Federal Express) or by means of telegram, telex or
facsimile transmission, addressed to such director or shareholder at his address
or telex or facsimile transmission number, as the case may be. All notices shall
be deemed to be given on the earlier of receipt or at the tune when the same
shall be deposited in the mail or with an express delivery service or when
transmitted, as the case may be, addressed or directed to the proper destination
as it appears on the records of the Corporation, with postage and fees thereon
prepaid. An affidavit of the Secretary or Assistant Secretary or of the transfer
agent of the Corporation that the notice has been given shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
----- -----
Section 2. Waiver of Notice. Whenever any notice is required to be
------------------
given to any committee member, director or shareholder of the Corporation under
the provisions of the statutes, the Articles of Incorporation or these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the time stated in such notice, shall be deemed
equivalent to the giving of such notice. Attendance at a meeting shall
constitute a waiver of notice of such meeting, except where a person attends for
the expressed purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE VI.
OFFICERS, EMPLOYEES AND AGENTS:
POWERS AND DUTIES
Section 1. Appointment of Officers. The officers of the Corporation
-------------------------
shall be appointed by the Board of Directors and shall be a Chairman, a Chief
Executive Officer, a President, a Chief Operating Officer, a Chief Financial
Officer, a Vice President, a Secretary and a Treasurer. The Board of Directors
may also choose additional Vice Presidents and Assistant Secretaries and
Assistant Treasurers and such other officers as the Board of Directors may deem
appropriate. Any two or more offices may be held by the same person.
Additionally, unless expressly prohibited by the Board of Directors, the
President may appoint such assistant officers as the President deems necessary.
Section 2. Qualifications. Officers of the Corporation need not be
--------------
directors or shareholders of the Corporation, or residents of the State of
Nevada. Any two or more offices may be held by the same person.
Section 3. Term of Office. Each officer of the Corporation shall hold
---------------
office for the term specified by the Board of Directors. If no term is
specified, each officer shall hold office until his or her successor is chosen
and qualifies, or until his or her earlier death, resignation or removal from
office. The designation of a specific term of office does not grant to an
officer any contract rights, and the Board of Directors may remove such officer
as provided in these Bylaws.
7
Section 4. Removal; Filling of Vacancies. Any officer may be removed at
-----------------------------
any time, for or without cause, by the Board of Directors or, if appointed by
the President, by the President. Such removal shall be without prejudice to the
contract rights, if any. of the person so removed. A vacancy occurring in any
office for any reason may be filled by the Board of Directors. A vacancy in any
office held by an officer appointed by the President may be filled by the
President unless such authority is limited by the Board of Directors.
Section 5. Compensation. The compensation of all officers of the
------------
Corporation shall be fixed from time to time by the Board of Directors. The
Board of Directors may from time to time delegate to the President the authority
to fix the compensation of any or all of the other officers of the Corporation.
Section 6. Chairman of the Board. The Chairman of the Board shall be
-----------------------
selected among the members of the Board of Directors and will preside when
present at all meetings of the Board of Directors and of the shareholders. The
Chairman of the Board shall be available to consult with and advise the officers
of the Corporation with respect to the conduct of the business and affairs of
the Corporation and shall have such other powers and duties as designated in
accordance with these Bylaws and as from time to time may be assigned by the
Board of Directors. The Chairman of the Board shall be the highest officer of
the Corporation and, subject to the control of the Board of Directors, shall in
general supervise and control all business and affairs of the Corporation.
Section 7. Chief Executive Officer. Subject to the direction and
-------------------------
authority of the Board of Directors, the Chief Executive Officer shall have
general executive charge, management and control of the properties, business and
operations of the Corporation with all such powers as may be reasonably incident
to such responsibilities and each shall have such other powers and duties as
designated in accordance with these Bylaws and as from time to time be assigned
to him by the Board of Directors. The Chief Executive Officer may from time to
time delegate any of the aforementioned duties and responsibilities in
accordance with these Bylaws to any officer who directly or indirectly reports
to him.
Section 8. President. The President shall have charge of such
---------
properties, business and operations of the Corporation as may be assigned to him
from time to time in accordance with these Bylaws by the Chief Executive
Officer, as well as all such powers as may be reasonably incident to such
charge. Unless the Board of Directors otherwise determines, he shall, in the
absence of the Chairman of the Board and the Chief Executive Officer, preside at
all meetings of the shareholders and the Board of Directors. The President shall
have such other powers and duties as designated in accordance with these Bylaws
and as the Board of Directors shall prescribe. The President shall report
directly to the Chief Executive Officer and the Board of Directors.
Section 9. Chief Operating Officer. The Chief Operating Officer shall
------------------------
be responsible for the day to day operations of the Corporation and its
subsidiaries, and will have such other powers and duties as designated in
accordance with these Bylaws and as the Chief Executive Officer or the Board of
Directors shall prescribe. The Chief Operating Officer shall report directly to
the Chief Executive Officer and the Board of Directors.
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Section 10. Chief Financial Officer. The Chief Financial Officer will
------------------------
be the principal accounting and financial officer of the Corporation and will
have active control of and shall be responsible for all matters pertaining to
the accounts and finances of the Corporation. The Chief Financial Officer shall
be prepared at all times to give information as to the condition of the
Corporation and shall make a detailed annual report of the entire business and
financial condition of the Corporation. The person holding the office of Chief
Financial Officer shall also perform, under the direction and subject to the
control of the Chief Executive Officer, the President and the Board of
Directors, such other duties as may be assigned by either of such officers.
Section 11. Vice Presidents. Each Vice President shall have only such
----------------
powers and perform only such duties as the Board of Directors may from time to
time prescribe or as a Chief Executive Officer or the President may from time to
time delegate to him or her.
Section 12. Secretary. The Secretary shall attend all sessions of the
---------
Board of Directors and all meetings of the stockholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for any committee when required. Except as otherwise
provided herein, the Secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the Board of Directors, and
shall perform such other duties as may be prescribed by the Board of Directors
or President, under whose supervision he shall be. He shall keep in safe custody
the seal of the Corporation and, when authorized by the Board of Directors,
affix the same to any instrument requiring it, and, when so affixed, it shall be
attested by his signature or by the signature of the Treasurer or an Assistant
Secretary.
Section 13. Assistant Secretaries. Each Assistant Secretary shall have
---------------------
only such powers and perform only such duties as the Board of Directors may from
time to time prescribe or as the President may from time to time delegate.
Section 14. Treasurer. The Treasurer shall have the custody of the
---------
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all monies and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. He shall disburse
the funds of the Corporation as may be ordered by the Board of Directors, taking
proper vouchers for such disbursements, and shall render to the Chief Executive
Officer, the President, the Chief Financial Officer and directors, at the
regular meetings of the Board of Directors, or whenever they may require it, an
account of all his transactions as Treasurer and of the financial condition of
the Corporation, and shall perform such other duties as the Board of Directors
may prescribe. If required by the Board of Directors, he shall give the
Corporation a bond in such form, in such sum, and with such surety or sureties
as shall be satisfactory to the Board of Directors for the faithful performance
of the duties of his office and for the restoration to the Corporation, in case
of his death, resignation, retirement or removal from office, of all books,
papers, vouchers, money, and other property of whatever kind in his possession
or under his control belonging to the Corporation.
Section 15. Assistant Treasurers. Each Assistant Treasurer shall have
---------------------
only such powers and perform only such duties as the Chief Executive Officer,
the President, the Chief Financial Officer or the Board of Directors may from
time to time prescribe.
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Section 16. Additional Powers and Duties. In addition to the foregoing
----------------------------
specially enumerated duties, services and powers, the several elected and
appointive officers of the Corporation shall perform such other duties and
services and exercise such further powers as may be provided by statute, the
Articles of Incorporation or these Bylaws, or as the Board of Directors may from
time to time determine or as may be assigned to them by any competent superior
officer.
ARTICLE VII.
STOCK AND TRANSFER OF STOCK
Section 1. Certificates Representing Shares. Certificates in such form
--------------------------------
as may be determined by the Board of Directors and as shall conform to the
requirements of the statutes, the Articles of Incorporation and these Bylaws
shall be delivered representing all shares to which shareholders are entitled.
Such certificates shall be consecutively numbered and shall be entered in the
books of the Corporation as they are issued. Each certificate shall state on the
face thereof that the Corporation is organized under the laws of the State of
Nevada, the holder's name, the number and class of shares and the designation of
the series, if any, which such certificate represents, the par value of such
shares or a statement that such shares are without par value and such other
matters as may be required by law. Each certificate shall be signed by the
President or a Vice President and the Secretary or an Assistant Secretary and
may be sealed with the seal of the Corporation or a facsimile thereof. If any
certificate is countersigned by a transfer agent or registered by a registrar,
either of which is other than the Corporation or an employee of the Corporation,
the signature of any such officer may be a facsimile.
Section 2. Issuance. Subject to the provisions of the statutes, the
--------
Articles of Incorporation or these Bylaws, shares may be issued for such
consideration and to such persons as the Board of Directors may determine from
time to time. Shares may not be issued until the full amount of the
consideration, fixed as provided by law, has been paid.
Section 3. Payment of Shares. The consideration for the issuance of
-------------------
shares shall consist of money paid, labor done (including services actually
performed for the Corporation) or property (tangible or intangible) actually
received. Neither promissory notes nor the promise of future services shall
constitute payment for shares. In the absence of fraud in the transaction, the
judgment of the Board of Directors as to the value of consideration received
shall be conclusive. When consideration, fixed as provided by law, has been
paid, the shares shall be deemed to have been issued and shall be considered
fully paid and nonassessable.
Section 4. Lost, Stolen or Destroyed Certificates. The Board of
------------------------------------------
Directors, the President, or such other officer or officers of the Corporation
as the Board of Directors may from time to time designate, in its or his
discretion, may direct a new certificate or certificates representing shares to
be issued in place of any certificate or certificates theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate or certificates
to be lost, stolen or destroyed. When authorizing such issuance of a new
certificate or certificates, the Board of Directors, the President, or any such
other officer, in its or his discretion and as a condition precedent to the
issuance thereof, may require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such
10
manner as it or he shall require and/or give the Corporation a bond in such
form, in such sum, and with such surety or sureties, as it or he may direct as
indemnity against any claim that may be made against the Corporation with
respect to the certificate or certificates alleged to have been lost, stolen or
destroyed.
Section 5. Transfers of Shares. Shares of stock shall be transferable
--------------------
only on the books of the Corporation by the holder thereof in person or by his
duly authorized attorney. Upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate or certificates representing shares,
duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, with all required stock transfer tax stamps affixed
thereto and canceled or accompanied by sufficient funds to pay such taxes, it
shall be the duty of the Corporation or the transfer agent of the Corporation to
issue a new certificate or certificates to the person entitled thereto, cancel
the old certificate or certificates and record the transaction upon its books.
Section 6. Registered Shareholders. The Corporation shall be entitled
------------------------
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by law.
Section 7. Restriction on Transfer of Shares of Stock. These Bylaws
---------------------------------------------
authorize (but do not require) a restriction on the transfer of the
Corporation's shares which:
(a) maintains the status of the Corporation as an electing small business
corporation under Subchapter S of the United States Internal Revenue Code;
(b) obligates the holders of the restricted stock to offer to the other
holders of stock of the Corporation a prior opportunity, to be exercised within
a reasonable time, to acquire the restricted stock pursuant to an agreement
respecting the purchase and sale of the restricted stock;
(c) obligates the Corporation to the extent permitted by law or any
holder of stock of the Corporation to purchase the stock which is the subject of
an agreement respecting the purchase and sale of the restricted stock; or
(d) requires the Corporation and the holders of any stock of the
Corporation to consent to any proposed transfer of the restricted stock for the
purpose of preventing violations of federal or state law.
The Corporation will furnish to the holder of a certificate of stock in the
Corporation, without charge, upon written request to the Corporation at its
principal place of business or registered office, a copy of the Bylaws and the
Agreement, if any, restricting the transfer of stock.
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ARTICLE VIII.
MISCELLANEOUS
Section 1. Fixing Record Dates. For the purpose of determining
---------------------
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive a distribution by the
Corporation (other than a distribution involving a purchase or redemption by the
Corporation of any of its shares) or a share dividend, or in order to make a
determination of shareholders for any other proper purpose (other than
determining shareholders entitled to consent to action by shareholders proposed
to be taken without a meeting of shareholders), the Board of Directors may (i)
fix in advance the record date for any such determination of shareholders,
though such record date shall not be more than sixty (60) days and, for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, shall not be less than ten (10) days, prior to the date
on which the particular action requiring such determination of shareholders is
to be taken, or (ii) close the share transfer records for a period of not more
than sixty (60) days and, for the purpose of determining shareholders entitled
to notice of or to vote at a meeting of shareholders, for a period of not less
than ten (10) days, prior to the date on which the particular action requiring
such determination of shareholders is to be taken. In the absence of any such
action by the Board of Directors, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders. The record date for the
purpose of determining shareholders entitled to consent to an action shall be
fixed in accordance with applicable statutes.
Section 2. Reserves. There may be created from time to time by
--------
resolution of the Board of Directors, out of the earned surplus of the
Corporation, such reserve or reserves as the directors from time to time, in
their discretion, think proper to provide for contingencies, or to equalize
dividends, or to repair or maintain any property of the Corporation or for such
other purpose as the directors shall think beneficial to the Corporation. The
directors may modify or abolish any such reserve in the manner in which it was
created.
Section 3. Signature of Negotiable Instruments. All bills, notes,
--------------------------------------
checks or other instruments for the payment of money shall be signed or
countersigned by such officer, officers, agent or agents and in such manner as
are permitted by these Bylaws and/or as, from time to time, may be prescribed by
resolution (whether general or special) of the Board of Directors.
Section 4. Fiscal Year. The business of the Corporation shall be
------------
conducted on either a fiscal year or calendar year basis, and the selection of
the basis to be used shall be, and is hereby delegated to the discretion of the
Board of Directors.
Section 5. Seal. The Corporation's seal, if obtained, shall be in such
----
form as shall be adopted and approved from time to time by the Board of
Directors. The seal may be used by causing it, or a facsimile thereof, to be
impressed, affixed, imprinted or in any manner reproduced. Except as expressly
required by law, no action shall be invalid or unenforceable for failure to use
the corporate seal in connection therewith.
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Section 6. Books and Records. The Corporation shall keep correct and
-------------------
complete books and records of account and shall keep minutes of the proceedings
of its shareholders and Board of Directors and shall keep at its registered
office or principal place of business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names and addresses of all
shareholders and the number and class of the shares held by each.
Section 7. Resignation. Unless otherwise expressly provided, any
-----------
director, committee member, officer or agent may resign by giving written notice
to the President or the Secretary. The resignation shall take effect at the time
specified therein, or immediately if no time is specified. Unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective.
Section 8. Surety Bonds. Such officers and agents of the Corporation
-------------
(if any) as the President, or the Board of Directors may direct, from time to
time, shall be bonded for the faithful performance of their duties and for the
restoration to the Corporation, in case of their death, resignation, retirement,
disqualification or removal from office, of all books, papers, vouchers, money
and other property of whatever kind in their possession or under their control
belonging to the Corporation, in such amounts and by such surety companies as
the President or the Board of Directors may determine. The premiums on such
bonds shall be paid by the Corporation, and the bonds so furnished shall be in
the custody of the Secretary.
Section 9. Interested Directors. Officers and Security Holders. No
-------------------------------------------------------
contract or transaction between the Corporation and one or more of its
directors, officers or security holders, or between the Corporation and any
other corporation, partnership, association, trust, plan or other organization
or. enterprise in which one or more of the Corporation's directors, officers or
security holders are directors, officers, security holders, members or
employees, or have a direct or indirect financial interest, shall be void or
voidable solely because of such position or interest, solely because the
director, officer or security holder is present at or participates in the
meeting of the Board of Directors or committee thereof which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose, if:
(a) the material facts of the contract or transaction and of the
relationship or interest are known or disclosed to the Board of Directors or the
committee, and the Board or committee in good faith authorizes the contract or
transaction by the affirmative vote of a majority of the disinterested
directors, even though the disinterested directors be less than a quorum;
(b) the material facts of the contract or transaction and of the
relationship or interest are known or disclosed to the shareholders entitled to
vote thereon, and the contract or transaction is specifically approved in good
faith by a vote of the shareholders; or
(c) the contract or transaction is fair to the Corporation as of the time
it is authorized, approved, or ratified by the Board of Directors, a committee
thereof, or the shareholders.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board of Directors or of a committee which
authorizes the contract or transaction. No director shall be liable to account
to the Corporation for any profits realized by, from or through any such
contract or transaction by reason of an interest therein when such contract or
transaction has
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been authorized or ratified in accordance with the foregoing. This section shall
not be construed to invalidate any contract or transaction which would otherwise
be valid in the absence of this provision.
Section 10. Indemnification. Any person who was, is, or is threatened
---------------
to be made, a named defendant or respondent in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, arbitrative,
investigative or administrative, any appeal in such action suit or proceeding,
and any inquiry or investigation that could lead to such an action, suit or
proceeding (collectively, a "proceeding"), by reason of the fact that he or she
is or was a director or officer of the Corporation, or, while a director or
officer of the Corporation, is or was serving at the request of the Corporation
as a director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, shall be indemnified by the Corporation to the fullest extent
authorized by the Nevada Revised Statutes, as the same exists or may hereafter
be amended (but in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
such law permitted the Corporation to provide prior to such amendment), against
all expense, liability and loss (including attorneys' fees, judgments, court
costs, fines, penalties, excise taxes, and amounts paid in settlement)
reasonably incurred or suffered in connection therewith and such indemnification
shall continue as to any such person who has ceased to be a director or officer
and shall inure to the benefit of such persons' heirs, executors and
administrators. The right to indemnification conferred in this Section shall be
a contract right and shall include the right to be paid by the Corporation the
expenses (court costs and attorneys' fees) incurred in defending any such
proceeding in advance of its final disposition; provided, the applicable
requirements of the Nevada Revised Statutes are met prior to such advancement.
The right to indemnification and to the advancement of expenses conferred
in this Section shall not be exclusive of, nor shall it be construed to limit,
any other right which any person may have or hereafter acquire under any
statute, the Articles of Incorporation, these Bylaws, agreement, vote of
shareholders or otherwise.
ARTICLE IX.
AMENDMENTS
These Bylaws may be altered, amended or repealed or new Bylaws may be
adopted at any meeting of the Board of Directors at which a quorum is present by
the affirmative vote of a majority of the directors present at such meeting.
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CERTIFICATE
-----------
I, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, the undersigned Secretary of CCI TELECOM, INC., do
-----------------
hereby certify that the foregoing is a true and correct copy of the Bylaws of
said Corporation as duly approved at the organizational meeting of the Board of
Directors of the Corporation and as duly amended by action of the Board of
Directors through the date hereof.
WITNESS my hand and the seal of the Corporation this the 22nd day of
----
November 2000.
--------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Secretary
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