AGREEMENT AND CONTRACT FOR SALE
BETWEEN
CCI TELECOM, INC.
AND
CCI ASSOCIATES, LTD.
THIS AGREEMENT ("Agreement") is made this 29th day of April, 2005, by and
between CHARYS HOLDING COMPANY, INC., a Delaware corporation ("Charys"), CCI
TELECOM, INC., a Nevada corporation ("CCI"), CCI ASSOCIATES, LTD., a Texas
limited partnership ("Associates"), ▇▇▇▇▇ PROPERTIES, INC., a Texas corporation
("▇▇▇▇▇ Properties") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual ("▇▇▇▇▇").
WHEREAS, on or about March 4, 2005, Charys, Charys Acquisition Company,
Inc., a Nevada corporation, and CCI executed that certain Plan and Agreement of
Triangular Merger between Charys, Charys Acquisition Company, Inc. and CCI (the
"Plan of Merger") which is attached hereto as Attachment 1 (excluding supporting
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schedules); and
WHEREAS, as used herein, any reference to Charys shall include CCI, or vice
versa, unless the context requires otherwise; and
WHEREAS, as a condition to the closing of the Plan of Merger, Associates
and Charys executed a Letter Agreement (the "Letter Agreement") attached hereto
as Attachment 2 committting to execute a Definitive Agreement (as defined in the
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Letter Agreement) within 30 days after the execution of the Plan of Merger on
terms substantially the same as outlined in the Letter Agreement; and
WHEREAS, notwithstanding that more than 30 days has elapsed between the
date hereof and the execution of the Plan of Merger, this Agreement shall
constitute the Definitive Agreement for all purposes; and
WHEREAS, Charys has elected to have its wholly owned subsidiary, CCI,
acquire ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Subdivision, in
the City of San Antonio, Bexar County, Texas (the "Property") owned by
Associates as described in the Letter Agreement; and
WHEREAS, CCI has entered into a Contract of Sale (the "GurGur Contract") to
sell the Property to Gur Parsaad Properties, Ltd., a Texas limited partnership
("Gur"), which Contract is attached hereto as Attachment 3; and
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WHEREAS, CCI leases the Property from Associates for office and warehouse
facilities to operate its business; and
WHEREAS, ▇▇▇▇▇ Properties is a one percent (1%) owner of Associates and
serves as the the general partner of Associates; and
WHEREAS, ▇▇▇▇▇ is the sole owner of ▇▇▇▇▇ Properties and a seventy percent
(70%) limited partner in Associates;
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NOW, THEREFORE, in consideration of the foregoing and the following mutual
covenants and agreements, the parties agree as follows:
1. Purchase and Sale. As used herein, "Closing" shall mean the
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simultaneous closing of (i) the sale of the Property from Associates to CCI and
(ii) the sale of the Property from CCI to Gur. The Closing shall occur at the
time and place set forth in Gur Contract or as CCI and Gur may otherwise agree.
At the Closing, Associates shall sell to CCI and CCI shall purchase from
Associates for the Purchase Price (as hereinafter defined), the Property, upon
the same terms and conditions (other than Purchase Price and except as further
specifically provided to the contrary herein) and subject to the same
representations, warranties, and conditions set forth in the Gur Contract,
including the Permitted Exceptions (as defined in the Gur Contract). For
avoidance of doubt, all representations and warranties made by CCI to Gur in the
Gur Contract shall be deemed to be representations and warranties made by
Associates to CCI, and all Permitted Exceptions to title in the deed from CCI to
Gur shall be deemed Permitted Exceptions to title in the deed from Associates to
CCI subject to the provisions of Paragraph 6 hereinbelow.
2. Purchase Price. The purchase price ("Purchase Price") of the
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Property payable by CCI to Associates shall be equal to 250,000 shares of Charys
common stock (restricted as described in Paragraph 19 hereinbelow) (the
"Shares") valued at $4.00 per share, provided, however, that the Shares shall be
subject to a "Make Whole Calculation" as described in Paragraphs 7 and 8 (but
not Paragraph 9) of the Plan of Merger. The Make Whole Provision and
Calculation in the Plan of Merger occurs on the date which is twenty-four (24)
months after the effective date of the Plan of Merger. The Make Whole Provision
and Calculation related to the Shares, however, shall be applied concurrently
and simultaneously with the Make Whole Provision and Calculation in the Plan of
Merger, even if the period elapsing from the Closing to the Make Whole Provision
and Calculation in the Plan of Merger is less than twenty-four (24) months. In
addition to the Shares, the Purchase Price shall further consist of cash
payments from CCI to Associates in the amounts calculated pursuant to Paragraph
11 hereinbelow.
3. Closing. The Closing shall occur at the time and location set forth
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in the Gur Contract. The result of the Closing shall be that the title to the
Property shall be transferred to Charys in exchange for the Purchase Price as
outlined herein. The "effective date" for purposes of the Make Whole Provision
and Calculation shall be the same date as the Plan of Merger.
4. Title. The Associates shall convey title to the Property at the
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Closing in the same condition as CCI is obligated to convey title to Gur
pursuant to the Gur Contract, subject to the provisions of Paragraph 6
hereinbelow.
5. CCI's Obligations at the Closing. At the Closing, CCI shall do the
---------------------------------
following:
(a) Deliver to Associates the Shares;
(b) Pay CCI's closing costs as hereinafter specified; and
(c) Execute and deliver any other documents that are reasonably
necessary for the Closing.
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6. The Associates' Obligations at the Closing. At the Closing,
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Associates shall do the following:
(a) Execute and deliver to CCI a special warranty deed (the
"Deed"), duly executed and acknowledged, conveying to CCI title in the condition
set forth above;
(b) Deliver possession of the Property to CCI, subject to the
Permitted Exceptions;
(c) Pay Associates' closing costs as hereinafter specified; and
(d) Execute and deliver such other documents that are reasonably
necessary for the Closing.
Notwithstanding any provision herein to the contrary, it is understood and
agreed that with respect to the liens of Frost National Bank and the U.S. Small
Business Administration (the "Liens") which encumber the Property, Associates
shall convey the Property to CCI subject to the Liens, and CCI shall cause the
Liens to be released utilizing the proceeds from CCI's sale of the Property to
Gur.
7. The Associates' Closing Costs. The Associates shall pay the
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following costs and expenses in connection with the Closing:
(a) The Associates' portion of the prorated taxes and assessments
(as provided below);
(b) The Associates' own attorneys' fees after $7,500 paid by CCI;
and
(c) Such other incidental costs and fees customarily paid by
sellers in Bexar County, Texas land transactions of this nature, provided
Associates shall not pay for an Owner's Policy of Title Insurance since CCI is
purchasing an Owner's Policy of Title Insurance for Gur.
8. CCI's Closing Costs. Charys shall pay the following costs and
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expenses in connection with the Closing:
(a) CCI's own attorneys' fees;
(b) CCI's portion of the prorated taxes and assessments (as
provided below);
(c) The cost of recording the deed;
(d) The cost of any title company escrow fee;
(e) Such other incidental costs and fees customarily paid by
purchasers in Bexar County, Texas land transactions of this nature; and
(f) All costs that CCI has agreed to pay in connection with its
sale of the Property to Gur.
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9. Prorations. As between CCI and Associates, the proration of ad
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valorem taxes and assessments with respect to the Property shall be treated in
the same manner as such prorations are treated in the Gur Contract. For
avoidance of doubt, it is the intention of CCI and Associates that the net
effect of such ad valorem tax and assessment prorations on CCI shall be zero,
such that any charge to CCI on the CCI/Gur closing statement shall equal a
corresponding credit to CCI on the CCI/Associates closing statement, and any
credit to CCI on the CCI/Gur closing statement shall equal a corresponding
charge to CCI on the CCI/Associates closing statement.
10. Repurchase/Right of First Refusal. The Repurchase/Right of First
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Refusal set forth in Paragraph 7 of the Letter Agreement is hereby waived by
▇▇▇▇▇ and is of no further force or effect. ▇▇▇▇▇ warrants and represents to
Associates that in lieu thereof, ▇▇▇▇▇ has reached a separate agreement with CCI
providing for a repurchase right in favor of Charys and CCI to be incorporated
in the lease to be executed between Charys/CCI and Gur at the Closing, whereupon
by separate instrument Charys/CCI will effectively assign the beneficial right
to the repurchase option to ▇▇▇▇▇.
11. Taxes. The Purchase Price shall include cash payments by CCI to
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Associates in order to reimburse the partners of Associates for the federal
income taxes, if any, which will be due by the partners of Associates
attributable to this transaction. Such payments shall not exceed $125,000.00 in
the aggregate, and shall be paid to Associates for distribution to its partners
on or before the date upon which said partners' federal income tax payments
attributable to this transaction are due. This provision applies to federal
income taxes that will be due both upon the sale of the Property to CCI and upon
the Make Whole Provision and Calculation if same results in additional Shares or
cash being paid to Associates. Accordingly, this provision shall survive the
Closing. Charys hereby guarantees the performance of CCI pursuant to this
Paragraph 11 and agrees to be jointly and severally liable with CCI for the cash
payments required hereunder.
12. Termination ofGur Contract. In the event that the Gur Contract is
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terminated for any reason prior to the sale of the Property by CCI to Gur, this
Agreement shall also terminate, whereupon the parties hereto agree to promptly
negotiate in good faith a substitute Definitive Agreement as required by the
Letter Agreement.
13. No Warranties. Except as specifically stated in this Agreement or
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the Gur Contract, Associates hereby specifically disclaim any warranty, guaranty
or representation, oral or written, past, present or future, of, as, to or
concerning (a) the nature of and condition of the Property, including, but not
by way of limitation, the water drainage, soil, geology, and the suitability
thereof, and the suitability of the Property, for the construction of
foundations, subsurface improvements, or above-ground improvements thereon; and
(b) the manner or quality of construction of improvements on the Property and
the compliance of the Property, with any and all governmental regulations, laws,
statutes, ordinances or codes. CCI acknowledges that it has inspected the
Property. CCI shall rely upon its own inspections of the Property as well as
inquiries to third parties and does not rely upon any representations or
warranties of Associates. CCI also acknowledges that it is a financially
substantial and sophisticated real estate investor. The sale of the Property as
provided for herein is made on an "as is" basis, and CCI acknowledges that in
consideration of the agreements of Associates herein, except as otherwise
specified herein, in the Gur Contract or in the deed to be delivered at the
Closing, Associates
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MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION
OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION,
HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE. CCI hereby
releases and discharges Associates from any and all claims, causes of action,
charges and liabilities which CCI may now have or may in the future have against
Associates as a result of or in connection with defects in the Property, or
improvements thereon.
14. Non-Foreign Affidavit. Associates shall provide to the title
----------------------
company at the Closing an affidavit from Associates and any other parties
required pursuant to Section 1445 of the Internal Revenue Code and/or
regulations relating thereto stating, under penalties of perjury, (a) that
neither Associates nor any other party so swearing is a foreign person within
the meaning of Section 1445 of the Internal Revenue Code, (b) the U.S. taxpayer
identification number of Associates and such other parties, if any, (c) the
address of Associates and such other parties (or the business address if any
such party is not an individual), (d) such other information as may be required
by regulations enacted by the Department of Treasury, in connection with Section
1445 of the Internal Revenue Code.
15. Cooperation. The parties hereto will each cooperate with the
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other, at the other's request and expense, in furnishing information, testimony,
and other assistance in connection with any actions, proceedings, arrangements,
or disputes with other persons or governmental inquiries or investigations
involving the parties hereto or the transactions contemplated hereby.
16. Further Conveyances and Assurances. After the Closing, CCI and
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Associates 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.
17. Power and Authority of Associates. Associates warrants that it has
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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.
18. Representation 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 have known or should
have been reasonably expected to have known. Charys represents and warrants to
Associates as follows:
(i) Power and Authority. Charys has full power and authority
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to execute, deliver, and perform this Agreement and the Registration Rights
Agreement.
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(ii) Corporate Organization of Charys. Charys is a
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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.
(iii) 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 5,860,477 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. The Shares to be received by Associates hereunder, including Shares, if
any, received pursuant to the Make Whole Provision and Calculation, are duly
authorized, and upon issuance to Associates as contemplated by this Agreement,
will be validly issued, fully paid and non-assessable. The delivery of a
certificate or certificates to Associates pursuant to this Agreement
representing Shares in the manner provided herein will transfer to Associates
good and valid title to such Shares, free and clear of all liens.
(iv) Binding Effect. Upon execution and delivery by Charys,
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this Agreement and the Registration Rights Agreement shall be and constitute the
valid, binding and legal obligations of Charys, enforceable against Charys 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).
(v) No Violation. The execution and delivery by Charys of
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this Agreement, and the Registration Rights Agreement, 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 will comply with all applicable
regulations and orders in connection with the execution, delivery and
performance of this Agreement.
(vi) Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration, or
filing with any governmental body is required on the part of Charys in
connection with the transactions contemplated by this Agreement.
(vii) No Untrue Statements. No representation or warranty by
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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
6
required to make the statements herein or therein contained, in light of the
circumstances under which they were made, not misleading.
(viii) SEC Filings. Since April 30, 2004, Charys has filed
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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 date hereof.
19. Restricted Shares. All Shares 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, 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.
20. Registration Rights. Associates (and, to the extent that
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Associates distributes the Shares to its partners, all of said partners) shall
be granted registration rights with respect to all Shares as more specifically
set forth in that certain Registration Rights Agreement attached as Attachment 4
------------
hereto. The provisions of Attachment 4 are made a part hereof for all purposes
as fully as if set forth verbatim in the body of this Agreement and constitute a
binding obligation of Charys and a material inducement to Associates to enter
into this Agreement.
21. Expenses. Except as otherwise set forth herein, each of the
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parties hereto shall each bear its own expenses, including without limitation,
legal fees and expenses, with respect to this Agreement and the transactions
contemplated hereby.
22. No Assignment. This Agreement shall not be assignable by any party
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without the prior written consent of the other parties, which consent shall be
subject to such party's sole, absolute and unfettered discretion.
23. Brokerage. The parties hereto agree to indemnify and hold harmless
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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 whatsoever on
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agreements, arrangements, understandings or contracts made by either party with
a third party or parties.
24. Dispute Resolution. Any action or proceeding seeking to enforce
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any provision of, or based on any right arising out of, this Agreement, whether
before or after the Closing, shall be brought in the courts of the State of
Texas, County of Bexar, or in the United States District Court for the Western
District of Texas, 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.
25. Attorneys' Fees. In the event that it should become necessary for
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any party entitled hereunder to bring suit against any other party to this
Agreement for a breach of this Agreement, the prevailing party shall be entitled
to recover its costs and expenses, including reasonable attorney's fees.
26. Benefit. All the terms and provisions of this Agreement shall be
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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.
27. Notices. All notices, requests, demands, and other communications
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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 Charys addressed to ▇▇. ▇▇▇▇▇ ▇. ▇▇▇, ▇▇. at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, telephone (678)
▇▇▇-▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇@▇▇▇▇▇▇.▇▇▇; with a copy
(which will not constitute notice) to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., Glast, ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telephone (713)
▇▇▇-▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇, and e-mail ▇▇▇▇▇▇▇▇▇@▇▇▇-▇▇▇.▇▇▇; and if to
Associates addressed to ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ at ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, telecopier (▇▇▇) ▇▇▇-▇▇▇▇. Any party hereto may change
its address upon 10 days' written notice to any other party hereto.
28. Construction. Words of any gender used in this Agreement shall be
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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.
29. Waiver. No course of dealing on the part of any party hereto or
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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.
30. Cumulative Rights. The rights and remedies of any party under this
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Agreement and the instruments executed or to be executed in connection herewith,
or any of them, shall be
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cumulative and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
31. Invalidity. In the event any one or more of the provisions
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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.
32. Time of the Essence. Time is of the essence of this Agreement.
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33. Incorporation by Reference. The Plan of Merger and the Attachments
--------------------------
to this Agreement referred to or included herein constitute integral parts to
this Agreement and are incorporated into this Agreement by this reference.
34. 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.
35. Controlling Agreement. As between Associates on the one hand and
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CCI and Charys on the other hand, in the event of any conflict between the terms
of this Agreement or the Plan of Merger, the terms of this Agreement shall
control. This Agreement replaces and supplants the Letter Agreement and upon
full execution hereof, the Letter Agreement shall be of no further force or
effect.
36. Law Governing. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Texas, without regard to any
conflicts of laws provisions thereof.
37. Entire Agreement. This instrument and the attachments hereto
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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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above.
CHARYS HOLDING COMPANY, INC.
By:
--------------------------------
▇▇▇▇▇ ▇. ▇▇▇, ▇▇.
Chief Executive Officer
CCI ASSOCIATES, LTD.
By: ▇▇▇▇▇ PROPERTIES, INC.,
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its General Partner
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CCI TELECOM, INC.
By:
--------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
-----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
Attachments:
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Attachment 1 Plan of Merger
Attachment 2 Letter Agreement
Attachment 3 Gur Contract
Attachment 4 Registration Rights Agreement
Attachment 1
Plan of Merger
Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K,
filed with the Commission on March 10, 2005
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Attachment 2
Letter Agreement
CHARYS
HOLDING COMPANY, INC.
March 4, 2005
CCI Associates, Ltd.
Attn. ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇:
Charys Holding Company, Inc., a Delaware corporation, is pleased to provide you
with this Letter Agreement (the "Letter Agreement") that outlines terms under
which Charys Holding Company, Inc. or its authorized subsidiary ("Buyer") will
acquire the assets, obligations and liabilities related to certain real property
located in Bexar County, Texas owned by CCI Associates, Ltd., a Texas limited
partnership ("Associates" or "Seller"). This letter agreement is binding on
Seller and Buyer unless otherwise provided herein, with finalization of the
details of the transaction to be refined in a definitive purchase agreement (the
"Definitive Agreement") with Associates which the parties agree to finalize
within 30 days after signing this Letter Agreement. The provisions of the
Definitive Agreement will supersede and replace this Letter Agreement in all
respects once finalized and executed.
SUMMARY OF TERMS
1. PARTIES;DEFLNITIONS
(a) Charys Holding Company, Inc. is a Delaware corporation located at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(b) CCI Associates, Ltd. is a Texas limited partnership located
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. The partnership's sole purpose is
to own certain land and buildings in Bexar County, Texas which are leased to CCI
Telecom, Inc. for use as its primary business location.
(c) CCI Telecom, Inc. (CCI) will be a wholly owned subsidiary of Buyer
after execution of the Plan and Agreement of Triangular Merger between Charys
Holding Company, Inc, Charys Acquisition Company, Inc. and CCI Telecom, Inc. of
even date herewith (the "Merger Agreement"). Included herewith as Attachment 1
is the Merger Agreement, which is incorporated herein for all purposes.
(d) ▇▇▇▇▇ Properties, Inc. is a Texas corporation that is wholly owned
by ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇. ▇▇▇▇▇ Properties, Inc. owns 1% of Associates and is the
sole general partner of Associates.
CHARYS
HOLDING COMPANY, INC.
(e) ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is the CEO of CCI. ▇▇. ▇▇▇▇▇ owns a 71.58%
limited partnership interest in Associates, and he is the sole owner of ▇▇▇▇▇
Properties, Inc.
(f) "Closing" is defined as the time the Definitive Agreement is
concluded and executed by all parties hereto, and "Final Closing" is defined as
the time that title to the property has been transferred to Buyer in exchange
for the consideration set forth herein.
2. TRANSACTION. Subject to the terms and conditions of the Definitive Agreement,
Buyer shall purchase the real property located in Bexar County, Texas owned by
Associates (such real property being more fully described in the Appraisal dated
January 25, 2005 included herein as Attachment 3 and incorporated herein for all
purposes) that is leased to CCI (the "Property") at the time of the Final
Closing, and Buyer will assume all liabilities and obligations associated with
the Property in exchange for delivery of 250,000 shares of Charys Holding
Company, Inc. common stock to Seller, subject to certain adjustments and
additional payments as described in Section 4 of this Letter Agreement. The
ability to assume liabilities related to the Property by Buyer is subject to the
provisions of any of the agreements creating such liabilities, including but not
limited to the terms of any loan documents.
3. CLOSING. Upon execution of this Letter Agreement, Associates and Buyer shall
be bound to complete the transaction described herein, and will negotiate and
finalize a Definitive Agreement, which agreement shall include terms
substantially similar to those expressed in this Letter Agreement. This Letter
Agreement shall be executed in conjunction with the merger contemplated in the
Merger Agreement. Associates and Buyer agree that all reasonable efforts shall
be expended to complete the Definitive Agreement within 30 days of execution of
this Letter Agreement at Closing. Final Closing will occur on a date to be
agreed upon between Associates and Buyer after Buyer has identified a subsequent
purchaser of the Property or secured financing adequate to release all currently
existing liens on the Property. At Final Closing, Associates will convey the
Property to Buyer for the consideration set forth in Section 4 herein.
4. CONSIDERATION. In exchange for conveyance of the Property to Buyer at the
Final Closing, and subject to the terms of the Definitive Agreement, Buyer
agrees to transfer 250,000 shares of Charys Holding Company, Inc. common stock
to Associates. The number of shares to be conveyed to Associates and related
cash adjustments are described as follows:
(a) The 250,000 shares referenced above are subject to a "Make Whole
Calculation" as described in Sections 7 and 8 of the Merger Agreement, but are
also subject to the provisions of Section 4 (b) below. The Make Whole Provision
and Calculation in the Merger Agreement occurs on the date which is 24 months
after the effective date of the Merger Agreement. The Make Whole Provision and
Calculation
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CHARYS
HOLDING COMPANY, INC.
related to the 250,000 shares in this Letter Agreement shall be applied
concurrently with the Merger Agreement Make Whole Provision and Calculation.
That is, the 2 year period for the 250,000 shares in this Letter Agreement shall
start on the signing of this Letter Agreement and conclude simultaneously with
the Make Whole in the Merger Agreement, even if the time from the Final Closing
from this Letter Agreement to the Make Whole in this Letter Agreement is less
than 2 years.
(b) Buyer intends to sell or finance the Property after acquiring the
Property at the Final Closing. If during the 2 year period following the
effective date of the Merger Agreement Buyer obtains net proceeds of at least
$1.8 million either from the sale or financing of the Property, then the Make
Whole Calculation shall apply. The Definitive Agreement will contain provisions
regarding Buyer making diligent, good faith efforts to sell or finance the
Property to bona fide, third party buyers, with the General Partner of
Associates being periodically informed of all activities relating to the sale of
financing of the Property. The sum payable by Buyer to Associates under the Make
Whole Calculation shall be paid by Buyer to Associates as set forth in the
Merger Agreement.
(c) The consideration paid in this transaction shall include cash
payments by Buyer to Associates in order to reimburse the owners of Associates
for the federal income taxes, if any, that will be due by the owners of
Associates attributable to this transaction. Such payments shall not exceed
$125,000 in the aggregate and shall be paid to the owners of Associates on or
before the date on which their federal income tax payments related to this
transaction are due.
5. REGISTRATION RIGHTS. The shares acquired by Associates under Section 4 above
shall contain registration rights and shall be governed by the registration
rights agreement that is Attachment C to the Merger Agreement.
6. CHARYS SHARES. All shares of the Charys Holding Company, Inc. common stock to
be received by Associates under the terms of the Definitive Agreement 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
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HOLDING COMPANY, INC.
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.
No fractional shares of the Charys Holding Company, Inc. common stock shall be
issued in connection with the transaction contemplated herein. In the event that
any fractional shares of the Charys Holding Company, Inc. common stock would be
issued to Associates, the number of shares of such stock to be issued shall be
rounded up to the nearest whole share. The Definitive Agreement will contain
representations, warranties and covenants as to the Charys Holding Company, Inc.
shares to be delivered to Seller and as to Buyer's operation of such company
during the period of ownership of such shares by Buyer acceptable to Buyer.
7. REPURCHASE/RIGHT OF FIRST REFUSAL. As part of this Letter Agreement,
Buyer grants ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or his designee ("▇▇▇▇▇") certain rights with
respect to the Property:
(a) During the three years following the Final Closing, if Buyer
receives a bona fide offer from a third party for purchase of the property and
Buyer considers such offer as viable, ▇▇▇▇▇ has a first right to purchase the
Property. That is, should ▇▇▇▇▇ desire to purchase the Property on substantially
equal terms, including purchase price, as that offered to or solicited by Buyer,
▇▇▇▇▇ shall have: i) a period of 10 days from receipt by ▇▇▇▇▇ of written notice
from Buyer for ▇▇▇▇▇ to indicate his interest in matching the offer; and ii) 30
days after receipt of notice of such offer from Buyer to provide evidence to
Buyer that ▇▇▇▇▇ has obtained the financing or other means of matching the
purchase price set forth in the offer. This right of first refusal shall expire
three years after the date of the Final Closing or upon the sale of the property
by Buyer to the bona fide third party from whom the offer was received should
▇▇▇▇▇ not exercise his right of first refusal as to that offer, but otherwise
such right shall be a continuing right should the transaction with the bona fide
third party not close. The terms of this right of first refusal will be further
detailed in the Definitive Agreement.
(b) From the Final Closing until the third anniversary of the Final
Closing, and assuming that Buyer has not previously sold the Property as
authorized herein or in the Definitive Agreement, ▇▇▇▇▇ shall have the right to
purchase the property from Buyer for an amount equal to the greater of: i) $2.4
million, which is the appraised value of the Property as of January 25, 2005, as
shown in the Appraisal attached hereto as ATTACHMENT 3, or ii) the then current
appraised value of the Property. In the event a bona fide third party offer as
described in Section 7(a) is received before or during the process of ▇▇▇▇▇'▇
acquisition of the Property under this Section 7 (b) and such bona fide offer
exceeds either the then current appraised value of the Property or $2.4 million,
whichever amount is greater, then the terms of Section 7 (a) herein shall govern
▇▇▇▇▇'▇ potential purchase of the Property. As used herein, "current" means
dated within three (3) months of the date that ▇▇▇▇▇ exercised any rights set
forth in this Section 7.
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HOLDING COMPANY, INC.
8. Intervening Period. During the period between execution of this Letter
Agreement and the Final Closing, the parties to this Letter Agreement agree:
(a) To conduct all business operations as usual in the ordinary course
of business, and not to enter into any agreements that would materially change
the structure, operations or contractual arrangements relative to any party
other than as contemplated in the Merger Agreement. This includes, but is not
limited to, fulfilling the terms of all contracts and other agreements that the
parties have entered into as of the date of this Letter Agreement, including any
lease arrangements, and making payment of all obligations as they become due,
including payment of mortgages and taxes on the Property. Seller agrees to
maintain the Property in the ordinary course of business.
(b) That Buyer or any other party designated by Buyer may market the
Property for sale and search for and negotiate financing to pay in full any
existing loans on the Property, provided Buyer keeps Associates reasonably
informed of such activities.
9. POWER AND AUTHORITY - ASSOCIATES AND BUYER. ▇▇▇▇▇ Properties, Inc., acting as
General Partner for Associates, has full power and authority to execute,
deliver, and cause the performance of this Letter Agreement and any related
agreements between Buyer and Seller to be delivered in connection herewith,
including, without limitation, the Definitive Agreement. Buyer and the
undersigned representative of Buyer have full power and authority to execute,
deliver, and cause the performance of this Letter Agreement and any related
agreements between Buyer and Seller to be delivered in connection herewith,
including, without limitation, the Definitive Agreement. Buyer and Seller agree
to execute any and all further agreements or documents as may be reasonably
necessary to consummate the transactions contemplated in this Letter Agreement
at the Closing and the Final Closing.
10. EXPENSES. Buyer will be responsible for payment of all fees and expenses
incurred with regard to the transaction contemplated hereunder, including any
finders' fees, fees to investment bankers or to other financial advisers, and
Buyer's and Seller's attorneys' fees. Buyer will only be responsible, however,
for payment of Seller's attorneys' fees up to and including the amount of
$7,500. Associates represents and warrants to Buyer that Associates has not
incurred any fees or expenses of any nature, other than attorneys' fees.
11. DESTRUCTION OF PROPERTY. If, on or before the Final Closing, any substantial
portion of the improvements located on the Property shall suffer a loss because
of fire, flood, tornado, hurricane, riot, accident or other calamity, whether or
not insured, to such an extent that in the opinion of Buyer there will be such a
delay in repairing or replacing said improvements so as to materially affect the
future operations of the improvements, then Buyer may, at its sole option,
terminate this Agreement by providing written notice to Seller, and neither
party will have any further obligation to the other except for Buyer's
obligation to pay the expenses set forth in Section 10 herein.
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CHARYS
HOLDING COMPANY, INC.
12. VENUE; GOVERNING LAW; MISCELLANEOUS. This Letter Agreement contains all
agreements between the parties hereto, other than those set forth in the Merger
Agreement, and may be amended only by a written agreement executed by all
parties hereto. Any provisions of this Letter Agreement that are deemed invalid
or unenforceable shall be severable from the remainder of this Letter Agreement
and will not affect the validity of the remainder of this Letter Agreement. This
Letter 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
agreement. This Letter Agreement shall be governed by and construed in
accordance with the laws of the State of Texas and applicable federal law,
without giving effect to the principles of choice of law of any state. Venue for
any dispute between the parties hereto shall lie in Bexar County, Texas. This
Letter Agreement shall be binding upon and inure to the benefit of the
signatories hereto and their respective successors, heirs, administrators,
trustees, executors and assigns.
13. Default. Should any party default under the obligations required of them
under this Letter Agreement, any non-defaulting party may avail itself of any
and all remedies provided by law or in equity as to the defaulting party,
including but not limited to termination of this Letter Agreement. A prevailing
party in any legal action brought hereunder shall be entitled to collect its
attorneys' fees.
14. MULTIPLE COUNTERPARTS. This Agreement may be signed in multiple counterparts
each when taken together shall constitute one original.
[SEE NEXT PAGE FOR SIGNATURES]
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HOLDING COMPANY, INC.
Executed effective as of the 4th day of March, 2005.
CHARYS HOLDING COMPANY, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇, ▇▇., Chief Executive Officer
CCI ASSOCIATES, LTD., a Texas limited
partnership
By: ▇▇▇▇▇ Properties, Inc., its
General Partner
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
CCI TELECOM, INC., a Nevada
Corporation
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Executive
Officer
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, in his individual capacity
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