SECURITY AGREEMENT
SECURITY
AGREEMENT,
dated
January ___, 2007 (this “Agreement”)
is
made by CHARYS
HOLDING COMPANY, INC.,
a
Delaware corporation (the “Company”)
and
the undersigned subsidiaries of the Company (each a “Grantor”
and
collectively and together with the Company the “Grantors”),
in
favor of
XXXX X.
CROCHET
(“Crochet”) as Secured Party.
WHEREAS,
Grantor is indebted to Crochet as described in Section 3 below.
NOW,
THEREFORE, in consideration of the premises and the agreements herein, the
Grantors agree with Crochet as follows:
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SECTION
1.
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Definitions.
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Reference
is hereby made to the Renewal Promissory Note of even date herewith (the “Note”)
for a statement of certain of the terms hereof. All terms used in this Agreement
and the recitals hereto which are defined in the Note or in Articles 8 or 9
of
the Uniform Commercial Code as in effect from time to time in the State of
Texas
(the “Code”),
and
which are not otherwise defined herein shall have the same meanings herein
as
set forth therein; provided
that
terms used herein which are defined in the Code as in effect
in
the State of Texas on the date hereof shall continue to have the same meaning
notwithstanding any replacement or amendment of such statute except as Crochet
may otherwise determine.
The
following terms shall have the respective meanings provided for in the Code:
“Accounts,” “Cash Proceeds,” “Chattel Paper,” “Commodity Account,” “Commodity
Contracts,” “Deposit Account,” “Documents,” “Equipment,” “Fixtures,” “General
Intangibles,” “Goods,” “Instruments,” “Inventory,” “Investment Property,”
“Letter-of-Credit Rights,” “Noncash Proceeds,” “Payment Intangibles,”
“Proceeds,” “Promissory Notes,” “Security,” “Record,” “Security Account,”
“Software,” and “Supporting Obligations.”
As
used
in this Agreement, the following terms shall have the respective meanings
indicated below, such meanings to be applicable equally to both the singular
and
plural forms of such terms:
“Event
of Default”
shall
have the meaning set forth in the Note.
“Insolvency
Proceeding”
means
any proceeding commenced by or against any Person under any provision of the
Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or under
any other bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, or extensions generally
with creditors, or proceedings seeking reorganization, arrangement, or other
similar relief.
“Lien”
means
any
mortgage, deed of trust, pledge, lien (statutory or otherwise), security
interest, charge or other encumbrance or security or preferential arrangement
of
any nature, including, without limitation, any conditional sale or title
retention arrangement, any capitalized lease and any assignment, deposit
arrangement or financing lease intended as, or having the effect of,
security.
“Permitted
Liens”
means
all liens and security interests held on or in any of the assets of the Grantors
securing any debt owed in connection with (a) the New Stream Commercial Finance,
LLC financing of accounts receivable of Crochet & Borel Services, Inc., as
described in an 8-K filed by the Company with the Securities and Exchange
Commission on September 8, 2006, and the New Stream Commercial Finance, LLC
financing of accounts receivable of Ayin Tower Management Services Inc., as
described in an 8-K filed by the Company with the Securities and Exchange
Commission on September 8, 2006, (b) the Gottbetter Capital Finance, LLC
financing as described in an 8-K filed by the Company with the Securities and
Exchange Commission on September 6, 2006, (c) the Cotton Sellers, and the other
parties to the loan agreements identified in an 8-K filed by the Company with
the Securities and Exchange Commission on December 14, 2006, or (d) any other
Lien on any Collateral of any Grantor existing on the date hereof. All of the
Permitted Liens are more fully described in Schedule
1
attached
hereto.
1
SECTION
2. Grant
of Security Interest.
As
collateral security for all of the “Obligations” (as defined in Section
3
hereof),
each Grantor, subject to the Permitted Liens, hereby pledges and assigns to
Crochet and grants to Crochet a continuing security interest in, all personal
property of each Grantor, wherever located and whether now or hereafter existing
and whether now owned or hereafter acquired, of every kind and description,
tangible or intangible (collectively, the “Collateral”),
including, without limitation, the following:
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(a)
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All
Accounts;
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(b)
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All
Chattel Paper (whether tangible or
electronic);
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(c) All
Deposit Accounts, all cash and other property from time to time deposited
therein and the monies and property in the possession or under the control
of
Crochet or any affiliate, representative, agent or correspondent of
Crochet;
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(d)
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All
Documents;
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(e)
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All
Equipment;
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(f)
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All
Fixtures;
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(g)
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All
General Intangibles (including, without limitation, all Payment
Intangibles);
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(h)
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All
Goods;
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(i) All
Instruments (including, without limitation, Promissory Notes and each
certificated Security);
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(j)
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All
Inventory;
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(k)
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All
Investment Property;
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(l)
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All
Supporting Obligations;
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(m) All
other
tangible and intangible personal property of each Grantor (whether or not
subject to the Code), including, without limitation, all bank and other accounts
and all cash and all investments therein, all proceeds, products, accessions,
rents, profits, income, benefits, substitutions and replacements of and to
any
of the property of any Grantor described in the preceding clauses of this
Section
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(including, without limitation, any proceeds of insurance thereon and all causes
of action, claims and warranties now or hereafter held by each Grantor in
respect of any of the items listed above), and all books, correspondence, files
and other Records, including, without limitation, all tapes, desks, cards,
data
in the possession or under the control of any Grantor or any other Person from
time to time acting for any Grantor, in each case, to the extent of such
Grantor’s rights therein, that at any time evidence or contain information
relating to any of the property described in the preceding clauses of this
Section
2
or are
otherwise necessary or helpful in the collection or realization
thereof;
and
(n) All
Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
any
and all of the foregoing Collateral;
in
each
case howsoever any Grantor’s interest therein may arise or appear (whether by
ownership, security interest, claim or otherwise).
SECTION
3. Security
for Obligations.
The
security interest created hereby in the Collateral constitutes continuing
collateral security for all of the following obligations, whether now existing
or hereafter incurred (collectively, the “Obligations”): that certain Renewal
Promissory Note in the original principal amount of $77,932,514.15 dated
November 30, 2006, executed by Charys Holding Company, Inc. as Maker and
guaranteed by Grantors payable to Crochet as provided therein.
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SECTION
4. Representations
and Warranties.
With the
exception of Crochet & Borel Services, Inc., each Grantor represents and
warrants as of the date of this Agreement as follows:
(a) There
is
no pending or, to its knowledge, written notice threatening any action, suit,
proceeding or claim affecting any Grantor before any governmental authority
or
any arbitrator, or any order, judgment or award issued by any governmental
authority or arbitrator, in each case, that may adversely affect the grant
by
any Grantor, or the perfection, of the security interest purported to be created
hereby in the Collateral, or the exercise by Crochet of any of its rights or
remedies hereunder.
(b) The
exercise by Crochet of any of its rights and remedies hereunder will not
contravene any law or any contractual restriction binding on or otherwise
affecting each Grantor or any of its properties and will not result in or
require the creation of any Lien, upon or with respect to any of its
properties.
SECTION
5. Covenants
as to the Collateral.
So long
as any of the Obligations shall remain outstanding, unless Crochet shall
otherwise consent in writing, and subject to the Permitted Liens:
(a) Further
Assurances.
Each
Grantor will at its expense, at any time and from time to time, promptly execute
and deliver all further instruments and documents and take all further action
that Crochet may reasonably request in order to: (i) perfect and protect
the security interest purported to be created hereby; (ii) enable Crochet
to exercise and enforce his rights and remedies hereunder in respect of the
Collateral; or (iii) otherwise effect the purposes of this Agreement,
including, without limitation: (A) marking conspicuously all Chattel Paper
and, at the request of Crochet, each of its Records pertaining to the Collateral
with a legend, in form and substance satisfactory to Crochet, indicating that
such Chattel Paper or Collateral is subject to the security interest created
hereby, (B) delivering and pledging to Crochet pursuant to a Pledge each
Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter
owned by any Grantor, duly endorsed and accompanied by executed instruments
of
transfer or assignment, all in form and substance satisfactory to Crochet,
(C) executing and filing (to the extent, if any, that any Grantor’s
signature is required thereon) or authenticating the filing of, such financing
or continuation statements, or amendments thereto, as may be necessary or that
Crochet may reasonably request in order to perfect and preserve the security
interest purported to be created hereby, (D) furnishing to Crochet from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral in each
case
as Crochet may reasonably request, all in reasonable detail, (E) if any
Collateral shall be in the possession of a third party, notifying such Person
of
Crochet’s security interest created hereby and obtaining a written
acknowledgment from such Person that such Person holds possession of the
Collateral for
the
benefit of Crochet, which such written acknowledgement shall be in form and
substance reasonably satisfactory to Crochet, and (F) taking all actions
required by any earlier versions of the Uniform Commercial Code or by other
law,
as applicable, in any relevant Uniform Commercial Code jurisdiction, or by
other
law as applicable in any foreign jurisdiction.
(b) Taxes,
Etc.
Each
Grantor agrees to pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment
and
Inventory, except to the extent the validity thereof is being contested in
good
faith by proper proceedings which stay the imposition of any penalty, fine
or
Lien resulting from the non-payment thereof and with respect to which adequate
reserves in accordance with GAAP have been set aside for the payment
thereof.
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(c)
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Insurance.
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(i) Each
Grantor will, at its own expense, maintain insurance (including, without
limitation, commercial general liability and property insurance) with respect
to
the Equipment and Inventory in such amounts, against such risks, in such form
and with responsible and reputable insurance companies or associations as is
required by any governmental authority having jurisdiction with respect thereto
or as is carried generally in accordance with sound business practice by
companies in similar businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to Crochet. To the extent requested
by Crochet at any time and from time to time, each such policy for liability
insurance shall provide for all losses to be paid on behalf of Crochet and
any
Grantor as their respective interests may appear, and each policy for property
damage insurance shall provide for all losses to be adjusted with, and paid
directly to, Crochet. To the extent requested by Crochet at any time and from
time to time, each such policy shall in addition (A) name Crochet as an
additional insured party thereunder (without any representation or warranty
by
or obligation upon Crochet) as his interests may appear, (B) contain an
agreement by the insurer that any loss thereunder shall be payable to Crochet
on
his own account notwithstanding any action, inaction or breach of representation
or warranty by any Grantor, (C) provide that there shall be no recourse against
Crochet for payment of premiums or other amounts with respect thereto, and
(D)
provide that at least 30 days’ prior written notice of cancellation, lapse,
expiration or other adverse change shall be given to Crochet by the insurer.
Any
Grantor will, if so requested by Crochet, deliver to Crochet original or
duplicate policies of such insurance and, as often as Crochet may reasonably
request, a report of a reputable insurance broker with respect to such
insurance. Any Grantor will also, at the request of Crochet, execute and deliver
instruments of assignment of such insurance policies and cause the respective
insurers to acknowledge notice of such assignment.
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(ii) Reimbursement
under any liability insurance maintained by any Grantor pursuant to this
Section
5(b)
may be
paid directly to the Person who shall have incurred liability covered by such
insurance. In the case of any loss involving damage to Equipment or Inventory,
any proceeds of insurance maintained by any Grantor pursuant to this
Section
5(b)
shall be
paid to Crochet (except as to which paragraph (iii) of this Section
5(b)
is not
applicable),
any
Grantor will make or cause to be made the necessary repairs to or replacements
of such Equipment or Inventory, and any proceeds of insurance maintained by
any
Grantor pursuant to this Section
5(b)
shall be
paid by Crochet to any Grantor as reimbursement for the costs of such repairs
or
replacements.
(iii) All
insurance payments in respect of such Equipment or Inventory shall be paid
to
Crochet and applied as specified in Section
7(b)
hereof.
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(d)
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Provisions
Concerning the Accounts.
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(i) Any
Grantor will (A) give Crochet at least 30 days’ prior written notice of any
change in such Grantor’s name, identity or organizational structure, (B)
maintain its jurisdiction of incorporation, organization or formation, (C)
immediately notify Crochet upon obtaining an organizational identification
number, if on the date hereof such Grantor did not have such identification
number, and (D) keep adequate records concerning the Accounts and Chattel Paper
and permit representatives of Crochet during normal business hours on reasonable
notice to such Grantor, to inspect and make abstracts from such Records and
Chattel Paper.
(ii) Each
Grantor will, except as otherwise provided in this subsection (d), continue
to collect, at its own expense, all amounts due or to become due under the
Accounts. In connection with such collections, any Grantor may (and, at
Crochet’s direction, will) take such action as any Grantor or Crochet may deem
necessary or advisable to enforce collection or performance of the Accounts;
provided,
however,
that
Crochet shall have the right at any time, upon the occurrence and during the
continuance of an Event of Default, to notify the account debtors or obligors
under any Accounts of the assignment of such Accounts to Crochet and to direct
such account debtors or obligors to make payment of all amounts due or to become
due to any Grantor thereunder directly to Crochet or its designated agent and,
upon such notification and at the expense of any Grantor and to the extent
permitted by law, to enforce collection of any such Accounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and
to
the same extent as any Grantor might have done. After receipt by any Grantor
of
a notice from Crochet that Crochet has notified, intends to notify, or has
enforced or intends to enforce any Grantor’s rights against the account debtors
or obligors under any Accounts as referred to in the proviso to the immediately
preceding sentence, (A) all amounts and proceeds (including Instruments)
received by any Grantor in respect of the Accounts shall be received in trust
for the benefit of Crochet hereunder, shall be segregated from other funds
of
any Grantor and shall be forthwith paid over to Crochet in the same form as
so
received (with any necessary endorsement) to be applied as specified in
Section
7(b)
hereof,
and (B) no Grantor will adjust, settle or compromise the amount or payment
of
any Account or release wholly or partly any account debtor or obligor thereof
or
allow any credit or discount thereon. In addition, upon the occurrence and
during the continuance of an Event of Default, Crochet may (in his sole and
absolute discretion) direct any or all of the banks and financial institutions
with which any Grantor either maintains a Deposit Account or a lockbox or
deposits the proceeds of any Accounts to send immediately to Crochet by wire
transfer (to such account as Crochet shall specify, or in such other manner
as
Crochet shall direct) all or a portion of such securities, cash, investments
and
other items held by such institution. Any such securities, cash, investments
and
other items so received by Crochet shall be applied as specified in accordance
with Section
7(b)
hereof.
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(e)
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Transfers
and Other Liens.
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(i) No
Grantor will sell, assign (by operation of law or otherwise), lease, license,
exchange or otherwise transfer or dispose of any of the Collateral,
except
such Grantor may (A) sell or dispose of Inventory (including, without
limitation, As-extracted Collateral) in the ordinary course of business, and
(B)
sell or dispose of assets such Grantor has determined, in good faith, not to
be
useful in the conduct of its business, and (C) sell or dispose of accounts
in
the course of collection in the ordinary course of business consistent with
past
practice.
No
Grantor will create, suffer to exist or grant any Lien upon or with respect
to
any Collateral other than a Permitted Lien.
(f) Control.
Each
Grantor hereby agrees to take any or all action that may be necessary, desirable
or that Crochet may reasonably request in order for Crochet to obtain control
in
accordance with Sections 9-105 through 9-107 of the Code with respect to the
following Collateral: (i) Electronic Chattel Paper, (ii) Investment
Property, and (iii) Letter-of-Credit Rights.
(g) Inspection
and Reporting.
Each
Grantor shall permit Crochet, or any agent or representatives thereof or such
professionals or other Persons as Crochet may designate, during normal business
hours, after reasonable notice in the absence of an Event of Default and not
more than once a year in the absence of an Event of Default, (i) to examine
and make copies of and abstracts from any Grantor’s records and books of
account, (ii) to visit and inspect its properties, (iii) to verify
materials, leases, Instruments, Accounts, Inventory and other assets of any
Grantor from time to time, and (iv) to conduct audits, physical counts,
appraisals and/or valuations, examinations at the locations of any Grantor.
Each
Grantor shall also permit Crochet, or any agent or representatives thereof
or
such professionals or other Persons as Crochet may designate to discuss such
Grantor’s affairs, finances and accounts with any of its directors, officers,
managerial employees, independent accountants or any of its other
representatives.
(h) Fixture
Filings.
Within
10 Business Days after the date hereof, Grantors shall cause financing
statements to be filed in the appropriate county clerk’s offices in order to
perfect the security interest of Crochet in and to all Fixtures and As-extracted
Collateral constituting Collateral on the date hereof or within two Business
Days after the date hereof.
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SECTION
6.
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Additional
Provisions Concerning the Collateral.
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(a) Each
Grantor hereby (i) authorizes Crochet to file one or more Uniform Commercial
Code financing or continuation statements, and amendments thereto, relating
to
the Collateral and (ii) ratifies such authorization to the extent that Crochet
has filed any such financing or continuation statements, or amendments thereto,
prior to the date hereof. A photocopy or other reproduction of this Agreement
or
any financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
(b) If
any
Grantor fails to perform any agreement or obligation contained herein, Crochet
may himself perform, or cause performance of, such agreement or obligation,
in
the name of such Grantor or Crochet, and the expenses of Crochet incurred in
connection therewith shall be payable by such Grantor pursuant to Section
8
hereof
and shall be secured by the Collateral.
(c) The
powers conferred on Crochet hereunder are solely to protect his interest in
the
Collateral and shall not impose any duty upon him to exercise any such powers.
Except for the safe custody of any Collateral in his possession and the
accounting for moneys actually received by him hereunder, Crochet shall have
no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any
Collateral.
SECTION
7. Remedies
Upon Event of Default.
If any
Event of Default shall have occurred and be continuing, subject to the Permitted
Liens:
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(a) Crochet
may exercise in respect of the Collateral, in addition to any other rights
and
remedies provided for herein or otherwise available to him, all of the rights
and remedies of a secured party upon default under the Code (whether or not
the
Code applies to the affected Collateral), and also may (i) take absolute
control of the Collateral, including, without limitation, transfer into
Crochet’s name or into the name of his nominee or nominees (to the extent
Crochet has not theretofore done so) and thereafter receive, for the benefit
of
Crochet, all payments made thereon, give all consents, waivers and ratifications
in respect thereof and otherwise act with respect thereto as though he were
the
outright owner thereof, (ii) require each Grantor to, and each Grantor
hereby agrees that it will at its expense and upon request of Crochet forthwith,
assemble all or part of its respective Collateral as directed by Crochet and
make it available to Crochet at a place or places to be designated by Crochet
that is reasonably convenient to both parties, and Crochet may enter into and
occupy any premises owned or leased by any Grantor where the Collateral or
any
part thereof is located or assembled for a reasonable period in order to
effectuate Crochet’s rights and remedies hereunder or under law, without
obligation to any Grantor in respect of such occupation, and (iii) without
notice except as specified below and without any obligation to prepare or
process the Collateral for sale, (A) sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any of Crochet’s
offices or elsewhere, for cash, on credit or for future delivery, and at such
price or prices and upon such other terms as Crochet may deem commercially
reasonable and/or (B) lease, license or dispose of the Collateral or any
part thereof upon such terms as Crochet may deem commercially reasonable. Each
Grantor agrees that, to the extent notice of sale or any other disposition
of
its respective Collateral shall be required by law, at least ten (10) days’
notice to any Grantor of the time and place of any public sale or the time
after
which any private sale or other disposition of its respective Collateral is
to
be made shall constitute reasonable notification. Crochet shall not be obligated
to make any sale or other disposition of any Collateral regardless of notice
of
sale having been given. Crochet may adjourn any public or private sale from
time
to time by announcement at the time and place fixed therefor, and such sale
may,
without further notice, be made at the time and place to which it was so
adjourned. Each Grantor hereby waives any claims against Crochet arising by
reason of the fact that the price at which its respective Collateral may have
been sold at a private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount of the
Obligations, even if Crochet accepts the first offer received and does not
offer
such Collateral to more than one offeree, and waives all rights that any Grantor
may have to require that all or any part of such Collateral be marshaled upon
any sale (public or private) thereof. Each Grantor hereby acknowledges that
(i) any such sale of its respective Collateral by Crochet shall be made
without warranty, (ii) Crochet may specifically disclaim any warranties of
title, possession, quiet enjoyment or the like, and (iii) such actions set
forth in clauses (i) and (ii) above shall not adversely affect the
commercial reasonableness of any such sale of Collateral.
(b) Any
cash
held by Crochet as Collateral and all Cash Proceeds received by Crochet in
respect of any sale of or collection from, or other realization upon, all or
any
part of the Collateral shall be applied (after payment of any amounts payable
to
Crochet pursuant to Section
8
hereof)
by Crochet against, all or any part of the Obligations in such order as Crochet
shall elect, consistent with the provisions of the Securities Purchase
Agreement. Any surplus of such cash or Cash Proceeds held by Crochet and
remaining after the indefeasible payment in full in cash of all of the
Obligations shall be paid over to whomsoever shall be lawfully entitled to
receive the same or as a court of competent jurisdiction shall
direct.
(c) In
the
event that the proceeds of any such sale, collection or realization are
insufficient to pay all amounts to which Crochet is legally entitled, each
Grantor shall be liable for the deficiency, together with interest thereon
at
the highest rate specified in the Note for interest on overdue principal thereof
or such other rate as shall be fixed by applicable law, together with the costs
of collection and the reasonable fees, costs, expenses and other client charges
of any attorneys employed by Crochet to collect such deficiency.
(d) Each
Grantor hereby acknowledges that if Crochet complies with any applicable state,
provincial or federal law requirements in connection with a disposition of
the
Collateral, such compliance will not adversely affect the commercial
reasonableness of any sale or other disposition of the Collateral.
(e) Crochet
shall not be required to marshal any present or future collateral security
(including, but not limited to, this Agreement and the Collateral) for, or
other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order,
and
all of Crochet’s rights hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that any Grantor lawfully
may
agree, each Grantor hereby agrees that it will not invoke any law relating
to
the marshaling of collateral which might cause delay in or impede the
enforcement of Crochet’s rights under this Agreement or under any other
instrument creating or evidencing any of the Obligations or under which any
of
the Obligations is outstanding or by which any of the Obligations is secured
or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
each Grantor hereby irrevocably waives the benefits of all such
laws.
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SECTION
8.
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Indemnity
and Expenses.
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(a) Each
Grantor agrees, jointly and severally, to defend, protect, indemnify and hold
Crochet harmless from and against any and all claims, damages, losses,
liabilities, obligations, penalties, fees, costs and expenses (including,
without limitation, reasonable legal fees, costs, expenses, and disbursements
of
such Person’s counsel) to the extent that they arise out of or otherwise result
from this Agreement (including, without limitation, enforcement of this
Agreement), except to the extent resulting from such Person’s gross negligence
or willful misconduct, as determined by a final judgment of a court of competent
jurisdiction.
(b) Each
Grantor agrees, jointly and severally, to pay to Crochet upon demand the amount
of any and all costs and expenses, including the reasonable fees, costs,
expenses and disbursements of counsel for Crochet and of any experts and agents
(including, without limitation, any collateral trustee which may act as agent
of
Crochet), which Crochet may incur in connection with (i) the preparation,
negotiation, execution, delivery, recordation, administration, amendment, waiver
or other modification or termination of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any Collateral, (iii) the exercise or enforcement of any
of the rights of Crochet hereunder, or (iv) the failure by any Grantor to
perform or observe any of the provisions hereof.
SECTION
9. Notices,
Etc.
All
notices and other communications provided for hereunder shall be in writing
and
shall be mailed (by certified mail, postage prepaid and return receipt
requested), telecopied, e-mailed or delivered, if to any Grantor at its address
specified below and if to Crochet to it, at its address specified on the
signature pages below; or as to any such Person, at such other address as shall
be designated by such Person in a written notice to all other parties hereto
complying as to delivery with the terms of this Section
9.
All
such notices and other communications shall be effective (a) if sent by
certified mail, return receipt requested, when received or three days after
deposited in the mails, whichever occurs first, (b) if telecopied or e-mailed,
when transmitted (during normal business hours) and confirmation is received,
and otherwise, the day after the notice or communication was transmitted and
confirmation is received, or (c) if delivered in person, upon
delivery.
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SECTION
10.
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Miscellaneous.
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(a) No
amendment of any provision of this Agreement shall be effective unless it is
in
writing and signed by each Grantor and Crochet, and no waiver of any provision
of this Agreement, and no consent to any departure by each Grantor therefrom,
shall be effective unless it is in writing and signed by each Grantor and
Crochet, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) No
failure on the part of Crochet to exercise, and no delay in exercising, any
right hereunder or under any of the other Transaction Documents shall operate
as
a waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right. The rights and remedies of Crochet provided herein and in the other
Transaction Documents are cumulative and are in addition to, and not exclusive
of, any rights or remedies provided by law. The rights of Crochet under any
of
the other Transaction Documents against any party thereto are not conditional
or
contingent on any attempt by such Person to exercise any of its rights under
any
of the other Transaction Documents against such party or against any other
Person, including but not limited to, any Grantor.
(c) Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining portions
hereof or thereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
7
(d) This
Agreement, subject to the Permitted Liens, shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
the indefeasible payment in full in cash of the Obligations, and (ii) be binding
on each Grantor and all other Persons who become bound as debtor to this
Agreement in accordance with Section 9-203(d) of the Code and shall inure,
together with all rights and remedies of Crochet hereunder, to the benefit
of
Crochet and his permitted successors, transferees and assigns. Without limiting
the generality of clause (ii) of the immediately preceding sentence, without
notice to any Grantor, Crochet may assign or otherwise transfer his rights
and
obligations under this Agreement and any of the other Transaction Documents,
to
any other Person and such other Person shall thereupon become vested with all
of
the benefits in respect thereof granted to Crochet or otherwise. Upon any such
assignment or transfer, all references in this Agreement to Crochet shall mean
the assignee of Crochet. None of the rights or obligations of any Grantor
hereunder may be assigned or otherwise transferred without the prior written
consent of Crochet, and any such assignment or transfer without the consent
of
Crochet
shall be
null and void.
(e) Upon
the
indefeasible payment in full in cash of the Obligations, (i) this Agreement
and
the security interests created hereby shall terminate and all rights to the
Collateral shall revert to the respective Grantor that granted such security
interests hereunder, and (ii) Crochet will, upon any Grantor’s request and at
such Grantor’s expense, (A) return to such Grantor such of the Collateral as
shall not have been sold or otherwise disposed of or applied pursuant to the
terms hereof, and (B) execute and deliver to such Grantor such documents as
such
Grantor shall reasonably request to evidence such termination, all without
any
representation, warranty or recourse whatsoever.
(f) THIS
AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE
LAWS OF THE STATE OF TEXAS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION
AND
THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED
HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF
TEXAS.
(g) ANY
LEGAL
ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS IN JEFFERSON
COUNTY, TEXAS OR THE UNITED STATES OF AMERICA FOR THE EASTERN DISTRICT OF TEXAS,
AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW,
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR
PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF
SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
(h) EACH
GRANTOR AND CROCHET WAIVE ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY IN RESPECT
OF
ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES
HERETO.
(i) Each
Grantor irrevocably consents to the service of process of any of the aforesaid
courts in any such action, suit or proceeding by the mailing of copies thereof
by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to any Grantor at its address provided herein, such service
to
become effective 10 days after such mailing.
8
(j) Nothing
contained herein shall affect the right of Crochet to serve process in any
other
manner permitted by law or commence legal proceedings or otherwise proceed
against any Grantor or any property of any Grantor in any other
jurisdiction.
(k) Each
Grantor irrevocably and unconditionally waives any right it may have to claim
or
recover in any legal action, suit or proceeding referred to in this Section
any
special, exemplary, punitive or consequential damages.
(l) Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
(m) This
Agreement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together constitute one in the same
Agreement.
(n) Notwithstanding
anything herein contained to the contrary, as a condition precedent to any
obligation of a Grantor hereunder, the Grantor must first receive the consent
of
certain investors in the Grantor described in Schedule
2
hereto.
IN
WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
delivered by its officer thereunto duly authorized, as of the date first above
written.
|
CHARYS
HOLDING COMPANY, INC.
|
||
|
By
|
||
|
Xxxxx
X. Xxx, Xx., Chief Executive Officer
|
||
|
0000
Xxxxxxxxx Xxxxxx Xxxx, Xxxxx X000
|
||
|
Xxxxxxx,
Xxxxxxx 00000
|
||
|
Telephone:
000-000-0000
|
||
|
Facsimile:
000-000-0000
|
||
|
Email:
xxxx@xxxxxx.xxx
|
||
|
C
& B HOLDINGS, INC.
|
||
|
By
|
||
|
Xxxxx
X. Xxx, Xx., President
|
||
|
Xxxxx
X. Xxx, Xx., Chief Executive Officer
|
||
|
0000
Xxxxxxxxx Xxxxxx Xxxx, Xxxxx X000
|
||
|
Xxxxxxx,
Xxxxxxx 00000
|
||
|
Telephone:
000-000-0000
|
||
|
Facsimile:
000-000-0000
|
||
|
Email:
xxxx@xxxxxx.xxx
|
||
9
|
CROCHET
AND BOREL SERVICES. INC.
|
||
|
By
|
||
|
Xxxx
Crochet, Chief Executive Officer
|
||
|
000
Xxxx Xxxx Xxxxxxx,
|
||
|
Xxxx
Xxxxxx, Xxxxx 00000
|
||
|
Telephone:
000-000-0000
|
||
|
Facsimile:
000-000-0000
|
||
|
AYIN
HOLDING COMPANY, INC.
|
||
|
By
|
||
|
Xxxxx
Xxxxxx, President
|
||
ACCEPTED
BY:
|
Xxxx
X. Crochet
|
|
|
Address:
000 Xxxxxx Xxxxxx
|
|
|
Xxxx
Xxxxxx, Xxxxx 00000
|
|
|
Attachments:
|
|
|
Schedule
1 - Permitted Liens
|
|
|
Schedule
2 - Consent of Lien Holders
|
10
Schedule
1
Permitted
Liens
Permitted
Liens include all liens and security interests (a) disclosed in all filings
by
the Company with the United States Securities Exchange Commission; (b) disclosed
in the attachment to this Schedule
1;
(c) all
liens and security interests held on or in any of the assets of the Grantors
securing any debt owed in connection with (i) the New Stream Commercial Finance,
LLC financing of accounts receivable of Crochet & Borel Services, Inc., as
described in an 8-K filed by the Company with the Securities and Exchange
Commission on September 8, 2006, and the New Stream Commercial Finance, LLC
financing of accounts receivable of Ayin Tower Management Services Inc.,
as
described in an 8-K filed by the Company with the Securities and Exchange
Commission on September 8, 2006, (ii) the Gottbetter Capital Finance, LLC
financing as described in an 8-K filed by the Company with the Securities
and
Exchange Commission on September 6, 2006, (iii) the Cotton Sellers, and the
other parties to the loan agreements identified in an 8-K filed by the Company
with the Securities and Exchange Commission on December 14, 2006, which include
Cotton Holdings I, Inc., Cotton Commercial USA, LP, Cotton Restoration, LP,
Xxxx
Xxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxx,
Xxxx
Xxxx, Xxxxx Xxxxxxx, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxxxx.
Schedule
2
Consent
of Lien Holders
Consents
must be obtained from the following:
Cotton
Holdings I, Inc.
Cotton
Commercial USA, LP
Cotton
Restoration, LP
Xxxx
Xxxxxxx
Xxxxx
Xxxxxxxx
Xxxxx
Xxxxxxxxx
Xxxxx
Xxxxxx
Xxxxxxx
Xxxxxxxx
Xxxx
Xxxx
Xxxxx
Xxxxxxx
Xxxxxxx
Xxxxx
Xxxxxx
Xxxxxxxxx
Imperium
Master Fund, Ltd.
New
Stream Commercial Finance, LLC
Gottbetter
Capital Finance, LLC
Fort
Xxxxx Master, LP
UBS
Alternative & Quantitative Investments, LLC
Fort
Xxxxx Partners, LP
GCA
Strategic Investment Fund Limited
PCM
II,
LLC
