ex10_1.htm


    
      

    

    Execution
      Copy

    


    


    AMENDMENT
      AGREEMENT

    


    AMENDMENT
      AGREEMENT (this “Agreement”), dated as of April 5,
      2007, by and between Charys Holding Company, Inc., a Delaware corporation (the
      “Company”), and the Holders named on the Schedule of Holders
      attached hereto (each, a “Holder” and collectively, the
“Holders”).

    


    WHEREAS:

    


    A          Pursuant
      to a certain Securities Purchase Agreement dated August 30, 2006 (the
“Securities Purchase Agreement”), the Company issued certain
      senior secured convertible notes (the “Existing
      Notes”).

    


    B.          As
      of the date hereof, the Holders beneficially own all of the outstanding Existing
      Notes.

    


    C.          The
      Company has requested that the Holders extend the maturity date of the Existing
      Notes and make certain other modifications to the Existing Notes, and the
      Holders have agreed to make such modifications to the Existing
      Notes.

    


    D.          In
      connection with and in consideration for the foregoing modifications, the
      Company and each Holder wishes to amend and restate such Holder’s Existing Note
      in substantially the form attached hereto as Exhibit A (the
“Note” and, collectively with the other
      Existing Notes being amended and restated hereunder, the
“Notes”), and such Note shall have an aggregate principal
      amount as set forth opposite such Holder’s name in column (3) on the Schedule of
      Holders attached hereto, which is convertible into the shares (the
“Conversion Shares”) of the Company’s common stock, par value
      $0.001 per share (the “Common Stock”), in accordance with the
      terms of such Note.

    


       E.           The
      parties intend that, at the Closing (as defined below), the Holders and the
      Company will amend and restate the Registration Rights Agreement dated August
      30, 2006 (the “Existing Registration Rights Agreement”) in
      substantially the form attached hereto as Exhibit B (the
“Registration Rights Agreement”) in order to, among other
      things, extend the filing and effectiveness deadlines for the registration
      of
      the Conversion Shares and the shares of Common Stock into which the Warrants
      (as
      defined in the Securities Purchase Agreement) are exercisable; in each case,
      under the 1933 Act and the rules and regulations promulgated thereunder, and
      applicable state securities laws.

    


        F.           The
      Notes and the Conversion Shares collectively are referred to herein as the
      “Securities.”

    


        G.           The
      Notes will rank senior to all outstanding and future indebtedness of the Company
      except as otherwise set forth on Section
      3(o).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


       H.           The
      Company’s obligations under this Agreement and the Securities Purchase
      Agreement, the Notes, the Warrants issued by the Company to Imperium Master
      Fund, Ltd. (the “Imperium Warrants”), and the Registration
      Rights Agreement, including, without limitation. its obligation to make payments
      of principal of and interest on the Notes, will be guaranteed by each of the
      Company’s subsidiaries pursuant to a Subsidiary Guarantee in the form attached
      hereto as Exhibit C (the “Subsidiary Guarantee”), and
      are secured pursuant to the terms of (i) a Security Agreement dated as of August
      30, 2006 (the “Existing Security Agreement”), which, at the
      Closing, will be amended and restated in the form attached hereto as Exhibit
      D (the “Security Agreement” and, together with the
      Subsidiary Guarantee and Security Agreement, the “Security
      Documents”).  This Agreement and the Securities Purchase
      Agreement, the Notes, the Imperium Warrants, the Registration Rights Agreement
      and the Security Documents are sometimes referred to herein as the
“Transaction Documents”.

     

         
  I.          The
      Company and the Holders are executing and delivering this Agreement in reliance
      upon the exemption from securities registration afforded by Section 4(2) of
      the
      Securities Act of 1933, as amended (the “1933 Act”), and Rule
      506 of Regulation D (“Regulation D”) as promulgated by the
      United States Securities and Exchange Commission (the “SEC”)
      under the 1933 Act.

    


    NOW,
      THEREFORE, the Company and the Holders hereby agree as
      follows:

    


    1.           AMENDMENT
      AND RESTATEMENT OF NOTE.

    


    (a)           General.

    


    (i)           Notes.  Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections
      6 and 7 below, the Company shall execute and deliver
      to each Holder on the Closing Date (as defined below), a Note with a principal
      amount as is set forth opposite such Holder’s name in column (3) on the Schedule
      of Holders (the “Closing”).

    


    (ii)           Closing.  The
      Closing shall occur on the Closing Date at the offices of Mazzeo Song LLP,
      708
      Third Avenue, New York, NY 10017.

    


    (b)           Closing
      Date. The date and time of the Closing (the “Closing Date”)
      shall be 10:00 a.m., New York City Time, on the first Business Day following
      the
      satisfaction (or waiver) of the conditions to the Closing set forth in
Sections 6 and 7 below (or such later date as
      is mutually agreed to by the Company and each Holder). As used herein
“Business Day” means any day other than a Saturday, Sunday, or
      other day on which commercial banks in The City of New York are authorized
      or
      required by law to remain closed.


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    2.           HOLDER’S
      REPRESENTATIONS AND WARRANTIES.

    


    Each
      Holder severally and not jointly represents and warrants that:

    


    (a)           No
      Public Sale or Distribution.  Such Holder, upon conversion of the
      Note, will acquire the Conversion Shares issuable upon conversion of the Note
      for its own account and not with a view towards, or for resale in connection
      with, the public sale or distribution thereof, except pursuant to sales
      registered or exempt from registration under the 1933 Act; provided,
however, that by making the representations herein, such Holder does
      not
      agree to hold any of the Securities for any minimum or other specific term
      and
      reserves the right to dispose of the Securities at any time in accordance with
      or pursuant to a registration statement or an exemption from registration under
      the 1933 Act.  Such Holder is acquiring the Securities hereunder in
      the ordinary course of its business.  Such Holder does not presently
      have any agreement or understanding, directly or indirectly, with any Person
      to
      distribute any of the Securities.  Further, there are no contracts,
      arrangements, understandings or relationships (legal or otherwise) among such
      Holder and any other Person with respect to any securities of the Company,
      including but not limited to transfer or voting of any of the Securities,
      finder’s fees, joint ventures, loan or option arrangements, puts or calls,
      guarantees of profits, division of profits or loss, or the giving or withholding
      of proxies.

    


    (b)           Accredited
      Investor Status and Broker-Dealer Status.  Such Holder is an
“accredited investor” as that term is defined in Rule 501(a) under the 1933
      Act.  Such Holder is not a registered broker-dealer under Section 15
      of the Securities Exchange Act of 1934, as amended (the “1934
      Act”).

    


    (c)           Reliance
      on Exemptions.  Such Holder understands that the transactions
      contemplated hereby are being effectuated in reliance on specific exemptions
      from the registration requirements of United States federal and state securities
      laws and that the Company is relying in part upon the truth and accuracy of,
      and
      such Holder’s compliance with, the representations, warranties, agreements,
      acknowledgments and understandings of such Holder set forth herein in order
      to
      determine the availability of such exemptions.

    


    (d)           Information.  Such
      Holder and its advisors, if any, have been furnished with all materials relating
      to the business, finances and operations of the Company and materials relating
      to the transactions contemplated hereby which have been requested by such
      Holder.  Such Holder and its advisors, if any, have been afforded the
      opportunity to ask questions of the Company.  Neither such inquiries nor any other due diligence
      investigations conducted
      by such Holder or its advisors, if any, or its representatives shall modify,
      amend or affect such Holder’s right to rely on the Company’s representations and
      warranties contained herein.  Such Holder understands that its
      investment in the Securities involves a high degree of risk.  Such
      Holder has sought such accounting, legal and tax advice as it has considered
      necessary to make an informed investment decision with respect to its investment
      in the Securities.  Specifically, such Holder has been provided with
      access to all of the Company’s SEC Documents (as defined below), including the
      following: (i) the Company’s annual report to stockholders for the fiscal year
      ended April 30, 2006, and the definitive proxy statement filed in connection
      with that annual report; (ii) the information contained in an annual report
      on
      Form 10-KSB under the 1934 Act for the fiscal year ended April 30, 2006; and
      (iii) the information contained in any reports or documents required to be
      filed
      by the Company under Sections 13(a), 14(a), 14(c), and 15(d) of the 1934 Act
      since the distribution or filing of the reports specified above.  As
      used herein, “SEC Documents” means all reports, schedules,
      exhibits, forms, statements and other documents required to be filed by the
      Company with the SEC pursuant to the reporting requirements of the 1934 Act
      (including documents incorporated by reference therein).


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    (e)           No
      Governmental Review.  Such Holder understands that no United
      States federal or state agency or any other government or governmental agency
      has passed on or made any recommendation or endorsement of the Securities or
      the
      fairness or suitability of the investment in the Securities nor have such
      authorities passed upon or endorsed the merits of the transactions contemplated
      hereby.

    


     (f)           Transfer
      or Resale.  Such Holder understands that except as provided in the
      Registration Rights Agreement: (i) the Securities have not been and are not
      being registered under the 1933 Act or any state securities laws, and may not
      be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, (B) such Holder shall have delivered to the Company
      an
      opinion of counsel, in a form reasonably acceptable to the Company, to the
      effect that such Securities to be sold, assigned or transferred may be sold,
      assigned or transferred pursuant to an exemption from such registration, or
      (C)
      such Holder provides the Company with reasonable assurance that such Securities
      can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
      promulgated under the 1933 Act, as amended (or a successor rule thereto)
      (collectively, “Rule 144”); (ii) any sale of the Securities
      made in reliance on Rule 144 may be made only in accordance with the terms
      of
      Rule 144 and further, if Rule 144 is not applicable, any resale of the
      Securities under circumstances in which the seller (or the Person (as defined
      in
Section 3(n)) through whom the sale is made) may be deemed to
      be an underwriter (as that term is defined in the 1933 Act) may require
      compliance with some other exemption under the 1933 Act or the rules and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      Person is under any obligation to register the Securities under the 1933 Act
      or
      any state securities laws or to comply with the terms and conditions of any
      exemption thereunder.  The Securities may be pledged in connection
      with a bona fide margin account or other loan or financing arrangement secured
      by the Securities and such pledge of Securities shall not be deemed to be a
      transfer, sale or assignment of the Securities hereunder, and no Holder
      effecting a pledge of Securities shall be required to provide the Company with
      any notice thereof or otherwise make any delivery to the Company pursuant to
      this Agreement or any other Transaction Document, including, without limitation,
      this Section 2(f).

    


    (g)           Legends.  Such
      Holder understands that the certificates or other instruments representing
      the
      Note and, until such time as the resale of the Conversion Shares have been
      registered under the 1933 Act as contemplated by the Registration Rights
      Agreement, the stock certificates representing the Conversion Shares, except
      as
      set forth below, shall bear any legend as required by the “blue sky” laws of any
      state and a restrictive legend in substantially the following form (and a
      stop-transfer order may be placed against transfer of such stock
      certificates):

    


    [NEITHER
      THE ISSUANCE AND SALE OF THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
      SECURITIES ARE CONVERTIBLE HAVE BEEN]
      [THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
      BEEN]  REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY
      NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF
      (A)
      AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
      ACT
      OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY
      ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
      ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
      ARRANGEMENT SECURED BY THE SECURITIES.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities upon which
      it is
      stamped, or issue to such holder by electronic delivery at the applicable
      balance account at DTC (as defined below), unless otherwise required by state
      securities laws, if: (i) such Securities are registered for resale under the
      1933 Act, (ii) in connection with a sale, assignment or other transfer, such
      holder provides the Company with an opinion of counsel, in a form reasonably
      acceptable to the Company, to the effect that such sale, assignment or transfer
      of the Securities may be made without registration under the applicable
      requirements of the 1933 Act, or (iii) such holder provides the Company with
      reasonable assurance that the Securities can be sold, assigned or transferred
      pursuant to Rule 144 or Rule 144A.

    


    (h)           Validity;
      Enforcement.  The Transaction Documents to which such Holder is a
      party have been duly and validly authorized, executed and delivered (or will
      be
      executed and delivered) on behalf of such Holder and, upon such execution and
      delivery, shall constitute the legal, valid and binding obligations of such
      Holder enforceable against such Holder in accordance with their respective
      terms, except as such enforceability may be limited by general principles of
      equity or by applicable bankruptcy, insolvency, reorganization, moratorium,
      liquidation and other similar laws relating to, or affecting generally, the
      enforcement of applicable creditors’ rights and remedies.

    


     (i)           No
      Conflicts.  The execution, delivery and performance by such Holder
      of the Transaction Documents to which such Holder is a party and the
      consummation by such Holder of the transactions contemplated hereby and thereby
      will not (i) result in a violation of the organizational documents of such
      Holder or (ii) conflict with, or constitute a default (or an event which with
      notice or lapse of time or both would become a default) under, or give to others
      any rights of termination, amendment, acceleration or cancellation of, any
      agreement, indenture or instrument to which such Holder is a party, or (iii)
      result in a violation of any law, rule, regulation, order,
      judgment  or decree (including federal and state securities laws)
      applicable to such Holder, except in the case of clauses (ii) and (iii) above,
      for such conflicts, defaults, rights or violations which
      would not, individually or in the aggregate, reasonably be expected to have
      a
      material adverse effect on the ability of such Holder to perform its obligations
      hereunder.


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


     (j)           Residency.  Such
      Holder is a resident of that jurisdiction specified below its address on the
      Schedule of Holders.

    


    (k)           Independent
      Investment Decision.  Such Holder acknowledges that it had the
      opportunity to review this Agreement, the other Transaction Documents and the
      transactions contemplated hereby and thereby with its own legal counsel and
      investment and tax advisors, if any.  Such Holder is relying solely on
      such counsel and advisors and not on any statements or representations of the
      Company or any of its representatives or agents for legal, tax or investment
      advice with respect to this investment, the transactions contemplated by this
      Agreement and the other Transaction Documents; provided, however, that in no
      event shall anything contained in this Section 2(k) limit in
      any way such Holder’s right to rely on the representations made by the Company
      in this Agreement or the other Transaction Documents.

    


     (l)           Organization;
      Authority.  Such Holder, if an entity, is an entity duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its organization with the requisite corporate or partnership
      or
      other entity power and authority to enter into and to consummate the
      transactions contemplated by the applicable Transaction Documents to which
      it is
      a party (as defined below) and otherwise to carry out its obligations
      thereunder.

    


    (m)           Certain
      Trading Activities.  Such Holder has not, prior to the date
      hereof, directly or indirectly engaged in any transactions in the securities
      of
      the Company in violation of applicable securities laws.  Such Holder
      covenants that neither it nor any Person acting on its behalf will engage in
      any
      transactions in the securities of the Company from the date hereof until the
      time that the transactions contemplated by this Agreement are publicly disclosed
      pursuant to Section 4(g).  Notwithstanding the
      foregoing, if such Holder is a multi-managed investment vehicle whereby separate
      portfolio managers manage separate portions of such Holder’s  assets
      and the portfolio managers have no direct knowledge of the investment decisions
      made by the portfolio managers managing other portions of such Holder’s assets,
      the representations set forth above shall only apply with respect to the portion
      of the assets managed by the portfolio manager that made the investment decision
      to enter into the transactions contemplated by this Agreement.

    


    3.           REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

    


    The
      Company represents and warrants to each Holder that:

    


    (a)           Organization
      and Qualification.  The Company and its
“Subsidiaries” (which for purposes of this Agreement means any
      joint venture or any entity in which the Company, directly or indirectly, owns
      capital stock or holds an equity or similar interest) are entities duly
      organized and validly existing in good standing under the laws of the
      jurisdiction in which they are formed, and have the requisite power and
      authority to own their properties and to carry on their business as now being
      conducted.  Each of the Company and its Subsidiaries is duly qualified
      as a foreign entity to do business and is in good standing in every jurisdiction
      in which its ownership of property or the nature of the business conducted
      by it
      makes such qualification necessary, except to the extent that the failure to
      be
      so qualified or be in good standing would not have a Material Adverse
      Effect.  As used in this Agreement, “Material Adverse
      Effect” means any material adverse effect on the business, properties,
      assets, operations, results of operations, condition (financial or otherwise)
      or
      prospects of the Company and its Subsidiaries, taken as a whole, or on the
      transactions contemplated hereby and the other Transaction Documents or by
      the
      agreements and instruments to be entered into in connection herewith or
      therewith, or on the authority or ability of the Company to perform its
      obligations under the Transaction Documents (as defined below).  The
      Company has no Subsidiaries except as set forth on Schedule
      3(a).  The Company owns, directly or indirectly, all of the
      capital stock or other equity interests of each Subsidiary free and clear of
      any
      liens, except for Permitted Liens (as defined in the Notes), and all the issued
      and outstanding shares of capital stock of each Subsidiary are validly issued
      and are fully paid, non-assessable and free of preemptive and similar rights
      to
      subscribe for or purchase securities.  For purposes
      of this Agreement, “Lien” means, with respect to any property,
      any mortgage, pledge, hypothecation, assignment, security interest, tax lien,
      charge, or other lien, easement or encumbrance.


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    (b)           Authorization;
      Enforcement; Validity.  Subject to the obtaining of all consents
      from third parties pursuant to Section 4(q), the
      Company has the requisite power and authority to enter into and perform its
      obligations under the Transaction Documents to which it is a party and to issue
      the Conversion Shares in accordance with the terms of the Notes.  The
      execution and delivery of this Agreement and the other Transaction Documents
      by
      the Company and the consummation by the
      Company of the
      transactions contemplated hereby and thereby, including, without limitation,
      the
      amendment and restatement of the Existing Notes, the reservation for issuance
      and the issuance of the Conversion Shares issuable upon conversion of the Notes,
      and the granting of a security interest in the Collateral (as defined in the
      Security Documents) have been duly authorized by the Company’s board of
      directors and (other than (i) the filing of appropriate UCC financing statements
      with the appropriate states and other authorities pursuant to the Security
      Agreement, (ii) the filing of a Form D under Regulation D of the 1933 Act
      and (iii) the filing with the SEC of one or more Registration Statements and
      any
      other filings as may be required by any state securities agency in accordance
      with the requirements of the Registration Rights Agreement) no further filing,
      consent, or authorization is required by the Company, its board of directors
      or
      its stockholders.  This Agreement and the other Transaction Documents
      to which the Company and/or any Subsidiary is a party have been duly executed
      and delivered by the Company and/or such Subsidiary, as applicable, and
      constitute the legal, valid and binding obligations of the Company and/or such
      Subsidiary, as applicable, enforceable against the Company and/or such
      Subsidiary, as applicable, in accordance with their respective terms, except
      as
      such enforceability may be limited by general principles of equity or applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or other similar
      laws relating to, or affecting generally, the enforcement of applicable
      creditors’ rights and remedies.

    


    (c)           Issuance
      of Conversion Shares.  The Notes are free from all
      Liens.  As of the Closing, a number of shares of Common Stock shall
      have been duly authorized and reserved for issuance which equals 175% of the
      maximum number of shares Common Stock initially issuable upon conversion of
      the
      Notes.  Upon conversion in accordance with the Notes, the Conversion
      Shares will be validly issued, fully paid and nonassessable and free from all
      preemptive or similar rights, taxes, Liens and charges with respect to the
      issue
      thereof, with the holders being entitled to all rights accorded to a holder
      of
      Common Stock.  The amendment and restatement of the Existing Notes,
      and the issuance of the Conversion Shares contemplated hereby are exempt from
      registration under the 1933 Act.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    (d)           No
      Conflicts.  Subject to the obtaining of all consents from third
      parties pursuant to Section 4(q), the execution,
      delivery and performance of this Agreement and the other Transaction Documents
      by the Company and the consummation by the Company of the transactions
      contemplated hereby and thereby (including, without limitation, the amendment
      and restatement of the Existing Notes, the granting of a security interest
      in
      the Collateral and the reservation for issuance and issuance of the Conversion
      Shares) will not (i) result in a violation of the Certificate of Incorporation
      (as defined in Section 3(m)) of the Company or any of its
      Subsidiaries, any capital stock of the Company or Bylaws (as defined in
Section 3(m)) of the Company or any of its Subsidiaries or (ii)
      conflict with, or constitute a default (or an event which with notice or lapse
      of time or both would become a default) under, or give to others any rights
      of
      termination, amendment, acceleration or cancellation of, any agreement,
      indenture or instrument to which the Company or any of its Subsidiaries is
      a
      party, or (iii) result in a violation of any law, rule, regulation, order,
      judgment or decree (including federal and state securities laws and regulations
      and the rules and regulations of the Over-The-Counter Bulletin Board (the
“Principal Market”)) applicable to the Company or any of its
      Subsidiaries or by which any property or asset of the Company or any of its
      Subsidiaries is bound or affected.

    


    (e)           Consents.  Except
      as set forth on Schedule 3(e) or the SEC Documents filed at least
      three Business Days prior to the date of this Agreement, the Company is not
      required to obtain any consent, authorization or order of, or make any filing
      or
      registration with, any court, governmental agency or any regulatory or
      self-regulatory agency or any other Person in order for it to execute, deliver
      or perform any of its obligations under or contemplated by the Transaction
      Documents, in each case in accordance with the terms hereof or
      thereof.  All consents, authorizations, orders, filings and
      registrations which the Company is required to obtain pursuant to the preceding
      sentence shall have been obtained or effected on or prior to the Closing Date
      or
      as may be otherwise permitted hereunder, and the Company and its Subsidiaries
      are unaware of any facts or circumstances which might prevent the Company from
      obtaining or effecting any of the registrations, applications or filings
      pursuant to the preceding sentence.  The Company is not in violation
      of the applicable listing requirements of the Principal Market and has no
      knowledge of any facts which would reasonably lead to delisting or suspension
      of
      the Common Stock in the foreseeable future.  The consummation of the
      transactions contemplated hereby shall not have the effect of delisting or
      suspending the Common Stock from the Principal Market.

    


     (f)           Acknowledgment
      Regarding Transactions.  The Company acknowledges and agrees that
      each Holder is acting solely in the capacity of an arm’s length third party with
      respect to the Transaction Documents and the transactions contemplated hereby
      and thereby and that such Holder is not (i) an officer or director of the
      Company, (ii) to the knowledge of the Company, an “affiliate” of the Company (as
      defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial
      owner” of more than 10% of the shares of Common Stock (as defined for purposes
      of Rule 13d-3 of the 1934 Act).  The Company further acknowledges that
      no Holder is acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the other Transaction
      Documents and the transactions contemplated hereby and thereby, and any advice
      given by a Holder or any of its representatives or agents in connection with
      this Agreement and the other Transaction Documents and the transactions
      contemplated hereby and thereby is merely incidental to the transactions
      contemplated hereby.  The Company further represents to each Holder
      that the Company’s decision to enter into the Transaction Documents has been
      based solely on the independent evaluation by the Company and its
      representatives.


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    (g)           No
      General Solicitation.  Neither the Company, nor any of its
      Subsidiaries or Affiliates, nor, to the Company’s knowledge, any Person acting
      on its or their behalf, has engaged in any form of general solicitation or
      general advertising (within the meaning of Regulation D) in connection with
      the
      transactions contemplated hereby.  The Company shall be responsible
      for the payment of any placement agent’s fees, financial advisory fees, or
      brokers’ commissions (other than for persons engaged by a Holder or its
      investment advisor) relating to or arising out of the transactions contemplated
      hereby.  The Company shall pay, and hold each Holder harmless against,
      any liability, loss or expense (including, without limitation, attorney’s fees
      and out-of-pocket expenses) arising in connection with any such
      claim).  The Company has not engaged any placement agent or other
      agent in connection with the sale of the Securities.

    


    (h)           No
      Integration.  None of the Company, its Subsidiaries, any of their
      Affiliates, or any Person acting on its or their behalf has, directly or
      indirectly, made any offers or sales of any security or solicited any offers
      to
      buy any security, under circumstances that would require registration of any
      of
      the Securities under the 1933 Act or cause the transactions contemplated hereby
      to be integrated with prior offerings by the Company for purposes of the 1933
      Act (the result of which would be to require registration of any of the
      Securities under the 1933 Act) or any applicable stockholder approval
      provisions, including, without limitation, under
      the rules
      and regulations of any exchange or automated quotation system on which any
      of
      the securities of the Company are listed or designated.  None of the
      Company, its Subsidiaries, their Affiliates or any Person acting on its or
      their
      behalf will take any action or steps referred to in the preceding sentence
      that
      would require registration of any of the Securities under the 1933 Act or cause
      the transactions contemplated hereby to be integrated with other
      offerings.

    


     (i)           Dilutive
      Effect.  The Company understands and acknowledges that the number
      of Conversion Shares issuable upon conversion of the Notes will increase in
      certain circumstances. The Company further acknowledges that its obligation
      to
      issue Conversion Shares upon conversion of the Notes in accordance with this
      Agreement and the Notes is absolute and unconditional regardless of the dilutive
      effect that such issuance may have on the ownership interests of other
      stockholders of the Company.  The Company further acknowledges that,
      to the extent not prohibited by applicable law, the Holders may enter into
      hedging transactions with respect to the securities of the Company.

    


     (j)           Application
      of Takeover Protections; Rights Agreement.  The Company and its
      board of directors have taken all necessary action, if any, in order to render
      inapplicable any control share acquisition, business combination, poison pill
      (including any distribution under a rights agreement) or other similar
      anti-takeover provision under the Certificate of Incorporation or the laws
      of
      the jurisdiction of its formation which is or could become applicable to the
      Holders as a result of the transactions contemplated by this
      Agreement.  The Company has not adopted a stockholder rights plan or
      similar arrangement relating to accumulations of beneficial ownership of Common
      Stock or a change in control of the Company.


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    (k)           Absence
      of Certain Changes.  Except as disclosed in the SEC Documents
      filed at least three Business Days prior to the date of this Agreement, since
      the date of the Company’s most recent audited financial statements contained in
      a Form 10-KSB, there has been no material adverse change and no material adverse
      development in the business, assets, properties, operations, condition
      (financial or otherwise), results of operations or prospects of the
      Company.  Neither the Company nor any of its Subsidiaries has taken
      any steps to seek protection pursuant to any bankruptcy law nor does the Company
      have any knowledge or reason to believe that its creditors intend to initiate
      involuntary bankruptcy proceedings or any actual knowledge of any fact which
      would reasonably lead a creditor to do so.  The Company, individually
      and on a consolidated basis, is not as of the date hereof, and after giving
      effect to the transactions contemplated hereby to occur at the Closing, will
      not
      be Insolvent (as defined below).  For purposes of this
Section 3(k), “Insolvent” means
      (i) the present fair saleable value of the Company’s assets is less than
      the amount required to pay the Company’s total Indebtedness (as defined in
Section 3(n)), (ii) the Company is unable to pay its
      debts and liabilities, subordinated, contingent or otherwise, as such debts
      and
      liabilities become absolute and matured, (iii) the Company intends to incur
      or believes that it will incur debts that would be beyond its ability to pay
      as
      such debts mature or (iv) the Company has unreasonably small capital with
      which to conduct the business in which it is engaged as such business is now
      conducted and is proposed to be conducted.

    


     (l)           No
      Undisclosed Events, Liabilities, Developments or
      Circumstances.  No event, liability, development or circumstance
      has occurred or exists, or is contemplated to occur with respect to the Company,
      its Subsidiaries or their respective business, properties, prospects, operations
      or financial condition, that would be required to be disclosed by the Company
      under applicable securities laws on a registration statement on Form SB-2 or
      any
      other appropriate form filed with the SEC relating to an issuance and sale
      by
      the Company of its Common Stock and which has not been publicly
      announced.

    


    (m)           Equity
      Capitalization.  As of February 28, 2007, the authorized capital
      stock of the Company consists of (i) 300,000,000 shares of Common Stock, of
      which as of such date, 40,264,710 were issued and outstanding, up to 8,000,000
      shares were reserved for issuance pursuant to the Company’s stock option and
      purchase plans and 223,300,000 shares were reserved for issuance pursuant to
      securities (including the Notes) exercisable or exchangeable for, or convertible
      into, shares of Common Stock and (ii) 5,000,000 shares of preferred stock,
      par
      value $0.001 per share, of which as of such date, 1,000,000 shares of Series
      A
      Preferred Stock were issued and outstanding, 500,000 shares of Series C
      Preferred Stock were issued and outstanding, and 900 shares of Series D
      Preferred Stock were issued and outstanding.  All
      of such outstanding shares have been, or upon issuance will be, validly issued
      and are fully paid and nonassessable.  Except as disclosed on
Schedule 3(m) or as set forth in the SEC Documents filed at least three
      Business Days prior to the date hereof, (i) none of the Company’s capital stock
      is subject to any Liens suffered or permitted by the Company; (ii) there are
      no
      outstanding options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any capital stock of
      the
      Company or any of its Subsidiaries, or contracts, commitments, understandings
      or
      arrangements by which the Company or any of its Subsidiaries is or may become
      bound to issue additional capital stock of the Company or any of its
      Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
      commitments of any character whatsoever relating to, or securities or rights
      convertible into, or exercisable or exchangeable for, any capital stock of
      the
      Company or any of its Subsidiaries; (iii) there are no outstanding debt
      securities, notes, credit or loan agreements, credit facilities or other
      agreements, documents or instruments evidencing Indebtedness (as defined below)
      of the Company or any of its Subsidiaries or by which the Company or any of
      its
      Subsidiaries is or may become bound; (iv) there are no financing statements
      securing obligations in any material amounts, either singly or in the aggregate,
      filed in connection with the Company or any of its Subsidiaries; (v) there
      are
      no agreements or arrangements under which the Company or any of its Subsidiaries
      is obligated to register the sale of any of their securities under the 1933
      Act
      (except pursuant to the Registration Rights Agreement); (vi) there are no
      outstanding securities or instruments of the Company or any of its Subsidiaries
      which contain any redemption or similar provisions, and there are no contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      Subsidiaries is or may become bound to purchase, repurchase, retire or redeem
      a
      security of the Company or any of its Subsidiaries; (vii) there are no
      securities or instruments containing anti-dilution or similar provisions that
      will be triggered by the transactions contemplated hereby; (viii) the Company
      does not have any stock appreciation rights or “phantom stock” plans or
      agreements or any similar plan or agreement; and (ix) the Company and its
      Subsidiaries have no liabilities or obligations required to be disclosed in
      such
      SEC Documents but not so disclosed in such SEC Documents, other than those
      incurred in the ordinary course of the Company’s or its Subsidiaries’ respective
      businesses and which, individually or in the aggregate, do not or would not
      have
      a Material Adverse Effect.  The Company has furnished to each Holder
      true, correct and complete copies of the Company’s Certificate of Incorporation,
      as amended and as in effect on the date hereof (the
“Certificate of Incorporation”), and the
      Company’s Bylaws, as amended and as in effect on the date hereof (the
“Bylaws”) not available on the EDGAR system if such
      Certificate of Incorporation and Bylaws have been requested in writing by such
      Holder.  The terms of all securities convertible into, or exercisable
      or exchangeable for, shares of Common Stock and the material rights of the
      holders thereof in respect thereto are disclosed in the SEC Documents that
      have
      been filed at least three Business Days prior to the date of this
      Agreement.


    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    (n)           Indebtedness
      and Other Contracts.  Except as disclosed on Schedule 3(n),
      the SEC Documents filed at least three Business Days prior to the date of this
      Agreement, or any of the other Schedules attached hereto, neither the Company
      nor any of its Subsidiaries (i) has any outstanding Indebtedness (as defined
      below), (ii) is a party to any contract, agreement or instrument, the violation
      of which, or default under which, by the other party(ies) to such contract,
      agreement or instrument would result in a Material Adverse Effect, (iii) is
      in
      violation of any term of or in default under (and no event or circumstance
      has
      occurred or is existing that, with the giving of notice or passage of time,
      or
      both, would constitute any such violation of or default under) any contract,
      agreement or instrument relating to any Indebtedness, except where such
      violations and defaults would not result, individually or in the aggregate,
      in a
      Material Adverse Effect, or (iv) is a party to any contract, agreement or
      instrument relating to any Indebtedness, the performance of which, in the
      judgment of the Company’s officers, has or is expected to have a Material
      Adverse Effect.  For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without
      duplication (A) all indebtedness for borrowed money, (B) all obligations issued,
      undertaken or assumed as the deferred purchase price of property or services
      including (without limitation) capital leases in accordance with generally
      accepted accounting principles (other than trade payables entered into in the
      ordinary course of business), (C) all reimbursement or payment obligations
      with
      respect to letters of credit, surety bonds and other similar instruments, (D)
      all obligations evidenced by notes, bonds, debentures or similar instruments,
      including obligations so evidenced and incurred in connection with the
      acquisition of property, assets or businesses, (E) all indebtedness created
      or
      arising under any conditional sale or other title retention agreement, or
      incurred in connection with a financing, in either case with respect to any
      property or assets acquired with the proceeds of such indebtedness (even though
      the rights and remedies of the seller or bank under such agreement in the event
      of default are limited to repossession or sale of such property), (F) all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (G) all
      indebtedness referred to in clauses (A) through (F) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any Lien upon or in any property or assets
      (including accounts and contract rights) owned by any Person, even though the
      Person which owns such assets or property has not assumed or become liable
      for
      the payment of such indebtedness, and (H) all Contingent Obligations in respect
      of indebtedness or obligations of others of the kinds referred to in clauses
      (A)
      through (G) above; (y) “Contingent Obligation” means, as to any
      Person, any direct or indirect liability, contingent or otherwise, of that
      Person with respect to any Indebtedness, lease, dividend or other obligation
      of
      another Person if the primary purpose or intent of the Person incurring such
      liability, or the primary effect thereof, is to provide assurance to the obligee
      of such liability that such liability will be paid or discharged, or that any
      agreements relating thereto will be complied with, or that the holders of such
      liability will be protected (in whole or in part) against loss with respect
      thereto; and (z) “Person” means an individual, a limited
      liability company, a partnership, a joint venture, a corporation, a trust,
      an
      unincorporated organization and a government or any department or agency
      thereof.


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    (o)           Ranking
      of Notes.  Except as set forth on Schedule 3(o) and
      the SEC Documents filed at least three Business Days prior to the date of this
      Agreement, no Indebtedness of the Company or its Subsidiaries is senior to
      or
      ranks pari passu with the Notes in right of payment, whether in respect
      of payment of redemptions, interest, damages or upon liquidation or dissolution
      or otherwise.

    


    (p)           Form
      SB-2 Eligibility.  Except as set forth on Schedule 3(p),
      the Company is eligible to register the Conversion Shares and the shares for
      which the Warrants are exercisable for resale by the Holders using Form SB-2
      promulgated under the 1933 Act or any other appropriate form filed with the
      SEC relating to an issuance and sale by the Company of its Common
      Stock.

    


    (q)           Manipulation
      of Price.  The Company and its Subsidiaries have not, and to the
      Company’s knowledge no one acting on its behalf has, (i) taken, directly or
      indirectly, any action designed to cause or to result or that could reasonably
      be expected to cause or result in the stabilization or manipulation of the
      price
      of any security of the Company to facilitate any transaction with respect to
      the
      Securities, (ii) sold, bid for, purchased, or paid any compensation for
      soliciting any transaction involving the Securities, or (iii) paid or agreed
      to
      pay to any person any compensation for soliciting another to purchase any other
      securities of the Company.


    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


     (r)           Disclosure.  The
      Company confirms that neither it nor any other Person acting on its behalf
      has
      provided any Holder or its agents or counsel with any information that
      constitutes or could reasonably be expected to constitute material, nonpublic
      information other than the existence of the transactions contemplated by this
      Agreement or the other Transaction Documents.  The Company understands
      and confirms that each Holder will rely on the foregoing representations in
      effecting transactions in the Securities.  To the best knowledge of
      the Company, all disclosure provided to each Holder regarding the Company,
      its
      business and the transactions contemplated by this Agreement and the other
      Transaction Documents, including the Schedules and Exhibits hereto and thereto,
      furnished by or on behalf of the Company is true and correct and does not
      contain any untrue statement of a material fact or omit to state any material
      fact necessary in order to make the statements made herein or therein, in the
      light of the circumstances under which they were made, not
      misleading.  Each press release issued by the Company or its
      Subsidiaries during the twelve (12) months preceding the date of this Agreement,
      which was not subsequently corrected, did not contain any untrue statement
      of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading.  No event or
      circumstance has occurred or information exists with respect to the Company
      or
      any of its Subsidiaries or its or their business, assets, liabilities,
      properties, prospects, operations or financial condition (financial or
      otherwise), which, under applicable law, rule or regulation, requires public
      disclosure or announcement by the Company but which has not been so publicly
      announced or disclosed.

    


    (s)           SEC
      Documents; Financial Statements.  Except as disclosed in the SEC
      Documents or on Schedule 3(s), during the two (2) years prior to the date
      hereof, the Company has filed all SEC Documents required to be filed by it
      with
      the SEC.  The Company has delivered to each Holder or its
      representatives true, correct and complete copies of the SEC Documents not
      available on the EDGAR system if such SEC Documents have been requested in
      writing by such Holder.  As of their respective filing dates, the SEC
      Documents complied in all material respects with the requirements of the 1934
      Act and the rules and regulations of the SEC promulgated thereunder applicable
      to the SEC Documents, and except as subsequently amended, none of the SEC
      Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not
      misleading.  As of their respective filing dates, except as
      subsequently amended in a filing with the SEC, the financial statements of
      the
      Company included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the SEC with respect thereto.  Such financial
      statements have been prepared in accordance with generally accepted accounting
      principles, consistently applied, during the periods involved (except (i) as
      may
      be otherwise indicated in such financial statements or the notes thereto, or
      (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or
      may be condensed or
      summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to any Holder in connection
      with the transactions contemplated hereby which is not included in the SEC
      Documents, including, without limitation, information referred to in
Section 2(d) of this  Agreement or in any disclosure
      schedules, contains any untrue  statement of a material fact or omits
      to state any material fact necessary in order to make the statements therein,
      in
      the light of the circumstance under which they are or were made, not
      misleading.

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

     (t)           Conduct
      of Business; Regulatory Permits.  Neither the Company nor any of
      its Subsidiaries is in material violation of any term of or in default under
      its
      Certificate of Incorporation or Bylaws or their organizational charter or
      certificate of incorporation or bylaws, respectively.  Neither the
      Company nor any of its Subsidiaries is in material violation of any judgment,
      decree or order or any law, statute, ordinance, rule or regulation applicable
      to
      the Company or its Subsidiaries, and neither the Company nor any of its
      Subsidiaries is, or will conduct its business, in violation of any of the
      foregoing, except for possible violations which would not, individually or
      in
      the aggregate, have a Material Adverse Effect.  Without limiting the
      generality of the foregoing, the Company is not in violation of any of the
      rules, regulations or requirements of the Principal Market and has no knowledge
      of any facts or circumstances which would reasonably lead to delisting or
      suspension of the Common Stock by the Principal Market in the foreseeable
      future.  During the two (2) years prior to the date hereof, except as
      disclosed in the SEC Documents filed at least three Business Days prior to
      the
      date of this Agreement, (i) the Common Stock has been designated for quotation
      on the Principal Market, (ii) trading in the Common Stock
      has not been suspended by the SEC or the Principal Market and (iii) the Company
      has received no communication, written or oral, from the SEC or the Principal
      Market regarding the suspension or delisting of the Common Stock from the
      Principal Market.  The Company and its Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate regulatory
      authorities necessary to conduct their respective businesses, except where
      the
      failure to possess such certificates, authorizations or permits would not have,
      individually or in the aggregate, a Material Adverse Effect, and neither the
      Company nor any such Subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

    


    (u)           Off
      Balance Sheet Arrangements.  There is no transaction, arrangement,
      or other relationship between the Company or any of its Subsidiaries and an
      unconsolidated or other off balance sheet entity that is required to be
      disclosed by the Company in the SEC Documents filed at least 10 days prior
      to
      the date hereofand is not so disclosed or that otherwise would be reasonably
      likely to have a Material Adverse Effect.

    


    4.           COVENANTS.

    


    (a)           Best
      Efforts.  Each party shall use its best efforts to timely satisfy
      each of the conditions to be satisfied by it as provided in Sections
      6 and 7 of this Agreement.

    


    (b)           Reporting
      Status.  Until the date on which the Holders shall have sold all
      the Conversion Shares and none of the Notes is outstanding (the
“Reporting Period”), the Company shall file all reports
      required to be filed with the SEC pursuant to the 1934 Act, and the Company
      shall not terminate its status as an issuer required to file reports under
      the
      1934 Act even if the 1934 Act or the rules and regulations thereunder would
      otherwise permit such termination.


    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    


    (c)           Financial
      Information.  The Company agrees to send the following to each
      Holder during the Reporting Period (i) unless the following are filed with
      the
      SEC through EDGAR and are available to the public through the EDGAR system,
      within one (1) Business Day after the filing thereof with the SEC, a copy of
      its
      Annual Reports on Form 10-K or 10-KSB, any interim reports or any consolidated
      balance sheets, income statements, stockholders’ equity statements and/or cash
      flow statements for any period other than annual, any Current Reports on Form
      8-K and any registration statements (other than on Form S-8) or amendments
      filed
      pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile
      or e-mailed copies of all press releases issued by the Company or any of its
      Subsidiaries, and (iii) copies of any notices and other information made
      available or given to the stockholders of the Company generally,
      contemporaneously with the making available or giving thereof to the
      stockholders.

    


    (d)           Listing.  Pursuant
      to the Registration Rights Agreement, the Company shall promptly secure the
      listing of all of the Registrable Securities (as defined in the Registration
      Rights Agreement) upon each national securities exchange and automated quotation
      system, if any, upon which the Common Stock is then listed (subject to official
      notice of issuance) and shall maintain such listing of all Registrable
      Securities from time to time issuable under the terms of the Transaction
      Documents.  The Company shall maintain the Common Stock’s
      authorization for quotation on the Principal
      Market.  Neither the Company nor any of its Subsidiaries shall take
      any action which would be reasonably expected to result in the delisting or
      suspension of the Common Stock on the Principal Market.  The Company
      shall pay all fees and expenses in connection with satisfying its obligations
      under this Section 4(d).

    


    (e)           Fees.  Except
      as otherwise set forth herein or in the Transaction Documents, each party to
      this Agreement shall bear its own expenses in connection with the transactions
      contemplated by this Agreement.

    


    (f)           Pledge
      of Securities.  The Company acknowledges and agrees that the
      Securities subject to the provisions of Rule 144 may be pledged by any Holder
      in
      connection with a bona fide margin agreement or other loan or financing
      arrangement that is secured by the Securities.  The pledge of
      Securities shall not be deemed to be a transfer, sale or assignment of the
      Securities hereunder, and such Holder shall not be required to provide the
      Company with any notice thereof or otherwise make any delivery to the Company
      pursuant to this Agreement or any other Transaction Document, including, without
      limitation, Section 2(f) hereof; provided that such Holder and
      its pledgee shall be required to comply with the provisions of Section
      2(f) hereof in order to effect a sale, transfer or assignment of
      Securities to such pledgee.  The Company hereby agrees to execute and
      deliver such documentation as a pledgee of the Securities may reasonably request
      in connection with a pledge of the Securities to such pledgee by such
      Holder.

    

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

     

    (g)           Disclosure
      of Transactions and Other Material Information.  On or before 8:30
      a.m., New York Time, on the first Business Day following the date of this
      Agreement, the Company shall file a Current Report on Form 8-K describing the
      terms of the transactions contemplated by the Transaction Documents in the
      form
      required by the 1934 Act and attaching the material Transaction Documents
      (including, without limitation, this Agreement) as exhibits to such filing
      (collectively, the “8-K Filing”).  From and after the
      filing of the 8-K Filing with the SEC, the Company shall have disclosed any
      material, nonpublic information delivered to the Holders by the Company, any
      of
      its Subsidiaries or any of their respective officers, directors, employees,
      stockholders, representatives or agents.  The Company shall not, and
      shall cause each of its Subsidiaries and its and each of their respective
      officers, directors, employees and agents, not to, provide any Holder with
      any
      material, nonpublic information regarding the Company or any of its Subsidiaries
      from and after the filing of the 8-K Filing with the SEC without the express
      prior written consent of such Holder.  In the event of a breach of the
      foregoing covenant by the Company, its Subsidiaries, or any of its respective
      officers, directors, employees and agents, in addition to any other remedy
      provided herein or in the Transaction Documents, such Holder shall have the
      right to make a public disclosure, in the form of a press release, public
      advertisement or otherwise, of such material, nonpublic information without
      the
      prior approval by the Company, its Subsidiaries, or any of their respective
      officers, directors, employees or agents.  No Holder shall have any
      liability to the Company, its Subsidiaries, or any of its or their respective
      officers, directors, employees, stockholders or agents for any such
      disclosure.  Subject to the foregoing, none of the Company, its
      Subsidiaries or any Holder shall issue any press releases or any other public
      statements with respect to the transactions contemplated hereby; provided,
      however, that the Company shall be entitled, without the prior approval of
      the
      Holders, to make any press release or other public disclosure with respect
      to
      such transactions (i) in substantial conformity with the 8-K Filing and
      substantially contemporaneously therewith and (ii) as is required by applicable
      law and regulations (provided that in the case of clause (i) the Holders shall
      be consulted by the Company in connection with any such press release or other
      public disclosure prior to its release).


    (h)           Restriction
      on Redemption and Cash Dividends.  Except as set forth on
Schedule 4(h) and except as disclosed in the SEC Documents filed at
      least three Business Days prior to the date of this Agreement, so long as any
      Notes are outstanding, the Company shall not, directly or indirectly, redeem,
      or
      declare or pay any cash dividend or distribution on the Common Stock or
      preferred stock without the prior express written consent of the Required
      Holders (as defined in the Notes).

    


     (i)           Additional
      Securities; Dilutive Issuances.  Except as may be permitted with
      respect to the purchase of any current Subsidiaries or any proposed acquisition
      of a new Subsidiary and except as disclosed in the SEC Documents filed at least
      three Business Days prior to the date of this Agreement, ), or the issuance
      of
      any shares of the Common Stock to consultants for services rendered to the
      Company or any Subsidiary, or the issuance of any shares of the Common Stock
      in
      settlement of debts of the Company or any Subsidiary, or the issuance of any
      shares of the Common Stock pursuant to any Stock Option Plan adopted by the
      Company or any Subsidiary, or shares of the Common Stock issued pursuant to
      any
      S-8 Registration Statement filed by the Company with the SEC, or as otherwise
      consented to by the Required Holders, so long as any Holder beneficially owns
      any Notes, the Company will not issue any debt or equity securities that would
      cause a breach or default under the Notes.  For long as any Notes
      remain outstanding, the Company shall not, in any manner, issue or sell any
      rights, warrants or options to subscribe for or purchase Common Stock or
      directly or indirectly convertible into or exchangeable or exercisable for
      Common Stock at a price which varies or may vary with the market price of the
      Common Stock, including by way of one or more reset(s) to any fixed price unless
      the conversion, exchange or exercise price of any such security cannot be less
      than the then applicable Conversion Price (as defined in the Notes) with respect
      to the Common Stock into which any Notes are convertible.  Except as
      may be permitted with respect to the purchase of any of its Subsidiaries and
      as
      disclosed in the SEC Documents, or so long as any Notes remain outstanding,
      the
      Company shall not, in any manner, enter into or effect any Dilutive Issuance
      (as
      defined in the Notes) if the effect of such Dilutive Issuance is to cause the
      Company to be required to issue upon conversion of any Notes any shares of
      Common Stock in excess of that number of shares of Common Stock which the
      Company has authorized and reserved for purposes of such conversions or
      exercises or which the Company may issue upon conversion of the Notes without
      breaching the Company’s obligations under the rules or regulations of the
      Principal Market or any market or exchange on which the Common Stock is then
      listed or quoted.  Notwithstanding the foregoing, the Holders consent to
      Permitted Indebtedness (as defined in the Notes).


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    


     (j)           Corporate
      Existence.  So long as the Holders beneficially own any
      Securities, the Company shall not be party to any Fundamental Transaction (as
      defined in the Notes) unless the Company is in compliance with the applicable
      provisions governing Fundamental Transactions set forth in the
      Notes.

    


    (k)           Reservation
      of Shares.  So long as the Holders own any Securities, the Company
      shall take all action necessary to at all times have authorized, and reserved
      for the purpose of issuance, no less than 175% of the number of shares of Common
      Stock issuable upon conversion in full of the Notes then outstanding (without
      taking into account any limitations on the conversion of the Notes set forth
      in
      the Notes).

    


     (l)           Conduct
      of Business.  Neither the Company nor its Subsidiaries will
      conduct its business in violation of any term of or in default under its
      Certificate or Articles of Incorporation or Bylaws.  The business of
      the Company and its Subsidiaries shall not be conducted in violation of any
      law,
      ordinance or regulation of any government, or any department or agency thereof
      or governmental entity, except where such violations would not reasonably be
      expected to result, either individually or in the aggregate, in a Material
      Adverse Effect.


    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    


    (m)           Additional
      Issuances of Securities.

    


    (i)           For
      purposes of this Section 4(m), the following definitions shall
      apply.

    


    (1)           “Convertible
      Securities” means any stock or securities (other than Options)
      convertible into or exercisable or exchangeable for shares of Common
      Stock.

    


    (2)           “Options”
      means any rights, warrants or options to subscribe for or purchase shares of
      Common Stock or Convertible Securities.

    


    (3)           “Common
      Stock Equivalents” means, collectively, Options and Convertible
      Securities.

    


    (ii)           Except
      as may be required in connection with the Company’s acquisition of any current
      Subsidiaries or any proposed acquisition of a new Subsidiary, or other
      obligations as disclosed in the SEC Documents filed at least ten days prior
      to
      the date hereof, from the date hereof until the date (the “Trigger
      Date”) that is 30 Trading Days (as defined in the Notes) following the
      Effective Date (as defined in the Registration Rights Agreement), or the
      issuance of any shares of the Common Stock to consultants for services rendered
      to the Company or any Subsidiary, or the issuance of any shares of the Common
      Stock in settlement of debts of the Company or any Subsidiary, or the issuance
      of any shares of the Common Stock pursuant to any Stock Option Plan adopted
      by
      the Company or any Subsidiary, or shares of the Common Stock issued pursuant
      to
      any S-8 Registration Statement filed by the Company with the SEC, or as
      otherwise consented to by the Required Holders, the Company will not, directly
      or indirectly, offer, sell, grant any option to purchase, or otherwise dispose
      of (or announce any offer, sale, grant or any option to purchase or other
      disposition of) any of its or its Subsidiaries’ equity or equity equivalent
      securities, including without limitation any debt, preferred stock or other
      instrument or security that is, at any time during its life and under any
      circumstances, convertible into or exchangeable or exercisable for shares of
      Common Stock or Common Stock Equivalents (any such offer, sale, grant,
      disposition or announcement being referred to as a “Subsequent
      Placement”).

    


    (iii)           Except
      as may be required in connection with the Company’s acquisition of any of its
      Subsidiaries, or other obligations as disclosed in the SEC Documents filed
      at
      least ten days prior to the date hereof, from the Trigger Date until the date
      on
      which none of the Notes is outstanding, the Company will not, directly or
      indirectly, effect any Subsequent Placement unless the Company shall have first
      complied with this Section 4(m)(iii), as follows: (1) The Company
      shall deliver to the Holders (each, an
“Offeree”) a written notice (the “Offer
      Notice”) of any proposed or intended issuance or sale or exchange
      (the “Offer”) of the securities being offered (the
“Offered Securities”) in a Subsequent Placement, which Offer
      Notice shall (w) identify and describe the Offered Securities, (x) describe
      the price and other terms upon which they are to be issued, sold or exchanged,
      and the number or amount of the Offered Securities to be issued, sold or
      exchanged, (y) identify the persons or entities (if known) to which or with
      which the Offered Securities are to be offered, issued, sold or exchanged and
      (z) offer to issue and sell to or exchange with the Offerees all of the Offered
      Securities, allocated among the Offerees (a) based on the Offerees’ pro rata
      portion of the aggregate original principal amount of the Notes (the
“Basic Amount”), and (b) with respect to each Offeree that
      elects to purchase its Basic Amount, any additional portion of the Offered
      Securities attributable to the Basic Amounts of other Offerees as such Offeree
      shall indicate it will purchase or acquire should the other Offerees subscribe
      for less than their Basic Amounts (the “Undersubscription
      Amount”).


    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    


    (2)           To
      accept an Offer, in whole or in part, an Offeree must deliver a written notice
      to the Company prior to the end of the tenth (10th ) Business
      Day
      after such Offeree’s receipt of the Offer Notice (the “Offer
      Period”), setting forth the portion of such Offeree’s Basic Amount that
      such Offeree elects to purchase and, if such Offeree shall elect to purchase
      all
      of its Basic Amount, the Undersubscription Amount, if any, that such Offeree
      elects to purchase (in either case, the “Notice of
      Acceptance”).  If the Basic Amounts subscribed for by all
      Offerees are less than the total of all of the Basic Amounts, then each Offeree
      who has set forth an Undersubscription Amount in its Notice of Acceptance shall
      be entitled to purchase, in addition to the Basic Amounts subscribed for, the
      Undersubscription Amount it has subscribed for; provided, however,
      that if the Undersubscription Amounts subscribed for exceed the difference
      between the total of all the Basic Amounts and the Basic Amounts subscribed
      for
      (the “Available Undersubscription Amount”), each Offeree who
      has subscribed for any Undersubscription Amount shall be entitled to purchase
      only that portion of the Available Undersubscription Amount as the Basic Amount
      of such Offeree bears to the total Basic Amounts of all Offerees that have
      subscribed for Undersubscription Amounts, subject to rounding by the Company
      to
      the extent it deems reasonably necessary.

    


    (3)           Following
      the expiration of the Offer Period, the Company shall as promptly as reasonably
      practicable offer, issue, sell or exchange all or any part of such Offered
      Securities as to which a Notice of Acceptance has not been given by the Offerees
      (the “Refused Securities”), but only to the Offerees described
      in the Offer Notice (if so described therein) and only upon terms and conditions
      (including, without limitation, unit prices and interest rates) that are not
      more favorable to the acquiring person or persons or less favorable to the
      Company than those set forth in the Offer Notice.

    


    (4)           In
      the event the Company shall propose to sell less than all the Refused Securities
      (any such sale to be in the manner and on the terms specified in Section
      4(m)(iii)(3) above), then each Offeree may, at its sole option and in
      its sole discretion, reduce the number or amount of the Offered Securities
      specified in its Notice of Acceptance to an amount that
      shall be not less than the number or amount of the Offered Securities that
      such
      Offeree elected to purchase pursuant to Section 4(m)(iii)(2)
      above multiplied by a fraction, (i) the numerator of which shall be the number
      or amount of Offered Securities the Company actually proposes to issue, sell
      or
      exchange (including Offered Securities to be issued or sold to the Offerees
      pursuant to Section 4(m)(iii)(3) above prior to such reduction)
      and (ii) the denominator of which shall be the original amount of the Offered
      Securities.  In the event that any Offeree so elects to reduce the
      number or amount of Offered Securities specified in its Notice of Acceptance,
      the Company may not issue, sell or exchange more than the reduced number or
      amount of the Offered Securities unless and until such securities have again
      been offered to Offerees in accordance with
Section 4(m)(iii)(1) above.


    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    


    (5)           Upon
      the closing of the issuance, sale or exchange of all or less than all of the
      Refused Securities, the Offerees shall acquire from the Company, and the Company
      shall issue to the Offerees, the number or amount of Offered Securities
      specified in the Notices of Acceptance, as reduced pursuant to Section
      4(m)(iii)(3) above if the Offerees have so elected, upon the terms and
      conditions specified in the Offer.  The purchase by the Offerees of
      any Offered Securities is subject in all cases to the preparation, execution
      and
      delivery by the Company and the Offerees of a purchase agreement relating to
      such Offered Securities reasonably satisfactory in form and substance to the
      Offerees and their respective counsel and to the Company and its
      counsel.

    


    (6)           Any
      Offered Securities not acquired by the Offerees or other persons in accordance
      with Section 4(m)(iii)(3) above may not be issued, sold or
      exchanged until they are again offered to the Offerees under the procedures
      specified in this Agreement.

    


    (iv)           The
      restrictions contained in subsections (ii) and (iii) of this Section
      4(m) shall not apply in connection with the issuance of any Excluded
      Securities (as defined in the Notes).

    


    (n)           Transactions
      With Affiliates.  Except as may be required in connection with the
      Company’s future acquisition of any of its Subsidiaries, or other obligations as
      disclosed in the SEC Documents filed at least ten days prior to the date hereof,
      so long as any Notes are outstanding, the Company shall not, and shall cause
      each of its Subsidiaries not to, enter into, amend, modify or supplement, or
      permit any Subsidiary to enter into, amend, modify or supplement any agreement,
      transaction, commitment, or arrangement with any of its or any Subsidiary’s
      officers, directors, person who were officers or directors at any time during
      the previous two (2) years, stockholders who beneficially own five percent
      (5%)
      or more of the Common Stock, or Affiliates (as defined below) or with any
      individual related by blood, marriage, or adoption to any such individual or
      with any entity in which any such entity or individual owns a five percent
      (5%)
      or more beneficial interest (each a “Related Party”), except
      for (a) customary employment arrangements and benefit programs on reasonable
      terms, (b) any agreement, transaction, commitment, or arrangement on an
      arms-length basis on terms no less favorable than terms which would have been
      obtainable from a person other than such Related Party, or (c) any agreement
      transaction, commitment, or arrangement which is approved by a majority of
      the
      disinterested directors of the Company, for purposes hereof, any director who
      is
      also an officer of the Company or any subsidiary of the Company shall not be
      a
      disinterested director with respect to any such agreement, transaction,
      commitment, or arrangement.  “Affiliate” for purposes hereof means,
      with respect to any person or entity, another person or entity that, directly
      or
      indirectly, (i) has a ten percent (10%) or more equity interest in that person
      or entity, (ii) has ten percent (10%) or more common ownership with that person
      or entity, (iii) controls that person or entity, or (iv) shares common
      control with that person or entity.  “Control” or “controls” for
      purposes hereof means that a person or entity has the power, direct or indirect,
      to conduct or govern the policies of another person or entity.


    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    


    (o)           Removal
      of Legend.  In addition to each Holder’s other available remedies,
      the Company shall pay to such Holder, in cash, as partial liquidated damages
      and
      not as a penalty, for each $1,000 of Conversion Shares (based on the closing
      price of the Common Stock on the date such Conversion Shares are submitted
      to
      the Company’s transfer agent), $5 per Business Day (increasing to $10 per
      Business Day five Business Days after such damages have begun to accrue) for
      each Business Day after the third Business Day following delivery by such Holder
      to the Company or the Company’s transfer agent of a certificate representing
      Conversion Shares issued with a restrictive legend, until such certificate
      is
      delivered to such Holder with such legend removed. Nothing herein shall limit
      such Holder’s right to pursue actual damages for the failure of the Company and
      its transfer agent to deliver certificates representing any securities as
      required hereby, and such Holder shall have the right to pursue all remedies
      available to it at law or in equity, including, without limitation, a decree
      of
      specific performance and/or injunctive relief.

    


    (p)           Collateral
      Agent.

    


    (i)           Each
      Holder hereby (a) appoints Imperium Advisers, as the collateral agent hereunder
      and under the other Security Documents (in such capacity, the
“Collateral Agent”), and (b) authorizes the Collateral Agent
      (and its officers, directors, employees and agents) to take such action on
      such
      Holder’s behalf in accordance with the terms hereof and thereof.  The
      Collateral Agent shall not have, by reason hereof or any of the other Security
      Documents, a fiduciary relationship in respect of any Holder.  Neither
      the Collateral Agent nor any of its officers, directors, employees and agents
      shall have any liability to any Holder for any action taken or omitted to be
      taken in connection hereof or any other Security Document except to the extent
      caused by its own gross negligence or willful misconduct, and each Holder agrees
      to defend, protect, indemnify and hold harmless the Collateral Agent and all
      of
      its officers, directors, employees and agents (collectively, the
“Collateral Agent Indemnitees”) from and against any losses,
      damages, liabilities, obligations, penalties, actions, judgments, suits, fees,
      costs and expenses (including, without limitation, reasonable attorneys’ fees,
      costs and expenses) incurred by such Collateral Agent Indemnitee, whether
      direct, indirect or consequential, arising from or in connection with the
      performance by such Collateral Agent Indemnitee of the duties and obligations
      of
      Collateral Agent pursuant hereto or any of the Security Documents except to
      the
      extent caused by its own gross negligence or willful misconduct.

     

    (ii)           The
      Collateral Agent shall be entitled to rely upon any written notices, statements,
      certificates, orders or other documents or any telephone message believed by
      it
      in good faith to be genuine and correct and to have been signed, sent or made
      by
      the proper Person, and with respect to all matters pertaining to this Agreement
      or any of the other Transaction Documents and its duties hereunder or
      thereunder, upon advice of counsel selected by it.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    


    (iii)           The
      Collateral Agent (i) may resign from the performance of all its functions and
      duties hereunder and under the Notes and the Security Documents at any time
      by
      giving at least ten (10) Business Days prior written notice to the Company
      and
      each holder of the Notes and (ii) if the Collateral Agent is Imperium Advisers,
      the Collateral Agent shall immediately resign if neither Imperium Master Fund,
      Ltd. nor any of its other affiliates holds any of the Notes.  Such
      resignation shall take effect upon the acceptance by a successor Collateral
      Agent of appointment as provided below.  Upon any such notice of
      resignation, the holders of a majority of the outstanding principal under the
      Notes shall appoint a successor Collateral Agent.  Upon the acceptance
      of the appointment as Collateral Agent, such successor Collateral Agent shall
      succeed to and become vested with all the rights, powers, privileges and duties
      of the retiring Collateral Agent, and the retiring Collateral Agent shall be
      discharged from its duties and obligations under this Agreement, the Notes
      and
      the other Security Documents.  After any Collateral Agent’s
      resignation hereunder, the provisions of this Section 4(p)
      shall inure to its benefit.  If a successor Collateral Agent shall not
      have been so appointed within said ten (10) Business Day period, the retiring
      Collateral Agent shall then appoint a successor Collateral Agent who shall
      serve
      until such time, if any, as the holders of a majority of the outstanding
      principal under the Notes appoint a successor Collateral Agent as provided
      above.

    


    (q)           Security
      Documents.  The parties hereto acknowledge and agree that (i) each
      Subsidiary of the Company listed on Schedule 4(q) has not executed and
      delivered the Security Documents because such Subsidiary must first obtain
      the
      consent of its secured lender before it is permitted to execute, deliver and
      perform the Security Documents, (ii) it is the intent of the parties hereto
      that
      such Subsidiary use its reasonable best efforts to obtain such consent and
      become party to the Security Documents as promptly as practicable after the
      date
      hereof, and (iii) each future Subsidiary of the Company becomes party to the
      Security Documents contemporaneously with its acquisition or
      creation.  In furtherance of the foregoing, the Company shall use its
      reasonable best efforts to obtain, and cause each Subsidiary listed on
Schedule 4(q) or hereafter created or acquired to obtain, all necessary
      consents necessary to permit each such Subsidiary to execute, deliver and
      perform the Security Documents as promptly as practicable, and to execute and
      deliver to the Collateral Agent an Assumption Agreement in the form attached
      to
      the Security Agreement and the Subsidiary Guarantee.  It shall be a
      breach of this Section 4(q) if any Subsidiary listed on
Schedule 4(q) or any Subsidiary of the Company that is hereafter
      created
      or acquired fails to (x) obtain the consent necessary for such Subsidiary to
      execute, deliver and perform to the Security Documents or (y) deliver to the
      Collateral Agent the executed Assumption Agreements for the Security Documents;
      in each such case, within thirty (30) days from the date hereof in the case
      of
      any Subsidiary listed on Schedule 4(q) or two Business Days from the date
      any future Subsidiary is acquired or created.

     

    5.           REGISTER.  The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to each holder of
      Securities), a register for the Notes in which the Company shall record the
      name
      and address of the Person in whose name the Notes have been issued (including
      the name and address of each transferee), the principal amount of the Notes
      held
      by such Person, the number of Conversion Shares issuable upon conversion of
      the
      Notes held by such Person.  The Company shall keep the register open
      and available at all times during business hours for inspection by the Holders
      or their legal representatives.


    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    


    6.           CONDITIONS
      TO THE COMPANY’S OBLIGATIONS.

    


    The
      obligations of the Company hereunder are subject to the satisfaction, at or
      before the Closing Date, of each of the following conditions, provided that
      these conditions are for the Company’s sole benefit and may be waived by the
      Company at any time in its sole discretion by providing the Holders with prior
      written notice thereof:

    


    (i)           Each
      Holder shall have executed each of the Transaction Documents to which it is
      a
      party and delivered the same to the Company.

    


    (ii)           The
      representations and warranties of each Holder shall be true and correct in
      all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date), and such Holder shall have performed, satisfied and complied
      in
      all material respects with the covenants, agreements and conditions required
      by
      this Agreement to be performed, satisfied or complied with by such Holder at
      or
      prior to the Closing Date.

    


    7.           CONDITIONS
      TO THE HOLDERS’ OBLIGATIONS.

    


    Subject
      to all of the terms of this Agreement, the obligations of each Holder hereunder
      are subject to the satisfaction, at or before the Closing Date or as otherwise
      may be provided herein, of each of the following conditions, provided that
      these
      conditions are for such Holder’s sole benefit and may be waived by such Holder
      at any time in its sole discretion by providing the Company with prior written
      notice thereof:

    


    (i)           The
      Company shall have executed and delivered (or, in the case of any Transaction
      Document to which a Subsidiary is a party, caused such Subsidiary to execute
      and
      deliver) to such Holder each of the Transaction Documents to which it or any
      Subsidiary is a party, including, without limitation, the Note for such
      Holder.

    


    (ii)           The
      Company shall have delivered to such Holder a certificate,
      executed by an Executive Officer or Secretary of the Company and dated as of
      the
      Closing Date, as to the resolutions consistent with Section
      3(b) as adopted by the Company’s Board of Directors.

    


    (iii)           The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (other than representations and warranties that are already
      qualified by materiality or Material Adverse Effect which shall be true and
      correct in all respects) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied in all respects with the covenants, agreements and conditions required
      by the Transaction Documents to be performed, satisfied or complied with by
      the
      Company at or prior to the Closing Date.


    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    


    (iv)           The
      Common Stock (I) shall be designated for quotation or listed on the Principal
      Market and (II) shall not have been suspended, as of the Closing Date, by the
      SEC or the Principal Market from trading on the Principal Market nor shall
      suspension by the SEC or the Principal Market have been threatened, as of the
      Closing Date, either (A) in writing by the SEC or the Principal Market or (B)
      by
      falling below the minimum listing maintenance requirements of the Principal
      Market.

    


    (v)           The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the consummation of the transactions
      contemplated hereby.

    


    (vi)           The
      Company shall have delivered to such Holder an opinion of outside counsel to
      the
      Company, dated as of the Closing Date, in form and substance reasonably
      satisfactory to such Holder.

    


    (vii)           Imperium
      Advisers shall have been appointed the collateral agent under the Security
      Agreement, dated as of August 30, 2006, securing the Company’s obligations under
      the Existing Notes, the Securities Purchase Agreement, and the other transaction
      documents contemplated thereby.

    


    (viii)                      The
      Company shall have delivered to such Holder such other documents relating to
      the
      transactions contemplated by this Agreement as such Holder or its counsel may
      reasonably request.

    


    8.           TERMINATION.  In
      the event that the Closing shall not have occurred on or before five (5)
      Business Days from the date hereof due to the Company’s or a Holder’s failure to
      satisfy the conditions set forth in Sections 6 and
7 above (and the nonbreaching party’s failure in its sole and
      absolute discretion to waive such unsatisfied condition(s)), the nonbreaching
      party shall have the option to terminate this Agreement with respect to such
      breaching party without liability to any other party; provided,
however, that if this Agreement is terminated pursuant to this
Section 8, the Company shall remain obligated to reimburse
      the
      non-breaching Holders for the expenses described in Section
      4(e) above.

    


    9.           MISCELLANEOUS.

    


    (a)           Governing
      Law; Jurisdiction; Jury Trial.  All questions concerning the
      construction, validity, enforcement and interpretation of this Agreement shall
      be governed by the internal laws of the State of New York, without giving effect
      to any choice of law or conflict of law provision or rule (whether of the State
      of New York or any other jurisdictions) that would cause the application of
      the
      laws of any jurisdictions other than the State of New York.  Each
      party hereby irrevocably submits to the exclusive jurisdiction of the state
      and
      federal courts sitting in The City of New York, Borough of Manhattan, for the
      adjudication of any dispute hereunder or in connection herewith or with any
      transaction contemplated hereby or discussed herein, and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is brought in an inconvenient forum or that
      the
      venue of such suit, action or proceeding is improper.  Each party
      hereby irrevocably waives personal service of process and consents to process
      being served in any such suit, action or proceeding by mailing a copy thereof
      to
      such party at the address for such notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof.  Nothing contained herein shall be deemed to limit in
      any way any right to serve process in any manner permitted by
      law.   EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
      HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
      DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR
      ANY
      TRANSACTION CONTEMPLATED HEREBY.


    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    


    (b)           Counterparts.  This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party;
      provided that a facsimile signature shall be considered due execution and shall
      be binding upon the signatory thereto with the same force and effect as if
      the
      signature were an original, not a facsimile signature.

    


    (c)           Headings.  The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

    


    (d)           Severability.  If
      any provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

    


    (e)           Entire
      Agreement; Amendments.  This Agreement and the other Transaction
      Documents supersede all other prior oral or written agreements between the
      Holder, the Company, their Affiliates and Persons acting on their behalf with
      respect to the matters discussed herein, and this Agreement, the other
      Transaction Documents and the instruments referenced herein and therein contain
      the entire understanding of the parties with respect to the matters covered
      herein and therein and, except as specifically set forth herein or therein,
      neither the Company nor any Holder makes any representation, warranty, covenant
      or undertaking with respect to such matters.  No provision of this
      Agreement may be amended other than by an instrument in writing signed by the
      Company and the Required Holders.  No provision hereof may be waived
      other than by an instrument in writing signed by the party against whom
      enforcement is sought.  No such amendment shall be effective to the
      extent that it applies to less than all of the Notes or Registrable Securities
      then outstanding.  No consideration shall be offered or paid to any
      Person to amend or consent to a waiver or modification of any provision of
      any
      of the Transaction Documents unless the same consideration also is offered
      to
      all of the parties to the Transaction Documents.  The Company has not,
      directly or indirectly, made any agreements with any Holder relating to the
      terms or conditions of the transactions contemplated by the Transaction
      Documents except as set forth in the Transaction Documents.


    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    


    (f)           Notices.
      Any notices, consents, waivers or other communications required or permitted
      to
      be given under the terms of this Agreement must be in writing and will be deemed
      to have been delivered:  (i) upon receipt, when delivered personally;
      (ii) upon receipt, when sent by facsimile (provided confirmation of transmission
      is mechanically or electronically generated and kept on file by the sending
      party); or (iii) one Business Day after deposit with an overnight courier
      service, in each case properly addressed to the party to receive the
      same.  The addresses and facsimile numbers for such communications
      shall be:

    


    If
      to the
      Company:

    
      	 	
              Charys
                Holding Company, Inc.

            
	 	
              1117
                Perimeter Center West, Suite N415

            
	 	
              Atlanta,
                GA 30338

            
	 	
              Attention:    Billy
                V. Ray, Jr.

            
	 	
              Telephone:  
                678-443-2300

            
	 	
              Facsimile:     
                678-443-2320

            


    

    


    Copy
      to (for informational purposes only):

    


    
      	 	
              Glast,
                Phillips & Murray, P.C.

            
	 	
              815
                Walker Street, Suite 1250

            
	 	
              Houston,
                Texas 77002

            
	 	
              Attention:    Norman
                T. Reynolds, Esq.

            
	 	
              Telephone:   713-237-3135

            
	 	
              Facsimile:     
                713-237-3202

            


    

    


    If
      to the
      Transfer
      Agent:                                                      

    


    
      	 	
              Fidelity
                Transfer Company

            
	 	
              1800
                S. West Temple, Suite 301

            
	 	
              Salt
                Lake City, Utah 84115

            
	 	
              Attention:    Heidi
                Sadowski

            
	 	
              Telephone:   801-484-7222

            
	 	
              Facsimile:     
                801-466-4122

            
	 	 
	 	If
              to the Holder, to its address and facsimile number set forth on the
              Schedule of Holders, with copies to the Holder’s representatives as set
              forth on the Schedule of Holders, 


    

    


    or
      to such other address and/or facsimile number
      and/or to the attention of such other Person as the recipient party has
      specified by written notice given to each other party five (5) days prior to
      the
      effectiveness of such change.  Written confirmation of receipt (A)
      given by the recipient of such notice, consent, waiver or other communication,
      (B) mechanically or electronically generated by the sender’s facsimile machine
      containing the time, date, recipient facsimile number and an image of the first
      page of such transmission or (C)
      provided by an overnight courier service shall be rebuttable evidence of
      personal service, receipt by facsimile or receipt from an overnight courier
      service in accordance with clause (i), (ii) or (iii) above,
      respectively.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    


    (g)           Successors
      and Assigns.  This Agreement shall be binding upon and inure to
      the benefit of the parties and their respective successors and assigns,
      including any subsequent purchasers of the Notes.  The Company shall
      not assign this Agreement or any rights or obligations hereunder without the
      prior written consent of the Holders (unless the Company is in compliance with
      the applicable provisions governing Fundamental Transactions set forth in the
      Notes).  Subject to United States federal and state securities laws,
      any Holder may assign some or all of its rights hereunder without the consent
      of
      the Company or the other Holders, in which event such assignee shall be deemed
      to be such Holder hereunder with respect to such assigned rights; provided
      that
      such assignee agrees in writing to be bound by all of the provisions contained
      herein.

    


    (h)           No
      Third Party Beneficiaries.  This Agreement is intended for the
      benefit of the parties hereto and their respective permitted successors and
      assigns, and, except as set forth in Section 9(k) below, is not
      for the benefit of, nor may any provision hereof be enforced by, any other
      Person.

    


    (i)           Survival.  Unless
      this Agreement is terminated under Section 8, the
      representations and warranties of the Company and the Holders contained in
      Sections 2 and 3 and the agreements and
      covenants set forth in Sections 4, 5 and
9 shall survive the Closing.

    


    (j)           Further
      Assurances.  Each party shall do and perform, or cause to be done
      and performed, all such further acts and things, and shall execute and deliver
      all such other agreements, certificates, instruments and documents, as any
      other
      party may reasonably request in order to carry out the intent and accomplish
      the
      purposes of this Agreement and the consummation of the transactions contemplated
      hereby.

    


    (k)           Indemnification.  In
      consideration of each Holder’s execution and delivery of the Transaction
      Documents and in addition to all of the Company’s other obligations under the
      Transaction Documents, the Company shall defend, protect, indemnify and hold
      harmless such Holder and each other holder of the Securities and all of their
      stockholders, partners, members, managers, officers, directors, employees and
      direct or indirect investors and any of the foregoing Persons’ agents or other
      representatives (including, without limitation, those retained in connection
      with the transactions contemplated by this Agreement) (collectively, the
“Indemnitees”) from and against any and all actions, causes of
      action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
      and expenses in connection therewith (irrespective of whether any such
      Indemnitee is a party to the action for which indemnification hereunder is
      sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a
      result of, or arising out of, or relating to (a) any misrepresentation or breach of any representation or warranty
      made by the Company or
      any Subsidiary in the Transaction Documents or any other certificate, instrument
      or document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company or any Subsidiary contained in the
      Transaction Documents or any other certificate, instrument or document
      contemplated hereby or thereby or (c) any cause of action, suit or claim brought
      or made against such Indemnitee by a third party (including for these purposes
      a
      derivative action brought on behalf of the Company) and arising out of or
      resulting from (i) the execution, delivery, performance or enforcement of the
      Transaction Documents or any other certificate, instrument or document
      contemplated hereby or thereby, (ii) any disclosure made by the Holders pursuant
      to Section 4(g), or (iii) the status of the Holders or holder
      of the Securities as an investor in the Company pursuant to the transactions
      contemplated by the Transaction Documents.  To the extent that the
      foregoing undertaking by the Company may be unenforceable for any reason, the
      Company shall make the maximum contribution to the payment and satisfaction
      of
      each of the Indemnified Liabilities which is permissible under applicable
      law.  Except as otherwise set forth herein, the mechanics and
      procedures with respect to the rights and obligations under this Section
      9(k) shall be the same as those set forth in Section 6 of the
      Registration Rights Agreement.


    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    


    (l)           No
      Strict Construction.  The language used in this Agreement will be
      deemed to be the language chosen by the parties to express their mutual intent,
      and no rules of strict construction will be applied against any
      party.

    


    (m)           Remedies.  The
      Holders and each holder of the Securities shall have all rights and remedies
      set
      forth in the Transaction Documents and all rights and remedies which such
      holders have been granted at any time under any other agreement or contract
      and
      all of the rights which such holders have under any law.  Any Person
      having any rights under any provision of this Agreement shall be entitled to
      enforce such rights specifically (without posting a bond or other security),
      to
      recover damages by reason of any breach of any provision of this Agreement
      and
      to exercise all other rights granted by law.  Furthermore, the Company
      recognizes that in the event that it fails to perform, observe, or discharge
      any
      or all of its obligations under the Transaction Documents, any remedy at law
      may
      prove to be inadequate relief to the Holders.  The Company therefore
      agrees that the Holders shall be entitled to seek temporary and permanent
      injunctive relief in any such case without the necessity of proving actual
      damages and without posting a bond or other security.

    


    (n)           Rescission
      and Withdrawal Right.  Notwithstanding anything to the contrary
      contained in (and without limiting any similar provisions of) the Transaction
      Documents, whenever a Holder exercises a right, election, demand or option
      under
      a Transaction Document and the Company does not timely perform its related
      obligations within the periods therein provided, then such Holder may rescind
      or
      withdraw, in its sole discretion from time to time upon written notice to the
      Company, any relevant notice, demand or election in whole or in part without
      prejudice to its future actions and rights.

    


    (o)           Payment
      Set Aside.  To the extent that the Company makes a payment or
      payments to a Holder hereunder or pursuant to any of the other Transaction
      Documents or such Holder enforces or exercises its rights hereunder or
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other Person under any law (including, without limitation,
      any
      bankruptcy law, foreign, state or federal law, common law or equitable cause
      of
      action), then to the extent of any such restoration the obligation or part
      thereof originally intended to be satisfied
      shall be revived
      and continued in full force and effect as if such payment had not been made
      or
      such enforcement or setoff had not occurred.


    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    


    (p)           Independent
      Nature of Holder’s Obligations and Rights.  The obligations of
      each Holder under any Transaction Document are several and not joint with the
      obligations of any other Holder or other Person, and such Holder shall not
      be
      responsible in any way for the performance of the obligations of any other
      Person under any Transaction Document.  Nothing contained herein or in
      any other Transaction Document, and no action taken by a Holder pursuant hereto
      or thereto, shall be deemed to constitute such Holder and any other Holder
      or
      other Person as a partnership, an association, a joint venture or any other
      kind
      of entity, or create a presumption that such Holder and any other Person are
      in
      any way acting in concert or as a group with respect to such obligations or
      the
      transactions contemplated by the Transaction Documents and the Company
      acknowledges that to its knowledge no Holder is acting in concert or as a group
      with any other Person, and the Company will not assert any such claim, with
      respect to such obligations or the transactions contemplated by the Transaction
      Documents.  Each Holder confirms that it has independently
      participated in the negotiation of the transaction contemplated hereby with
      the
      advice of its own counsel and advisors.  Each Holder shall be entitled
      to independently protect and enforce its rights, including, without limitation,
      the rights arising out of this Agreement or out of any other Transaction
      Documents, and it shall not be necessary for any other Person to be joined
      as an
      additional party in any proceeding for such purpose.

    


    (q)           Controlling
      Agreement.  In the event of any conflict between the provisions of
      this Agreement and any of the other Transaction Documents, the terms of this
      Agreement shall control.

    


    


    [Signature
      Page Follows]


    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Holder and the Company have caused their
      respective signature page to this Agreement to be duly executed as of the date
      first written above.

    


    


    
      	 	
              CHARYS
                HOLDING COMPANY, INC.

            
	 	 	 
	
               

            	 	 
	 	
              By

            	
               

            	
            
	 	 	
              Billy
                V. Ray, Jr.

            
	 	 	
              Chief
                Executive Officer

            
	 	 	 
	 	
              HOLDER:

            
	
               

            	 	 
	 	
              IMPERIUM
                MASTER FUND, LTD.

            
	
               

            	 	 
	
               

            	 	 
	 	
              By:

            	
               

            	
            
	 	 	
              Maurice
                Hryshko

            
	 	 	
              General
                Counsel

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Holder and the Company have caused their
      respective signature page to this Agreement to be duly executed as of the date
      first written above.

    


    


    
      	 	
              CHARYS
                HOLDING COMPANY, INC.

            
	 	 	 
	
               

            	 	 
	 	
              By

            	
               

            	
            
	 	 	
              Billy
                V. Ray, Jr.

            
	 	 	
              Chief
                Executive Officer

            
	 	 	 
	 	
              HOLDER:

            
	
               

            	 	 
	 	
              JED
                FAMILY TRUST

            
	
               

            	 	 
	
               

            	 	 
	 	
              By:

            	
               

            	
            
	 	 	
              Name:

            
	 	 	
              Title:

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the Holder and the Company have caused their
      respective signature page to this Agreement to be duly executed as of the date
      first written above.

    


    


    
      	 	
              CHARYS
                HOLDING COMPANY, INC.

            
	 	 	 
	
               

            	 	 
	 	
              By

            	
               

            	
            
	 	 	
              Billy
                V. Ray, Jr.

            
	 	 	
              Chief
                Executive Officer

            
	 	 	 
	 	
              HOLDER:

            
	
               

            	 	 
	 	
              JOHN
                MICHAELSON

            
	
               

            	 	 
	
               

            	 	 
	 	
               

            	 	
            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      OF
      HOLDERS

    


     

    
      
        
          	
                  (1)

                	 	
                  (2)

                	 	
                  (3)

                	 	
                  (4)

                
	
                  Holder

                	 	
                  Address
                    and

                  Facsimile
                    Number

                	 	
                  Aggregate
                    Note Principal

                	 	
                  Legal
                    Representative’s

                  Address
                    and

                  Facsimile
                    Number

                
	 	 	 	 	 	 	 
	
                  Imperium
                    Master Fund, Ltd.

                   

                   

                   

                   

                	 	
                  c/o
                    Imperium Advisers, LLC

                  153
                    East 53rd
                    Street

                  New
                    York, NY 10022

                  Tel:
                    (212) 433-1360

                  Fax
                    (212) 433-1361

                   

                	 	
                  $3,666,568.35

                   

                	 	
                  Mazzeo Song
                    LLP

                  708
                    Third Avenue

                  NY,
                    NY 10017

                  Attn:
                    David S. Song

                  Tel:  212-599-0700

                  Fax:  212-599-8400

                
	 	 	 	 	 	 	 
	
                  JED Family
                    Trust

                	 	
                  c/o
                    Imperium Advisers, LLC

                  153
                    East 53rd
                    Street

                  New
                    York, NY 10022

                  Tel:
                    (212) 433-1360

                  Fax
                    (212) 433-1361

                	 	
                  $526,315.79

                	 	 
	 	 	 	 	 	 	 
	
                  John Michaelson

                	 	
                  c/o
                    Imperium Advisers, LLC

                  153
                    East 53rd
                    Street

                  New
                    York, NY 10022

                  Tel:
                    (212) 433-1360

                  Fax
                    (212) 433-1361

                	 	
                  $526,315.79

                	 	 
	 	 	 	 	 	 	 
	 	 	
                  TOTAL

                	 	
                  $4,719,199.93

                	 	 


        

      

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    EXHIBITS

     

    
      	
              Exhibit
                A

            	
              Form
                of Amended and Restated Note

            


    

    
      	
              Exhibit
                B

            	
              Form
                of Amended and Restated Registration Rights
                Agreement

            


    

    
      	
              Exhibit
                C

            	
              Form
                of Subsidiary Guarantee

            


    

    
      	
              Exhibit
                D

            	
              Form
                of Amended and Restated Security
                Agreement

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULES
      TO THE AMENDMENT AGREEMENT

     

    
      	
              Schedule
                3(a)

            	
              Subsidiaries

            


    

    
      	
              Schedule
                3(e)

            	
              Consents

            


    

    
      	
              Schedule
                3(m)

            	
              Exceptions
                to Equity Capital

            


    

    
      	
              Schedule
                3(n)

            	
              Indebtedness
                and Other Contracts

            


    

    
      	
              Schedule
                3(o)

            	
              Ranking
                of the Note

            


    

    
      	
              Schedule
                3(p)

            	
              Exceptions
                to SB-2 Eligibility

            


    

    
      	
              Schedule
                3(s)

            	
              Exceptions
                to SEC Filing Requirements

            


    

    
      	
              Schedule
                4(h)

            	
              Exceptions
                to Restrictions on Redemptions and Cash
                Dividends

            


    

    
      	
              Schedule
                4(q)

            	
              Subsidiaries
                Not Party to Security Documents

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      A

    Form
      of Amended and Restated Note

    
       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Revised
        Execution Copy

      


      


      AMENDED
        AND RESTATED SENIOR SECURED CONVERTIBLE NOTE

      


      NEITHER
        THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
        THE
        SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
        UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
        LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
        ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
        THE
        SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
        OF
        COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION
        IS
        NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE
        144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE
        PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
        FINANCING ARRANGEMENT SECURED BY THE SECURITIES.  ANY TRANSFEREE OF THIS
        NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS
        3(c)(iii) AND 18(a) HEREOF.  THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE
        AND, ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS
        THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
        OF
        THIS NOTE.

      


      


      CHARYS
        HOLDING COMPANY, INC.

       

      AMENDED
        AND RESTATED SENIOR SECURED CONVERTIBLE NOTE

       

      


      Amendment
        Date:  April 5, 2007

      


      Principal
        Amount:  U.S. $3,666,568.35

      


      FOR
        VALUE
        RECEIVED, Charys Holding Company, Inc., a Delaware corporation (the
“Company”), hereby promises to pay to IMPERIUM MASTER FUND,
        LTD. or its registered assigns (“Holder”) the amount set out
        above as the Principal Amount (as may be reduced pursuant to the terms hereof
        pursuant to redemption, conversion or otherwise, the
“Principal”) when due, whether upon the Maturity Date (as
        defined below), acceleration, redemption or otherwise (in each case in
        accordance with the terms hereof) and to pay interest
        (“Interest”) on any outstanding Principal at a rate per annum
        equal to the Interest Rate (as defined below), from the date set out above
        as
        the Amendment Date (the “Amendment Date”) until the same
        becomes due and payable, whether upon an Interest Date (as defined below),
        or
        the Maturity Date, acceleration, conversion, redemption or otherwise (in
        each
        case in accordance with the terms hereof).  This Amended and Restated
        Senior Secured Convertible Note (including all Senior Secured Convertible
        Notes
        issued in exchange, transfer or replacement hereof, this
“Note”) is one of an issue of unpaid Senior Secured Convertible
        Notes (the “Existing Notes”) issued
        pursuant to the Securities Purchase Agreement, dated as of August 30, 2006
        (the
“Securities Purchase Agreement”), which Existing Notes are
        being amended and restated pursuant to the Amendment Agreement, dated as
        of the
        date hereof (the “Amendment Agreement”), between the Company
        and the holders named therein (this Note and the other amended and restated
        Existing Notes being collectively referred to herein as the
“Notes”).  This Note may not be redeemed or prepaid
        by the Company except as expressly contemplated by and in accordance with
        the
        terms and conditions of this Note. Certain capitalized terms used herein
        are
        defined in Section 28.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      1.           PAYMENTS
        OF PRINCIPAL; MATURITY.    The “Maturity Date”
shall be April 5, 2009, as may be extended at the option
        of the Holder in its
        sole and absolute discretion (i) in the event that, and for so long as, an
        Event
        of Default (as defined in Section 4(a)) shall have occurred and be continuing
        or
        any event shall have occurred and be continuing which with the passage of
        time
        and the failure to cure would result in an Event of Default, and (ii) through
        the date that is ten (10) days after the consummation of a Change of Control
        in
        the event that a Change of Control is publicly announced or a Change of Control
        Notice (as defined in Section 5(b)) is delivered prior to the Maturity
        Date.  All outstanding Principal and accrued and unpaid Interest (at
        the applicable Company Redemption Price (as defined below)) and other unpaid
        amounts, if any, accrued hereon shall be paid to the Holder in full on the
        Maturity Date in cash by wire transfer of immediately available
        funds.

      


      2.           INTEREST;
        INTEREST RATE.

      


      (a)           Interest
        on this Note shall commence accruing on the Amendment Date and shall be computed
        on the basis of a 360-day year and actual days elapsed and shall be payable
        in
        arrears on the first day of each Calendar Month during the period beginning
        on
        the Amendment Date and ending on the Maturity Date (each, a “Scheduled
        Interest Date”) with the first Scheduled Interest Date being May 1,
        2007.  Interest shall be payable on (i) each Scheduled Interest Date, (ii)
        on the Maturity Date and (iii) on any date on which the entire Principal
        of this
        Note is paid in full (whether through conversion or otherwise) (each of (i),
        (ii) and (iii) being referred to herein as an “Interest Date”)
        to the record holder of this Note on the applicable Interest Date, in
        cash.

      


      (b)           From
        and after the occurrence of an Event of Default, the Interest Rate shall
        be
        increased to fifteen percent (15%) per annum.  In the event that such Event
        of Default is subsequently cured, the adjustment referred to in the preceding
        sentence shall cease to be effective as of the date of such cure; provided
        that
        the Interest as calculated at such increased rate during the continuance
        of such
        Event of Default shall continue to apply to the extent relating to the days
        after the occurrence of such Event of Default through and including the date
        of
        cure of such Event of Default.  

      


      3.           CONVERSION
        OF NOTES.  This Note shall be convertible into shares of common stock
        of the Company, par value $0.001 per share (the “Common
        Stock”), on the terms and conditions set forth in this Section
        3.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


      (a)           Conversion
        Right.  Subject to the provisions of Section 3(d), at any time or times
        on or after the Amendment Date, the Holder shall be entitled to convert any
        portion of the outstanding and unpaid Conversion Amount (as defined below)
        into
        fully paid and nonassessable shares of Common Stock in accordance with Section
        3(c), at the Conversion Rate (as defined below).  The Company shall not
        issue any fraction of a share of Common Stock upon any conversion.  If the
        issuance would result in the issuance of a fraction of a share of Common
        Stock,
        the Company shall round such fraction of a share of Common Stock up to the
        nearest whole share.  The Company shall pay any and all transfer, stamp and
        similar taxes that may be payable with respect to the issuance and delivery
        of
        Common Stock upon conversion of any Conversion Amount.

      


      (b)           Conversion
        Rate.  The number of shares of Common Stock issuable upon conversion of
        any Conversion Amount pursuant to Section 3(a) shall be determined by dividing
        (x) such Conversion Amount by (y) the Conversion Price then in effect (the
        “Conversion Rate”).

      


      (i)           “Conversion
        Amount” means the portion of the Note to be converted, redeemed or
        otherwise with respect to which this determination is being made.

      


      (ii)           “Conversion
        Price” means, as of the Amendment Date, $2.25. The Conversion
        Price shall be subject to further adjustment from time to time in accordance
        with the terms set forth herein (including Section 7 hereof). The Conversion
        Price shall also be appropriately adjusted for any stock split, stock dividend,
        stock combination or other similar transaction that proportionately decreases
        or
        increases the Common Stock.

      


      (c)           Mechanics
        of Conversion.

      


      (i)           Optional
        Conversion.  To convert any Conversion Amount into shares of Common
        Stock on any date (a “Conversion Date”), the Holder shall (A)
        transmit by facsimile (or otherwise deliver), for receipt on or prior to
        11:59
        p.m., New York Time, on such date, a copy of an executed notice of conversion
        in
        the form attached hereto as Exhibit I (the “Conversion
        Notice”) to the Company and (B) if required by Section 3(c)(iii)
        hereof, surrender this Note to the Company by sending this Note to the Company
        using a nationally recognized overnight delivery service (or an indemnification
        undertaking with respect to this Note in the case of its loss, theft or
        destruction). On or before the next Business Day following the date of receipt
        of a Conversion Notice, the Company shall transmit by facsimile a confirmation
        of receipt of such Conversion Notice to the Holder and the Transfer Agent.
         On or before the second (2nd) Business
        Day
        following the date of receipt of a Conversion Notice (the “Share
        Delivery Date”), the Company shall, (X) provided that the Transfer
        Agent is participating in the Fast Automated Securities Transfer Program
        of DTC,
        credit such aggregate number of shares of Common Stock to which the Holder
        shall
        be entitled to the Holder’s or its designee’s balance account with DTC through
        its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent
        is
        not participating in the DTC Fast Automated Securities Transfer Program,
        issue
        and deliver to the address as specified in the Conversion Notice, a certificate,
        registered in the name of the Holder or its designee, for the number of shares
        of Common Stock to which the Holder shall be entitled.  If this Note is
        physically surrendered for conversion as required by Section 3(c)(iii) and
        this
        Note is not being converted in full, then the Company shall as soon as
        practicable and in no event later than three Business Days after receipt
        of this
        Note and at its own expense, issue and deliver to the holder a new Note (in
        accordance with Section 18(d)) representing the outstanding amount of this
        Note
        not converted.  The Person or Persons entitled to receive the shares of
        Common Stock issuable upon a conversion of
        this Note shall be
        treated for all purposes as the record holder or holders of such shares of
        Common Stock on the Conversion Date.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


      (ii)           Company’s
        Failure to Timely Convert.  If within three (3) Business Days after the
        Company’s receipt of the facsimile copy of a Conversion Notice the Company shall
        fail to issue and deliver a certificate to the Holder or credit the Holder’s
        balance account with DTC for the number of shares of Common Stock to which
        the
        Holder is entitled upon such Holder’s conversion of any Conversion Amount (a
“Conversion Failure”), and if on or after such Business Day the
        Holder purchases (in an open market transaction or otherwise) Common Stock
        to
        deliver in satisfaction of a sale by the Holder of Common Stock issuable
        upon
        such conversion that the Holder anticipated receiving from the Company (a
        “Buy-In”), then the Company shall, within three (3) Business
        Days after the Holder’s request and in the Holder’s sole discretion, either (i)
        pay cash to the Holder by wire transfer of immediately available funds in
        an
        amount equal to the Holder’s total purchase price (including brokerage
        commissions and other out-of-pocket expenses, if any) for the shares of Common
        Stock so purchased (the “Buy-In Price”), at which point the
        Company’s obligation to deliver such certificate (and to issue such Common
        Stock) shall terminate, or (ii) promptly honor its obligation to deliver
        to the
        Holder a certificate or certificates representing such Common Stock and pay
        cash
        to the Holder by wire transfer of immediately available funds in an amount
        equal
        to the excess (if any) of the Buy-In Price over the product of (A) such number
        of shares of Common Stock, times (B) the Closing Bid Price on the Conversion
        Date.

      


      (iii)           Registration;
        Book-Entry.  The Company shall maintain a register (the
“Register”) for the recordation of the names and addresses of
        the holders of the Notes and the principal amount of the Notes held by such
        holders (the “Registered Notes”).  The entries in the
        Register shall be conclusive and binding for all purposes absent manifest
        error.  The Company and the holders of the Notes shall treat the
        Person whose name is recorded in the Register as the owner of this Note as
        the
        owner of this Note for all purposes, including, without limitation, the right
        to
        receive payments of Principal and Interest hereunder, notwithstanding notice
        to
        the contrary.  A Registered Note may be assigned or sold in whole or
        in part only by registration of such assignment or sale on the
        Register.  Upon its receipt of a request to assign or sell all or part
        of any Registered Note by a Holder, the Company shall record the information
        contained therein in the Register and issue one or more new Registered Notes
        in
        the same aggregate principal amount as the principal amount of the surrendered
        Registered Note to the designated assignee or transferee pursuant to Section
        17.  Notwithstanding anything to the contrary set forth herein, upon
        conversion of any portion of this Note in accordance with the terms hereof,
        the
        Holder shall not be required to physically surrender this Note to the Company
        unless (A) the full Conversion Amount represented by this Note is being
        converted or (B) the Holder has provided the Company with prior written notice
        (which notice may be included in a Conversion Notice) requesting physical
        surrender and reissue of this Note.  The Holder and the Company shall
        maintain records showing the amount of this Note converted and the dates
        of such
        conversions or shall use such other method, reasonably satisfactory to the
        Holder and the Company, so as not to require physical surrender of this Note
        upon conversion.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      (iv)           Pro
        Rata Conversion; Disputes.  In the event that the
        Company receives a Conversion Notice from more than one holder of Notes for
        the
        same Conversion Date and the Company is unable (due to having an insufficient
        number of shares of Common Stock authorized for issuance) to convert all
        of the
        aggregate amount of the Notes submitted for conversion, the Company, subject
        to
        Section 3(d), shall convert from each holder of Notes electing to have Notes
        converted on such date a pro rata portion of such holder’s Note submitted for
        conversion based on the Conversion Amount of the Notes submitted for conversion
        on such date by such holder relative to the aggregate principal Conversion
        Amount of all Notes submitted for conversion on such date, and shall convert
        the
        balance of such Conversion Amount immediately upon the authorization of a
        sufficient number of shares of Common Stock to do so.  In the event of
        a dispute as to the number of shares of Common Stock issuable to the Holder
        in
        connection with a conversion of this Note, the Company shall issue to the
        Holder
        the number of shares of Common Stock not in dispute and resolve such dispute
        in
        accordance with Section 23.

      


      (d)           Limitations
        on Conversions.  The Company shall not effect any conversion of
        this Note, and the Holder of this Note (including any successor, transferee
        or
        assignee) shall not have the right to convert any portion of this Note pursuant
        to Section 3(a), to the extent that after giving effect to such conversion,
        the
        Holder (together with the Holder’s affiliates) would beneficially own in excess
        of 4.99% (the “Maximum Percentage”) of the number of shares of
        Common Stock outstanding immediately after giving effect to such conversion.
         For purposes of the foregoing sentence, the number of shares of Common
        Stock beneficially owned by the Holder and its affiliates shall include the
        number of shares of Common Stock issuable upon conversion of this Note with
        respect to which the determination of such sentence is being made, but shall
        exclude the number of shares of Common Stock which would be issuable upon
        (A)
        conversion of the remaining, nonconverted portion of this Note beneficially
        owned by the Holder or any of its affiliates and (B) exercise or conversion
        of
        the unexercised or nonconverted portion of any other securities of the Company
        (including, without limitation, any other convertible notes or warrants)
        subject
        to a limitation on conversion or exercise analogous to the limitation contained
        herein beneficially owned by the Holder or any of its affiliates.  Except
        as set forth in the preceding sentence, for purposes of this Section 3(d),
        beneficial ownership shall be calculated in accordance with Section 13(d)
        of the
        Securities Exchange Act of 1934, as amended.  For purposes of this Section
        3(d), in determining the number of outstanding shares of Common Stock, the
        Holder may rely on the number of outstanding shares of Common Stock as reflected
        in (x) the Company’s most recent Form 10-KSB, Form 10-K, Form 10-QSB, Form 10-Q
        or Form 8-K, as the case may be (y) a more recent public announcement by
        the
        Company or (z) any other notice by the Company or the Transfer Agent setting
        forth the number of shares of Common Stock outstanding.  For any reason at
        any time, during regular business hours of the Company and upon the written
        request of the Holder, the Company shall within two (2) Business Days confirm
        in
        writing to the Holder the number of shares of Common Stock then outstanding.
         In any case, the number of outstanding shares of Common Stock shall be
        determined after giving effect to the conversion or exercise of securities
        of
        the Company, including this Note by the Holder, since the date as of which
        such
        number of outstanding shares of Common Stock was reported.  By written
        notice to the Company, the Holder may increase or decrease the Maximum
        Percentage to any other percentage specified in such notice; provided that
        (i)
        any such increase will not be effective until the sixty-first (61st) day
        after such
        notice is delivered to the Company, (ii) any such increase or decrease will
        apply only to the Holder and not to any other holder of Notes and (iii) and
        in
        no case shall the Maximum Percentage exceed 9.999%.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


      4.           RIGHTS
        UPON EVENT OF DEFAULT.

      


      (a)           Event
        of Default.  Each of the following events shall constitute an “Event of
        Default”:

      


      (i)           the
        failure to file the applicable Registration Statement required to be filed
        pursuant to the Registration Rights Agreement on or prior to the Filing Deadline
        (as defined in the Registration Rights Agreement) or the failure of the
        applicable Registration Statement required to be filed pursuant to the
        Registration Rights Agreement to be declared effective by the SEC on or prior
        to
        the date that is thirty (30) days after the applicable Effectiveness Deadline
        (as defined in the Registration Rights Agreement), or, while the applicable
        Registration Statement is required to be maintained effective pursuant to
        the
        terms of the Registration Rights Agreement, the
        effectiveness
        of the applicable Registration Statement lapses for any reason (including,
        without limitation, the issuance of a stop order) or is unavailable to any
        holder of the Notes for sale of all of such holder’s Registrable Securities (as
        defined in the Registration Rights Agreement) in accordance with the terms
        of
        the Registration Rights Agreement, and such lapse or unavailability continues
        for a period of ten (10) consecutive days or for more than an aggregate of
        thirty (30) days in any 365-day period (other than days during an Allowable
        Grace Period (as defined in the Registration Rights
        Agreement));

      


      (ii)           the
        suspension from trading or failure of the Common Stock to be listed on the
        Principal Market or on an Eligible Market for a period of five (5) consecutive
        Business Days or for more than an aggregate of ten (10) Business Days in
        any
        365-day period;

      


      (iii)           the
        Company’s (A) failure to cure a Conversion Failure by delivery of the required
        number of shares of Common Stock within ten (10) Business Days after the
        applicable Conversion Date or (B) written notice to any holder of the Notes,
        including by way of public announcement or through any of its authorized
        agents,
        at any time, of its intention not to comply with a request for conversion
        of any
        Notes into shares of Common Stock that is tendered in accordance with the
        provisions of the Notes;

      


      (iv)           at
        any time following the tenth consecutive Business Day that the Holder’s
        Authorized Share Allocation is less than the number of shares of Common Stock
        that the Holder would be entitled to receive upon a conversion of four hundred
        percent (400%) of the full Conversion Amount of this Note (without regard
        to any
        limitations on conversion set forth in Section 3(d) or otherwise);

      


      (v)           the
        Company’s failure to pay to the Holder any amount of Principal (including,
        without limitation, on any redemption), Interest, Late Charges or other amounts
        when and as due under this Note or any other Transaction Document (as defined
        in
        the Amendment Agreement), including any Company Redemption Price or Redemption
        Premium in connection with any redemption of this Note, or any other agreement,
        document, certificate or other instrument delivered in connection with the
        transactions contemplated hereby and thereby to which the Company is a party,
        except, in the case of a failure to pay Interest and Late Charges when and
        as
        due, in which case only if such failure continues for a period of at least
        five
        (5) Business Days;

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


      (vi)           any
        default under, redemption of or acceleration prior to maturity of any
        Indebtedness of the Company or any of its Subsidiaries (as defined in Section
        3(a) of the Amendment Agreement);

      


      (vii)           the
        Company or any of its Subsidiaries, pursuant to or within the meaning of
        Title
        11, U.S. Code, or any similar Federal, foreign or state law for the relief
        of
        debtors (collectively, “Bankruptcy Law”), (A) commences a
        voluntary case, (B) consents to the entry of an order for relief against
        it in
        an involuntary case, (C) consents to the appointment of a receiver, trustee,
        assignee, liquidator or similar official (a
“Custodian”), (D) makes a general
        assignment for the benefit of
        its creditors or (E) admits in writing that it is generally unable to pay
        its
        debts as they become due;

      


      (viii)                                           a
        court of competent jurisdiction enters an order or decree under any Bankruptcy
        Law that (A) is for relief against the Company or any of its Subsidiaries
        in an
        involuntary case, (B) appoints a Custodian of the Company or any of its
        Subsidiaries or (C) orders the liquidation of the Company or any of its
        Subsidiaries;

      


      (ix)           a
        final judgment or judgments for the payment of money aggregating in excess
        of
        $250,000 are rendered against the Company or any of its Subsidiaries and
        which
        judgments are not, within sixty (60) days after the entry thereof, bonded,
        discharged or stayed pending appeal, or are not discharged within sixty (60)
        days after the expiration of such stay; provided, however, that any judgment
        which is covered by insurance or an indemnity from a credit worthy party
        shall
        not be included in calculating the $250,000 amount set forth above so long
        as
        the Company provides the Holder a written statement from such insurer or
        indemnity provider (which written statement shall be reasonably satisfactory
        to
        the Holder) to the effect that such judgment is covered by insurance or an
        indemnity and the Company will receive the proceeds of such insurance or
        indemnity within thirty (30) days of the issuance of such judgment;

      


      (x)           the
        Company breaches any representation, warranty, covenant or other term or
        condition of any Transaction Document, except, in the case of a breach of
        a
        covenant which is curable, only if such breach continues for a period of
        at
        least ten (10) consecutive Business Days;

      


      (xi)           any
        breach or failure in any respect to comply with (x) Section 15 of this Note
        or
        (y) any of the Potential Partner Conditions;

      


      (xii)           any
        Event of Default (as defined in the other Notes) occurs with respect to any
        other Note;

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      


      (xiii)                      to
        the knowledge of the Company, the SEC commencing either a formal or informal
        investigation of the Company and/or its Subsidiaries, which has not been
        concluded in the Company’s favor within 120 days of such
        commencement;

      


      (xiv)                      the
        inability of the Common Stock to be transferred at DTC through the Deposit
        Withdrawal at Custodian system;

      


      (xv)           the
        Security Agreement (as defined in the Amendment Agreement) shall for any
        reason
        fail or cease to create a valid and perfected and, except to the extent
        permitted by the terms thereof, first priority lien (subject to any applicable
        Permitted Liens) in favor of the Collateral Agent (as defined in the Amendment
        Agreement) for the benefit of the holders of the Notes (including without
        limitation this Note) on any Collateral (as defined in the Security Agreement)
        purported to be covered thereby;

      


      (xvi)                      any
        optional redemption request made by any holder of the Company’s Series D
        Preferred Stock pursuant to the Certificate of Designation thereof, including,
        without limitation, Section 4 of such Certificate of Designation, or any
        event
        of default by the Company under or any breach of, any of the transaction
        documents with the holders of the Company’s Series D Preferred Stock;
        or

      


      (xvii)                      any
        amendment to the letter agreement with the holders of the Company’s Series D
        Preferred Stock dated as of November 8, 2006, an executed copy of which has
        been
        delivered to the Holder.

      


      (b)           Redemption
        Right.  Upon the occurrence of an Event of Default with respect to this
        Note, the Company shall within two (2) Business Days after the day on which
        the
        Company is aware of the Event of Default deliver written notice thereof via
        facsimile and overnight courier (an “Event of Default Notice”)
        to the Holder.  At any time after the earlier of the Holder’s receipt of an
        Event of Default Notice and the Holder becoming aware of an Event of Default,
        the Holder may require the Company to redeem all or any portion of this Note
        by
        delivering written notice thereof (the “Event of Default Redemption
        Notice”) to the Company, which Event of Default Redemption Notice shall
        indicate the portion of this Note the Holder is electing to have redeemed.
         Each portion of this Note subject to redemption by the Company pursuant to
        this Section 4(b) shall be redeemed by the Company at a price equal to the
        greater of (i) the product of (x) the Conversion Amount to be redeemed and
        (y)
        the Redemption Premium and (ii) the product of (A) the Conversion Rate with
        respect to such Conversion Amount in effect at such time as the Holder delivers
        an Event of Default Redemption Notice and (B) the Closing Sale Price of the
        Common Stock on the date immediately preceding such Event of Default (the
        “Event of Default Redemption Price”).  Redemptions
        required by this Section 4(b) shall be made in accordance with the provisions
        of Section 12.  To the extent redemptions required
        by
        this Section 4(b) are deemed or determined by a court of competent jurisdiction
        to be prepayments of the Note by the Company, such redemptions shall be deemed
        to be voluntary prepayments.  The parties hereto agree that in the event of
        the Company’s redemption of any portion of this Note under this Section 4(b),
        the Holder’s damages would be uncertain and difficult to estimate because of the
        parties’ inability to predict future interest rates and the uncertainty of the
        availability of a suitable substitute investment opportunity for the Holder.
         Accordingly, any Redemption Premium due under this Section 4(b) is
        intended by the parties to be, and shall be deemed, a reasonable estimate
        of the
        Holder’s actual loss of its investment opportunity and not as a penalty.
 

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      


      5.           RIGHTS
        UPON FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

      


      (a)           Assumption.
         The Company shall not enter into or be party to a Fundamental Transaction
        unless (i)  the Successor Entity assumes in writing all of the obligations
        of the Company under this Note and the other Transaction Documents in accordance
        with the provisions of this Section 5(a) pursuant to written agreements in
        form
        and substance satisfactory to the Required Holders and approved by the Required
        Holders prior to such Fundamental Transaction, including agreements to deliver
        to each holder of Notes in exchange for such Notes a security of the Successor
        Entity evidenced by a written instrument substantially similar in form and
        substance to the Notes, including, without limitation, having a principal
        amount
        and interest rate equal to the principal amounts and the interest rates of
        the
        Notes held by such holder, having similar conversion rights as the Notes
        and
        having similar ranking to the Notes, and satisfactory to the Required Holders
        and (ii) the Successor Entity (including its Parent Entity) is a publicly
        traded corporation whose common stock is quoted on or listed for trading
        on an
        Eligible Market. Upon the occurrence of any Fundamental Transaction, the
        Successor Entity shall succeed to, and be substituted for (so that from and
        after the date of such Fundamental Transaction, the provisions of this Note
        referring to the “Company” shall refer instead to the Successor Entity), and may
        exercise every right and power of the Company and shall assume all of the
        obligations of the Company under this Note with the same effect as if such
        Successor Entity had been named as the Company herein.  Upon consummation
        of the Fundamental Transaction, the Successor Entity shall deliver to the
        Holder
        confirmation that there shall be issued upon conversion or redemption of
        this
        Note at any time after the consummation of the Fundamental Transaction, in
        lieu
        of the shares of Common Stock (or other securities, cash, assets or other
        property) issuable upon the conversion of the Notes prior to such Fundamental
        Transaction, such shares of publicly traded common stock (or their equivalent)
        of the Successor Entity, as adjusted in accordance with the provisions of
        this
        Note.  The provisions of this Section shall apply similarly and equally to
        successive Fundamental Transactions and shall be applied without regard to
        any
        limitations on the conversion of this Note.

      


      (b)           Change
        of Control Redemption Right.  No sooner than fifteen (15) days nor
        later than ten (10) days prior to the consummation of a Change of Control,
        but
        not prior to the public announcement of such Change of Control, the Company
        shall deliver written notice thereof via facsimile and overnight courier
        to the
        Holder (a “Change of Control Notice”).  At any time during
        the period beginning after the Holder’s receipt of a Change of Control Notice
        and ending ten (10) Trading Days after the consummation of such Change of
        Control, the Holder may require the Company to redeem all or any portion
        of this
        Note by delivering written notice thereof (“Change
        of Control Redemption Notice”) to the Company, which Change of Control
        Redemption Notice shall indicate the Conversion Amount the Holder is electing
        to
        be redeemed. The portion of this Note subject to redemption pursuant to this
        Section 5 shall be redeemed by the Company in cash at a price equal to the
        greater of (i) the product of the Change of Control Premium and the product
        of
        (x) the sum of the Conversion Amount being redeemed and any accrued and unpaid
        Interest with respect to such Conversion Amount and accrued and unpaid Late
        Charges with respect to such Conversion Amount and Interest and (y) the quotient
        determined by dividing (A) the Closing Sale Price of the Common Stock
        immediately following the public announcement of such proposed Change of
        Control
        by (B) the Conversion Price and (ii) 150% of the sum of the Conversion Amount
        being redeemed and any accrued and unpaid Interest with respect to such
        Conversion Amount subject to such Change of Control Redemption and accrued
        and
        unpaid Late Charges with respect to such Conversion Amount and Interest (the
        “Change of Control Redemption Price”).  Redemptions
        required by this Section 5 shall be made in accordance with the provisions
        of
        Section 15 and shall have priority over payments to shareholders in connection
        with a Change of Control.  To the extent redemptions required by this
        Section 5(b) are deemed or determined by a court of competent jurisdiction
        to be
        prepayments of this Note by the Company, such redemptions shall be deemed
        to be
        voluntary prepayments. Notwithstanding anything to the contrary in this Section
        5, until the Change of Control Redemption Price (together with any Interest
        thereon) is paid in full, the Conversion Amount submitted for redemption
        under
        this Section 5(b) may be converted, in whole or in part, by the Holder into
        shares of Common Stock, or in the event the Conversion Date is after the
        consummation of the Change of Control, shares of publicly traded common stock
        (or their equivalent) of the Successor Entity pursuant to Section 3.  The
        parties hereto agree that in the event of the Company’s redemption of any
        portion of this Note under this Section 5(b), the Holder’s damages would be
        uncertain and difficult to estimate because of the parties’ inability to predict
        future Interest rates and the uncertainty of the availability of a suitable
        substitute investment opportunity for the Holder.  Accordingly, any
        redemption premium due under this Section 5(b) is intended by the parties
        to be,
        and shall be deemed, a reasonable estimate of the Holder’s actual loss of its
        investment opportunity and not as a penalty.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      


      6.           RIGHTS
        UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.

      


      (a)           Purchase
        Rights.  If at any time the Company grants, issues or sells any
        Options, Convertible Securities or rights to purchase stock, warrants,
        securities or other property pro rata to the record holders of any class
        of
        Common Stock (the “Purchase Rights”), then the Holder will be
        entitled to acquire, upon the terms applicable to such Purchase Rights, the
        aggregate Purchase Rights which the Holder could have acquired if the Holder
        had
        held the number of shares of Common Stock acquirable upon complete conversion
        of
        this Note (without taking into account any limitations or restrictions on
        the
        convertibility of this Note) immediately before the date on which a record
        is
        taken for the grant, issuance or sale of such Purchase Rights, or, if no
        such
        record is taken, the date as of which the record holders of Common Stock
        are to
        be determined for the grant, issue or sale of such Purchase Rights.

      


      (b)           Other
        Corporate Events.  In addition to and not in substitution for any other
        rights hereunder, prior to the consummation of any Fundamental Transaction
        pursuant to which holders of shares of Common Stock are entitled to receive
        securities or other assets with respect to or in exchange
        for shares of Common Stock (a “Corporate Event”), the Company
        shall make appropriate provision to ensure that the Holder will thereafter
        have
        the right to receive upon conversion of this Note, at the Holder’s option, (i)
        in addition to the shares of Common Stock receivable upon such conversion,
        such
        securities or other assets to which the Holder would have been entitled with
        respect to such shares of Common Stock had such shares of Common Stock been
        held
        by the Holder upon the consummation of such Corporate Event (without taking
        into
        account any limitations or restrictions on the convertibility of this Note)
        or
        (ii) in lieu of the shares of Common Stock otherwise receivable upon such
        conversion, such securities or other assets received by the holders of shares
        of
        Common Stock in connection with the consummation of such Corporate Event
        in such
        amounts as the Holder would have been entitled to receive had this Note
        initially been issued with conversion rights for the form of such consideration
        (as opposed to shares of Common Stock) at a conversion rate for such
        consideration commensurate with the Conversion Rate.  Provision made
        pursuant to the preceding sentence shall be in a form and substance satisfactory
        to the Required Holders.  The provisions of this Section shall apply
        similarly and equally to successive Corporate Events and shall be applied
        without regard to any limitations on the conversion or redemption of this
        Note.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      7.           RIGHTS
        UPON ISSUANCE OF OTHER SECURITIES.

      


      (a)           Adjustment
        of Conversion Price upon Issuance of Common Stock.  If at any time
        after the Closing Date, the Company issues or sells, or in accordance with
        this
        Section 7(a) is deemed to have issued or sold, any shares of Common Stock
        (including the issuance or sale of shares of Common Stock owned or held by
        or
        for the account of the Company, but excluding shares of Common Stock issued
        or
        sold or deemed to have been issued or sold by the Company in connection with
        any
        Excluded Security) for a consideration per share (the “New Issuance
        Price”) less than a price (the “Applicable Price”)
        equal to the Conversion Price in effect immediately prior to such issue or
        sale
        (the foregoing, a “Dilutive Issuance”), then immediately after
        such Dilutive Issuance, the Conversion Price then in effect shall be reduced
        to
        the New Issuance Price.  For purposes of determining the adjusted
        Conversion Price under this Section 7(a), the following shall be
        applicable:

      


      (i)           Issuance
        of Options.  If the Company in any manner grants or sells any Options
        and the lowest price per share for which one share of Common Stock is issuable
        upon the exercise of any such Option or upon conversion or exchange or exercise
        of any Convertible Securities issuable upon exercise of such Option is less
        than
        the Applicable Price, then all of such shares of Common Stock underlying
        such
        Option shall be deemed to be outstanding and to have been issued and sold
        by the
        Company at the time of the granting or sale of such Option for such price
        per
        share.  For purposes of this Section 7(a)(i), the “lowest price per share
        for which one share of Common Stock is issuable upon the exercise of any
        such
        Option or upon conversion or exchange or exercise of any Convertible Securities
        issuable upon exercise of such Option” shall be equal to the sum of the lowest
        amounts of consideration (if any) received or receivable by the Company with
        respect to any one share of Common Stock upon granting or sale of the Option,
        upon exercise of the Option and upon conversion or exchange or exercise of
        any
        Convertible Security issuable upon exercise of such Option.  No further
        adjustment of the Conversion Price shall be made upon the actual issuance
        of
        such share of Common Stock or of such Convertible Securities upon the exercise
        of such Options or upon the actual issuance of such Common
        Stock upon conversion or exchange or exercise of such Convertible
        Securities.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      


      (ii)           Issuance
        of Convertible Securities.  If the Company in any manner issues or
        sells any Convertible Securities and the lowest price per share for which
        one
        share of Common Stock is issuable upon such conversion or exchange or exercise
        thereof is less than the Applicable Price, then all share of Common Stock
        issuable upon conversion of such Convertible Securities shall be deemed to
        be
        outstanding and to have been issued and sold by the Company at the time of
        the
        issuance or sale of such Convertible Securities for such price per share.
         For the purposes of this Section 7(a)(ii), the “lowest price per share for
        which one share of Common Stock is issuable upon such conversion or exchange
        or
        exercise” shall be equal to the sum of the lowest amounts of consideration (if
        any) received or receivable by the Company with respect to any one share
        of
        Common Stock upon the issuance or sale of the Convertible Security and upon
        the
        conversion or exchange or exercise of such Convertible Security.  No
        further adjustment of the Conversion Price shall be made upon the actual
        issuance of such share of Common Stock upon conversion or exchange or exercise
        of such Convertible Securities, and if any such issue or sale of such
        Convertible Securities is made upon exercise of any Options for which adjustment
        of the Conversion Price had been or are to be made pursuant to other provisions
        of this Section 7(a), no further adjustment of the Conversion Price shall
        be
        made by reason of such issue or sale.

      


      (iii)           Change
        in Option Price or Rate of Conversion.  If the purchase price provided
        for in any Options, the additional consideration, if any, payable upon the
        issue, conversion,  exchange or exercise of any Convertible Securities, or
        the rate at which any Convertible Securities are convertible into or
        exchangeable or exercisable for Common Stock changes at any time, the Conversion
        Price in effect at the time of such change shall be adjusted to the Conversion
        Price which would have been in effect at such time had such Options or
        Convertible Securities provided for such changed purchase price, additional
        consideration or changed conversion rate, as the case may be, at the time
        initially granted, issued or sold.  For purposes of this Section 7(a)(iii),
        if the terms of any Option or Convertible Security that was outstanding as
        of
        the Closing Date are changed in the manner described in the immediately
        preceding sentence, then such Option or Convertible Security and the Common
        Stock deemed issuable upon exercise, conversion or exchange thereof shall
        be
        deemed to have been issued as of the date of such change.  No adjustment
        shall be made if such adjustment would result in an increase of the Conversion
        Price then in effect.

      


      (iv)           Calculation
        of Consideration Received.  In case any Option is issued in connection
        with the issue or sale of other securities of the Company, together comprising
        one integrated transaction in which no specific consideration is allocated
        to
        such Options by the parties thereto, the Options will be deemed to have been
        issued for such consideration as determined in good faith by the Board of
        Directors of the Company.  If any Common Stock, Options or Convertible
        Securities are issued or sold or deemed to have been issued or sold for cash,
        the consideration received therefor will be deemed to be the net amount received
        by the Company therefor.  If any Common Stock, Options or Convertible
        Securities are issued or sold for a consideration other than cash, the amount
        of
        the consideration other than cash received by the Company will be the fair value of such consideration as determined
        in good faith by the
        Board of Directors of the Company, except where such consideration consists
        of
        publicly traded securities, in which case the amount of consideration received
        by the Company will be the Closing Sale Price of such publicly traded securities
        on the date of receipt.  If any Common Stock, Options or Convertible
        Securities are issued to the owners of the non-surviving entity in connection
        with any merger in which the Company is the surviving entity, the amount
        of
        consideration therefor will be deemed to be the fair value of such portion
        of
        the net assets and business of the non-surviving entity as is attributable
        to
        such Common Stock, Options or Convertible Securities, as the case may be.
         The fair value of any consideration other than cash or publicly traded
        securities will be determined jointly by the Company and the Required Holders.
         If such parties are unable to reach agreement within ten (10) days after
        the occurrence of an event requiring valuation (the “Valuation
        Event”), the fair value of such consideration will be determined within
        five (5) Business Days after the tenth day following the Valuation Event
        by an
        independent, reputable appraiser jointly selected by the Company and the
        Required Holders.  The determination of such appraiser shall be deemed
        binding upon all parties absent manifest error and the fees and expenses
        of such
        appraiser shall be borne by the Company.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      (v)           Record
        Date.  If the Company takes a record of the holders of Common Stock for
        the purpose of entitling them (A) to receive a dividend or other distribution
        payable in Common Stock, Options or in Convertible Securities or (B) to
        subscribe for or purchase Common Stock, Options or Convertible Securities,
        then
        such record date will be deemed to be the date of the issue or sale of the
        Common Stock deemed to have been issued or sold upon the declaration of such
        dividend or the making of such other distribution or the date of the granting
        of
        such right of subscription or purchase, as the case may be.

      


      (b)           Adjustment
        of Conversion Price upon Subdivision or Combination of Common Stock.
 If the Company at any time on or after the Closing Date subdivides (by
        any
        stock split, stock dividend, recapitalization or otherwise) one or more classes
        of its outstanding shares of Common Stock into a greater number of shares,
        the
        Conversion Price in effect immediately prior to such subdivision will be
        proportionately reduced.  If the Company at any time on or after the
        Closing Date combines (by combination, reverse stock split or otherwise)
        one or
        more classes of its outstanding shares of Common Stock into a smaller number
        of
        shares, the Conversion Price in effect immediately prior to such combination
        will be proportionately increased.

      


      (c)           Other
        Events.  If any event occurs of the type contemplated by the provisions
        of this Section 7 but not expressly provided for by such provisions (including,
        without limitation, the granting of stock appreciation rights, phantom stock
        rights or other rights with equity features), then the Company’s Board of
        Directors will make an appropriate adjustment in the Conversion Price so
        as to
        protect the rights of the Holder under this Note; provided that no such
        adjustment will increase the Conversion Price as otherwise determined pursuant
        to this Section 7.

      


      8.           COMPANY
        RIGHT OF REDEMPTION.  

      


      (a)           General.
        From and after the Amendment Date, for as long as no Event of Default has
        occurred and is continuing, the Company at its option shall have the right
        to
        redeem, with three (3) Business Days advance written notice (the
“Company Redemption Notice”), a portion or all of the
        outstanding Principal of this Note.  The Holder may convert this Note
        after the Company Redemption Notice is received up until such time as the
        Company Redemption Price is received by the Holder.  The redemption
        price shall be one hundred twenty percent (120%) of the sum of (x) the face
        amount redeemed plus (y) accrued Interest until the expiration of nine (9)
        months following the Amendment Date and one hundred forty percent (140%)
        of the
        sum of (i) the face amount redeemed thereafter plus (ii) accrued Interest
        (the
“CompanyRedemption Price”).  The
        Company shall pay the Company Redemption Price on all payments made pursuant
        to
        this Note (except to the extent a higher redemption price is due in connection
        with an Event of Default or Change of Control, in which case such higher
        redemption price shall be paid by the Company), including payments made before,
        on, or after the Maturity Date.  It shall be an Event of Default if
        the Company does not timely redeem the portion of this Note elected to be
        redeemed pursuant to a Company Redemption Notice and, thereafter, the Holder
        shall be able to exercise all of its rights and remedies hereunder upon an
        Event
        of Default, including the right to accelerate this Note and cause this Note
        to
        be redeemed in full pursuant to Section 4(b) hereof.  For all payments
        under this Note, the payment of the Company Redemption Price by the Company
        shall be in addition to any accrued Interest due.

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      


      (b)           Mechanics
        of Company Redemption.  If the Company elects to redeem the Note in
        accordance with Section 8(a), then the Company Redemption Price, if any,
        which
        is to be paid to the Holder, shall be paid, by wire transfer of immediately
        available funds, an amount in cash equal to 100% of the Company Redemption
        Price.  If the Company fails to redeem the Company Redemption Price on or
        before the applicable date specified in Section 12 below, then at the option
        of
        the Holder designated in writing to the Company (any such designation,
“Conversion Notice” for purposes of this Note), the Holder may
        require the Company to convert all or any part of the Company Redemption
        Price
        at the Conversion Price.  Conversions required by this Section 8(b) shall
        be made in accordance with the provisions of Section 3(c).  Notwithstanding
        anything to the contrary in this Section 8(b), but subject to Section 3(d),
        until the Company Redemption Price (together with any Interest thereon) is
        paid
        in full, the Company Redemption Price (together with any Interest thereon)
        may
        be converted, in whole or in part, by the Holder into Common Stock pursuant
        to
        Section 3.

      


      (c)           Pro
        Rata Redemption Requirement.  If the Company elects to redeem any
        Conversion Amount of this Note pursuant to Section 8(a), then it must
        simultaneously take the same action in the same proportion with respect to
        the
        other Notes.

      


      (d)           Upon
        the occurrence of a Financing Transaction, the Holder may require the Company
        to
        redeem all or any portion of this Note by delivering written notice thereof
        (the
“Financing Transaction Redemption Notice”) to the Company,
        which Financing Transaction Redemption Notice shall indicate the portion
        of this
        Note the Holder is electing to redeem.  Each portion of this Note subject
        to redemption by the Company pursuant to this Section 8(d) shall be redeemed
        by
        the Company at a price equal to the then-applicable Company Redemption Price.
        Redemptions required by this Section 8(d) shall be made in accordance with
        the
        provisions of Section 12.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      


      (e)           Upon
        the expiration of nine (9) months following the Amendment Date, the Holder
        may
        require the Company to redeem all or, from time to time, any portion of this
        Note by delivering written notice thereof (the “Nine Month Redemption
        Notice”) to the Company, which Nine Month Redemption Notice shall
        indicate the portion of this Note the Holder is electing to be redeemed.
        Each
        portion of this Note subject to redemption by the Company pursuant to this
        Section 8(e) shall be redeemed by the Company at a price equal to the Company
        Redemption Price.  Redemptions required by this Section 8(e) shall be
        made in accordance with the provisions of Section 12.

      


      9.           SECURITY.
         This Note and the other Notes are secured to the extent and in the manner
        set forth in the Security Documents (as defined in the Amendment
        Agreement).

      


      10.           NONCIRCUMVENTION.
         The Company hereby covenants and agrees that the Company will not, by
        amendment of its Certificate of Incorporation, Bylaws or through any
        reorganization, transfer of assets, consolidation, merger, scheme, arrangement,
        dissolution, issue or sale of securities, or any other voluntary action,
        avoid
        or seek to avoid the observance or performance of any of the terms of this
        Note,
        and will at all times in good faith carry out all of the provisions of this
        Note
        and take all reasonable action as may be required to protect the rights of
        the
        Holder of this Note.

      


      11.           RESERVATION
        OF AUTHORIZED SHARES.

      


      (a)           Reservation.
         The Company initially shall reserve out of its authorized and unissued
        Common Stock a number of shares of Common Stock for this Note equal to 175%
        of
        the number of shares of Common Stock issuable upon conversion of this Note
        as of
        the Amendment Date (without regard to any limitations on conversions).  So
        long as any of the Notes are outstanding, the Company shall take all action
        necessary to reserve and keep available out of its authorized and unissued
        Common Stock, solely for the purpose of effecting the conversion of the Notes,
        175% of the number of shares of Common Stock as shall from time to time be
        necessary to effect the conversion of all of the Notes then outstanding;
        provided that at no time shall the number of shares of Common Stock so reserved
        be less than the number of shares required to be reserved pursuant to the
        previous sentence (without regard to any limitations on conversions) (the
        “Required Reserve Amount”).  The initial number of
        shares of Common Stock reserved for conversions of the Notes and each increase
        in the number of shares so reserved shall be allocated pro rata among the
        holders of the Notes (including without limitation this Note) based on the
        principal amount of the Notes held by each holder at the Closing (as defined
        in
        the Amendment Agreement) or increase in the number of reserved shares, as
        the
        case may be (the “Authorized Share Allocation”).  In
        the event that a holder shall sell or otherwise transfer any of such holder’s
        Notes, each transferee shall be allocated a pro rata portion of such holder’s
        Authorized Share Allocation.  Any shares of Common Stock reserved and
        allocated to any Person which ceases to hold any Notes shall be allocated
        to the
        remaining holders of Notes, pro rata based on the principal amount of the
        Notes
        then held by such holders.

      


      (b)           Insufficient
        Authorized Shares.  If at any time while any of the Notes remain
        outstanding the Company does not have a sufficient number of authorized and
        unreserved shares of Common Stock to satisfy its obligation to reserve for
        issuance upon conversion of the Notes at least a number of shares of Common
        Stock equal to the Required Reserve Amount (an “Authorized Share
        Failure”), then the Company shall immediately take all action necessary
        to increase the Company’s authorized shares of Common Stock to an amount
        sufficient to allow the Company to reserve the Required Reserve Amount for
        the
        Notes then outstanding.  Without limiting the generality of the foregoing
        sentence, as soon as practicable after the date of the occurrence of an
        Authorized Share Failure, but in no event later than forty-five (45) days
        after
        the occurrence of such Authorized Share Failure, the Company shall hold a
        meeting of its shareholders for the approval of an increase in the number
        of
        authorized shares of Common Stock.  In connection with such meeting, the
        Company shall provide each shareholder with a proxy or information statement
        and
        shall use its best efforts to solicit its shareholders’ approval of such
        increase in authorized shares of Common Stock and to cause its board of
        directors to recommend to the shareholders that they approve such
        proposal.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      12.           HOLDER’S
        REDEMPTIONS.  (a) The Company shall deliver the applicable Event of
        Default Redemption Price to the Holder within five (5) Business Days after
        the
        Company’s receipt of the Holder’s Event of Default Redemption Notice.  If
        the Holder has submitted a Change of Control Redemption Notice in accordance
        with Section 5(b), the Company shall deliver the applicable Change of Control
        Redemption Price to the Holder concurrently with the consummation of such
        Change
        of Control if such notice is received prior to the consummation of such Change
        of Control and within five (5) Business Days after the Company’s receipt of such
        notice otherwise. If the Holder has submitted a Financing Transaction Redemption
        Notice or a Nine Month Redemption Notice, the Company shall deliver the
        applicable Company Redemption Price within five (5) Business Days after the
        Company’s receipt of such notice.  In the event of a redemption of less
        than all of this Note, the Company shall promptly cause to be issued and
        delivered to the Holder a new Note (in accordance with Section 18(d))
        representing the portion of this Note which has not been redeemed.  In the
        event that the Company does not pay the applicable Redemption Price to the
        Holder within the time period required, at any time thereafter and until
        the
        Company pays such unpaid Redemption Price in full, the Holder shall have
        the
        option, in lieu of redemption, to require the Company to promptly return
        to the
        Holder all or any portion of this Note representing the Conversion Amount
        that
        was submitted for redemption and for which the applicable Redemption Price
        (together with any Late Charges thereon) has not been paid.  Upon the
        Company’s receipt of such notice, (x) the applicable Redemption Notice shall be
        null and void with respect to such Conversion Amount, (y) the Company shall
        immediately return this Note, or issue a new Note (in accordance with Section
        18(d)) to the Holder representing the sum of such Conversion Amount to be
        redeemed together with accrued and unpaid Interest with respect to such
        Conversion Amount and accrued and unpaid Late Charges with respect to such
        Conversion Amount and Interest and (z) the Conversion Price of this Note
        or such
        new Notes shall be adjusted to the lesser of (A) the Conversion Price as
        in
        effect on the date on which the applicable Redemption Notice is voided and
        (B)
        the lowest Closing Bid Price during the period beginning on and including
        the
        date on which the applicable Redemption Notice is delivered to the Company
        and
        ending on and including the date on which the applicable Redemption Notice
        is
        voided.  The Holder’s delivery of a notice voiding a Redemption Notice and
        exercise of its rights following such notice shall not affect the Company’s
        obligations to make payments of Interest or Late Charges which have accrued
        prior to the date of such notice with respect to the Conversion Amount subject
        to such notice. All amounts required to be paid pursuant to this Section
        12
        shall be paid in cash by wire transfer of immediately available
        funds.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      


      (b)           Redemption
        by Other Holders.  Upon the Company’s receipt of notice from any
        of the holders of the other Notes for redemption or repayment as a result
        of an
        event or occurrence substantially similar to the events or occurrences described
        in Section 4(b) or Section 5(b) (each, an “Other Redemption
        Notice”), the Company shall immediately, but no later than one (1)
        Business Day of its receipt thereof, forward to the Holder by facsimile a
        copy
        of such notice.  If the Company receives a Redemption Notice and one
        or more Other Redemption Notices, during the seven (7) Business Day period
        beginning on and including the date which is three (3) Business Days prior
        to
        the Company’s receipt of the Holder’s Redemption Notice and ending on and
        including the date which is three (3) Business Days after the Company’s receipt
        of the Holder’s Redemption Notice and the Company is unable, as a result of
        having insufficient funds, to redeem all Principal, Interest and other amounts
        designated in such Redemption Notice and such Other Redemption Notices received
        during such seven (7) Business Day period, then the Company shall redeem
        a pro
        rata amount from each holder of the Notes (including the Holder) based on
        the
        principal amount of the Notes submitted for redemption pursuant to such
        Redemption Notice and such Other Redemption Notices received by the Company
        during such seven (7) Business Day period, and shall redeem the balance of
        such
        principal amount immediately upon its receipt of sufficient funds to do
        so.

      


      13.           RESTRICTION
        ON REDEMPTION AND CASH DIVIDENDS.  Until all of the Notes have been
        converted, redeemed or otherwise satisfied in accordance with their terms,
        the
        Company shall not, except as otherwise permitted under the Amendment Agreement,
        directly or indirectly, redeem, repurchase or declare or pay any cash dividend
        or distribution on its capital stock without the prior express written consent
        of the Required Holders.

      


      14.           VOTING
        RIGHTS.  The Holder shall have no voting rights as the holder of this
        Note, except as required by law, including but not limited to Section 212
        of the
        Delaware General Corporation Law, and as expressly provided in this
        Note.

      


      15.           COVENANTS.
         

      


      (a)           Rank.  All
        payments due under this Note shall rank pari passu with all other Notes
        and no other Indebtedness of the Company and its Subsidiaries (other than
        Indebtedness of the Company’s Subsidiaries set forth on Schedule 3(o) of the
        Amendment Agreement) shall be senior to the Indebtedness of the Company
        evidenced by this Note and the other Notes.  Without limiting the
        foregoing, the Company shall ensure that its 8.75% Senior Convertible Notes
        Due
        2012 issued under and pursuant to that certain Indenture, dated as of February
        16, 2007, between the Company, the Guarantors named therein, and The Bank
        of New
        York, N.A., are subordinate in right of payment to the prior payment in full
        of
        this Note and the other Notes.

      


      (b)           Incurrence
        of Indebtedness.  So long as this Note is outstanding, the Company
        shall not, and the Company shall not permit any of its Subsidiaries to, directly
        or indirectly, incur or guarantee, assume or suffer to exist any Indebtedness,
        other than (i) the Indebtedness evidenced by this Note and the other Notes
        and
        (ii) Permitted Indebtedness.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      


      (c)           Existence
        of Liens.  So long as this Note is outstanding, the Company shall not,
        and the Company shall not permit any of its Subsidiaries to, directly or
        indirectly, allow or suffer to exist any mortgage, lien, pledge, charge,
        security interest or other encumbrance upon or in any property or assets
        (including accounts and contract rights) owned by the Company or any of its
        Subsidiaries (collectively, “Liens”) other than Permitted
        Liens.

      


      (d)           Restricted
        Payments.  So long as this Note is outstanding, the Company shall not,
        and the Company shall not permit any of its Subsidiaries to, directly or
        indirectly, redeem, defease, repurchase, repay or make any payments in respect
        of, by the payment of cash or cash equivalents (in whole or in part, whether
        by
        way of open market purchases, tender offers, private transactions or otherwise),
        all or any portion of any Permitted Indebtedness, whether by way of payment
        in
        respect of Principal of (or premium, if any) or Interest on, such Indebtedness
        if at the time such payment is due or is otherwise made or, after giving
        effect
        to such payment, an event constituting, or that with the passage of time
        and
        without being cured would constitute, an Event of Default has occurred and
        is
        continuing.

      


      (e)           Sales
        of Equity Securities.  So long as this Note is outstanding, except
        for any issuance of Securities in accordance with the Transaction Documents
        or
        as otherwise permitted under the Amendment Agreement, the Company will not,
        directly or indirectly, offer, sell, grant any option to purchase, or otherwise
        dispose of (or announce any offer, sale, grant or any option to purchase
        or
        other disposition of) any of its equity or Common Stock Equivalents (as defined
        in the Amendment Agreement), including without limitation any debt, preferred
        stock or other instrument or security that is, at any time during its life
        and
        under any circumstances, convertible into or exchangeable or exercisable
        for
        shares of common equity of the Company, without the prior written consent
        of the
        Required Holders.

      


      (f)           Subsidiary
        Internal Accounting Controls.  So long as this Note is outstanding, the
        Company and each of its Subsidiaries shall maintain, in all material respects,
        a
system of internal accounting controls
        consistent with
        applicable law.

      


      (g)           Dispositions.
        So long as any Obligations are outstanding, the Company shall not, and the
        Company shall not permit any of its Subsidiaries to, convey, sell, lease
        or
        sublease, transfer or otherwise dispose of, whether in one transaction or
        a
        series of related transactions, all or any part of its business, property
        or
        assets, whether now owned or hereafter acquired (or agree to do any of the
        foregoing); provided, however, that the Company and its Subsidiaries may
        (i)
        sell inventory in the ordinary course of business, (ii) dispose of obsolete
        or
        worn-out equipment in the ordinary course of business and (iii) dispose of
        non-core assets to the extent permitted under the other Transaction
        Documents.

      


      (h)           Additional
        Collateral Security. Except as otherwise set forth in the Amendment
        Agreement, the Company shall cause each Subsidiary of the Company or any
        such
        Subsidiary not in existence on the Amendment Date, to execute and deliver
        to the
        Collateral Agent promptly and in any event within five (5) Business Days
        after
        the formation, acquisition or change in status thereof (i) a Security Agreement
        and (ii) such other agreements, instruments, approvals, legal opinions or
        other
        documents reasonably requested by the Collateral Agent in order to create,
        perfect, establish the first priority of (subject to Permitted Liens) or
        otherwise protect any Lien purported to be covered by any such Security
        Agreement or otherwise to effect the intent that such Subsidiary shall become
        bound by all of the terms, covenants and agreements contained in the this
        Note
        and that all property and assets of such Subsidiary shall become Collateral
        for
        the Obligations.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      


      16.           VOTE
        TO ISSUE, OR CHANGE THE TERMS OF, NOTES.  The affirmative vote at a
        meeting duly called for such purpose or the written consent without a meeting
        of
        the Required Holders shall be required for any change or amendment to this
        Note
        or any other Note.  In no event shall any amendment, modification or
        waiver be made to this Note which would adversely affect the Holder without
        the
        written consent of the Holder.

      


      17.           TRANSFER.
         The Holder and the Company acknowledge and agree that this Note may be
        offered, sold, assigned or transferred by the Holder without the consent
        of the
        Company, provided that the provisions of Section 2(f) of the Amendment Agreement
        are complied with in all respects.

      


      18.           REISSUANCE
        OF THIS NOTE.

      


      (a)           Transfer.
         If this Note is to be transferred, the Holder shall surrender this Note to
        the Company, whereupon the Company will issue, promptly following the
        satisfaction of the provisions of Section 2(f) of the Amendment Agreement,
        and
        deliver upon the order of the Holder a new Note (in accordance with Section
        18(d)), in the name of the validly registered assigns or transferee,
        representing the outstanding Principal being transferred by the Holder and,
        if
        less then the entire outstanding amount of this Note is being transferred,
        a new
        Note (in accordance with Section 18(d)) to the Holder representing the
        outstanding amount of this Note not being transferred.  The Holder and any
        assignee, by acceptance of this Note, acknowledge and agree that, by reason
        of
        the provisions of Section 3(c)(iii) and this Section 18(a), following conversion
        or redemption of any portion of this Note, the outstanding Principal represented
        by this Note may be less than the Principal stated on the face of this
        Note.

      


      (b)           Lost,
        Stolen or Mutilated Note.  Upon receipt by the Company of evidence
        reasonably satisfactory to the Company of the loss, theft, destruction or
        mutilation of this Note, and, in the case of loss, theft or destruction,
        of any
        indemnification undertaking by the Holder to the Company in customary form
        and,
        in the case of mutilation, upon surrender and cancellation of this Note,
        the
        Company shall execute and deliver to the Holder a new Note (in accordance
        with
        Section 18(d)) representing the outstanding amount of this Note.

      


      (c)           Note
        Exchangeable for Different Denominations.  This Note is exchangeable,
        upon the surrender hereof by the Holder at the principal office of the Company,
        for a new Note or Notes (in accordance with Section 18(d) and in principal
        amounts of at least $100,000) representing in the aggregate the outstanding
        amount of this Note, and each such new Note will represent such portion of
        such
        outstanding amount as is designated by the Holder at the time of such
        surrender.

      


                 (d)           Issuance
        of New Notes.  Whenever the Company is required to issue a new Note
        pursuant to the terms of this Note, such new Note (i) shall be of like tenor
        with this Note, (ii) shall represent, as indicated on the face of such new
        Note,
        the Principal remaining outstanding (or in the case of a new Note being issued
        pursuant to Section 18(a) or Section 18(c), the Principal designated by the
        Holder which, when added to the principal represented by the other new Notes
        issued in connection with such issuance, does not exceed the Principal remaining
        outstanding under this Note immediately prior to such issuance of new Notes),
        (iii) shall have an issuance date that is the same as the Amendment Date
        of this
        Note, (iv) shall have the same rights and conditions as this Note, and (v)
        shall
        represent accrued Interest and Late Charges on the Principal and Interest
        of
        this Note, from the Amendment Date.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      


      19.           REMEDIES,
        CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
 The remedies provided in this Note shall be cumulative and in addition
        to
        all other remedies available under this Note and any of the other Transaction
        Documents at law or in equity (including a decree of specific performance
        and/or
        other injunctive relief), and nothing herein shall limit the Holder’s right to
        pursue actual and consequential damages for any failure by the Company to
        comply
        with the terms of this Note.  Amounts set forth or provided for herein with
        respect to payments, conversion and the like (and the computation thereof)
        shall
        be the amounts to be received by the Holder and shall not, except as expressly
        provided herein, be subject to any other obligation of the Company (or the
        performance thereof).  The Company acknowledges that a breach by it of its
        obligations hereunder will cause irreparable harm to the Holder and that
        the
        remedy at law for any such breach may be inadequate.  The Company therefore
        agrees that, in the event of any such breach or threatened breach, the Holder
        shall be entitled, in addition to all other available remedies, to an injunction
        restraining any breach, without the necessity of showing economic loss and
        without any bond or other security being required.

      


      20.           PAYMENT
        OF COLLECTION, ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed
        in the hands of an attorney for collection or enforcement or is collected
        or
        enforced through any legal proceeding or the Holder otherwise takes action
        to
        collect amounts due under this Note or to enforce the provisions of this
        Note or
        (b) there occurs any bankruptcy, reorganization, receivership of the Company
        or
        other proceedings affecting Company creditors’ rights and involving a claim
        under this Note, then the Company shall pay the costs incurred by the Holder
        for
        such collection, enforcement or action or in connection with such bankruptcy,
        reorganization, receivership or other proceeding, including, but not limited
        to,
        attorneys’ fees and disbursements.

      


      21.           CONSTRUCTION;
        HEADINGS.  This Note shall be deemed to be jointly drafted by the
        Company and the Holder (as defined in the Amendment Agreement) and shall
        not be
        construed against any person as the drafter hereof.  The headings of this
        Note are for convenience of reference and shall not form part of, or affect
        the
        interpretation of, this Note.

      


      22.           FAILURE
        OR INDULGENCE NOT WAIVER.  No failure or delay on the part of the
        Holder in the exercise of any power, right or privilege hereunder shall operate
        as a waiver thereof, nor shall any single or partial exercise of any such
        power,
        right or privilege preclude other or further exercise thereof or of any other
        right, power or privilege.

      


      23.           DISPUTE
        RESOLUTION.  In the case of a dispute as to the determination of the
        Closing Bid Price, the Closing Sale Price, the Average Market Price or the
        Weighted Average Price or the arithmetic calculation of the Conversion Rate
        or
        any Redemption Price, the Company shall submit the disputed determinations
        or
        arithmetic calculations via facsimile within one (1) Business Day of receipt
        of
        the Conversion Notice or Redemption Notice or other event giving rise to
        such
        dispute, as the case may be, to the Holder.  If the Holder and the Company
        are unable to agree upon such determination or calculation within one (1)
        Business Day of such disputed determination or arithmetic calculation being
        submitted to the Holder, then the Company shall, within one (1) Business
        Day
        submit via facsimile (a) the disputed determination of the Closing Bid Price,
        the Closing Sale Price, the Average Market Price or the Weighted Average
        Price
        to an independent, reputable investment bank selected by the Company and
        approved by the Holder (such approval not to be unreasonably withheld or
        delayed) or (b) the disputed arithmetic calculation of the Conversion Rate
        or
        any Redemption Price to the Company’s independent, outside accountant.  The
        Company, at the Company’s expense, shall cause the investment bank or the
        accountant, as the case may be, to perform the determinations or calculations
        and notify the Company and the Holder of the results no later than five (5)
        Business Days from the time it receives the disputed determinations or
        calculations.  Such investment bank’s or accountant’s determination or
        calculation, as the case may be, shall be binding upon all parties absent
        demonstrable error.

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      


      24.           NOTICES;
        PAYMENTS.

      


      (a)           Notices.
         Whenever notice is required to be given under this Note, unless otherwise
        provided herein, such notice shall be given in accordance with Section 9(f)
        of
        the Amendment Agreement.  The Company shall provide the Holder with prompt
        written notice of all actions taken pursuant to this Note, including in
        reasonable detail a description of such action and the reason therefore.
         Without limiting the generality of the foregoing, the Company will give
        written notice to the Holder (i) immediately upon any adjustment of the
        Conversion Price, setting forth in reasonable detail, and certifying, the
        calculation of such adjustment and (ii) at least twenty (20) days prior to
        the
        date on which the Company closes its books or takes a record (A) with respect
        to
        any dividend or distribution upon the Common Stock, (B) with respect to any
        pro
        rata subscription offer to holders of Common Stock or (C) for determining
        rights
        to vote with respect to any Fundamental Transaction, dissolution or liquidation,
        provided in each case that such information shall be made known to the public
        prior to or in conjunction with such notice being provided to the
        Holder.

      


      (b)           Payments.
         Whenever any payment of cash is to be made by the Company to any Person
        pursuant to this Note, and except where such payment is explicitly required
        by
        this Agreement to be made by wire transfer, such payment shall be made in
        lawful
        money of the United States of America by a check drawn on the account of
        the
        Company and sent via overnight courier service to such Person at such address
        as
        previously provided to the Company in writing (which address, in the case
        of the
        Holder (as defined in the Amendment Agreement), shall initially be as set
        forth
        on the Schedule of Holders attached to the Amendment Agreement); provided
        that
        the Holder may elect to receive a payment of cash via wire transfer of
        immediately available funds by providing the Company with prior written notice
        setting out such request and the Holder’s wire transfer instructions.
 Whenever any amount expressed to be due by the terms of this Note is due
        on any day which is not a Business Day, the same shall instead be due on
        the
        next succeeding day which is a Business Day and, in the case of any Interest
        Date which is not the date on which this Note is paid in
        full, the extension of the due date thereof shall not be taken into account
        for
        purposes of determining the amount of Interest due on such date.  Any
        amount of Principal or other amounts due under the Transaction Documents,
        other
        than Interest, which is not paid when due shall result in a late charge being
        incurred and payable by the Company in an amount equal to interest on such
        amount at the rate of fifteen percent (15%) per annum from the date such
        amount
        was due until the same is paid in full (“Late
        Charge”).

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      


      25.           CANCELLATION.
         After all Principal, accrued Interest and other amounts at any time owed
        on this Note has been paid in full, this Note shall automatically be deemed
        canceled, shall be surrendered to the Company for cancellation and shall
        not be
        reissued.

      


      26           WAIVER
        OF NOTICE.  To the extent permitted by law, the Company hereby waives
        demand, notice, protest and all other demands and notices in connection with
        the
        delivery, acceptance, performance, default or enforcement of this Note, the
        Amendment Agreement and the other Transaction Documents.

      


      27.           GOVERNING
        LAW; JURISDICTION; JURY TRIAL.  This Note shall be construed and
        enforced in accordance with, and all questions concerning the construction,
        validity, interpretation and performance of this Note shall be governed by,
        the
        internal laws of the State of New York, without giving effect to any choice
        of
        law or conflict of law provision or rule (whether of the State of New York
        or
        any other jurisdictions) that would cause the application of the laws of
        any
        jurisdictions other than the State of New York.  The Company hereby
        irrevocably submits to the exclusive jurisdiction of the state and federal
        courts sitting in The City of New York, Borough of Manhattan, for the
        adjudication of any dispute hereunder or in connection herewith or with any
        transaction contemplated hereby or discussed herein, and hereby irrevocably
        waives, and agrees not to assert in any suit, action or proceeding, any claim
        that it is not personally subject to the jurisdiction of any such court,
        that
        such suit, action or proceeding is brought in an inconvenient forum or that
        the
        venue of such suit, action or proceeding is improper.  The Company hereby
        irrevocably waives personal service of process and consents to process being
        served in any such suit, action or proceeding by mailing a copy thereof to
        such
        party at the address it set forth on the signature page hereto and agrees
        that
        such service shall constitute good and sufficient service of process and
        notice
        thereof.  Nothing contained herein shall be deemed to limit in any way
        any right to serve process in any manner permitted by law.  In the event
        that any provision of this Note is invalid or unenforceable under any applicable
        statute or rule of law, then such provision shall be deemed inoperative to
        the
        extent that it may conflict therewith and shall be deemed modified to conform
        with such statute or rule of law.  Any such provision which may prove
        invalid or unenforceable under any law shall not affect the validity or
        enforceability of any other provision of this Note.  Nothing contained
        herein shall be deemed or operate to preclude the Holder from bringing suit
        or
        taking other legal action against the Company in any other jurisdiction to
        collect on the Company’s obligations to the Holder, to realize on any collateral
        or any other security for such obligations, or to enforce a judgment or other
        court ruling in favor of the Holder.  THE COMPANY HEREBY IRREVOCABLY WAIVES
        ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
        ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT
        OF
        THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.

       

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      


      28.           CERTAIN
        DEFINITIONS.  For purposes of this Note,
        the following terms shall have the following meanings:

      


      (a)           “Approved
        Stock Plan” means any employee benefit plan which has been approved by
        the Board of Directors of the Company, pursuant to which the Company’s
        securities may be issued to any employee, consultant, officer or director
        for
        services provided to the Company.

      


      (b)           “Average
        Market Price” means, for any given date, the lesser of (i) the
        arithmetic average of the Weighted Average Price of the Common Stock during
        the
        twenty (20) consecutive Trading Day period ending on the third (3rd) Trading
        Day
        immediately prior to such given date and (ii) the arithmetic average of the
        Weighted Average Price of the Common Stock during the five (5) consecutive
        Trading Day period commencing during the 20 consecutive Trading Day period
        ending on the third (3rd) Trading
        Day
        immediately prior to such given date provided, that all such determinations
        shall be appropriately adjusted for any stock split, stock dividend, stock
        combination or other similar transaction that proportionately decreases or
        increases the Common Stock during such periods.

      


      (c)           “Bloomberg”
        means Bloomberg Financial Markets.

      


      (d)           “Business
        Day” means any day other than Saturday, Sunday or other day on which
        commercial banks in The City of New York are authorized or required by law
        to
        remain closed.

      


      (e)           “Calendar
        Month” means the period beginning on and including the first of each
        calendar month and ending on and including the last day of such calendar
        month.

      


      (f)           “Change
        of Control” means any Fundamental Transaction other than (i) any
        reorganization, recapitalization or reclassification of the Common Stock
        in
        which holders of a majority of the Company’s voting power immediately prior to
        such reorganization, recapitalization or reclassification continue after
        such
        reorganization, recapitalization or reclassification to hold publicly traded
        securities and, directly or indirectly, the voting power of the surviving
        entity
        or entities necessary to elect a majority of the members of the board of
        directors (or their equivalent if other than a corporation) of such entity
        or
        entities, or (ii) pursuant to a migratory merger effected solely for the
        purpose
        of changing the jurisdiction of incorporation of the Company.

      


      (g)           “Change
        of Control Premium” means (i) 125% or (ii) 120% in the event of a
        Change of Control involving consideration paid to holders of the Company’s
        Common Stock where the consideration per share of the Company’s Common Stock to
        be received by the holders thereof is greater (as to amounts other than cash,
        as
        determined reasonably and in good faith by the Board of Directors of the
        Company) than 200% of the Conversion Price as of the
        Amendment Date (as adjusted for stock splits, stock dividends, reverse stock
        splits, recapitalizations, reclassifications and similar
        events).

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      


      (h)           “Closing
        Bid Price” and “Closing Sale Price” means, for any
        security as of any date, the last closing bid price and last closing trade
        price, respectively, for such security on the Principal Market, as reported
        by
        Bloomberg, or, if the Principal Market begins to operate on an extended hours
        basis and does not designate the closing bid price or the closing trade price,
        as the case may be, then the last bid price or last trade price, respectively,
        of such security prior to 4:00 p.m., New York Time, as reported by Bloomberg,
        or, if the Principal Market is not the principal securities exchange or trading
        market for such security, the last closing bid price or last trade price,
        respectively, of such security on the principal securities exchange or trading
        market where such security is listed or traded as reported by Bloomberg,
        or if
        the foregoing do not apply, the last closing bid price or last trade price,
        respectively, of such security in the over-the-counter market on the electronic
        bulletin board for such security as reported by Bloomberg, or, if no closing
        bid
        price or last trade price, respectively, is reported for such security by
        Bloomberg, the average of the bid prices, or the ask prices, respectively,
        of
        any market makers for such security as reported in the “pink sheets” by Pink
        Sheets LLC (formerly the National Quotation Bureau, Inc.).  If the Closing
        Bid Price or the Closing Sale Price cannot be calculated for a security on
        a
        particular date on any of the foregoing bases, the Closing Bid Price or the
        Closing Sale Price, as the case may be, of such security on such date shall
        be
        the fair market value as mutually determined by the Company and the
        Holder.  If the Company and the Holder are unable to agree upon the
        fair market value of such security, then such dispute shall be resolved pursuant
        to Section 23.  All such determinations to be appropriately adjusted for
        any stock dividend, stock split, stock combination or other similar transaction
        during the applicable calculation period.

      


      (i)           “Closing
        Date” shall have the meaning set forth in the Amendment Agreement,
        which date is the date the Company has amended and restated the Existing
        Notes
        pursuant to the terms of the Amendment Agreement.

      


      (j)           “Contingent
        Obligation” means, as to any Person, any direct or indirect liability,
        contingent or otherwise, of that Person with respect to any indebtedness,
        lease,
        dividend or other obligation of another Person if the primary purpose or
        intent
        of the Person incurring such liability, or the primary effect thereof, is
        to
        provide assurance to the obligee of such liability that such liability will
        be
        paid or discharged, or that any agreements relating thereto will be complied
        with, or that the holders of such liability will be protected (in whole or
        in
        part) against loss with respect thereto.

      


      (k)           “Convertible
        Securities” means any stock or securities (other than Options) directly
        or indirectly convertible into or exercisable or exchangeable for Common
        Stock.

      


      (l)           “Eligible
        Market” means, the Principal Market, The New York Stock Exchange, Inc.,
        the Nasdaq Capital Market, the Nasdaq Global Market or the American Stock
        Exchange.

      


      (m)           “Excluded
        Securities” means any Common Stock issued or issuable: (i) in
        connection with any Approved Stock Plan up to a maximum of five percent (5%)
        of
        the outstanding Common Stock; (ii) upon conversion of, or in exchange for,
        the
        Notes or the exercise of the Warrants; (iii) upon conversion of any Options
        or
        Convertible Securities which are outstanding on the day immediately preceding
        the Closing Date, provided that the terms of such Options or Convertible
        Securities are not amended, modified or changed on or after the Closing Date
        and
        (iv) in connection with Permitted Indebtedness.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      


      (n)           “Financing
        Transaction” means that the Company or any of its Subsidiaries engages
        in a debt, equity or any other financing or series of financing transactions
        in
        which the Company and/or its Subsidiaries receive a gross dollar amount of
        Fifty
        Million Dollars ($50,000,000) or more.

      


      (o)           “Fundamental
        Transaction” means that the Company shall, directly or indirectly, in
        one or more related transactions, (i) consolidate or merge with or into (whether
        or not the Company is the surviving corporation) another Person, or (ii)
        sell,
        assign, transfer, convey or otherwise dispose of all or substantially all
        of the
        properties or assets of the Company to another Person, or (iii) allow another
        Person or Persons to make a purchase, tender or exchange offer that is accepted
        by the holders of more than the 50% of the outstanding shares of Voting Stock
        (not including any shares of Voting Stock held by the Person or Persons making
        or party to, or associated or affiliated with the Person or Persons making
        or
        party to, such purchase, tender or exchange offer), (iv) consummate a stock
        purchase agreement or other business combination (including, without limitation,
        a reorganization, recapitalization, spin-off or scheme of arrangement) with
        another Person whereby such other Person acquires more than the 50% of either
        the outstanding shares of Voting Stock (not including any shares of Voting
        Stock
        held by the other Person or other Persons making or party to, or associated
        or
        affiliated with the other Persons making or party to, such stock purchase
        agreement or other business combination), (v) reorganize, recapitalize or
        reclassify its Common Stock or (vi) any “person” or “group” (as these terms are
        used for purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule
        13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate
        Voting Stock of the Company.  Provided, however, notwithstanding
        anything herein contained or in any of the other Transaction Documents, any
        consolidation of a Subsidiary into another Subsidiary or Subsidiaries shall
        not
        be deemed to be a Fundamental Transaction.

      


      (p)           “GAAP”
        means United States generally accepted accounting principles, consistently
        applied.

      


      (q)           “Indebtedness”
        of any Person means, without duplication (i) all indebtedness for borrowed
        money, (ii) all obligations issued, undertaken or assumed as the deferred
        purchase price of property or services, including (without limitation) “capital
        leases” in accordance with generally accepted accounting principles (other than
        trade payables entered into in the ordinary course of business), (iii) all
        reimbursement or payment obligations with respect to letters of credit, surety
        bonds and other similar instruments, (iv) all obligations evidenced by notes,
        bonds, debentures or similar instruments, including obligations so evidenced
        incurred in connection with the acquisition of property, assets or businesses,
        (v) all indebtedness created or arising under any conditional sale or other
        title retention agreement, or incurred as financing, in either case with
        respect
        to any property or assets acquired with the proceeds of such indebtedness
        (even
        though the rights and remedies of the seller or bank under such agreement
        in the
        event of default are limited to repossession or sale of such property), (vi)
        all
        monetary obligations under any leasing or similar arrangement which, in
        connection with generally accepted accounting principles, consistently applied
        for the periods covered thereby, is classified as a capital lease, (vii)
        all
        indebtedness referred to in clauses (i) through (vi) above secured by (or
        for
        which the holder of such Indebtedness has an existing right, contingent or
        otherwise, to be secured by) any mortgage, lien, pledge, charge, security
        Interest or other encumbrance upon or in any property or assets (including
        accounts and contract rights) owned by any Person, even though the Person
        which
        owns such assets or property has not assumed or become liable for the payment
        of
        such indebtedness, (viii) all obligations issued, undertaken or assumed as
        part
        of any financing facility with respect to accounts receivables of the Company
        and its Subsidiaries, including, without limitation, any factoring arrangement
        of such accounts receivables and (ix) all Contingent Obligations in respect
        of
        indebtedness or obligations of others of the kinds referred to in clauses
        (i)
        through (viii) above.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      


      (r)           “Interest
        Rate” means ten percent (10%) per annum, subject to periodic adjustment
        pursuant to Section 2.

      


      (s)           “Options”
        means any rights, warrants or options to subscribe for or purchase Common
        Stock
        or Convertible Securities.

      


      (t)           “Parent
        Entity” of a Person means an entity that, directly or indirectly,
        controls the applicable Person and whose common stock or equivalent equity
        security is quoted or listed on an Eligible Market, or, if there is more
        than
        one such Person or Parent Entity, the Person or Parent Entity with the largest
        public market capitalization as of the date of consummation of the Fundamental
        Transaction.

      


      (u)           “Permitted
        Indebtedness” means (A) all Indebtedness existing as of the date hereof
        or incurred by the Company after the date hereof and is made expressly
        subordinate in right of payment and priority to the Indebtedness evidenced
        by
        this Note pursuant to any other written agreement acceptable to the Holder
        and
        approved by the Holder in writing (which approval shall not be unreasonably
        delayed), and which Indebtedness does not provide at any time for (1) the
        payment, prepayment, repayment, repurchase or defeasance, directly or
        indirectly, of any principal or premium, if any, thereon until ninety-one
        (91)
        days after the Maturity Date or later and (2) total Interest and fees at
        a rate
        in excess of the Interest Rate hereunder, (B) Permitted Sureties, (C)
        Indebtedness secured by Permitted Liens, (D) Indebtedness to trade creditors
        incurred in the ordinary course of business, and (E)
        extensions, refinancings and renewals of any items of Permitted Indebtedness,
        provided that the principal amount is not increased or the terms modified
        to
        impose more burdensome terms upon the Company or its Subsidiary, as the case
        may
        be.

      


      (v)           “Permitted
        Liens” means (i) any Lien for taxes not yet due or delinquent or being
        contested in good faith by appropriate proceedings for which adequate reserves
        have been established in accordance with GAAP, (ii) any statutory Lien arising
        in the ordinary course of business by operation of law with respect to a
        liability that is not yet due or delinquent, (iii) any Lien created by operation
        of law, such as materialmen’s liens, mechanics’ liens and other similar liens,
        arising in the ordinary course of business with respect to a liability that
        is
        not yet due or delinquent or that are being contested in good faith by
        appropriate proceedings, (iv) Liens securing the Company’s obligations under the
        Notes, (v) Liens (A) upon or in any equipment (as defined in the Security
        Agreement) acquired or held by the Company or any of its Subsidiaries to
        secure
        the purchase price of such equipment or indebtedness incurred solely for
        the
        purpose of financing the acquisition or lease of such equipment, or (B) existing
        on such equipment at the time of its acquisition, provided that the Lien
        is
        confined solely to the property so acquired and improvements thereon, and
        the
        proceeds of such equipment, (vi) Liens incurred in connection with the
        extension, renewal or refinancing of the indebtedness secured by Liens of
        the
        type described in clause (v) above, provided that any extension, renewal
        or
        replacement Lien shall be limited to the property encumbered by the existing
        Lien and the principal amount of the Indebtedness being extended, renewed
        or
        refinanced does not increase, (vii) leases or subleases and licenses and
        sublicenses hereafter granted to others in the ordinary course of the Company’s
        business, not interfering in any material respect with the business of the
        Company and its Subsidiaries taken as a whole, (viii) Liens in favor of customs
        and revenue authorities arising as a matter of law to secure payments of
        custom
        duties in connection with the importation of goods; (ix) Liens arising from
        judgments, decrees or attachments in circumstances not constituting an Event
        of
        Default under Section 4(a)(ix), (x) Liens with respect to Indebtedness not
        individually in excess of $25,000 or in the aggregate in excess of $100,000,
        which individually and in aggregate are not material to the Company, and
        (xi)
        all Liens existing on the date hereof.

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      


      (w)           “Permitted
        Sureties” means any General Agreement of Indemnity,
        Indemnity Agreement, or Surety Agreement, whereby the Company or any Subsidiary
        desires to execute bonds, undertakings, and/or obligations of suretyship
        or
        guarantee, including undertakings and other obligations, including any bond
        or
        bonds (severally, the “Bond”) on its behalf and on behalf of any of its present
        or future, directly or indirectly owned or controlled subsidiaries or
        affiliates, whether alone or in joint venture with others whether or not
        named
        herein, and any corporation, partnership or person upon the written request
        of
        the issuer of any such Bond.

      


      (x)           “Person”
        means an individual, a limited liability company, a partnership, a joint
        venture, a corporation, a trust, an unincorporated organization, any other
        entity  and a government or any department or agency thereof.

      


      (y)           “Potential
        Partner Conditions” means at any time during the period commencing on
        the date of the consummation of any material transaction between the Company
        and
        a Person and ending on the first anniversary of the Amendment Date, there
        shall
        be no disclosure that any executive officer of such Person has (i) exhibited
        dishonesty in the performance of his or her duties, which is materially and
        demonstrably injurious to the Company; or (ii) been
        convicted of (x) a felony under the laws of the United States or any state
        thereof or (y) a misdemeanor involving moral turpitude, in each case, which
        is
        materially and demonstrably injurious to the Company.

      


      (z)           “Principal
        Market” means Over-the-Counter Bulletin Board.

      


      (aa)           “Redemption
        Notices” means, collectively, the Event of Default Redemption Notices,
        Change of Control Redemption Notices, the Company Redemption Notice, Financing
        Transaction Redemption Notice, Nine Month Redemption Notice, and, each of
        the
        foregoing, individually, a Redemption Notice.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      


      (bb)           “Redemption
        Premium” means 145%.

      


      (cc)           “Redemption
        Prices” means, collectively, the Event of Default Redemption Price,
        Change of Control Redemption Price, and the Company Redemption Price, and,
        each
        of the foregoing, individually, a Redemption Price.

      


      (dd)           “Registration
        Rights Agreement” means that certain registration rights agreement
        between the Company and the initial holders of the Notes relating to, among
        other things, the registration of the resale of the Common Stock issuable
        upon
        conversion of the Notes and exercise of the Warrants.

      


      (ee)           “Required
        Holders” mean the holders of Notes and the other Notes representing at
        least two-thirds (2/3) of the aggregate principal amount of the Notes and
        the
        other Notes then outstanding.

      


      (ff)           “SEC”
        means the United States Securities and Exchange Commission.

      


      (gg)           “Successor
        Entity” means the Person, which may be the Company, formed by,
        resulting from or surviving any Fundamental Transaction or the Person with
        which
        such Fundamental Transaction shall have been made, provided that if such
        Person
        is not a publicly traded entity whose common stock or equivalent equity security
        is quoted or listed for trading on an Eligible Market, Successor Entity shall
        mean such Person’s Parent Entity.

      


      (hh)           “Trading
        Day” means any day on which the Common Stock is traded on the Principal
        Market, or, if the Principal Market is not the principal trading market for
        the
        Common Stock, then on the principal securities exchange or securities market
        on
        which the Common Stock is then traded; provided that “Trading Day” shall not
        include any day on which the Common Stock is scheduled to trade on such exchange
        or market for less than 4.5 hours or any day that the Common Stock is suspended
        from trading during the final hour of trading on such exchange or market
        (or if
        such exchange or market does not designate in advance the closing time of
        trading on such exchange or market, then during the hour ending at 4:00 p.m.,
        New York Time).

      


      (ii)           “Voting
        Stock” of a Person means capital stock of such Person of the class or
        classes pursuant to which the holders thereof have the general voting power
        to
        elect, or the general power to appoint, at least a majority of the board
        of
        directors, managers or trustees of such Person (irrespective of whether or
        not
        at the time capital stock of any other class or classes shall have or might
        have
        voting power by reason of the happening of any contingency).

      


      (jj)           “Warrants”
        has the meaning ascribed to such term in the Amendment Agreement, and shall
        include all warrants issued in exchange therefor or replacement
        thereof.

      


      (kk)           “Weighted
        Average Price” means, for any security as of any date, the dollar
        volume-weighted average price for such security on the Principal Market during
        the period beginning at 9:30 a.m., New York Time (or such other time as the
        Principal Market publicly announces is the official open of trading), and
        ending
        at 4:00 p.m., New York Time (or such other time as the Principal Market publicly
        announces is the official close of trading) as reported by Bloomberg through
        its
“Volume at Price” functions, or, if the foregoing does not apply, the dollar
        volume-weighted average price of such security in the over-the-counter market
        on
        the electronic bulletin board for such security during the period beginning
        at
        9:30 a.m., New York Time (or such other time as such market publicly announces
        is the official open of trading), and ending at 4:00 p.m., New York Time
        (or
        such other time as such market publicly announces is the official close of
        trading) as reported by Bloomberg, or, if no dollar volume-weighted average
        price is reported for such security by Bloomberg for such hours, the average
        of
        the highest closing bid price and the lowest closing ask price of any of
        the
        market makers for such security as reported in the “pink sheets” by Pink Sheets
        LLC (formerly the National Quotation Bureau, Inc.).  If the Weighted
        Average Price cannot be calculated for a security on a particular date on
        any of
        the foregoing bases, the Weighted Average Price of such security on such
        date
        shall be the fair market value as mutually determined by the Company and
        the
        Holder.  If the Company and the Holder are unable to agree upon the fair
        market value of such security, then such dispute shall be resolved pursuant
        to
        Section 23.  All such determinations to be appropriately adjusted for any
        stock dividend, stock split, stock combination or other similar transaction
        during the applicable calculation period.

       

      
        
          
          

        

        
          28

          
            

          

        

        
          
          

        

      


      29.           DISCLOSURE.
        Upon receipt or delivery by the Company of any notice in accordance with
        the
        terms of this Note, unless the Company has in good faith determined that
        the
        matters relating to such notice do not constitute material, nonpublic
        information relating to the Company or its Subsidiaries, the Company shall
        within one (1) Business Day after any such receipt or delivery publicly disclose
        such material, nonpublic information on a Current Report on Form 8-K or
        otherwise.  In the event that the Company believes that a notice
        contains material, nonpublic information, relating to the Company or its
        Subsidiaries, the Company shall indicate to the Holder contemporaneously
        with
        delivery of such notice, and in the absence of any such indication, the Holder
        shall be allowed to presume that all matters relating to such notice do not
        constitute material, nonpublic information relating to the Company or its
        Subsidiaries.

      


      30.           Controlling
        Agreement.  In the event of any conflict between the provisions of
        this Note, the Amendment Agreement and any of the other Transaction Documents,
        the terms of the Amendment Agreement shall control.

      


      


      [Signature
        Page Follows]


      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the Company has caused this Note to be duly
        executed as of the Amendment Date set out above.

      


      


      
        	 	
                CHARYS
                  HOLDING COMPANY, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	
                 

              	
              
	 	
                Billy
                  V. Ray, Jr.

              
	 	
                Chief
                  Executive Officer

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        I

      


      


      NOTICE
        OF CONVERSION

      


      The
        undersigned hereby elects to convert principal of the Amended and Restated
        Senior Secured Convertible Note (the “Note”) issued by CHARYS HOLDING COMPANY,
        INC. (the “Company”) into shares of common stock (“Common Stock”) of the
        Company according to the terms and conditions of the Note. Capitalized terms
        used herein and not otherwise defined shall have the respective meanings
        set
        forth in the Note.

      


      


      
        	 	
                Date
                  of Conversion:

              	
                 

              
	 	 	 
	 	
                Principal
                  Amount of

              	 
	 	
                Note
                  to be Converted:

              	
                 

              
	 	 	 
	 	
                Number
                  of Shares of

              	 
	 	
                Common
                  Stock to be Issued:

              	
                 

              
	 	 	 
	 	
                Name
                  of Holder:

              	
                 

              
	 	 	 
	 	 	 
	 	
                By:

              	
                 

              
	 	
                Name:

              
	 	
                Title:

              
	 	 	 
	 	 	 
	 	
                Holder’s
                  Address:

              	
                 

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 


      

      


      


      Holder
        Requests Delivery to be made: (check one)

      


      
        	
                

              	
                By
                  Delivery of Physical Certificates to the Above
                  Address

              


      

      


      
        	
                

              	
                Through
                  Depository Trust Corporation

              


      

      (Account
                                                             
)

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      B

    Form
      of Amended and Restated Registration Rights Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Execution
        Copy

      


      AMENDED
        AND RESTATED

      REGISTRATION
        RIGHTS AGREEMENT

      


      THIS
        AMENDED AND RESTATED REGISTRATION
        RIGHTS AGREEMENT (this “Agreement”), dated as of April 5, 2007,
        is by and among Charys Holding Company, Inc., a Delaware corporation (the
        “Company”), and the undersigned holders.

      


      WHEREAS:

      


      A.           Pursuant
        to a Registration Rights Agreement, dated as of August 30, 2006 (the
“Existing Registration Rights Agreement”), by and among the
        Company and the holders named therein, the Company was obligated to register
        the
        shares of the Company’s common stock, par value $0.001 per share (the
“Common Stock”), into which certain of the notes and warrants
        held by such holders were convertible or exercisable;

      


      B.           The
        Company has not timely fulfilled its registration obligations under the Existing
        Registration Rights Agreement and has requested that the registration deadline
        be extended as set forth herein; and

      


      C.           The
        Existing Registration Rights Agreement may be amended in writing by the Company
        and the Required Holders (as defined below), and the undersigned holders
        constitute the Required Holders;

      


      NOW,
        THEREFORE, in consideration of the
        premises and the mutual covenants contained herein and other good and valuable
        consideration, the receipt and sufficiency of which are hereby acknowledged,
        the
        Company and each of the undersigned holders hereby agree that the Existing
        Registration Rights Agreement is hereby amended and restated in its entirety
        to
        read as follows:

      


      1.           DEFINITIONS.

      


      Capitalized
        terms used herein and not
        otherwise defined herein shall have the respective meanings set forth in
        the
        Securities Purchase Agreement (as defined below), by and among the Company
        and
        the holders named therein.  As used in this Agreement, the following
        terms shall have the following meanings:

      


      a.           “Amendment
        Agreement” means the Amendment Agreement, dated as of the date hereof,
        by and among the Company and the holders named therein.

      


      b.           “Business
        Day” means any day other than Saturday, Sunday or any other day on
        which commercial banks in The City of New York are authorized or required
        by law
        to remain closed.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      c.           “Conversion
        Shares” means the shares of Common Stock into which the Notes are
        convertible.

      


      d.           “Effective
        Date” means the date that the Registration Statement has been declared
        effective by the SEC.

      


      e.           “Effectiveness
        Deadline” means the date that is 60 days after the Filing Deadline.

      


      f.           “Filing
        Deadline” means the earlier of (i) August 31, 2007 and (ii) the date
        that is 10 Business Days after the date on which all registration statements
        required to be filed pursuant to Section 2(a) of the Registration Rights
        Agreement, dated February 16, 2007, by and between the Company and McMahan
        Securities Co., L.P., are declared effective by the SEC.

      


      g.           “Holder”
        means a holder of any Securities or any transferee or assignee thereof to
        whom a
        holder assigns its rights under this Agreement and who agrees to become bound
        by
        the provisions of this Agreement in accordance with Section 9 and any
        transferee or assignee thereof to whom a transferee or assignee assigns its
        rights under this Agreement and who agrees to become bound by the provisions
        of
        this Agreement in accordance with Section 9.

      


      h.           “Notes”
        means the Amended and Restated Senior Secured Convertible Notes of the Company,
        dated as of the date hereof, which, as of the date hereof, are held by the
        undersigned Holders.

      


      i.           “Person”
        means an individual, a limited liability company, a partnership, a joint
        venture, a corporation, a trust, an unincorporated organization and a government
        or any department or agency thereof.

      


      j.           “Register,”
        “registered,” and “registration” refer to a
        registration effected by preparing and filing one or more Registration
        Statements (as defined below) in compliance with the 1933 Act and pursuant
        to
        Rule 415 and the declaration or ordering of effectiveness of such
        Registration Statement(s) by the SEC.

      


      k.           “Registrable
        Securities” means (i) the Conversion Shares issued or issuable
        upon conversion of the Notes, (ii) the Warrant Shares issued or issuable
        upon exercise of the Warrants and (iii) any capital stock of the Company
        issued
        or issuable with respect to the Conversion Shares, the Notes, the Warrant
        Shares
        and/or the Warrants as a result of any stock split, stock dividend,
        recapitalization, exchange or similar event or otherwise, without regard
        to any
        limitations on conversions of the Notes or exercises of the
        Warrants.

      


      l.           “Registration
        Statement” means a registration statement or registration statements of
        the Company filed under the 1933 Act covering the Registrable
        Securities.

      


      m.           “Required
        Holders” means the holders of at least a majority of the Registrable
        Securities.


      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      


      n.           “Required
        Registration Amount” means 175% of the sum of (i) the number of
        Conversion Shares issued and issuable pursuant to the Notes as of the Trading
        Day immediately preceding the applicable date of determination, and
        (ii) the number of Warrant Shares issued and issuable pursuant to the
        Warrants as of the Trading Day immediately preceding the applicable date
        of
        determination, all subject to adjustment as provided in Section 2(e) (without
        regard to any limitations on conversion of the Notes or exercise of the
        Warrants).

      


      o.           “Rule 415”
        means Rule 415 under the 1933 Act or any successor rule providing for
        offering securities on a continuous or delayed basis.

      


      p.           “SEC”
        means the United States Securities and Exchange Commission.

      


      q.           “Securities”
        means the Notes, Warrants, Conversion Shares and Warrant Shares.

      


      r.           “Securities
        Purchase Agreement” means the Securities Purchase Agreement dated
        August 30, 2006 by and among the Company and the investors named therein,
        and
        the Securities Purchase Agreement dated November 10, 2006 by and between
        the
        Company and the investor named therein.

      


      s.   “Trading
        Day” has the meaning given to such term in the Notes.

      


      t.           “Warrants”
        means the Warrants issued by the Company pursuant to the Securities Purchase
        Agreement.

      


      u.           “Warrant
        Shares” means the shares of Common Stock for which the Warrants are
        exercisable.

      


      2.           REGISTRATION.

      


      a.           Mandatory
        Registration.  The Company shall prepare, and, as soon as
        practicable, but in no event later than the Filing Deadline, file with the
        SEC
        the Registration Statement on Form SB-2, or any other available form, covering
        the resale of all of the Registrable Securities, subject to
        the provisions of Section 2(d).  The Registration Statement
        prepared pursuant hereto shall register for resale at least the number of
        shares
        of Common Stock equal to the Required Registration Amount as of date the
        Registration Statement is initially filed with the SEC.  The Company
        shall use its best efforts to have the Registration Statement declared effective
        by the SEC as soon as practicable, but in no event later than the Effectiveness
        Deadline.  By 9:30 am on the Business Day following the Effective
        Date, the Company shall file with the SEC in accordance with Rule 424 under
        the 1933 Act the final prospectus to be used in connection with sales pursuant
        to such Registration Statement.

      


      b.           Allocation
        of Registrable Securities.  The initial number of Registrable
        Securities included in any Registration Statement and any increase in the
        number
        of Registrable Securities included therein shall be allocated pro rata among
        the
        Holders based on the number of Registrable Securities held by each Holder
        at the
        time the Registration Statement covering such initial number of Registrable
        Securities or increase thereof is declared effective by the SEC.  In
        the event that an Holder sells or otherwise transfers any of such Holder’s
        Registrable Securities, each transferee shall be allocated a pro rata portion
        of
        the then remaining number of Registrable Securities included in such
        Registration Statement for such transferor.  Any Shares of Common
        Stock included in a Registration Statement and which remain allocated to
        any
        Person which ceases to hold any Registrable Securities covered by such
        Registration Statement shall be allocated to the remaining Holders, pro rata
        based on the number of Registrable Securities then held by such Holders which
        are covered by such Registration Statement.  The Holders understand
        that the Company has obligations with respect to other registration rights
        and
        that the Company may include in the Registration Statement those securities
        set
        forth on Schedule 2(b) hereof with respect to which it has an existing
        obligation to register such securities under 1933 Act as of the date
        hereof.


      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      


      c.           Legal
        Counsel.  Subject to Section 5 hereof, the Required Holders
        shall have the right to select one legal counsel to review and oversee any
        registration pursuant to this Section 2 (“Legal Counsel”),
        which shall be Mazzeo Song LLP or such other counsel as thereafter designated
        by
        the Required Holders.  The Company and Legal Counsel shall reasonably
        cooperate with each other in performing the Company’s obligations under this
        Agreement.

      


      d.           Ineligibility
        for Form S-3.  In the event that Form S-3 is not available
        for the registration of the resale of Registrable Securities hereunder, the
        Company shall (i) register the resale of the Registrable Securities on
        another appropriate form reasonably acceptable to the Required Holders and
        (ii) undertake to register the Registrable Securities on Form S-3 as soon
        as such form is available, provided that the Company shall maintain the
        effectiveness of the Registration Statement then in effect until such time
        as a
        Registration Statement on Form S-3 covering the Registrable Securities has
        been
        declared effective by the SEC.

      


      e.           Sufficient
        Number of Shares Registered.  In the event the number of shares
        available under a Registration Statement filed pursuant to Section 2(a) is
        insufficient to cover all of the Registrable Securities required to be covered
        by such Registration Statement or an Holder’s allocated portion of the
        Registrable Securities pursuant to Section 2(b), the Company shall amend
        the applicable Registration Statement, or file a new Registration Statement
        (on
        the shortest form available therefor, if applicable), or both, so as to cover
        at
        least the Required Registration Amount as of the Trading Day immediately
        preceding the date of the filing of such amendment or new Registration
        Statement, in each case, as soon as practicable, but in any event not later
        than
        forty-five (45) days after the necessity therefor arises.  The Company
        shall use its best efforts to cause such amendment and/or new Registration
        Statement to become effective as soon as practicable following the filing
        thereof.  For purposes of the foregoing provision, the number of
        shares available under a Registration Statement shall be deemed “insufficient to
        cover all of the Registrable Securities” if at any time the number of shares of
        Common Stock available for resale under the Registration Statement is less
        than
        the product determined by multiplying (i) the Required Registration Amount
        as of such time by (ii) 0.90.  The calculation set forth in the
        foregoing sentence shall be made without regard to any limitations on the
        conversion of the Notes or the exercise of the Warrants and such calculation
        shall assume that the Notes are then convertible into shares of Common Stock
        at
        the then prevailing Conversion Rate (as defined in the Notes) and that the
        Warrants are then exercisable for shares of Common Stock at the then prevailing
        Exercise Price (as defined in the Warrants) and for the number of Warrant
        Shares
        covered thereby.


      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      


      f.           Effect
        of Failure to File and Obtain and Maintain Effectiveness of Registration
        Statement.  If (i) a Registration Statement covering all of
        the Registrable Securities required to be covered thereby and required to
        be
        filed by the Company pursuant to this Agreement is (A) not filed with the
        SEC on or before the respective Filing Deadline (a “Filing
        Failure”) or (B) not declared effective by the SEC on or before
        the respective Effectiveness Deadline (an “Effectiveness
        Failure”); provided, however, that for thirty (30)
        days  following the Effectiveness Deadline there will be no
        Effectiveness Failure if the SEC is reviewing the Registration Statement
        and the
        Company is using its best efforts to have the Registration Statement declared
        effective or (ii) on any day after the Effective Date sales of all of the
        Registrable Securities required to be included on such Registration Statement
        cannot be made (other than during an Allowable Grace Period (as defined in
        Section 3(r)) pursuant to such Registration Statement (including, without
        limitation, because of a failure to keep such Registration Statement effective,
        to disclose such information as is necessary for sales to be made pursuant
        to
        such Registration Statement or to register a sufficient number of Shares
        of
        Common Stock) (a “Maintenance Failure”) then, as partial relief
        for the damages to any holder by reason of any Filing Failure, Effectiveness
        Failure or Maintenance Failure (which remedy shall not be exclusive of any
        other
        remedies available at law or in equity), the Company shall pay to each holder
        of
        Registrable Securities relating to such Registration Statement an amount
        in cash
        equal to two percent (2%) of the aggregate principal amount of such Holder's
        Notes relating to the Registrable Securities included in such Registration
        Statement on each of the following dates: (i) the day of a Filing Failure
        and on
        every thirtieth (30th) day
        thereafter
        (pro rated for periods totaling less than thirty (30) days) until such Filing
        Failure is cured; (ii) the day of an Effectiveness Failure and on every
        thirtieth (30th) day
        thereafter
        (pro rated for periods totaling less than thirty (30) days) until such
        Effectiveness Failure is cured; provided, however, if an
        Effectiveness Failure occurs and there has been an SEC review of the
        Registration Statement, Registration Delay Payments will begin to accrue
        on the
        30th day following the Effectiveness Deadline; and (iii) the initial day
        of a
        Maintenance Failure and on every thirtieth (30th) day
        thereafter
        (pro rated for periods totaling less than thirty (30) days) until such
        Maintenance Failure is cured.  The payments to which a holder shall be
        entitled pursuant to this Section 2(f) are referred to herein as
        "Registration Delay Payments".  Registration Delay
        Payments shall be paid on the day of the Filing Failure, Effectiveness Failure
        and the initial day of a Maintenance Failure, as applicable, and thereafter
        on
        the earlier of (I) the thirtieth (30th) day
        after the
        event or failure giving rise to the Registration Delay Payments has occurred
        and
        (II) the third Business Day after the event or failure giving rise to the
        Registration Delay Payments is cured.  By way of example, if a
        Registration Statement covering the Registrable Securities is filed on the
        6th day
        following the Filing Deadline, the Company shall pay to the Holders the
        Registration Delay Payment on the date of the Filing Failure and shall, on
        or
        prior to the third Business Day following such 6th day,
        pay to the
        Holders a pro rata amount of the Registration Delay Payment for such subsequent
        period (determined by multiplying such Registration Delay Payment by the
        product
        obtained by dividing the number of days (6) during which such Filing Failure
        occurred during such subsequent period by 30)).  In the event the
        Company fails to make Registration Delay Payments in a timely manner, such
        Registration Delay Payments shall bear interest at the rate of one and one-half
        percent (1.5%) per month (prorated for partial months) until paid in
        full.  Notwithstanding anything herein to the contrary, in no event
        shall the Registration Delay Payments exceed ten percent (10%) of the aggregate
        principal amount of the Notes held by all Holders on the date hereof (the
        "Registration Delay Payments Cap").  Any amount in
        excess of the Registration Delay Payments Cap (the "Excess Registration
        Delay Payments") shall cause the Conversion Price of the Holder's Notes
        to be lowered by an amount equal to the quotient of the amount of such Holders
        Excess Registration Delay Payments divided by the then outstanding amount
        of
        such Holder's Notes. Notwithstanding anything to the contrary contained herein,
        (y) in no event shall the Company be liable for any damages in connection
        with
        the Warrant or Warrant Shares and (z) no Registration Delay Payments shall
        be
        payable with respect to any Registrable Securities excluded from a Registration
        Statement by election of a Holder.


      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      


      3.   RELATED
        OBLIGATIONS.

      


      At
        such time as the Company is
        obligated to file a Registration Statement with the SEC pursuant to
        Section 2(a), 2(d) or 2(e), the Company will use its best efforts to effect
        the registration of the Registrable Securities in accordance with the intended
        method of disposition thereof and, pursuant thereto, the Company shall have
        the
        following obligations:

      


      a.           The
        Company shall promptly, but in no event later than the Filing Deadline, prepare
        and file with the SEC a Registration Statement with respect to the Registrable
        Securities and use its best efforts to cause such Registration Statement
        relating to the Registrable Securities to become effective as soon as
        practicable after such filing (but in no event later than the Effectiveness
        Deadline).  The Company shall keep each Registration Statement
        effective pursuant to Rule 415 at all times until the earlier of
        (i) the date as of which the Holders may sell all of the Registrable
        Securities covered by such Registration Statement without restriction pursuant
        to Rule 144(k) (or any successor thereto) promulgated under the 1933 Act
        or
        (ii) the date on which the Holders shall have sold all of the Registrable
        Securities covered by such Registration Statement (the “Registration
        Period”).  The Company shall ensure that each Registration
        Statement (including any amendments or supplements thereto and prospectuses
        contained therein) shall not contain any 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 case of prospectuses, in the light of
        the
        circumstances in which they were made) not misleading.  The term “best
        efforts” shall mean, among other things, that the Company shall submit to the
        SEC, within two (2) Business Days after the later of the date that (i) the
        Company learns that no review of a particular Registration Statement will
        be
        made by the staff of the SEC or that the staff has no further comments on
        a
        particular Registration Statement, as the case may be, and (ii) the
        approval of Legal Counsel pursuant to Section 3(c) (which approval is
        immediately sought), a request for acceleration of effectiveness of such
        Registration Statement to a time and date not later than 48 hours after the
        submission of such request.

      


      b.           The
        Company shall prepare and file with the SEC such amendments (including
        post-effective amendments) and supplements to a Registration Statement and
        the
        prospectus used in connection with such Registration Statement, which prospectus
        is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
        be necessary to keep such Registration Statement effective at all times during
        the Registration Period, and, during such period, comply with the provisions
        of
        the 1933 Act with respect to the disposition of all Registrable Securities
        of
        the Company covered by such Registration Statement until such time as all
        of
        such Registrable Securities shall have been disposed of in accordance with
        the
        intended methods of disposition by the seller
        or sellers
        thereof as set forth in such Registration Statement.  In the case of
        amendments and supplements to a Registration Statement which are required
        to be
        filed pursuant to this Agreement (including pursuant to this Section 3(b))
        by reason of the Company filing a report on Form 10-Q or Form 10-QSB, Form
        10-K
        or Form 10-KSB or any analogous report under the Securities Exchange Act
        of
        1934, as amended (the “1934 Act”), the Company shall have
        incorporated such report by reference into such Registration Statement, if
        applicable, or shall file such amendments or supplements with the SEC on
        the
        same day on which the 1934 Act report is filed which created the requirement
        for
        the Company to amend or supplement such Registration
        Statement.


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


      c.           The
        Company shall (A) permit Legal Counsel to review and comment upon
        (i) a Registration Statement at least five (5) Business Days prior to
        its filing with the SEC and (ii) all amendments and supplements to all
        Registration Statements (except for Annual Reports on Form 10-K or Form 10-KSB,
        and Reports on Form 10-Q or Form 10-QSB and any similar or successor reports)
        within a reasonable number of days prior to their filing with the SEC, and
        (B) not file any Registration Statement or amendment or supplement thereto
        in a form to which Legal Counsel reasonably objects.  The Company
        shall not submit a request for acceleration of the effectiveness of a
        Registration Statement or any amendment or supplement thereto without the
        prior
        approval of Legal Counsel, which consent shall not be unreasonably
        withheld.  The Company shall furnish to Legal Counsel, without charge,
        (i) copies of any correspondence from the SEC or the staff of the SEC to
        the Company or its representatives relating to any Registration Statement,
        (ii) promptly after the same is prepared and filed with the SEC, one copy
        of any Registration Statement and any amendment(s) thereto, including financial
        statements and schedules, all documents incorporated therein by reference,
        if
        requested by an Holder, and all exhibits and (iii) upon the effectiveness
        of any Registration Statement, one copy of the prospectus included in such
        Registration Statement and all amendments and supplements
        thereto.  The Company shall reasonably cooperate with Legal Counsel in
        performing the Company’s obligations pursuant to this
        Section 3.

      


      d.           The
        Company shall furnish to each Holder whose Registrable Securities are included
        in any Registration Statement, without charge, (i) if the Company shall not
        have filed a final prospectus in accordance with Rule 424 per
        Section 2(a), upon the effectiveness of any Registration Statement, ten
        (10) copies of the prospectus included in such Registration Statement and
        all
        amendments and supplements thereto (or such other number of copies as such
        Holder may reasonably request) and (ii) such other documents, including
        copies of any preliminary or final prospectus, as such Holder may reasonably
        request from time to time in order to facilitate the disposition of the
        Registrable Securities owned by such Holder.

      


      e.           The
        Company shall use its best efforts to (i) register and qualify, unless an
        exemption from registration and qualification applies, the resale by Holders
        of
        the Registrable Securities covered by a Registration Statement under such
        other
        securities or “blue sky” laws of all applicable jurisdictions in the United
        States, (ii) prepare and file in those jurisdictions, such amendments
        (including post-effective amendments) and supplements to such registrations
        and
        qualifications as may be necessary to maintain the effectiveness thereof
        during
        the Registration Period, (iii) take such other actions as may be necessary
        to maintain such registrations and qualifications in effect at all times
        during
        the Registration Period, and (iv) take all other actions reasonably necessary
        or
        advisable to qualify the Registrable Securities for sale
        in
        such jurisdictions; provided, however, that the Company shall not be required
        in
        connection therewith or as a condition thereto to (x) qualify to do
        business in any jurisdiction where it would not otherwise be required to
        qualify
        but for this Section 3(e), (y) subject itself to general taxation in
        any such jurisdiction, or (z) file a general consent to service of process
        in any such jurisdiction.  The Company shall promptly notify Legal
        Counsel and each Holder who holds Registrable Securities of the receipt by
        the
        Company of any notification with respect to the suspension of the registration
        or qualification of any of the Registrable Securities for sale under the
        securities or “blue sky” laws of any jurisdiction in the United States or its
        receipt of actual notice of the initiation or threatening of any proceeding
        for
        such purpose.


      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      


      f.           The
        Company shall notify Legal Counsel and each Holder in writing of the happening
        of any event, as promptly as practicable after becoming aware of such event,
        as
        a result of which the prospectus included in a Registration Statement, as
        then
        in effect, includes an untrue statement of a material fact or omission 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 (provided that in no event shall such notice contain
        any
        material, nonpublic information), and, subject to Section 3(r), promptly
        prepare a supplement or amendment to such Registration Statement to correct
        such
        untrue statement or omission, and deliver ten (10) copies of such supplement
        or
        amendment to Legal Counsel and each Holder (or such other number of copies
        as
        Legal Counsel or such Holder may reasonably request).  The Company
        shall also promptly notify Legal Counsel and each Holder in writing
        (i) when a prospectus or any prospectus supplement or post-effective
        amendment has been filed, and when a Registration Statement or any
        post-effective amendment has become effective (notification of such
        effectiveness shall be delivered to Legal Counsel and each Holder by facsimile
        or e-mail on the same day of such effectiveness and by overnight mail),
        (ii) of any request by the SEC for amendments or supplements to a
        Registration Statement or related prospectus or related information, and
        (iii) of the Company’s reasonable determination that a post-effective
        amendment to a Registration Statement would be appropriate.

      


      g.           The
        Company shall use its best efforts to prevent the issuance of any stop order
        or
        other suspension of effectiveness of a Registration Statement, or the suspension
        of the qualification of any of the Registrable Securities for sale in any
        jurisdiction and, if such an order or suspension is issued, to obtain the
        withdrawal of such order or suspension at the earliest possible moment and
        to
        notify Legal Counsel and each Holder who holds Registrable Securities being
        sold
        of the issuance of such order and the resolution thereof or its receipt of
        actual notice of the initiation or threat of any proceeding for such
        purpose.

      


      h.           At
        the reasonable request of any Holder, the Company shall furnish to such Holder,
        on the date of the effectiveness of the Registration Statement and thereafter
        from time to time on such dates as an Holder may reasonably request (i) a
        letter, dated such date, from the Company’s independent certified public
        accountants in form and substance as is customarily given by independent
        certified public accountants to underwriters in an underwritten public offering,
        addressed to the Holders, and (ii) an opinion, dated as of such date, of
        counsel representing the Company for purposes of such Registration Statement,
        in
        form, scope and substance as is customarily given in an underwritten public
        offering, addressed to the Holders.


      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      


      i.           If
        any Holder may be required under applicable securities law to be described
        in
        the Registration Statement as an underwriter, the Company shall make available
        for inspection by (i) any Holder, (ii) Legal Counsel and (iii) one
        firm of accountants or other agents retained by the Holders (collectively,
        the
“Inspectors”), all pertinent financial and other records, and
        pertinent corporate documents and properties of the Company (collectively,
        the
“Records”), as shall be reasonably deemed necessary by each
        Inspector, and cause the Company’s officers, directors and employees, counsel
        and the Company’s independent certified public accountants to supply all
        information which may be necessary and any Inspector may reasonably request;
        provided, however, that each Inspector shall agree to hold in strict confidence
        and shall not make any disclosure (except to an Holder) or use of any Record
        or
        other information which the Company determines in good faith to be confidential,
        and of which determination the Inspectors are so notified, unless (a) the
        disclosure of such Records is necessary to avoid or correct a misstatement
        or
        omission in any Registration Statement or is otherwise required under the
        1933
        Act, (b) the release of such Records is ordered pursuant to a final,
        non-appealable subpoena or order from a court or government body of competent
        jurisdiction, or (c) the information in such Records has been made
        generally available to the public other than by disclosure in violation of
        this
        or any other agreement of which the Inspector has knowledge.  Each
        Holder agrees that it shall, upon learning that disclosure of such Records
        is
        sought in or by a court or governmental body of competent jurisdiction or
        through other means, give prompt notice to the Company and allow the Company,
        at
        its expense, to undertake appropriate action to prevent disclosure of, or
        to
        obtain a protective order for, the Records deemed
        confidential.  Nothing herein (or in any other confidentiality
        agreement between the Company and any Holder) shall be deemed to limit the
        Holders’ ability to sell Registrable Securities in a manner which is otherwise
        consistent with applicable laws and regulations.

      


      j.           The
        Company shall hold in confidence and not make any disclosure of information
        concerning an Holder provided to the Company unless (i) disclosure of such
        information is necessary to comply with federal or state securities laws,
        (ii) the disclosure of such information is necessary to avoid or correct a
        misstatement or omission in any Registration Statement, (iii) the release
        of such information is ordered pursuant to a subpoena or other final,
        non-appealable order from a court or governmental body of competent
        jurisdiction, or (iv) such information has been made generally available to
        the public other than by disclosure in violation of this Agreement or any
        other
        agreement.  The Company agrees that it shall, upon learning that
        disclosure of such information concerning an Holder is sought in or by a
        court
        or governmental body of competent jurisdiction or through other means, give
        prompt written notice to such Holder and allow such Holder, at the Holder’s
        expense, to undertake appropriate action to prevent disclosure of, or to
        obtain
        a protective order for, such information.

      


      k.           The
        Company shall use its best efforts either to (i) cause all of the
        Registrable Securities covered by a Registration Statement to be listed on
        each
        securities exchange on which securities of the same class or series issued
        by
        the Company are then listed (which shall include the OTC Bulletin Board),
        if
        any, if the listing of such Registrable Securities is then permitted under
        the
        rules of such exchange, or (ii) secure designation and quotation of all of
        the Registrable Securities covered by a Registration Statement on the Nasdaq
        National Market, or (iii) if, despite the Company’s commercially reasonable
        best efforts to satisfy the preceding clauses (i) or (ii) the Company
        is unsuccessful in satisfying the preceding clauses (i) or (ii), to secure
        the inclusion for quotation on The Nasdaq Capital Market for
        such Registrable Securities and, without limiting the generality of the
        foregoing, to use its commercially reasonable best efforts to arrange for
        at
        least two market makers to register with the National Association of Securities
        Dealers, Inc. (“NASD”) as such with respect to such Registrable
        Securities.  The Company shall pay all fees and expenses in connection
        with satisfying its obligation under this
        Section 3(k).


      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      


      l.           The
        Company shall cooperate with the Holders who hold Registrable Securities
        being
        offered and, to the extent applicable, facilitate the timely preparation
        and
        delivery of certificates (not bearing any restrictive legend) representing
        the
        Registrable Securities to be offered pursuant to a Registration Statement
        and
        enable such certificates to be in such denominations or amounts, as the case
        may
        be, as the Holders may reasonably request and registered in such names as
        the
        Holders may request.

      


      m.           If
        requested by an Holder, the Company shall within ten (10) days of receipt
        of
        notice from such Holder (i) incorporate in a prospectus supplement or
        post-effective amendment such information as an Holder reasonably requests
        to be
        included therein relating to the sale and distribution of Registrable
        Securities, including, without limitation, information with respect to the
        number of Registrable Securities being offered or sold, the purchase price
        being
        paid therefor and any other terms of the offering of the Registrable Securities
        to be sold in such offering; (ii) make all required filings of such prospectus
        supplement or post-effective amendment after being notified of the matters
        to be
        incorporated in such prospectus supplement or post-effective amendment; and
        (iii) supplement or make amendments to any Registration Statement if
        reasonably requested by an Holder holding any Registrable
        Securities.

      


      n.           The
        Company shall reasonably cooperate with the Holders as may be necessary to
        consummate the disposition of such Registrable Securities.

      


      o.           The
        Company shall make generally available to its security holders as soon as
        practical, but not later than ninety (90) days after the close of the period
        covered thereby, an earnings statement (in form complying with, and in the
        manner provided by, the provisions of Rule 158 under the 1933 Act) covering
        a twelve-month period beginning not later than the first day of the Company’s
        fiscal quarter next following the effective date of the Registration
        Statement.

      


      p.           The
        Company shall otherwise use its best efforts to comply with all applicable
        rules
        and regulations of the SEC in connection with any registration
        hereunder.

      


      q.           Within
        two (2) Business Days after a Registration Statement which covers Registrable
        Securities is ordered effective by the SEC, the Company shall deliver, and
        shall
        cause legal counsel for the Company to deliver, to the transfer agent for
        such
        Registrable Securities (with copies to the Holders whose Registrable Securities
        are included in such Registration Statement) confirmation that such Registration
        Statement has been declared effective by the SEC in the form attached hereto
        as Exhibit A.


      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      


      r.           Notwithstanding
        anything to the contrary herein, at any time after Effective Date, the Company
        may delay the disclosure of material, non-public information concerning the Company the disclosure
        of which at the time is
        not, in the good faith opinion of the Board of Directors of the Company and
        its
        counsel, in the best interest of the Company and, in the opinion of counsel
        to
        the Company, otherwise required (a “Grace Period”); provided,
        that the Company shall promptly (i) notify the Holders in writing of the
        existence of material, non-public information giving rise to a Grace Period
        (provided that in each notice the Company will not disclose the content of
        such
        material, non-public information to the Holders) and the date on which the
        Grace
        Period will begin, and (ii) notify the Holders in writing of the date on
        which the Grace Period ends; and, provided further, that no Grace Period
        shall
        exceed ten (10) consecutive days and during any three hundred sixty five
        (365)
        day period such Grace Periods shall not exceed an aggregate of thirty (30)
        days
        and the first day of any Grace Period must be at least two Trading Days after
        the last day of any prior Grace Period (each, an “Allowable Grace
        Period”).  For purposes of determining the length of a Grace
        Period above, the Grace Period shall begin on and include the date the Holders
        receive the notice referred to in clause (i) and shall end on and include
        the later of the date the Holders receive the notice referred to in clause
        (ii) and the date referred to in such notice.  The provisions of
        Section 3(g) hereof shall not be applicable during the period of any Allowable
        Grace Period.  Upon expiration of the Grace Period, the Company shall
        again be bound by the first sentence of Section 3(f) with respect to the
        information giving rise thereto unless such material, non-public information
        is
        no longer applicable.  Notwithstanding anything to the contrary, the
        Company shall cause its transfer agent to deliver unlegended shares of Common
        Stock to a transferee of a Holder in accordance with the terms of the Securities
        Purchase Agreement in connection with any sale of Registrable Securities
        with
        respect to which an Holder has entered into a contract for sale, and delivered
        a
        copy of the prospectus included as part of the applicable Registration Statement
        (unless an exemption from such prospectus delivery requirement exists), prior
        to
        the Holder’s receipt of the notice of a Grace Period and for which the Holder
        has not yet settled.

      


      4.           OBLIGATIONS
        OF THE HOLDERS.

      


      a.           At
        least ten (10) Business Days prior to the first anticipated filing date of
        a
        Registration Statement, the Company shall notify each Holder in writing of
        the
        information the Company requires from each such Holder if such Holder elects
        to
        have any of such Holder’s Registrable Securities included in such Registration
        Statement.  It shall be a condition precedent to the obligations of
        the Company to complete the registration pursuant to this Agreement with
        respect
        to the Registrable Securities of a particular Holder that such Holder shall
        furnish to the Company such information regarding itself, the Registrable
        Securities held by it and the intended method of disposition of the Registrable
        Securities held by it, as shall be reasonably required to effect and maintain
        the effectiveness of the registration of such Registrable Securities and
        shall
        execute such documents in connection with such registration as the Company
        may
        reasonably request.


      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      


      b.           Each
        Holder, by such Holder’s acceptance of the Registrable Securities, agrees to
        cooperate with the Company as reasonably requested by the Company in connection
        with the preparation and filing of any Registration Statement hereunder,
        unless
        such Holder has notified the Company in writing of such Holder’s election to
        exclude all of such Holder’s Registrable Securities from such Registration
        Statement.

      


      c.           Each
        Holder agrees that, upon receipt of any notice from the Company of the happening
        of any event of the kind described in Section 3(g) or the first sentence
        of
        3(f), such Holder will immediately discontinue disposition of Registrable
        Securities pursuant to any Registration Statement(s) covering such Registrable
        Securities until such Holder’s receipt of the copies of the supplemented or
        amended prospectus contemplated by Section 3(g) or the first sentence of
        3(f) or
        receipt of notice that no supplement or amendment is
        required.  Notwithstanding anything to the contrary, the Company shall
        cause its transfer agent to deliver unlegended shares of Common Stock to
        a
        transferee of a Holder in accordance with the terms of the Securities Purchase
        Agreement in connection with any sale of Registrable Securities with respect
        to
        which an Holder has entered into a contract for sale prior to the Holder’s
        receipt of a notice from the Company of the happening of any event of the
        kind
        described in Section 3(g) or the first sentence of 3(f) and for which the
        Holder
        has not yet settled.

      


      d.           Each
        Holder covenants and agrees that it will comply with any applicable prospectus
        delivery requirements of the 1933 Act as applicable to or an exemption therefrom
        it in connection with sales of Registrable Securities pursuant to the
        Registration Statement.

      


      5.           EXPENSES
        OF REGISTRATION.

      


      All
        reasonable expenses, other than underwriting discounts and commissions, incurred
        in connection with registrations, filings or qualifications pursuant to
        Sections 2 and 3, including, without limitation, all registration, listing
        and qualifications fees, printers and accounting fees, and fees and
        disbursements of counsel for the Company related to registrations shall be
        paid
        by the Company.  The Company shall also reimburse the Holders for the
        fees and disbursements of Legal Counsel in connection with registration,
        filing
        or qualification pursuant to Sections 2 and 3 of this Agreement which
        amount shall be limited to $15,000.

      


      6.           INDEMNIFICATION.

      


      In
        the event any Registrable Securities
        are included in a Registration Statement under this Agreement:

      


      a.           To
        the fullest extent permitted by law, the Company will, and hereby does,
        indemnify, hold harmless and defend each Holder, the directors, officers,
        members, managers, partners, employees, stockholders, agents, representatives
        of, and each Person, if any, who controls any Holder within the meaning of
        the
        1933 Act or the 1934 Act (each, an “Indemnified Person”),
        against any losses, claims, damages, liabilities, judgments, fines, penalties,
        charges, costs, reasonable attorneys’ fees, amounts paid in settlement or
        expenses, joint or several, (collectively, “Claims”) incurred
        in investigating, preparing or defending any action, claim, suit, inquiry,
        proceeding, investigation or appeal taken from the foregoing by or before
        any
        court or governmental, administrative or other regulatory agency, body or
        the
        SEC, whether pending or threatened, whether or not an indemnified party is
        or
        may be a party thereto (“Indemnified Damages”), to which any of
        them may become subject insofar as such Claims (or actions or proceedings,
        whether commenced or threatened, in respect thereof) arise out of or are
        based
        upon: (i) any untrue statement or alleged untrue statement of a material
        fact in a Registration Statement or any post-effective amendment thereto
        or in
        any filing made in connection with the qualification of the offering under
        the
        securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are
        offered (“Blue Sky
        Filing”), or the omission or alleged omission to state a material fact
        required to be stated therein or necessary to make the statements therein
        not
        misleading, (ii) any untrue statement or alleged untrue statement of a
        material fact contained in any preliminary prospectus if used prior to the
        effective date of such Registration Statement, or contained in the final
        prospectus (as amended or supplemented, if the Company files any amendment
        thereof or supplement thereto with the SEC) or the omission or alleged omission
        to state therein any material fact necessary to make the statements made
        therein, in light of the circumstances under which the statements therein
        were
        made, not misleading, (iii) any violation or alleged violation by the
        Company of the 1933 Act, the 1934 Act, any other law, including, without
        limitation, any state securities law, or any rule or regulation thereunder
        relating to the offer or sale of the Registrable Securities pursuant to a
        Registration Statement or (iv) any violation of this Agreement (the matters
        in the foregoing clauses (i) through (iv) being, collectively,
“Violations”).  Subject to Section 6(c), the
        Company shall reimburse the Indemnified Persons, promptly as such expenses
        are
        incurred and are due and payable, for any legal fees or other reasonable
        expenses incurred by them in connection with investigating or defending any
        such
        Claim.  Notwithstanding anything to the contrary contained herein, the
        indemnification agreement contained in this Section 6(a): (i) shall
        not apply to a Claim by an Indemnified Person arising out of or based upon
        a
        Violation which occurs in reliance upon and in conformity with information
        furnished in writing to the Company by such Indemnified Person for such
        Indemnified Person expressly for use in connection with the preparation of
        the
        Registration Statement or any such amendment thereof or supplement thereto,
        if
        such prospectus was timely made available by the Company pursuant to Section
        3(d) and (ii) shall not apply to amounts paid in settlement of any Claim if
        such settlement is effected without the prior written consent of the Company,
        which consent shall not be unreasonably withheld or delayed.  Such
        indemnity shall remain in full force and effect regardless of any investigation
        made by or on behalf of the Indemnified Person and shall survive the transfer
        of
        the Registrable Securities by the Holders pursuant to
        Section 9.


      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      


      b.           In
        connection with any Registration Statement in which an Holder is participating,
        each such Holder agrees to severally and not jointly indemnify, hold harmless
        and defend, to the same extent and in the same manner as is set forth in
        Section 6(a), the Company, each of its directors, each of its officers who
        signs the Registration Statement and each Person, if any, who controls the
        Company within the meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified Party”), against any Claim or Indemnified Damages
        to which any of them may become subject, under the 1933 Act, the 1934 Act
        or
        otherwise, insofar as such Claim or Indemnified Damages arise out of or are
        based upon any Violation, in each case to the extent, and only to the extent,
        that such Violation occurs in reliance upon and in conformity with written
        information furnished to the Company by such Holder expressly for use in
        connection with such Registration Statement; and, subject to Section 6(c),
        such Holder will reimburse any legal or other expenses reasonably incurred
        by an
        Indemnified Party in connection with investigating or defending any such
        Claim;
        provided, however, that the indemnity agreement contained in this Section
        6(b)
        and the agreement with respect to contribution contained in Section 7 shall
        not apply to amounts paid in settlement of any Claim if such settlement is
        effected without the prior written consent of such Holder, which consent
        shall
        not be unreasonably withheld or delayed; provided, further, however, that
        the
        Holder shall be liable under this Section 6(b) or Section 7 for only that
        amount
        of a Claim or Indemnified Damages as does not exceed the net proceeds to
        such
        Holder as a result of the sale of Registrable Securities pursuant to such
        Registration Statement.  Such indemnity shall remain in full force and
        effect regardless of any investigation made by or on behalf of such Indemnified
        Party and shall survive the transfer of the Registrable Securities by the
        Holders pursuant to Section 9.  Notwithstanding anything to the
        contrary contained herein, the indemnification agreement contained in this
        Section 6(b) with respect to any preliminary prospectus shall not inure to
        the
        benefit of any Indemnified Party if the untrue statement or omission of material
        fact contained in the preliminary prospectus was corrected on a timely basis
        in
        the prospectus, as then amended or supplemented.


      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      


      c.           Promptly
        after receipt by an Indemnified Person or Indemnified Party under this
        Section 6 of notice of the commencement of any action or proceeding
        (including any governmental action or proceeding) involving a Claim, such
        Indemnified Person or Indemnified Party shall, if a Claim in respect thereof
        is
        to be made against any indemnifying party under this Section 6, deliver to
        the indemnifying party a written notice of the commencement thereof, and
        the
        indemnifying party shall have the right to participate in, and, to the extent
        the indemnifying party so desires, jointly with any other indemnifying party
        similarly noticed, to assume control of the defense thereof with counsel
        mutually satisfactory to the indemnifying party and the Indemnified Person
        or
        the Indemnified Party, as the case may be; provided, however, that an
        Indemnified Person or Indemnified Party shall have the right to retain its
        own
        counsel with the fees and expenses of not more than one counsel for such
        Indemnified Person or Indemnified Party to be paid by the indemnifying party,
        if, in the reasonable opinion of counsel retained by the indemnifying party,
        the
        representation by such counsel of the Indemnified Person or Indemnified Party
        and the indemnifying party would be inappropriate due to actual or potential
        differing interests between such Indemnified Person or Indemnified Party
        and any
        other party represented by such counsel in such proceeding.  In the
        case of an Indemnified Person, legal counsel referred to in the immediately
        preceding sentence shall be selected by the Holders holding at least a majority
        in interest of the Registrable Securities included in the Registration Statement
        to which the Claim relates.  The Indemnified Party or Indemnified
        Person shall cooperate reasonably with the indemnifying party in connection
        with
        any negotiation or defense of any such action or Claim by the indemnifying
        party
        and shall furnish to the indemnifying party all information reasonably available
        to the Indemnified Party or Indemnified Person which relates to such action
        or
        Claim.  The indemnifying party shall keep the Indemnified Party or
        Indemnified Person fully apprised at all times as to the status of the defense
        or any settlement negotiations with respect thereto.  No indemnifying
        party shall be liable for any settlement of any action, claim or proceeding
        affected without its prior written consent, provided, however, that the
        indemnifying party shall not unreasonably withhold, delay or condition its
        consent.  No indemnifying party shall, without the prior written
        consent of the Indemnified Party or Indemnified Person, consent to entry
        of any
        judgment or enter into any settlement or other compromise which does not
        include
        as an unconditional term thereof the giving by the claimant or plaintiff
        to such
        Indemnified Party or Indemnified Person of a release from all liability in
        respect to such Claim or litigation.  Following indemnification as
        provided for hereunder, the indemnifying party shall be subrogated to all
        rights
        of the Indemnified Party or Indemnified Person with respect to all third
        parties, firms or corporations relating to the matter for which indemnification
        has been made.  The failure to deliver written notice to the
        indemnifying party within a reasonable time of the commencement of any such
        action shall not relieve such indemnifying party of any liability to the
        Indemnified Person or Indemnified Party under this Section 6, except to the
        extent that the indemnifying party is materially prejudiced in its ability
        to
        defend such action.


      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      d.           The
        indemnification required by this Section 6 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 Indemnified Damages are
        incurred.

      


      e.           The
        indemnity agreements contained herein shall be in addition to (i) any cause
        of action or similar right of the Indemnified Party or Indemnified Person
        against the indemnifying party or others, and (ii) any liabilities the
        indemnifying party may be subject to pursuant to the law.

      


      7.           CONTRIBUTION.

      


      To
        the extent any indemnification by an
        indemnifying party is prohibited or limited by law, the indemnifying party
        agrees to make the maximum contribution with respect to any amounts for which
        it
        would otherwise be liable under Section 6 to the fullest extent permitted
        by law; provided, however, that: (i) no Person involved in the sale of
        Registrable Securities which Person is guilty of fraudulent misrepresentation
        (within the meaning of Section 11(f) of the 1933 Act) in connection with
        such
        sale shall be entitled to contribution from any Person involved in such sale
        of
        Registrable Securities who was not guilty of fraudulent misrepresentation;
        and
        (ii) contribution by any seller of Registrable Securities shall be limited
        in amount to the net amount of proceeds received by such seller from the
        sale of
        such Registrable Securities pursuant to such Registration
        Statement.

      


      8.           REPORTS
        UNDER THE 1934 ACT.

      


      With
        a view to making available to the
        Holders the benefits of Rule 144 promulgated under the 1933 Act or any
        other similar rule or regulation of the SEC that may at any time permit the
        Holders to sell securities of the Company to the public without registration
        (“Rule 144”), the Company agrees to:

      


      a.           make
        and keep public information available, as those terms are understood and
        defined
        in Rule 144;

      


      b.           file
        with the SEC in a timely manner all reports and other documents required
        of the
        Company under the 1933 Act and the 1934 Act so long as the Company remains
        subject to such requirements (it being understood that nothing herein shall
        limit the Company’s obligations under Section 4(c) of the Securities Purchase
        Agreement) and the filing of such reports and other documents is required
        for
        the applicable provisions of Rule 144; and


      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      


      c.           furnish
        to each Holder so long as such Holder owns Registrable Securities, promptly
        upon
        request, (i) a written statement by the Company, if true, that it has
        complied with the reporting requirements of Rule 144, the 1933 Act and the
        1934 Act, (ii) a copy of the most recent annual or quarterly report of the
        Company and such other reports and documents so filed by the Company, and
        (iii) such other information as may be reasonably requested to permit the
        Holders to sell such securities pursuant to Rule 144 without
        registration.

      


      9.           ASSIGNMENT
        OF REGISTRATION RIGHTS.

      


      The
        rights under this Agreement shall
        be automatically assignable by an Holder to any transferee of all or any
        portion
        of such Holder’s Registrable Securities if: (i) such Holder agrees in
        writing with the transferee or assignee to assign such rights, and a copy
        of
        such agreement is furnished to the Company within a reasonable time after
        such
        assignment; (ii) the Company is, within a reasonable time after such
        transfer or assignment, furnished with written notice of (a) the name and
        address of such transferee or assignee, and (b) the securities with respect
        to which such registration rights are being transferred or assigned;
        (iii) immediately following such transfer or assignment the further
        disposition of such securities by the transferee or assignee is restricted
        under
        the 1933 Act and applicable state securities laws; (iv) at or before the
        time the Company receives the written notice contemplated by clause (ii) of
        this sentence the transferee or assignee agrees in writing with the Company
        to
        be bound by all of the provisions contained herein; and (v) such transfer
        shall have been made in accordance with the applicable requirements of the
        Securities Purchase Agreement.

      


      10.           AMENDMENT
        OF REGISTRATION RIGHTS.

      


      Provisions
        of this Agreement may be
        amended and the observance thereof may be waived (either generally or in
        a
        particular instance and either retroactively or prospectively), only with
        the
        written consent of the Company and the Required Holders.  Any
        amendment or waiver effected in accordance with this Section 10 shall be
        binding upon each Holder and the Company.  No such amendment shall be
        effective to the extent that it applies to less than all of the holders of
        the
        Registrable Securities.  No consideration shall be offered or paid to
        any Person to amend or consent to a waiver or modification of any provision
        of
        any of this Agreement unless the same consideration also is offered to all
        of
        the parties to this Agreement.

      


      11.           MISCELLANEOUS.

      


      a.           A
        Person is deemed to be a holder of Registrable Securities whenever such Person
        owns or is deemed to own of record such Registrable Securities.  If
        the Company receives conflicting instructions, notices or elections from
        two or
        more Persons with respect to the same Registrable Securities, the Company
        shall
        act upon the basis of instructions, notice or election received from such
        record
        owner of such Registrable Securities.


      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      


      b.           Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms of this Agreement must be in writing and will be deemed
        to
        have been delivered: (i) upon receipt, when delivered personally;
        (ii) upon receipt, when sent by facsimile (provided confirmation of
        transmission is mechanically or electronically generated and kept on file
        by the
        sending party); or (iii) one Business Day after deposit with a nationally
        recognized overnight delivery service, in each case properly addressed to
        the
        party to receive the same.  The addresses and facsimile numbers for
        such communications shall be:

      


      If
        to the
        Company:

      
        Charys
          Holding Company, Inc.

        1117
          Perimeter Center West, Suite N415

        Atlanta,
          GA 30338

        
          	
                   

                	
                  Attention:

                	
                  Billy
                    V. Ray, Jr.

                


        

        
          	
                   

                	
                  Telephone:

                	
                  678-443-2300

                


        

        
          	
                   

                	
                  Facsimile:

                	
                  678-443-2320

                


        

      

       

      If
        to
        Legal Counsel for the Company:

      


      Morris Manning
        & Martin, LLP

      1600
        Atlanta Financial Center

      3343
        Peachtree Road

      Atlanta,
        Georgia 30326

      
        	
                 

              	
                Attention:

              	
                Larry W. Shackelford,
                  Esq.

              


      

      
        	
                 

              	
                Telephone:

              	
                404-233-7000

              


      

      
        	
                 

              	
                Facsimile:

              	
                404-365-9532

              


      

      


      and

      


      Glast,
        Phillips & Murray, P.C.

      815
        Walker Street, Suite 1250

      Houston,
        Texas 77002

      
        	
                 

              	
                Attention:

              	
                Norman
                  T. Reynolds, Esq.

              


      

      
        	
                 

              	
                Telephone:

              	
                713-237-3135

              


      

      
        	
                 

              	
                Facsimile:

              	
                713-237-3202

              


      

      


      If
        to a
        Holder, to its address and facsimile number set forth in the Securities Purchase
        Agreement or the Amendment Agreement, as applicable, with copies to such
        Holder’s representatives as set forth therein, or to such other address and/or
        facsimile number and/or to the attention of such other Person as the recipient
        party has specified by written notice given to each other party five
        (5) days prior to the effectiveness of such change.  Written
        confirmation of receipt (A) given by the recipient of such notice, consent,
        waiver or other communication, (B) mechanically or electronically generated
        by the sender’s facsimile machine containing the time, date, recipient facsimile
        number and an image of the first page of such transmission or (C) provided
        by a courier or overnight courier service shall be rebuttable evidence of
        personal service, receipt by facsimile or receipt from a nationally recognized
        overnight delivery service in accordance with clause (i), (ii) or (iii)
        above, respectively.


      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      


      c.           Failure
        of any party to exercise any right or remedy under this Agreement or otherwise,
        or delay by a party in exercising such right or remedy, shall not operate
        as a
        waiver thereof.

      


      d.           All
        questions concerning the construction, validity, enforcement and interpretation
        of this Agreement shall be governed by the internal laws of the State of
        New
        York, without giving effect to any choice of law or conflict of law provision
        or
        rule (whether of the State of New York or any other jurisdictions) that would
        cause the application of the laws of any jurisdictions other than the State
        of
        New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state
        and federal courts sitting
        in The City of New York, Borough of Manhattan, for the adjudication of any
        dispute hereunder or in connection herewith or with any transaction contemplated
        hereby or discussed herein, and hereby irrevocably waives, and agrees not
        to
        assert in any suit, action or proceeding, any claim that it is not personally
        subject to the jurisdiction of any such court, that such suit, action or
        proceeding is brought in an inconvenient forum or that the venue of such
        suit,
        action or proceeding is improper.  Each party hereby irrevocably
        waives personal service of process and consents to process being served in
        any
        such suit, action or proceeding by mailing a copy thereof to such party at
        the
        address for such notices to it under this Agreement and agrees that such
        service
        shall constitute good and sufficient service of process and notice
        thereof.  Nothing contained herein shall be deemed to limit in any way
        any right to serve process in any manner permitted by law.  If any
        provision of this Agreement shall be invalid or unenforceable in any
        jurisdiction, such invalidity or unenforceability shall not affect the validity
        or enforceability of the remainder of this Agreement in that jurisdiction
        or the
        validity or enforceability of any provision of this Agreement in any other
        jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
        HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
        DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT
        OR
        ANY TRANSACTION CONTEMPLATED HEREBY.

      


      e.           This
        Agreement, the other Transaction Documents (as defined in the Amendment
        Agreement) and the instruments referenced herein and therein constitute the
        entire agreement among the parties hereto with respect to the subject matter
        hereof and thereof.  There are no restrictions, promises, warranties
        or undertakings, other than those set forth or referred to herein and
        therein.  This Agreement, the other Transaction Documents and the
        instruments referenced herein and therein supersede all prior agreements
        and
        understandings among the parties hereto with respect to the subject matter
        hereof and thereof.

      


      f.           Subject
        to the requirements of Section 9, this Agreement shall inure to the benefit
        of and be binding upon the permitted successors and assigns of each of the
        parties hereto.

      


      g.           The
        headings in this Agreement are for convenience of reference only and shall
        not
        limit or otherwise affect the meaning hereof.


      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      


      h.           This
        Agreement may be executed in identical counterparts, each of which shall
        be
        deemed an original but all of which shall constitute one and the same
        agreement.  This Agreement, once executed by a party, may be delivered
        to the other party hereto by facsimile transmission of a copy of this Agreement
        bearing the signature of the party so delivering this Agreement.

      


      i.           Each
        party shall do and perform, or cause to be done and performed, all such further
        acts and things, and shall execute and deliver all such other agreements,
        certificates, instruments and documents, as any other party may reasonably
        request in order to carry out the intent and accomplish the purposes of this
        Agreement and the consummation of the transactions contemplated
        hereby.

      


      j.           All
        consents and other determinations required to be made by the Holders pursuant
        to
        this Agreement shall be made, unless otherwise specified in this Agreement,
        by
        the Required Holders.

      


      k.           The
        language used in this Agreement will be deemed to be the language chosen
        by the
        parties to express their mutual intent and no rules of strict construction
        will
        be applied against any party.

      


      l.           This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other Person.

      


      m.           The
        obligations of each Holder hereunder are several and not joint with the
        obligations of any other Holder, and no provision of this Agreement is intended
        to confer any obligations on any Holder vis-à-vis any other
        Holder.  Nothing contained herein, and no action taken by any Holder
        pursuant hereto, shall be deemed to constitute the Holders as a partnership,
        an
        association, a joint venture or any other kind of entity, or create a
        presumption that the Holders are in any way acting in concert or as a group
        with
        respect to such obligations or the transactions contemplated
        herein.

      


      n.           In
        the event of any conflict between the terms of this Agreement, the Amendment
        Agreement, or any of the other Transaction Documents or exhibits referred
        to
        herein or therein, the terms of the Amendment Agreement shall
        control.

      


      [SIGNATURES
        ON FOLLOWING PAGE]


      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the undersigned
        holders and the Company have caused their respective signature page to this
        Amended and Restated Registration Rights Agreement to be duly executed as
        of the
        date first written above.

      


      
        	 	
                CHARYS
                  HOLDING COMPANY, INC.

              
	 	 	 
	
                 

              	 	 
	 	
                By

              	
                 

              	
              
	
                 

              	 	
                Billy V. Ray,
                  Jr.

              
	
                 

              	 	
                Chief
                  Executive Officer

              
	 	 	 
	 	
                HOLDER: 

              
	
                 

              	 	 
	 	
                IMPERIUM
                  MASTER FUND, LTD.

              
	
                 

              	 	 
	
                 

              	 	 
	 	
                By:

              	
                 

              	
              
	
                 

              	 	
                Maurice Hryshko

              
	
                 

              	 	
                General
                  Counsel

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the undersigned
        holders and the Company have caused their respective signature page to this
        Amended and Restated Registration Rights Agreement to be duly executed as
        of the
        date first written above.

      


      
        	 	
                CHARYS
                  HOLDING COMPANY, INC.

              
	 	 	 
	
                 

              	 	 
	 	
                By

              	 	 
	
                 

              	 	
                Billy V. Ray,
                  Jr.

              
	
                 

              	 	
                Chief
                  Executive Officer

              
	 	 	 
	 	
                HOLDER:

              
	
                 

              	 	 
	 	
                JED
                  FAMILY TRUST

              
	
                 

              	 	 
	
                 

              	 	 
	 	
                By:

              	 	 
	
                 

              	 	
                Name:

              
	
                 

              	 	
                Title:

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the undersigned
        holders and the Company have caused their respective signature page to this
        Amended and Restated Registration Rights Agreement to be duly executed as
        of the
        date first written above.

      


      
        	 	
                CHARYS
                  HOLDING COMPANY, INC.

              
	 	 	 
	
                 

              	 	 
	 	
                By

              	 	 
	
                 

              	 	
                Billy V. Ray,
                  Jr.

              
	
                 

              	 	
                Chief
                  Executive Officer

              
	 	 	 
	 	
                HOLDER:

              
	
                 

              	 	 
	 	
                JOHN MICHAELSON

              
	 	 	 
	 	 	 	 


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        A

      


      FORM
        OF NOTICE OF EFFECTIVENESS

      OF
        REGISTRATION STATEMENT

      


      


      [Registrar
        & Transfer Co.

      10
        Commerce Drive

      Cranford,
        NJ 07016]

      


      
        	
                 

              	
                Re:

              	
                Charys
                  Holding Co., Inc.

              


      

      


      Ladies
        and Gentlemen:

      


      [We
        are][I am] counsel to Charys
        Holding Company, Inc., a Delaware corporation (the “Company”), and have
        represented the Company in connection with that certain Amended and Restated
        Registration Rights Agreement, dated as of April 5, 2007, by and among the
        Company and the Holders (as defined therein) (the “ Registration Rights
        Agreement”), pursuant to which the Company agreed, among other things, to
        register the Registrable Securities (as defined in the Registration Rights
        Agreement), including the shares of Common Stock issuable upon conversion
        of the
        Notes and the shares of Common Stock issuable upon exercise of the Warrants,
        under the Securities Act of 1933, as amended (the “1933 Act”).  In
        connection with the Company’s obligations under the Registration Rights
        Agreement, on ___, 200_, the Company filed a Registration Statement on Form
        SB-2
        (File No.  333-___) (the “Registration Statement ”) with the
        Securities and Exchange Commission (the “SEC”) relating to the Registrable
        Securities which names each of the Holders as a selling stockholder
        thereunder.

      


      In
        connection with the foregoing,
        [we][I] advise you that a member of the SEC’s staff has advised [us][me] by
        telephone that the SEC has entered an order declaring the Registration Statement
        effective under the 1933 Act at  [ ENTER TIME OF EFFECTIVENESS
        ]  on  [ ENTER DATE OF EFFECTIVENESS ]  and
        [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s
        staff, that any stop order suspending its effectiveness has been issued or
        that
        any proceedings for that purpose are pending before, or threatened by, the
        SEC
        and the Registrable Securities are available for resale under the 1933 Act
        pursuant to the Registration Statement.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      This
        letter shall serve as our standing
        opinion to you that the shares of Common Stock are freely transferable by
        the
        Holders pursuant to the Registration Statement.

      


      Very
        truly yours,

      


      [ISSUER’S
        COUNSEL]

      


      


      
        	
                CC:

              	
                [LIST
                  NAMES OF HOLDERS]

              


      

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      C

    Form
      of Subsidiary Guarantee

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Execution
      Copy

    


    GUARANTEE

    


    THIS
      GUARANTEE (this
“Guarantee”), dated as of April 5, 2007, made by each
      of the undersigned guarantors (together with any other entity that may become
      an
      additional guarantor hereunder, the “Guarantors”), in
      favor of the Holders (the “Holders”) of Senior Secured
      Convertible Notes of Charys Holding Company, Inc., a Delaware corporation (the
      “Company”), which notes have been amended and restated
      as of the date hereof (such notes, as amended and restated, the
“Notes”), and Imperium Advisers, LLC, as the
      Collateral Agent (the “Collateral
      Agent”).  Capitalized terms used herein and not
      otherwise defined shall have the respective meanings specified in the Amendment
      Agreement (as defined below).

    


    W
      I T N E
      S S E T H:

    


    WHEREAS,
      pursuant to that certain
      Amendment Agreement, dated as of the date hereof, by and between the Company
      and
      the holders named therein (the “Amendment Agreement”),
      it is a condition precedent to the performance by the holders named therein
      of
      their obligations under the Amendment Agreement that the Guarantors execute
      and
      deliver this Guarantee; and

    


    WHEREAS,
      each Guarantor, as a
      subsidiary of the Company, will directly or indirectly benefit from the
      extension of credit to the Company represented by the Notes.

    


    NOW,
      THEREFORE, in consideration of the agreements herein contained and for other
      good and valuable consideration, the receipt and sufficiency of which is hereby
      acknowledged, the parties hereto hereby agree as follows:

    


    1.           GUARANTEE.

    


    1.1           Guarantee
      of Obligations.

    


    (a)           Each
      Guarantor hereby, jointly and severally, unconditionally and irrevocably,
      guarantees to each Holder and its lawful successors, endorsees, transferees
      and
      assigns, the prompt and complete payment and performance by the Company when
      due
      (whether at the stated maturity, by acceleration or otherwise) of all
      obligations and undertakings of the Company of whatever nature, monetary or
      otherwise, under the Securities Purchase Agreement, and the Notes, the Amendment
      Agreement, the Imperium Warrants, the Registration Rights Agreement, the
      Security Agreement and the other Transaction Documents, together with all
      reasonable attorneys’ fees, disbursements and all other costs and expenses of
      collection incurred by Holders in enforcing any of such Obligations and/or
      this
      Guarantee (collectively, the
“Obligations”).  This Guarantee shall remain
      in full force and effect until all the Obligations and the obligations of each
      Guarantor under this Guarantee shall have been satisfied by payment and
      performance in full.  Each Guarantor shall be regarded, and shall be
      in the same position, as principal debtor with respect to the
      Obligations.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    (b)           Anything
      herein or in any other Transaction Document to the contrary notwithstanding,
      the
      maximum liability of each Guarantor hereunder and under the other Transaction
      Documents shall in no event exceed the amount which can be guaranteed by such
      Guarantor under applicable federal and state laws, including laws relating
      to
      the insolvency of debtors, fraudulent conveyance or transfer or laws affecting
      the rights of creditors generally (after giving effect to the right of
      contribution established in Section 1.3 of this
      Guarantee).

    


    1.2           Guarantee
      Absolute and Unconditional.  Each Guarantor understands and agrees
      that this Guarantee shall be construed as a continuing, absolute and
      unconditional guarantee of payment and performance without regard to (a) the
      validity or enforceability of the Amendment Agreement or any other Transaction
      Document, any of the Obligations or any other collateral security therefor
      or
      guarantee or right of offset with respect thereto at any time or from time
      to
      time held by the Holders, (b) any defense, set-off or counterclaim (other than
      a
      defense of payment or performance or fraud or misconduct by Holders) which
      may
      at any time be available to or be asserted by the Company or any other Person
      against the Holders, or (c) any other circumstance whatsoever (with or without
      notice to or knowledge of the Company or such Guarantor) which constitutes,
      or
      might be construed to constitute, an equitable or legal discharge of the Company
      for the Obligations, or of such Guarantor under this Guarantee, in bankruptcy
      or
      in any other instance.

    


    1.3           Right
      of Contribution. Each Guarantor hereby agrees that to the extent that a
      Guarantor shall have paid more than its proportionate share of any payment
      made
      hereunder, such Guarantor shall be entitled to seek and receive contribution
      from and against any other Guarantor hereunder which has not paid its
      proportionate share of such payment.  Each Guarantor’s right of
      contribution shall be subject to the terms and conditions of Section
      1.4 of this Guarantee. The provisions of this Section
      1.3 shall in no respect limit the obligations and liabilities of
      any Guarantor to the Holders, and each Guarantor shall remain liable to the
      Holders for the full amount guaranteed by such Guarantor hereunder.

    


    1.4           No
      Subrogation.  Notwithstanding any payment made by any Guarantor
      hereunder or any set-off or application of funds of any Guarantor by the
      Holders, no Guarantor shall be entitled to be subrogated to any of the rights
      of
      the Holders against the Company or any other Guarantor or any collateral
      security or guarantee or right of offset held by the Holders for the payment
      of
      the Obligations, nor shall any Guarantor seek or be entitled to seek any
      contribution or reimbursement from the Company or any other Guarantor in respect
      of payments made by such Guarantor hereunder, until all amounts owing to the
      Holders by the Company on account of the Obligations are paid in full. If any
      amount shall be paid to any Guarantor on account of such subrogation rights
      at
      any time when all of the Obligations shall not have been paid in full, such
      amount shall be held by such Guarantor in trust for the benefit of the Holders,
      segregated from other funds of such Guarantor, and shall, forthwith upon receipt
      by such Guarantor, be turned over to the Holders in the exact form received
      by
      such Guarantor (duly indorsed by such Guarantor to the Holders, if required),
      to
      be applied against the Obligations, whether matured or unmatured, in such order
      as the Holders may determine.

    


    1.5           Modification
      of Guaranteed Obligations. Each Guarantor shall remain obligated hereunder
      notwithstanding that, without any reservation of rights against any Guarantor
      and without notice to or further assent by any Guarantor, any demand for payment
      of any of the Obligations made by the Holders may be rescinded by the Holders
      and any of the Obligations continued, and the Obligations, or the liability
      of
      any other Person upon or for any part thereof, or any collateral security or
      guarantee therefor or right of offset with respect thereto, may, from time
      to
      time, in whole or in part, be renewed, extended, amended, modified, accelerated,
      compromised, waived, surrendered or released by the Holders, and the Amendment
      Agreement and the other Transaction Documents and any other documents executed
      and delivered in connection therewith may be amended, modified, supplemented
      or
      terminated, in whole or in part, as the Holders may deem advisable from time
      to
      time, and any collateral security, guarantee or right of offset at any time
      held
      by the Holders for the payment of the Obligations may be sold, exchanged,
      waived, surrendered or released.  The Holders shall have no obligation
      to protect, secure, perfect or insure any Lien at any time held by them as
      security for the Obligations or for this Guarantee or any property subject
      thereto.


    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    


    1.6           Waiver.  Each
      Guarantor waives any and all notice of the creation, renewal, extension or
      accrual of any of the Obligations and notice of or proof of reliance by the
      Holders upon the guarantees contained in this Section
      1 or acceptance of the guarantees contained in this
Section 1.  The Obligations shall
      conclusively be deemed to have been created, contracted or incurred, or renewed,
      extended, amended or waived, in reliance upon the guarantees contained in this
      Section 1.  All dealings between the Company
      and any of the Guarantors, on the one hand, and the Holders, on the other hand,
      shall be conclusively presumed to have been had or consummated in reliance
      upon
      the guarantees contained in this Section
      1.  Each Guarantor waives to the extent permitted by law
      diligence, presentment, protest, demand for payment and notice of default or
      nonpayment to or upon the Company or any of the Guarantors with respect to
      the
      Obligations.

    


    1.7   Enforcement
      of Guarantee.

    


    (a)           When
      making any demand hereunder or otherwise pursuing its rights and remedies
      hereunder against any Guarantor, the Collateral Agent, acting on behalf of
      each
      Holder, may, but shall be under no obligation to, make a similar demand on
      or
      otherwise pursue such rights and remedies as the Collateral Agent, acting on
      behalf of the Holders, may have against the Company, any other Guarantor or
      any
      other Person or against any collateral security or guarantee for the Obligations
      or any right of offset with respect thereto, and any failure by the Collateral
      Agent, acting on behalf of the Holders, to make any such demand, to pursue
      such
      other rights or remedies or to collect any payments from the Company, any other
      Guarantor or any other Person or to realize upon any such collateral security
      or
      guarantee or to exercise any such right of offset, or any release of the
      Company, any other Guarantor or any other Person or any such collateral
      security, guarantee or right of offset, shall not relieve any Guarantor of
      any
      obligation or liability hereunder, and shall not impair or affect the rights
      and
      remedies, whether express, implied or available as a matter of law, of the
      Holders against any Guarantor. For the purposes hereof,
“demand” shall include the commencement and
      continuance of any legal proceedings.

    


    (b)           Expenses;
      Indemnification.

    


    (i)           Each
      Guarantor agrees to pay, or reimburse the Collateral Agent, acting on behalf
      of
      the Holders, all of the Collateral Agent’s costs and expenses incurred in
      collecting against such Guarantor under this Guarantee or otherwise enforcing
      or
      preserving any rights under this Guarantee and the other Transaction Documents
      to which such Guarantor is a party, including, without limitation, the
      reasonable fees and disbursements of counsel to the Collateral
      Agent.


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    


    (ii)           Each
      Guarantor agrees to pay, and to save the Holders harmless from, any and all
      liabilities with respect to, or resulting from any delay in paying, any and
      all
      stamp, excise, sales or other taxes which may be payable or determined to be
      payable in connection with any of the transactions contemplated by this
      Guarantee.

    


    (iii)           Each
      Guarantor agrees to pay, and to save the Holders harmless from, any and all
      liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
      costs, expenses or disbursements of any kind or nature whatsoever with respect
      to the execution, delivery, enforcement, performance and administration of
      this
      Guarantee to the extent the Company would be required to do so pursuant to
      the
      Amendment Agreement.

    


    (iv)           Notwithstanding
      anything to the contrary in this Guarantee, with respect to any defaulted
      non-monetary Obligations the specific performance of which by the Guarantors
      is
      not reasonably possible (e.g., the issuance of the Company’s Common Stock), the
      Guarantors shall only be liable for making the Holders whole on a monetary
      basis
      for the Company’s failure to perform such Obligations in accordance with the
      Transaction Documents.

    


    1.8           Right
      to Set-Off.  Each Guarantor hereby irrevocably authorizes the
      Collateral Agent, acting on behalf of the Holders, at any time and from time
      to
      time while an Event of Default (as defined in the Notes) under any of the
      Transaction Documents shall have occurred and be continuing, without notice
      to
      such Guarantor or any other Guarantor, any such notice being expressly waived
      by
      each Guarantor, to set-off and appropriate and apply any and all deposits,
      credits, indebtedness or claims, in any currency, in each case whether direct
      or
      indirect, absolute or contingent, matured or unmatured, at any time held or
      owing by a Holder to or for the credit or the account of such Guarantor, or
      any
      part thereof in such amounts as the Collateral Agent may elect, against and
      on
      account of the obligations and liabilities of such Guarantor to the Holders
      hereunder in any currency arising hereunder or under the Security Agreement
      as
      the Collateral Agent may elect, whether or not a Holder has made any demand
      for
      payment and although such obligations, liabilities and claims may be contingent
      or unmatured.  The Collateral Agent shall notify such Guarantor
      promptly of any such set-off and the application made by the Collateral Agent
      of
      the proceeds thereof, provided that the failure to give such notice
      shall not affect the validity of such set-off and application. The rights of
      each Holder under this Section 1.8 are in addition to
      other rights and remedies (including, without limitation, other rights of
      set-off) which the Collateral Agent, acting on behalf of the Holders, may
      have.

    


    1.9           Payments.  In
      addition to the terms of the Guaranty set forth in Section
      1.1 of this Guarantee, and in no manner imposing any limitation
      on
      such terms, it is expressly understood and agreed that, if, at any time, any
      of
      the Obligations are declared to be immediately due and payable by a Guarantor,
      then the Guarantors shall, upon ten (10) Business Days’ notice, pay to the
      Collateral Agent, acting on behalf of the Holders, the entire amount of such
      Obligations as has been declared due and payable to the
      Holders.  Payment by the Guarantors shall be made to the Collateral
      Agent in immediately available Federal funds to an account designated by the
      Collateral Agent or at the address set forth herein for the giving of notice
      to
      the Collateral Agent or at any other address that may be specified in writing
      from time to time by the Collateral Agent, and shall be credited and applied
      to
      the Obligations.


    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    


    1.10           Release.
      Subject to Section 2 of this Guarantee, each Guarantor
      will be released from all liability hereunder concurrently with the repayment
      and performance in full of all amounts owed under the Amendment Agreement,
      the
      Notes and the other Transaction Documents, and all other
      Obligations.  No payment made by the Company, any of the Guarantors,
      any other guarantor or any other Person or received or collected by the Holders
      or the Collateral Agent from the Company, any of the Guarantors, any other
      guarantor or any other Person by virtue of any action or proceeding or any
      set-off or appropriation or application at any time or from time to time in
      reduction of or in payment of the Obligations shall be deemed to modify, reduce,
      release or otherwise affect the liability of any Guarantor hereunder which
      shall, notwithstanding any such payment (other than any payment made by such
      Guarantor in respect of the Obligations or any payment received or collected
      from such Guarantor in respect of the Obligations), remain liable for the
      Obligations up to the maximum liability of such Guarantor hereunder until the
      Obligations are paid and performed in full.

    


    2.           REINSTATEMENT.

    


    The
      guarantees contained in Section 1 of this Guarantee
      shall continue to be effective, or be reinstated, as the case may be, if at
      any
      time payment, or any part thereof, of any of the Obligations is rescinded or
      must otherwise be restored or returned by the Holders or the Collateral Agent
      upon the insolvency, bankruptcy, dissolution, liquidation or reorganization
      of
      the Company or any Guarantor, or upon or as a result of the appointment of
      a
      receiver, intervenor or conservator of, or trustee or similar officer for,
      the
      Company or any Guarantor or any substantial part of its property, or otherwise,
      all as though such payments had not been made.

    


    3.           REPRESENTATIONS
      AND WARRANTIES.

    


    Each
      Guarantor hereby represents and warrants to the Collateral Agent and Holders
      as
      follows:

    


    3.1           Organization
      and Qualification. Each Guarantor is duly organized, validly existing and in
      good standing under the laws of its formation, with the requisite power and
      authority to own and use its properties and assets and to carry on its business
      as currently conducted.  Each Guarantor is duly qualified to do
      business and is in good standing as a foreign corporation in each jurisdiction
      in which the nature of the business conducted or property owned by it makes
      such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not, individually or in the aggregate,
      (x)
      adversely affect the legality, validity or enforceability of any of this
      Guarantee in any material respect, (y) have a material adverse effect on the
      results of operations, assets, prospects, or financial condition of the
      Guarantor or (z) adversely impair in any material respect the Guarantor’s
      ability to perform fully on a timely basis its obligations under this Guarantee
      (a “Material Adverse Effect”).


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    


    3.2           Authorization;
      Enforcement.  Each Guarantor has the requisite corporate power and
      authority to enter into and to consummate the transactions contemplated by
      this
      Guarantee, and otherwise to carry out its obligations hereunder. The execution
      and delivery of this Guarantee by each Guarantor and the consummation by it
      of
      the transactions contemplated hereby have been duly authorized by all requisite
      corporate action on the part of the Guarantor, and no further consent or
      authorization of the Guarantor, its board of directors, shareholders, or to
      its
      knowledge, any governmental authority or organization, or any other person
      or
      entity is required in connection therewith. This Guarantee has been duly
      executed and delivered by each Guarantor and constitutes the valid and binding
      obligation of such Guarantor enforceable against such Guarantor in accordance
      with its terms, except as such enforceability may be limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
      laws
      relating to, or affecting generally the enforcement of, creditors’ rights and
      remedies or by other equitable principles of general application.

    


    3.3           No
      Conflicts. The execution, delivery and performance of this Guarantee by each
      Guarantor and the consummation by each Guarantor of the transactions
      contemplated thereby do not and will not (i) conflict with or violate any
      provision of its certificate of incorporation, by-laws or any other governing
      document or (ii) conflict with, constitute a default (or an event which with
      notice or lapse of time or both would become a default) under, or give to others
      any rights of termination, amendment, acceleration or cancellation of, any
      agreement, indenture or instrument to which such Guarantor is a party or by
      which it or any of its asset or properties are bound or affected, or (iii)
      result in a violation of any law, rule, regulation, order, judgment, injunction,
      decree or other restriction of any court or governmental authority to which
      such
      Guarantor is subject (including Federal and state securities laws and
      regulations), or by which any of its properties or assets are bound or affected.
      The business of each Guarantor is not being conducted in violation of any law,
      ordinance or regulation of any governmental authority, except for violations
      which, individually or in the aggregate, do not have a Material Adverse
      Effect.

    


    3.4           Amendment
      Agreement. The representations and warranties of the Company set forth in
      the Amendment Agreement as they relate to each Guarantor, each of which is
      hereby incorporated herein by reference, are true and correct as of each time
      such representations are deemed to be made pursuant to such Amendment Agreement,
      and the Holders shall be entitled to rely on each of them as if they were fully
      set forth herein, provided, that each reference in each such
      representation and warranty to the Company’s knowledge shall, for the purposes
      of this Section 3.4, be deemed to be a reference to
      such Guarantor’s knowledge.

    


    3.5           Independence
      of Parties.  The Holders have no fiduciary relationship with or
      duty to any Guarantor arising out of or in connection with this Guarantee or
      any
      of the other Transaction Documents; the relationship between the Guarantors,
      on
      the one hand, and the Holders, on the other hand, in connection herewith or
      therewith is solely that of debtor and creditor; and no joint venture is created
      hereby or by the other Transaction Documents or otherwise exists by virtue
      of
      the transactions contemplated hereby among the Guarantors and the
      Holders.

    


    3.6           Counsel.  Each
      Guarantor has been advised by counsel in the negotiation, execution and delivery
      of this Guarantee and the other Transaction Documents to which it is a
      party.


    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    


    4.           FURTHER
      ASSURANCES.

    


    Each
      Guarantor covenants and agrees with the Collateral Agent, on behalf of each
      Holder, that, from and after the date of this Guarantee until the Obligations
      shall have been paid in full, such Guarantor shall (i) take, and/or shall
      refrain from taking, as the case may be, such commercially reasonable action
      (including complying with all of the obligations in Section 2 of the Notes,
      which obligations are incorporated by reference herein and shall be binding
      on
      each Guarantor) that is necessary to be taken or not taken, as the case may
      be,
      so that no Event of Default (as defined in the Notes) is caused by the failure
      to take such action or to refrain from taking such action by such Guarantor
      and
      (ii) execute and deliver to the Collateral Agent, from time to time, any
      additional instruments or documents which are reasonably necessary to cause
      this
      Guarantee to be, become or remain valid and effective in accordance with its
      terms.

    


    5.           MISCELLANEOUS.

    


    5.1           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 to the addressee
      at
      its address specified in 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 5.1.  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.

    


    5.2           Amendments;
      Waivers.  No amendment of any provision of this Guarantee shall be
      effective unless it is in writing and signed by each Guarantor, the Required
      Holders (as defined in the Note) and the Collateral Agent, and no waiver of
      any
      provision of this Guarantee, and no consent to any departure by each Guarantor
      therefrom, shall be effective unless it is in writing and signed by each
      Guarantor and the Collateral Agent, and then such waiver or consent shall be
      effective only in the specific instance and for the specific purpose for which
      given.

    


    5.3           No
      Implied Waivers.  No failure on the part of the Collateral Agent
      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 the Collateral Agent or any Holder 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 the
      Collateral Agent or any Holder 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 Guarantor.


    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    


    5.4           Severability.  Any
      provision of this Guarantee 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.

    


    5.5           GOVERNING
      LAW.  THIS GUARANTEE SHALL BE GOVERNED BY, CONSTRUED AND
      INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
      TO
      CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW
      YORK.

    


    5.6           JURISDICTION.  ANY
      LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS GUARANTEE OR ANY DOCUMENT
      RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE
      COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
      OF
      NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS
      GUARANTEE, EACH GUARANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
      PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
      COURTS.  EACH GUARANTOR 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
      FORUMNONCONVENIENS, 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.

    


    5.7           WAIVER
      OF JURY TRIAL.  EACH GUARANTOR AND (BY ITS ACCEPTANCE OF THE
      BENEFITS OF THIS GUARANTEE) THE COLLATERAL AGENT WAIVES ANY RIGHT IT MAY HAVE
      TO
      TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER
      OR IN
      CONNECTION WITH THIS GUARANTEE 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.

    


    5.8           SERVICE
      OF PROCESS.  EACH GUARANTOR 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 GUARANTOR AT ITS
      ADDRESS PROVIDED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 10 DAYS AFTER SUCH
      MAILING.  NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE
      COLLATERAL AGENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
      COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY GUARANTOR OR ANY
      PROPERTY OF ANY GUARANTOR IN ANY OTHER JURISDICTION.


    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    


    5.9           Section
      Headings.  Section headings herein are included for convenience of
      reference only and shall not constitute a part of this Guarantee for any other
      purpose.

    


    5.10           Counterparts.  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.

    


    5.11           Conflicts.  In
      the event of any conflict between the terms of this Guarantee, the Amendment
      Agreement, or any of the other Transaction Documents or exhibits referred to
      herein or therein, the terms of the Amendment Agreement shall
      control.

    


    5.12           Successors
      and Assigns.  The terms and conditions of this Guarantee shall
      inure to the benefit of and be binding upon the respective successors and
      permitted assigns of the parties.  Nothing in this Guarantee, express
      or implied, is intended to confer upon any party other than the parties hereto
      or their respective successors and permitted assigns any rights, remedies,
      obligations or liabilities under or by reason of this Guarantee, except as
      expressly provided in this Guarantee.  A Holder may assign its rights
      hereunder in connection with any valid private sale or transfer of its Notes
      as
      permitted under the Amendment Agreement and/or the Notes, in which case the
      term
“Holder” shall be deemed to refer to such transferee as though such transferee
      were an original beneficiary hereof.  No Guarantor may assign its
      rights or obligations under this Guarantee.

    


    5.13           Additional
      Guarantors.  If a Guarantor creates or acquires any new
      subsidiary, then such Guarantor shall cause such new subsidiary to become party
      to (i) this Guarantee for all purposes of this Guarantee by executing and
      delivering an Assumption Agreement in the form of Annex 1 hereto and (ii) the
      Security Agreement in accordance with the terms of the Security
      Agreement.

    


    5.14           Controlling
      Agreement.  In the event of any conflict between the terms of this
      Guarantee, the Amendment Agreement, or any of the other Transaction Documents
      or
      exhibits referred to herein or therein, the terms of the Amendment Agreement
      shall control.

    


    


    [SIGNATURE
      PAGE FOLLOWS]


    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    


    


    IN
      WITNESS WHEREOF, the undersigned has
      caused this Guarantee to be duly executed and delivered as of the date first
      above written.

    


    
      	 	
              PERSONNEL
                RESOURCES OF GEORGIA,
                INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                880 South Pleasantburg Drive, Suite 3C, Greenville, South Carolina
                29607

            
	 	 	
              Telephone:
                864-271-7611

            
	 	 	
              Facsimile:
                864-232-0178

            
	 	 	 
	 	
              CCI
                TELECOM, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                19240 Red Land Road, San Antonio, Texas 78259

            
	 	 	
              Telephone:
                210-496-1926

            
	 	 	
              Facsimile:
                210-491-0932

            
	 	 	 
	 	
              METHOD
                IQ, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                1750 Founders Parkway, Suite 180, Alpharetta, Georgia
                30004

            
	 	 	
              Telephone:
                678-507-1300

            
	 	 	
              Facsimile:
                678-507-1302

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	 	
              VIASYS
                SERVICES, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                26 Lake Wire Drive, Lakeland, Florida 33815

            
	 	 	
              Telephone:
                863-607-9988

            
	 	 	
              Facsimile:
                863-607-9955

            
	 	 	 
	 	
              VIASYS
                NETWORK SERVICES, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                26 Lake Wire Drive, Lakeland, Florida 33815

            
	 	 	
              Telephone:
                863-607-9988

            
	 	 	
              Facsimile:
                863-607-9955

            
	 	 	 
	 	
              VSI
                REAL ESTATE HOLDING, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                26 Lake Wire Drive, Lakeland, Florida 33815

            
	 	 	
              Telephone:
                863-607-9988

            
	 	 	
              Facsimile:
                863-607-9955

            
	 	 	 
	 	
              DIGITAL
                COMMUNICATION SERVICES, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Billy V. Ray,
                Jr.

            
	 	 	
              Title:

            
	 	 	
              Address:
                96 North 5th Avenue, Delray Beach, Florida
                33483

            


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                THIS
                  GUARANTEE ACCEPTED BY:

              	 
	 	 	 
	
                IMPERIUM
                  ADVISERS, LLC

              	 
	
                as
                  Collateral Agent

              	 
	 	 	 
	
                By:

              	 	 
	
                Name:

              	
                Maurice
                  Hryshko

              	 
	
                Title:

              	
                General
                  Counsel

              	 
	
                Address:

              	
                153
                  East 53rd Street

              	 
	 	
                29th
                  Floor

              	 
	 	
                New
                  York, NY 10022

              	 
	
                Telephone:

              	
                (212)
                  433-1360

              	 
	
                Facsimile:

              	
                (212)
                  433-1361

              	 


      

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Annex
      1
      to

    GUARANTEE

    


    ASSUMPTION
      AGREEMENT, dated as of _________, _____ made by __________________, a __________
      corporation (the “Additional Guarantor”), in favor of the Holders pursuant to
      the Amendment Agreement referred to below. All capitalized terms not defined
      herein shall have the meaning ascribed to them in such Amendment
      Agreement.

    


    W
      I T N E
      S S E T H :

    


    WHEREAS,
      Charys Holding Company, Inc.,
      a Delaware corporation (the “Company”), and the Holders have entered into a
      Amendment Agreement, dated as of April 5, 2007 (as amended, supplemented or
      otherwise modified from time to time, the “Amendment Agreement”);

    


    WHEREAS,
      in connection with the
      Amendment Agreement, the Company’s subsidiaries (other than the Additional
      Guarantor) have entered into the Guarantee, dated as of the date of the
      Amendment Agreement (as amended, supplemented or otherwise modified from time
      to
      time, the “Guarantee”) in favor of the Holders;

    


    WHEREAS,
      the Amendment Agreement
      requires the Additional Guarantor to become a party to the Guarantee;
      and

    


    WHEREAS,
      the Additional Guarantor has
      agreed to execute and deliver this Assumption Agreement in order to become
      a
      party to the Guarantee;

    


    NOW,
      THEREFORE, IT IS AGREED:

    


    1.           Guarantee.  By
      executing and delivering this Assumption Agreement, the Additional Guarantor,
      as
      provided in Section 5.13 of the Guarantee, hereby becomes a party to the
      Guarantee as a Guarantor thereunder with the same force and effect as if
      originally named therein as a Guarantor and, without limiting the generality
      of
      the foregoing, hereby expressly assumes all obligations and liabilities of
      a
      Guarantor thereunder.  The Additional Guarantor hereby represents and
      warrants that each of the representations and warranties contained in Section
      3
      of the Guarantee is true and correct on and as the date hereof as to such
      Additional Guarantor (after giving effect to this Assumption Agreement) as
      if
      made on and as of such date.

    


    2.           Governing
      Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
      INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE
      TO
      CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW
      YORK.

    


    3.           Controlling
      Agreement.  In the event of any conflict between the terms of this
      Assumption Agreement, the Amendment Agreement, or any of the other Transaction
      Documents or exhibits referred to herein or therein, the terms of the Amendment
      Agreement shall control.


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the undersigned has
      caused this Assumption Agreement to be duly executed and delivered as of the
      date first above written.

    


    


    
      	 	
              [ADDITIONAL
                GUARANTOR]

            
	 	 	 
	 	 	 
	 	
              By:

            	 
	 	 	
              Name:

            
	 	 	
              Title:

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      D

    Form
      of Amended and Restated Security Agreement

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Execution
        Copy

       

      AMENDED
        AND RESTATED

      SECURITY
        AGREEMENT

      


      AMENDED
        AND RESTATED SECURITY AGREEMENT, dated as of April 5. 2007 (this
“Agreement”) 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 IMPERIUM
        ADVISERS, LLC, a Delaware limited liability company, in its capacity as
        collateral agent (in such capacity, the “Collateral Agent”) for
        the benefit of the Holders (as defined below).

      


      


      WITNESSETH:

       

      WHEREAS,
        pursuant to a Security Agreement, dated as of August 30, 2006 (the
“Existing Security Agreement”), the Company and certain of the
        Company’s subsidiaries granted a security interest in their assets and
        properties to secure the Company’s obligations under the Securities Purchase
        Agreement, dated as August 30, 2006 (the “Securities Purchase
        Agreement”), and the other transaction agreements and documents
        contemplated thereby, including, without limitation, the Senior Secured
        Convertible Notes (the “Existing Notes”) issued under the
        Securities Purchase Agreement;

       

      WHEREAS,
        the Company has requested that the holders of the Existing Notes (the
“Noteholders”) extend the maturity date of the Existing Notes
        and make certain other modifications to the Existing Notes, and the Noteholders
        have agreed to make such modifications to the Existing Notes .(the Existing
        Notes, as so modified, amended and restated, being collectively referred
        to
        herein as the “Notes”);

      


      WHEREAS,
        in furtherance of the modifications to the Existing Notes, the Company and
        the
        Noteholders have entered into an Amendment Agreement, dated as of the date
        hereof (the “Amendment Agreement”), and it is a condition
        precedent to the performance by the Noteholders of their obligations under
        the
        Amendment Agreement that the Grantors execute and deliver this Agreement;
        and

       

      WHEREAS,
        the Existing Security Agreement may be amended in writing by each Grantor
        party
        to the Existing Security Agreement, the Required Holders (as defined in the
        Existing Notes), and the Collateral Agent, and all such parties are party
        hereto;

      


      NOW,
        THEREFORE, in consideration of the premises and the agreements herein, the
        parties hereto agree that the Existing Security Agreement is hereby amended
        and
        restated in its entirety to read as follows:

       

      SECTION
        1. Definitions.

       

      All
        terms
        used in this Agreement and the recitals hereto which are not defined herein
        shall have the meanings given to them in the Amendment Agreement or in Articles
        8 or 9 of the Uniform Commercial Code as in effect from time to time in the
        State of New York (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 New York on the date hereof shall continue to have
        the
        same meaning notwithstanding any replacement or amendment of such statute
        except
        as the Collateral Agent may otherwise determine.

       


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      The
        following terms shall have the respective meanings provided for in the Code:
        “Accounts”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort Claim”,
“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:

       

      “Copyright
        Licenses” means all licenses, contracts or other agreements, whether
        written or oral, naming any Grantor as licensee or licensor and providing
        for
        the grant of any right to use or sell any works covered by any
        copyright.

       

      “Copyrights”
        means all domestic and foreign copyrights, whether registered or not, including,
        without limitation, all copyright rights throughout the universe (whether
        now or
        hereafter arising) in any and all media (whether now or hereafter developed),
        in
        and to all original works of authorship fixed in any tangible medium of
        expression, acquired or used by any Grantor, all applications, registrations
        and
        recordings thereof (including, without limitation, applications, registrations
        and recordings in the United States Copyright Office or in any similar office
        or
        agency of the United States or any other country or any political subdivision
        thereof), and all reissues, divisions, continuations, continuations in part
        and
        extensions or renewals thereof.

       

      “Event
        of Default” shall have the meaning set forth in the
        Notes.

       

      “Holders”
        means a holder of any Securities or any transferee or assignee thereof to
        whom a
        holder assigns its rights under this Agreement in accordance with Section
        10(d)
        and any transferee or assignee thereof to whom a transferee or assignee assigns
        its rights under this Agreement in accordance with Section 10(d).

       

      “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.

       

      “Intellectual
        Property” means the Copyrights, Trademarks and Patents.

       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      


      “Licenses”
        means the Copyright Licenses, the Trademark Licenses and the Patent
        Licenses.

       

      “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.

       

      “Patent
        Licenses” means all licenses, contracts or other agreements, whether
        written or oral, naming any Grantor as licensee or licensor and providing
        for
        the grant of any right to manufacture, use or sell any invention covered
        by any
        Patent.

       

      “Patents”
        means all domestic and foreign letters patent, design patents, utility patents,
        industrial designs, inventions, trade secrets, ideas, concepts, methods,
        techniques, processes, proprietary information, technology, know-how, formulae,
        rights of publicity and other general intangibles of like nature, now existing
        or hereafter acquired, all applications, registrations and recordings thereof
        (including, without limitation, applications, registrations and recordings
        in
        the United States Patent and Trademark Office, or in any similar office or
        agency of the United States or any other country or any political subdivision
        thereof), and all reissues, divisions, continuations, continuations in part
        and
        extensions or renewals thereof.

       

      “Securities”
        means the Notes, the shares of Common Stock into which the Notes are
        convertible, the Warrants, and the shares of Common Stock for which the Warrants
        are exercisable.

      


      “Trademark
        Licenses” means all licenses, contracts or other agreements, whether
        written or oral, naming any Grantor as licensor or licensee and providing
        for
        the grant of any right concerning any Trademark, together with any goodwill
        connected with and symbolized by any such trademark licenses, contracts or
        agreements and the right to prepare for sale or lease and sell or lease any
        and
        all Inventory now or hereafter owned by any Grantor and now or hereafter
        covered
        by such licenses.

       

      “Trademarks”
        means all domestic and foreign trademarks, service marks, collective marks,
        certification marks, trade names, business names, d/b/a’s, Internet domain
        names, trade styles, designs, logos and other source or business identifiers
        and
        all general intangibles of like nature, now or hereafter owned, adopted,
        acquired or used by any Grantor, all applications, registrations and recordings
        thereof (including, without limitation, applications, registrations and
        recordings in the United States Patent and Trademark Office or in any similar
        office or agency of the United States, any state thereof or any other country
        or
        any political subdivision thereof), and all reissues, extensions or renewals
        thereof, together with all goodwill of the business symbolized by such marks
        and
        all customer lists, formulae and other Records of any Grantor relating to
        the
        distribution of products and services in connection with which any of such
        marks
        are used.

       

      “Transaction
        Documents” means this Agreement and the Securities Purchase Agreement,
        the Amendment Agreement, the Notes, the Warrants, the Amended and Restated
        Registration Rights Agreement, dated as of the date hereof, by and among
        the
        Company and the Holders, and the Subsidiary Guarantee, dated as of the date
        hereof, by the subsidiary Grantors for the benefit of the
        Noteholders.

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      


      “Warrants”
        means the Warrants issued by the Company to Imperium Master Fund,
        Ltd.

      


      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 the
        Collateral Agent for the benefit of the Holders, and grants to the Collateral
        Agent for the benefit of the Holders 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:

       

      (a)   all
        Accounts;

       

      (b)   all
        Chattel Paper (whether tangible or electronic);

      


      (c)   all
        Commercial Tort Claims;

      


      (d)           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
        the Collateral Agent or Holder or any affiliate, representative, agent or
        correspondent of the Collateral Agent or Holder; 

      


      (e)           all
        Documents;

      


      (f)           all
        Equipment;

      


      (g)           all
        Fixtures;

      


      (h)           all
        General Intangibles (including, without limitation, all Payment
        Intangibles);

      


      (i)           all
        Goods

      


      (j)           all
        Instruments (including, without limitation, Promissory Notes and each
        certificated Security);

      


      (k)           all
        Inventory;

      


      (l)           all
        Investment Property;

      


      (m)           all
        Copyrights, Patents and Trademarks, and all Licenses;

      


      (n)           all
        Letter-of-Credit Rights;

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

       

      (o)           all
        Supporting Obligations;

      


      (p)           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, offspring,
        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 2 (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, Software, data and computer programs 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

      


      (q)           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”):

       

      (a)           the
        payment by the Company and each Grantor, as and when due and payable (by
        scheduled maturity, required prepayment, acceleration, demand or otherwise),
        of
        all amounts from time to time owing by it in respect of the Transaction
        Documents, including, without limitation, (A) all principal of and interest
        on
        the Notes (including, without limitation, all interest that accrues after
        the
        commencement of any Insolvency Proceeding of any Grantor, whether or not
        the
        payment of such interest is unenforceable or is not allowable due to the
        existence of such Insolvency Proceeding), and (B) all fees, commissions,
        expense
        reimbursements, indemnifications and all other amounts due or to become due
        under any of the Transaction Documents (including any Registration Delay
        Payments (as defined in the Amended and Restated Registration Rights Agreement,
        dated as of the date hereof, by and among the Company and the Holders));
        and

       

      (b)           for
        so long as the Notes are outstanding, the due performance and observance
        by each
        Grantor of all of its other obligations from time to time existing in respect
        of
        any of the Transaction Documents, including without limitation, with respect
        to
        any conversion or redemption rights of the Holders under the
        Notes.


      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      


      SECTION
        4.  Representations and Warranties.  Each Grantor
        represents and warrants as of the date of this Agreement as
        follows:

       

      (a)           Schedule
        I hereto sets forth (i) the exact legal name of each Grantor, and (ii)
        the
        state of incorporation, organization or formation and the organizational
        identification number of each Grantor in such state.Schedule II hereto
        sets forth (x) the exact legal name of each entity that is a Subsidiary of
        the
        Company as of the date hereof but is not a Grantor as of the date hereof,
        and
        (y) the state of incorporation, organization or formation and the organizational
        identification number of each such Subsidiary in such state. 

      


      (b)           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 the Collateral Agent of any
        of its
        rights or remedies hereunder.

      


      (c)           Except
        as disclosed in the Amendment Agreement, all Federal, state and local tax
        returns and other reports required by applicable law to be filed by any Grantor
        have been filed, or extensions have been obtained, and all taxes, assessments
        and other governmental charges imposed upon any Grantor or any property of
        any
        Grantor (including, without limitation, all federal income and social security
        taxes on employees’ wages) and which have become due and payable on or prior to
        the date hereof have been paid, except to the extent 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 have been set aside for the payment thereof in accordance with
        generally accepted accounting principles consistently applied
        (“GAAP”).

      


      (d)           [Reserved]

      


      (e)           Each
        such License sets forth the entire agreement and understanding of the parties
        thereto relating to the subject matter thereof, and there are no other
        agreements, arrangements or understandings, written or oral, relating to
        the
        matters covered thereby or the rights of such Grantor or any of its affiliates
        in respect thereof.  Each material License now existing is, and any
        material License entered into in the future will be, the legal, valid and
        binding obligation of the parties thereto, enforceable against such parties
        in
        accordance with its terms.  No default under any material License by
        any such party has occurred, nor does any defense, offset, deduction or
        counterclaim exist thereunder in favor of any such party.

      


      (f)           Each
        Grantor owns and controls, or otherwise possesses adequate rights to use,
        all
        Trademarks, Patents and Copyrights, which are the only trademarks, patents,
        copyrights, inventions, trade secrets, proprietary information and technology,
        know-how, formulae, rights of publicity necessary to conduct its business
        in
        substantially the same manner as conducted as of the date hereof.  To
        the best knowledge of each Grantor, all such Intellectual Property of each
        Grantor is subsisting and in full force and effect, has not been adjudged
        invalid or unenforceable, is valid and enforceable and has not been abandoned
        in
        whole or in part.  Each Grantor has no knowledge of any conflict with
        the rights of others to any such Intellectual Property and, to the best
        knowledge of each Grantor, each Grantor is not now infringing or in conflict
        with any such rights of others in any material respect, and to the best
        knowledge of each Grantor, no other Person is now infringing or in conflict
        in
        any material respect with any such properties, assets and rights owned or
        used
        by each Grantor.  No Grantor has received any notice that it is
        violating or has violated the trademarks, patents, copyrights, inventions,
        trade
        secrets, proprietary information and technology, know-how, formulae, rights
        of
        publicity or other intellectual property rights of any third
        party.


      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      


      (g)           Each
        Grantor is and will be at all times the sole and exclusive owner of, or
        otherwise has and will have adequate rights in, the Collateral free and clear
        of
        any Liens, except for Permitted Liens on any Collateral.  Except for
        the Permitted Liens described in the Amendment Agreement, no effective financing
        statement or other instrument similar in effect covering all or any part
        of the
        Collateral is on file in any recording or filing office except such as may
        have
        been filed in favor of the Collateral Agent and/or the Holders relating to
        this
        Agreement or the other Transaction Documents.

      


      (h)           The
        exercise by the Collateral Agent 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.

      


      (i)           No
        authorization or approval or other action by, and no notice to or filing
        with,
        any governmental authority or other regulatory body, is required for
        (i) the grant by each Grantor, or the perfection, of the security interest
        purported to be created hereby in the Collateral, or (ii) the exercise by
        the Collateral Agent of any of its rights and remedies hereunder (except
        (A) for the filing of a UCC-1 financing statement with respect to each
        Grantor in the secretary of state office of the state of such Grantor’s
        formation, all of which financing statements have been duly filed and are
        in
        full force and effect or will be duly filed and in full force and effect,
        (B)
        with respect to Deposit Accounts, and all cash and other property from time
        to
        time deposited therein, for the execution of a control agreement with the
        depository institution with which such account is maintained, as provided
        in
Section 5(i), (C) with respect to the perfection of the security
        interest created hereby in the United States Intellectual Property and Licenses,
        for the recording of the appropriate Assignment for Security, substantially
        in
        the form of Exhibit A hereto in the United States Patent and Trademark
        Office or the United States Copyright Office, as applicable, (D) with
        respect to the perfection of the security interest created hereby in foreign
        Intellectual Property and Licenses, for registrations and filings in
        jurisdictions located outside of the United States and covering rights in
        such
        jurisdictions relating to such foreign Intellectual Property and Licenses,
        (E)
        with respect to the perfection of the security interest created hereby in
        Titled
        Collateral, for the submission of an appropriate application requesting that
        the
        Lien of the Collateral Agent be noted on the Certificate of Title or certificate
        of ownership, completed and authenticated by the applicable Grantor, together
        with the Certificate of Title or certificate of ownership, with respect to
        such
        Titled Collateral, to the appropriate governmental authority, (F) with respect
        to the perfection of the security interest created hereby in any
        Letter-of-Credit Rights, for the consent of the issuer of the applicable
        letter
        of credit to the assignment of proceeds as provided in the Uniform Commercial
        Code as in effect in the applicable jurisdiction, (G) with respect to any
        action
        that may be necessary to obtain control of Collateral constituting Deposit
        Accounts, Commodity Contracts, Electronic Chattel Paper, Investment Property
        or
        Letter-of-Credit Rights, the taking of such actions, and (H) the Collateral
        Agent having possession of all Documents, Chattel Paper, Instruments and
        cash
        constituting Collateral (subclauses (A), (B), (C), (D), (E), (F), G), and
        (H),
        each a “Perfection Requirement” and collectively, the “Perfection
        Requirements”)).


      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      


      (j)           This
        Agreement, subject to the Permitted Liens creates in favor of the Collateral
        Agent a legal, valid and enforceable security interest in the Collateral
        as
        security for the Obligations.  The Perfection Requirements result in
        the perfection of such security interests.  Such security interests
        are, or in the case of Collateral in which each Grantor obtains rights after
        the
        date hereof, will be, perfected, first priority security interests, subject
        only
        to Permitted Liens and the Perfection Requirements.  Such recordings
        and filings and all other action necessary to perfect and protect such security
        interest have been duly taken or will be taken pursuant to Section 5(n),
        and, in
        the case of Collateral in which each Grantor obtains rights after the date
        hereof, will be duly taken, except for the Collateral Agent’s having possession
        of all Documents, Chattel Paper, Instruments and cash constituting Collateral
        after the date hereof and the other actions, filings and recordations described
        above, including the Perfection Requirements.

      


      SECTION
        5.  Covenants as to the Collateral.  So long as any
        of the Obligations shall remain outstanding, unless the Collateral Agent
        shall
        otherwise consent in writing:

      


      (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 the Collateral Agent may reasonably
        request in order to: (i) perfect and protect the security interest
        purported to be created hereby; (ii) enable the Collateral Agent to
        exercise and enforce its 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 each License and, at the request of the Collateral Agent, each of its
        Records pertaining to the Collateral with a legend, in form and substance
        satisfactory to the Collateral Agent, indicating that such Chattel Paper,
        License or Collateral is subject to the security interest created hereby,
        (B)  delivering and pledging to the Collateral Agent pursuant to the 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
        the Collateral Agent, (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 the Collateral Agent may reasonably request in order to
        perfect and preserve the security interest purported to be created hereby,
        (D) furnishing to the Collateral Agent 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 the Collateral
        Agent
        may reasonably request, all in reasonable detail, (E) if any Collateral
        shall be in the possession of a third party, notifying such Person of the
        Collateral Agent’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 the Collateral Agent, which such written
        acknowledgement shall be in form and substance reasonably satisfactory to
        the
        Collateral Agent, (F) if at any time after the date hereof, any Grantor
        acquires or holds any Commercial Tort Claim, promptly notifying the Collateral
        Agent in a writing signed by such Grantor setting forth a brief description
        of
        such Commercial Tort Claim and granting to the Collateral Agent a security
        interest therein and in the proceeds thereof, which writing shall incorporate
        the provisions hereof and shall be in form and substance satisfactory to
        the
        Collateral Agent, (G) upon the acquisition after the date hereof by any
        Grantor of any motor vehicle or other Equipment subject to a certificate
        of
        title or ownership (other than a Motor Vehicle or Equipment that is subject
        to a
        purchase money security interest), causing the Collateral Agent to be listed
        as
        the lienholder on such certificate of title or ownership and delivering evidence
        of the same to the Collateral Agent in accordance with Section 5(j)
        hereof; and (H) 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.


      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      


      (b)           [Reserved]

      


      (c)           Condition
        of Equipment.  Each Grantor will maintain or cause the Equipment
        (necessary or useful to its business) to be maintained and preserved in good
        condition, repair and working order, ordinary wear and tear excepted, and
        will
        forthwith, or in the case of any loss or damage to any Equipment of any Grantor
        within a commercially reasonable time after the occurrence thereof, make
        or
        cause to be made all repairs, replacements and other improvements in connection
        therewith which are necessary or desirable, consistent with past practice,
        or
        which the Collateral Agent may request to such end.  Any Grantor will
        promptly furnish to the Collateral Agent a statement describing in reasonable
        detail any such loss or damage in excess of $250,000 per
        occurrence to any Equipment.

      


      (d)           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.

      


      (e)           Insurance.

      


      (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 the Collateral
        Agent.  To the extent requested by the Collateral Agent 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 the Collateral Agent 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, the Collateral Agent.  To the extent requested by the Collateral
        Agent at any time and from time to time, each such policy shall in addition
        (A)
        name the Collateral Agent as an additional insured party thereunder (without
        any
        representation or warranty by or obligation upon the Collateral Agent) as
        their
        interests may appear, (B) contain an agreement by the insurer that any loss
        thereunder shall be payable to the Collateral Agent on its own account
        notwithstanding any action, inaction or breach of representation or warranty
        by
        any Grantor, (C) provide that there shall be no recourse against the Collateral
        Agent 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 the Collateral Agent
        by the
        insurer.  Any Grantor will, if so requested by the Collateral Agent,
        deliver to the Collateral Agent original or duplicate policies of such insurance
        and, as often as the Collateral Agent may reasonably request, a report of
        a
        reputable insurance broker with respect to such insurance.  Any
        Grantor will also, at the request of the Collateral Agent, execute and deliver
        instruments of assignment of such insurance policies and cause the respective
        insurers to acknowledge notice of such assignment.


      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      


      (ii)           Reimbursement
        under any liability insurance maintained by any Grantor pursuant to this
        Section 5(e) 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(e) shall be paid to the
        Collateral Agent (except as to which paragraph (iii) of this Section 5(e)
        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(e) shall be paid by the Collateral Agent 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
        the Collateral Agent and applied as specified in Section 7(b)
        hereof.

      


      (f)           Provisions
        Concerning the Accounts and the Licenses.

      


      (i)           Any
        Grantor will (A) give the Collateral Agent 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 as set forth in Schedule I hereto, (C) immediately notify the
        Collateral Agent 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 the Collateral Agent 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 (f), 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 the Collateral Agent’s direction, will) take such action as any Grantor or
        the Collateral Agent may deem necessary or advisable to enforce collection
        or
        performance of the Accounts; provided, however, that the
        Collateral Agent 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 the Collateral
        Agent 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 the
        Collateral Agent 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 the Collateral
        Agent that the Collateral Agent 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 the Collateral Agent hereunder, shall be segregated from
        other funds of any Grantor and shall be forthwith paid over to the Collateral
        Agent 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, the Collateral Agent may (in its 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 the Collateral
        Agent by wire transfer (to such account as the Collateral Agent shall specify,
        or in such other manner as the Collateral Agent 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 the Collateral Agent shall be applied as specified in accordance
        with Section 7(b) hereof.


      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      


      (iii)           Upon
        the occurrence and during the continuance of any breach or default under
        any
        material License by any party thereto other than any Grantor, each Grantor
        party
        thereto will, promptly after obtaining knowledge thereof, give the Collateral
        Agent written notice of the nature and duration thereof, specifying what
        action,
        if any, it has taken and proposes to take with respect thereto and thereafter
        will take reasonable steps to protect and preserve its rights and remedies
        in
        respect of such breach or default, or will obtain or acquire an appropriate
        substitute License.

      


      (iv)           Each
        Grantor will, at its expense, promptly deliver to the Collateral Agent a
        copy of
        each notice or other communication received by it by which any other party
        to
        any material License purports to exercise any of its rights or affect any
        of its
        obligations thereunder, together with a copy of any reply by such Grantor
        thereto.

      


      (v)           Each
        Grantor will exercise promptly and diligently each and every right which
        it may
        have under each material License (other than any right of termination) and
        will
        duly perform and observe in all respects all of its obligations under each
        material License and will take all action reasonably necessary to maintain
        such
        Licenses in full force and effect.  No Grantor will, without the prior
        written consent of the Collateral Agent, cancel, terminate, amend or otherwise
        modify in any respect, or waive any provision of, any material
        License.

      


      (g)           Transfers
        and Other Liens.


      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      


      (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.

      


      (ii)           No
        Grantor will create, suffer to exist or grant any Lien upon or with respect
        to
        any Collateral other than a Permitted Lien.

      


      (h)   Intellectual
        Property.

      


      (i)           If
        applicable, any Grantor shall, upon the Collateral Agent’s written request, duly
        execute and deliver the applicable Assignment for Security in the form attached
        hereto as Exhibit A.  Each Grantor (either itself or through
        licensees) will, and will cause each licensee thereof to, take all action
        necessary to maintain all of the Intellectual Property in full force and
        effect,
        including, without limitation, using the proper statutory notices and markings
        and using the Trademarks on each applicable trademark class of goods in order
        to
        so maintain the Trademarks in full force and free from any claim of abandonment
        for non-use, and each Grantor will not (nor permit any licensee thereof to)
        do
        any act or knowingly omit to do any act whereby any Intellectual Property
        may
        become invalidated; provided, however, that so long as no Event of
        Default has occurred and is continuing, no Grantor shall have an obligation
        to
        use or to maintain any Intellectual Property (A) that relates solely to any
        product or work, that has been, or is in the process of being, discontinued,
        abandoned or terminated, (B) that is being replaced with Intellectual Property
        substantially similar to the Intellectual Property that may be abandoned
        or
        otherwise become invalid, so long as the failure to use or maintain such
        Intellectual Property does not materially adversely affect the validity of
        such
        replacement Intellectual Property and so long as such replacement Intellectual
        Property is subject to the Lien created by this Agreement or (C) that is
        substantially the same as another Intellectual Property that is in full force,
        so long the failure to use or maintain such Intellectual Property does not
        materially adversely affect the validity of such replacement Intellectual
        Property and so long as such other Intellectual Property is subject to the
        Lien
        and security interest created by this Agreement.  Each Grantor will
        cause to be taken all necessary steps in any proceeding before the United
        States
        Patent and Trademark Office and the United States Copyright Office or any
        similar office or agency in any other country or political subdivision thereof
        to maintain each registration of the Intellectual Property (other than the
        Intellectual Property described in the proviso to the immediately preceding
        sentence), including, without limitation, filing of renewals, affidavits
        of use,
        affidavits of incontestability and opposition, interference and cancellation
        proceedings and payment of maintenance fees, filing fees, taxes or other
        governmental fees.  If any Intellectual Property (other than
        Intellectual Property described in the proviso to the first sentence of
        subsection (i) of this clause (h)) is infringed, misappropriated, diluted
        or
        otherwise violated in any material respect by a third party, each Grantor
        shall
        (x) upon learning of such infringement, misappropriation, dilution or other
        violation, promptly notify the Collateral Agent and (y) to the extent any
        Grantor shall deem appropriate under the circumstances, promptly sue for
        infringement, misappropriation, dilution or other violation, seek injunctive
        relief where appropriate and recover any and all damages for such infringement,
        misappropriation, dilution or other violation, or take such other actions
        as
        such Grantor shall deem appropriate under the circumstances to protect such
        Intellectual Property.  Each Grantor shall furnish to the Collateral
        Agent from time to time upon its request statements and schedules further
        identifying and describing the Intellectual Property and Licenses and such
        other
        reports in connection with the Intellectual Property and Licenses as the
        Collateral Agent may reasonably request, all in reasonable detail and promptly
        upon request of the Collateral Agent, following receipt by the Collateral
        Agent
        of any such statements, schedules or reports, each Grantor shall, as the
        case
        may be, execute and authenticate such documents and do such acts as shall
        be
        necessary or, in the reasonable judgment of the Collateral Agent, desirable
        to
        subject such Intellectual Property and Licenses to the Lien and security
        interest created by this Agreement.  Notwithstanding anything herein
        to the contrary, upon the occurrence and during the continuance of an Event
        of
        Default, no Grantor may abandon or otherwise permit any Intellectual Property
        to
        become invalid without the prior written consent of the Collateral Agent,
        and if
        any Intellectual Property is infringed, misappropriated, diluted or otherwise
        violated in any material respect by a third party, each Grantor will take
        such
        action as the Collateral Agent shall deem appropriate under the circumstances
        to
        protect such Intellectual Property.

       

      
        
          
          

        

        
          -12-

          
            

          

        

        
          
          

        

      

       

      (ii)           In
        no event shall any Grantor, either itself or through any agent, employee,
        licensee or designee, file an application for the registration of any Trademark
        or Copyright or the issuance of any Patent with the United States Patent
        and
        Trademark Office or the United States Copyright Office, as applicable, or
        in any
        similar office or agency of the United States or any country or any political
        subdivision thereof unless it gives the Collateral Agent prior written notice
        thereof.  Upon request of the Collateral Agent, any Grantor shall
        execute, authenticate and deliver any and all assignments, agreements,
        instruments, documents and papers as the Collateral Agent may reasonably
        request
        to evidence the Collateral Agent’s security interest hereunder in such
        Intellectual Property and the General Intangibles of any Grantor relating
        thereto or represented thereby, and each Grantor hereby appoints the Collateral
        Agent its attorney-in-fact to execute and/or authenticate and file all such
        writings for the foregoing purposes, all acts of such attorney being hereby
        ratified and confirmed, and such power (being coupled with an interest) shall
        be
        irrevocable until the indefeasible payment in full in cash of all of the
        Obligations in full.

      


      (i)           Deposit,
        Commodities and Securities Accounts.  Upon the Collateral Agent’s
        written request, each Grantor shall cause each bank and other financial
        institution with an account of Grantor to execute and deliver to the Collateral
        Agent a control agreement, in form and substance reasonably satisfactory
        to the
        Collateral Agent, duly executed by each Grantor and such bank or financial
        institution, or enter into other arrangements in form and substance satisfactory
        to the Collateral Agent, pursuant to which such institution shall irrevocably
        agree, interalia, that (i) it will comply at any time with
        the instructions originated by the Collateral Agent to such bank or financial
        institution directing the disposition of cash, Commodity Contracts, securities,
        Investment Property and other items from time to time credited to such account,
        without further consent of each Grantor, which instructions the Collateral
        Agent
        will not give to such bank or other financial institution in the absence
        of a
        continuing Event of Default, (ii) all Commodity Contracts, securities,
        Investment Property and other items of each Grantor deposited with such
        institution shall be subject to a perfected, first priority security interest
        in
        favor of the Collateral Agent, (iii) any right of set off (other than
        recoupment of standard fees), banker’s Lien or other similar Lien, security
        interest or encumbrance shall be fully waived as against the Collateral Agent,
        and (iv) upon receipt of written notice from the Collateral Agent during
        the continuance of an Event of Default, such bank or financial institution
        shall
        immediately send to the Collateral Agent by wire transfer (to such account
        as
        the Collateral Agent shall specify, or in such other manner as the Collateral
        Agent shall direct) all such cash, the value of any Commodity Contracts,
        securities, Investment Property and other items held by it.  The
        provisions of this Section 5(i) shall not apply to (i) Deposit Accounts for
        which the Collateral Agent is the depositary and (ii) Deposit Accounts specially
        and exclusively used for payroll, payroll taxes and other employee wage and
        benefit payments to or for the benefit of each Grantor’s salaried or hourly
        employees.


      
        
          
          

        

        
          -13-

          
            

          

        

        
          
          

        

      


      (j)           Motor
        Vehicles.  To the extent that there are no Permitted Liens
        thereon:

      


      (i)           Upon
        the Collateral Agent’s written request, each Grantor shall deliver to the
        Collateral Agent originals of the certificates of title or ownership for
        all
        motor vehicles with a value in excess of $50,000, owned by it with the
        Collateral Agent listed as lienholder, for the benefit of the
        Holders.

       

      (ii)           Each
        Grantor hereby appoints the Collateral Agent as its attorney-in-fact, effective
        the date hereof and terminating upon the termination of this Agreement, for
        the
        purpose of (A) executing on behalf of such Grantor title or ownership
        applications for filing with appropriate state agencies to enable motor vehicles
        now owned or hereafter acquired by such Grantor to be retitled and the
        Collateral Agent listed as lienholder thereof, (B) filing such applications
        with
        such state agencies, and (C) executing such other documents and instruments
        on
        behalf of, and taking such other action in the name of, such Grantor as the
        Collateral Agent may deem necessary or advisable to accomplish the purposes
        hereof (including, without limitation, for the purpose of creating in favor
        of
        the Collateral Agent a perfected Lien on the motor vehicles and exercising
        the
        rights and remedies of the Collateral Agent hereunder).  This
        appointment as attorney-in-fact is coupled with an interest and is irrevocable
        until all of the Obligations are indefeasibly paid in full in cash and after
        all
        Transaction Documents have been terminated.

      


      (iii)           Any
        certificates of title or ownership delivered pursuant to the terms hereof
        shall
        be accompanied by odometer statements for each motor vehicle covered
        thereby.

      


      (iv)           So
        long as no Event of Default shall have occurred and be continuing, upon the
        request of any Grantor, the Collateral Agent shall execute and deliver to
        any
        Grantor such instruments as any Grantor shall reasonably request to remove
        the
        notation of the Collateral Agent as lienholder on any certificate of title
        for
        any motor vehicle; provided, however, that any such instruments
        shall be delivered, and the release effective, only upon receipt by the
        Collateral Agent of a certificate from any Grantor stating that such motor
        vehicle is to be sold or has suffered a casualty loss (with title thereto
        in
        such case passing to the casualty insurance company therefor in settlement
        of
        the claim for such loss) and the amount that any Grantor will receive as
        sale
        proceeds or insurance proceeds.  Any proceeds of such sale or casualty
        loss shall be paid to the Collateral Agent hereunder immediately upon receipt,
        to be applied to the Obligations then outstanding.

      


      (k)           Control.  Each
        Grantor hereby agrees to take any or all action that may be necessary, desirable
        or that the Collateral Agent may reasonably request in order for the Collateral
        Agent to obtain control in accordance with Sections 9-105 – 9-107 of the Code
        with respect to the following Collateral: (i) Electronic Chattel Paper,
        (ii) Investment Property, and (iii) Letter-of-Credit Rights.


      
        
          
          

        

        
          -14-

          
            

          

        

        
          
          

        

      


      (l)           Inspection
        and Reporting.  Each Grantor shall permit the Collateral Agent, or
        any agent or representatives thereof or such professionals or other Persons
        as
        the Collateral Agent 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 the Collateral Agent, or any agent or representatives thereof or such
        professionals or other Persons as the Collateral Agent 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.

      


      (m)           Future
        Subsidiaries.  If any Grantor shall hereafter create or acquire
        any Subsidiary, simultaneously with the creation or acquisition of such
        Subsidiary, such Grantor shall (i) cause such Subsidiary to become a party
        to
        this Agreement as an additional “Grantor” hereunder, (ii) such Grantor shall
        deliver to Collateral Agent revised Schedules to this Agreement, as appropriate,
        (iii) shall duly execute and deliver a guaranty of the Obligations in favor
        of
        the Collateral Agent in accordance with the Guarantee, and (iv) shall duly
        execute and/or deliver such opinions of counsel and other documents (including
        an Assumption Agreement by such Subsidiary in the form attached hereto as
        Exhibit B), in form and substance reasonably acceptable to the Collateral
        Agent, as the Collateral Agent shall reasonably request with respect thereto,
        provided that any Grantor that acquires a subsidiary on or within two days
        after
        the Closing Date shall have 10 Business Days in which to satisfy the
        requirements of this Section 5(m).

      


      (n)           Fixture
        Filings.  Within 10 Business Days after the Closing Date, Grantors
        shall cause financing statements to be filed in the appropriate county clerk’s
        offices in order to perfect the security interest of the Collateral Agent
        in and
        to all Fixtures and As-extracted Collateral constituting Collateral on the
        Closing Date or within two Business Days after the Closing Date.

      


      SECTION
        6.Additional Provisions Concerning the Collateral.

      


      (a)           Each
        Grantor hereby (i) authorizes the Collateral Agent 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 the Collateral Agent 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.

       


      
        
          
          

        

        
          -15-

          
            

          

        

        
          
          

        

      


      (b)           Each
        Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact
        and proxy, with full authority in the place and stead of such Grantor and
        in the
        name of such Grantor or otherwise, from time to time in the Collateral Agent’s
        discretion, so long as an Event of Default shall have occurred and is
        continuing, to take any action and to execute any instrument which the
        Collateral Agent may reasonably deem necessary or advisable to accomplish
        the
        purposes of this Agreement (subject to the rights of each Grantor under
Section 5 hereof), including, without limitation, (i) to obtain and
        adjust insurance required to be paid to the Collateral Agent pursuant to
        Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover,
        compound, receive and give acquittance and receipts for moneys due and to
        become
        due under or in respect of any Collateral, (iii) to receive, endorse, and
        collect any drafts or other instruments, documents and chattel paper in
        connection with clause (i) or (ii) above, (iv) to file any claims or take
        any
        action or institute any proceedings which the Collateral Agent may deem
        necessary or desirable for the collection of any Collateral or otherwise
        to
        enforce the rights of the Collateral Agent and the Holders with respect to
        any
        Collateral, and (v) to execute assignments, licenses and other documents
        to
        enforce the rights of the Collateral Agent and the Holders with respect to
        any
        Collateral.  This power is coupled with an interest and is irrevocable
        until all of the Obligations are indefeasibly paid in full in cash.

      


      (c)           For
        the purpose of enabling the Collateral Agent to exercise rights and remedies
        hereunder, at such time as the Collateral Agent shall be lawfully entitled
        to
        exercise such rights and remedies, and for no other purpose, each Grantor
        hereby
        grants to the Collateral Agent, to the extent assignable, an irrevocable,
        non-exclusive license (exercisable without payment of royalty or other
        compensation to any Grantor) to use, assign, license or sublicense any
        Intellectual Property now owned or hereafter acquired by such Grantor, wherever
        the same may be located, including in such license reasonable access to all
        media in which any of the licensed items may be recorded or stored and to
        all
        computer programs used for the compilation or printout
        thereof.  Notwithstanding anything contained herein to the contrary,
        but subject to the provisions of the Amendment Agreement that limit the right
        of
        any Grantor to dispose of its property, and Section 5(g) and Section
        5(h) hereof, so long as no Event of Default shall have occurred and be
        continuing, any Grantor may exploit, use, enjoy, protect, license, sublicense,
        assign, sell, dispose of or take other actions with respect to the Intellectual
        Property in the ordinary course of its business.  In furtherance of
        the foregoing, unless an Event of Default shall have occurred and be continuing,
        the Collateral Agent shall from time to time, upon the request of any Grantor,
        execute and deliver any instruments, certificates or other documents, in
        the
        form so requested, which such Grantor shall have certified are appropriate
        (in
        such Grantor’s judgment) to allow it to take any action permitted above
        (including relinquishment of the license provided pursuant to this clause
        (c) as
        to any Intellectual Property).  Further, upon the indefeasible payment
        in full in cash of all of the Obligations, the Collateral Agent (subject
        to
Section 10(e) hereof) shall release and reassign to any Grantor all of
        the Collateral Agent’s right, title and interest in and to the Intellectual
        Property, and the Licenses, all without recourse, representation or warranty
        whatsoever.  The exercise of rights and remedies hereunder by the
        Collateral Agent shall not terminate the rights of the holders of any licenses
        or sublicenses theretofore granted by each Grantor in accordance with the
        second
        sentence of this clause (c).  Each Grantor hereby releases the
        Collateral Agent from any claims, causes of action and demands at any time
        arising out of or with respect to any actions taken or omitted to be taken
        by
        the Collateral Agent under the powers of attorney granted herein other than
        actions taken or omitted to be taken through the Collateral Agent’s gross
        negligence or willful misconduct, as determined by a final determination
        of a
        court of competent jurisdiction.


      
        
          
          

        

        
          -16-

          
            

          

        

        
          
          

        

      


      (d)           If
        any Grantor fails to perform any agreement or obligation contained herein,
        the
        Collateral Agent may itself perform, or cause performance of, such agreement
        or
        obligation, in the name of such Grantor or the Collateral Agent, and the
        expenses of the Collateral Agent incurred in connection therewith shall be
        payable by such Grantor pursuant to Section 8 hereof and shall be secured
        by the Collateral.

      


      (e)           The
        powers conferred on the Collateral Agent hereunder are solely to protect
        its
        interest in the Collateral and shall not impose any duty upon it to exercise
        any
        such powers.  Except for the safe custody of any Collateral in its
        possession and the accounting for moneys actually received by it hereunder,
        the
        Collateral Agent 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.

      


      (f)           Anything
        herein to the contrary notwithstanding (i) each Grantor shall remain liable
        under the Licenses and otherwise with respect to any of the Collateral to
        the
        extent set forth therein to perform all of its obligations thereunder to
        the
        same extent as if this Agreement had not been executed, (ii) the exercise
        by the Collateral Agent of any of its rights hereunder shall not release
        any
        Grantor from any of its obligations under the Licenses or otherwise in respect
        of the Collateral, and (iii) the Collateral Agent shall not have any
        obligation or liability by reason of this Agreement under the Licenses or
        with
        respect to any of the other Collateral, nor shall the Collateral Agent be
        obligated to perform any of the obligations or duties of any Grantor thereunder
        or to take any action to collect or enforce any claim for payment assigned
        hereunder.

      


      SECTION
        7.  Remedies Upon Event of Default.  If any Event of
        Default shall have occurred and be continuing, subject to the Permitted
        Liens:

      


      (a)           The
        Collateral Agent may exercise in respect of the Collateral, in addition to
        any
        other rights and remedies provided for herein or otherwise available to it,
        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 the Collateral Agent’s name or into the name of its nominee or
        nominees (to the extent the Collateral Agent has not theretofore done so)
        and
        thereafter receive, for the benefit of the Collateral Agent, all payments
        made
        thereon, give all consents, waivers and ratifications in respect thereof
        and
        otherwise act with respect thereto as though it 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 the Collateral Agent forthwith, assemble
        all
        or part of its respective Collateral as directed by the Collateral Agent
        and
        make it available to the Collateral Agent at a place or places to be designated
        by the Collateral Agent that is reasonably convenient to both parties, and
        the
        Collateral Agent 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 the Collateral Agent’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 the Collateral Agent’s offices or elsewhere,
        for cash, on credit or for future delivery, and at such price or prices and
        upon
        such other terms as the Collateral Agent may deem commercially reasonable
        and/or
        (B) lease, license or dispose of the Collateral or any part thereof upon
        such terms as the Collateral Agent 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.  The Collateral Agent shall not be obligated to make any
        sale or other disposition of any Collateral regardless of notice of sale
        having
        been given.  The Collateral Agent 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 the
        Collateral Agent and the Holders 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 the Collateral Agent 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 the Collateral Agent shall be made without
        warranty, (ii) the Collateral Agent 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.  In addition to the foregoing, (1) upon written
        notice to any Grantor from the Collateral Agent after and during the continuance
        of an Event of Default, such Grantor shall cease any use of the Intellectual
        Property or any trademark, patent or copyright similar thereto for any purpose
        described in such notice; (2) the Collateral Agent may, at any time and from
        time to time after and during the continuance of an Event of Default, upon
        10
        days’ prior notice to such Grantor, license, whether general, special or
        otherwise, and whether on an exclusive or non-exclusive basis, any of the
        Intellectual Property, throughout the universe for such term or terms, on
        such
        conditions, and in such manner, as the Collateral Agent shall in its sole
        discretion determine; and (3) the Collateral Agent may, at any time, pursuant
        to
        the authority granted in Section 6 hereof (such authority being effective
        upon the occurrence and during the continuance of an Event of Default), execute
        and deliver on behalf of such Grantor, one or more instruments of assignment
        of
        the Intellectual Property (or any application or registration thereof), in
        form
        suitable for filing, recording or registration in any country.


      
        
          
          

        

        
          -17-

          
            

          

        

        
          
          

        

      


      (b)           Any
        cash held by the Collateral Agent as Collateral and all Cash Proceeds received
        by the Collateral Agent 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 the Collateral Agent pursuant to Section
        8 hereof) by the Collateral Agent against, all or any part of the
        Obligations in such order as the Collateral Agent shall elect, consistent
        with
        the provisions of the Amendment Agreement.  Any surplus of such cash
        or Cash Proceeds held by the Collateral Agent 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.


      
        
          
          

        

        
          -18-

          
            

          

        

        
          
          

        

      


      (c)           In
        the event that the proceeds of any such sale, collection or realization are
        insufficient to pay all amounts to which the Collateral Agent and the Holders
        are legally entitled, each Grantor shall be liable for the deficiency, together
        with interest thereon at the highest rate specified in the Notes 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 the Collateral
        Agent to collect such deficiency.

      


      (d)           Each
        Grantor hereby acknowledges that if the Collateral Agent 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)           The
        Collateral Agent 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 the Collateral Agent’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 the
        Collateral Agent’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.

      


      SECTION
        8.  Indemnity and Expenses.

      


      (a)           Each
        Grantor agrees, jointly and severally, to defend, protect, indemnify and
        hold
        the Collateral Agent and each of the Holders, jointly and severally, 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 the Collateral Agent upon
        demand the amount of any and all costs and expenses, including the reasonable
        fees, costs, expenses and disbursements of counsel for the Collateral Agent
        and
        of any experts and agents (including, without limitation, any collateral
        trustee
        which may act as agent of the Collateral Agent), which the Collateral Agent
        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 the
        Collateral Agent hereunder, or (iv) the failure by any Grantor to perform
        or observe any of the provisions hereof.


      
        
          
          

        

        
          -19-

          
            

          

        

        
          
          

        

      


      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 to the addressee 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.

      


      SECTION
        10.   Miscellaneous.

       

      (a)           No
        amendment of any provision of this Agreement shall be effective unless it
        is in
        writing and signed by each Grantor, the Required Holders (as defined in the
        Note) and the Collateral Agent, 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 the Collateral
        Agent, 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 the Collateral Agent 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 the Collateral Agent or
        any Holder 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 the Collateral Agent or any Holder 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.

      


      (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 the Collateral Agent and the Holders
        hereunder, to the benefit of the Collateral Agent and the Holders and their
        respective permitted successors, transferees and assigns.  Without
        limiting the generality of clause (ii) of the immediately preceding sentence,
        without notice to any Grantor, the Collateral Agent and the Holders may assign
        or otherwise transfer their 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 the Collateral Agent and the Holders herein or
        otherwise.  Upon any such assignment or transfer, all references in
        this Agreement to the Collateral Agent or any such Holder shall mean the
        assignee of the Collateral Agent or such Holder.  None of the rights
        or obligations of any Grantor hereunder may be assigned or otherwise transferred
        without the prior written consent of the Collateral Agent, and any such
        assignment or transfer without the consent of the Collateral Agent shall
        be null
        and void.


      
        
          
          

        

        
          -20-

          
            

          

        

        
          
          

        

      


      (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) the Collateral Agent 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 NEW YORK, 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 NEW
        YORK.

      


      (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 NEW YORK IN THE
        COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT
        OF
        NEW YORK, 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
FORUMNONCONVENIENS, 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 (BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT) THE COLLATERAL
        AGENT WAIVES ANY RIGHT IT 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.


      
        
          
          

        

        
          -21-

          
            

          

        

        
          
          

        

      


      (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.

      


      (j)           Nothing
        contained herein shall affect the right of the Collateral Agent 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)           In
        the event of any conflict between the terms of this Agreement, the Amendment
        Agreement, or any of the other Transaction Documents or exhibits referred
        to
        herein or therein, the terms of the Amendment Agreement shall
        control.

      


      


      [REMAINDER
        OF THIS PAGE INTENTIONALLY LEFT BLANK]

       

      
        
          
          

        

        
          -22-

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the Collateral Agent, the Required Holders and the Grantors
        have each 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:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:
                  Chief Executive Officer

              
	 	 	
                Address:
                  1117 Perimeter Center

              
	 	 	
                West,
                  Suite N415, Atlanta, Georgia 30338

              
	 	 	
                Telephone:
                  678-443-2300

              
	 	 	
                Facsimile:
                  678-443-2320

              
	 	 	
                Email:
                  bray@charys.com

              
	 	 	 
	 	 	 
	 	
                PERSONNEL
                  RESOURCES OF GEORGIA,
                  INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  880 South Pleasantburg Drive, Suite 3C, Greenville, South Carolina
                  29607

              
	 	 	
                Telephone:
                  864-271-7611

              
	 	 	
                Facsimile:
                  864-232-0178

              
	 	 	 
	 	 	 
	 	
                CCI
                  TELECOM, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  19240 Red Land Road, San Antonio, Texas 78259

              
	 	 	
                Telephone:
                  210-496-1926

              
	 	 	
                Facsimile:
                  210-491-0932

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      
        	 	
                METHOD
                  IQ, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  1750 Founders Parkway, Suite 180, Alpharetta, Georgia
                  30004

              
	 	 	
                Telephone:
                  678-507-1300

              
	 	 	
                Facsimile:
                  678-507-1302

              
	 	 	 
	 	 	 
	 	
                VIASYS
                  SERVICES, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  26 Lake Wire Drive, Lakeland, Florida 33815

              
	 	 	
                Telephone:
                  863-607-9988

              
	 	 	
                Facsimile:
                  863-607-9955

              
	 	 	 
	 	 	 
	 	
                VIASYS
                  NETWORK SERVICES, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  26 Lake Wire Drive, Lakeland, Florida 33815

              
	 	 	
                Telephone:
                  863-607-9988

              
	 	 	
                Facsimile:
                  863-607-9955

              
	 	 	 
	 	 	 
	 	
                VSI
                  REAL ESTATE HOLDING, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  26 Lake Wire Drive, Lakeland, Florida 33815

              
	 	 	
                Telephone:
                  863-607-9988

              
	 	 	
                Facsimile:
                  863-607-9955

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      
        	 	
                CROCHET
                  AND BOREL SERVICES, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  346 Twin City Highway, Port Neches, Texas 77651

              
	 	 	
                Telephone:
                  409-722-9697

              
	 	 	
                Facsimile:
                  409-722-7273

              
	 	 	 
	 	 	 
	 	
                DIGITAL
                  COMMUNICATION SERVICES, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:
                  96 North 5th Avenue, Delray Beach, Florida 33483

              
	 	 	 
	 	 	 
	 	
                AYIN
                  HOLDING COMPANY INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Name:
                  Billy V. Ray, Jr.

              
	 	 	
                Title:

              
	 	 	
                Address:

              
	 	 	
                Telephone:

              
	 	 	
                Facsimile:

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      THIS
        AMENDED AND RESTATED SECURITY AGREEMENT ACCEPTED BY:

       

      
        	
                IMPERIUM
                  ADVISERS, LLC

              	 
	
                as
                  Collateral Agent

              	 
	 	 	 
	 	 	 
	
                By:

              	 	 
	
                Name:

              	
                Maurice
                  Hryshko

              	 
	
                Title:

              	
                General
                  Counsel

              	 
	
                Address:

              	
                153
                  East 53rd Street

              	 
	 	
                29th
                  Floor

              	 
	 	
                New
                  York, NY 10022

              	 
	
                Telephone:

              	
                (212)
                  433-1360

              	 
	
                Facsimile:

              	
                (212)
                  433-1361

              	 
	 	 	 
	 	 	 
	
                IMPERIUM
                  MASTER FUND, LTD.

              	 
	
                as
                  Noteholder

              	 
	 	 	 
	 	 	 
	
                By:

              	 	 
	
                Name:

              	
                Maurice
                  Hryshko

              	 
	
                Title:

              	
                General
                  Counsel

              	 
	
                Address:

              	
                c/o
                  Imperium Advisers, LLC

              	 
	 	
                153
                  East 53rd Street

              	 
	 	
                29th
                  Floor

              	 
	 	
                New
                  York, NY 10022

              	 
	
                Telephone:

              	
                (212)
                  433-1360

              	 
	
                Facsimile:

              	
                (212)
                  433-1361

              	 
	 	 	 
	 	 	 
	
                JED
                  FAMILY TRUST

              	 
	
                as
                  Noteholder

              	 
	 	 	 
	 	 	 
	
                By:

              	 	 
	
                Name:

              	 	 
	
                Title:

              	 	 
	
                Address:

              	
                c/o
                  Imperium Advisers, LLC

              	 
	 	
                153
                  East 53rd Street

              	 
	 	
                29th
                  Floor

              	 
	 	
                New
                  York, NY 10022

              	 
	
                Telephone:

              	
                (212)
                  433-1360

              	 
	
                Facsimile:

              	
                (212)
                  433-1361

              	 
	 	 	 
	 	 	 
	
                JOHN
                  MICHAELSON

              	 
	
                as
                  Noteholder

              	 
	 	 	 
	 	 	 
	 	 
	
                Address:

              	
                c/o
                  Imperium Advisers, LLC

              	 
	 	
                153
                  East 53rd Street

              	 
	 	
                29th
                  Floor

              	 
	 	
                New
                  York, NY 10022

              	 
	
                Telephone:

              	
                (212)
                  433-1360

              	 
	
                Facsimile:

              	
                (212)
                  433-1361

              	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        I

       

      LEGAL
        NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR

      JURISDICTION
        OF ORGANIZATION

       

       

      
        	
                Charys
                  Holding Company, Inc.

                1117
                  Perimeter Center West

                Suite
                  N415

                Atlanta,
                  GA 30338

              	
                DE

              	
                3791748

              
	 	 	 
	
                Personnel
                  Resources of Georgia, Inc.

                669
                  N Academy St

                Greenville,
                  NC 29607

              	
                GA

              	
                0104816

              
	 	 	 
	
                CCI
                  Telecom, Inc.

                16901
                  N. Dallas Parkway

                Suite
                  105

                Addison,
                  TX  75001

              	
                NV

              	
                C-25002-2000

              
	 	 	 
	
                Method
                  IQ, Inc.

                1750
                  Founders Pkwy

                Suite
                  180

                Alpharetta,
                  GA 30004

              	
                GA

              	
                0153426

              
	 	 	 
	
                Viasys
                  Services, Inc.

                2944
                  Drane Field

                Lakeland,
                  FL 33811

              	
                FL

              	
                G09210

              
	 	 	 
	
                Viasys
                  Network Services, Inc.

                2944
                  Drane Field

                Lakeland,
                  FL 33811

              	
                FL

              	
                P05000012213

              
	 	 	 
	
                VSI
                  Real Estate Holding, Inc.

              	
                FL

              	
                P06000019107

              
	 	 	 
	
                Crochet
                  & Borel Services, Inc.

                346
                  Twin City Hwy

                Port
                  Neches, TX 77651

              	
                TX

              	
                138054100

              
	 	 	 
	
                Digital
                  Communication Services, Inc.

                96
                  North 5th

                Delray
                  Beach, FL 33483

              	
                KY

              	
                0416787

              
	 	 	 
	
                Ayin
                  Holding Company Inc.

                17314
                  SH 249

                Suite
                  230

                Houston,
                  TX 77064

              	
                DE

              	
                4147158

              


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      SCHEDULE
        II

       

      LEGAL
        NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR

      JURISDICTION
        OF ORGANIZATION

       

      
        	
                LFC,
                  Inc.

                17314
                  SH 249

                Suite
                  230

                Houston,
                  TX 77064

              	
                DE

              	
                4145595

              
	 	 	 
	
                Aeon
                  Technologies, Inc.

                16901
                  N. Dallas Parkway

                Suite
                  105

                Addison,
                  TX  75001

              	
                NV

              	
                C28977-2000

              
	 	 	 
	
                Berkshire
                  Wireless, Inc.

                480
                  Pleasant St

                Lee,
                  MA 01238

              	
                MA

              	
                000606988

              
	 	 	 
	
                CCI
                  Integrated Solutions, Inc.

                16901
                  N. Dallas Parkway

                Suite
                  105

                Addison,
                  TX  75001

              	
                TX

              	
                01602617

              
	 	 	 
	
                Mitchell
                  Site Acq., Inc.

                119
                  Veterinarian Rd

                Lafayette,
                  LA 70507

              	
                LA

              	
                34675000D

              
	 	 	 
	
                Ayin
                  Tower Management Services, Inc.

                17314
                  SH 249

                Suite
                  230

                Houston,
                  TX 77064

              	
                DE

              	
                4233831

              
	 	 	 
	
                Complete
                  Tower Sources, Inc.

                765
                  Vatican Road

                Carencro,
                  LA 70520

              	
                LA

              	
                35400877D

              
	 	 	 
	
                Cotton
                  Restoration of Central Texas, LP

                14345
                  NW Freeway

                Houston,
                  TX 77040

              	
                TX

              	
                800008991

              
	 	 	 
	
                Cotton
                  Commercial USA, LP

                14345
                  NW Freeway

                Houston,
                  TX 77040

              	
                TX

              	
                800433352

              
	 	 	 
	
                Cotton
                  Holdings 1, Inc.

                14345
                  NW Freeway

                Houston,
                  TX 77040

              	
                DE

              	
                3451808

              
	 	 	 
	
                C&B/Cotton
                  Holdings, Inc.

                14345
                  NW Freeway

                Houston,
                  TX 77040

              	
                DE

              	
                4236638

              

 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        A

       

      ASSIGNMENT
        FOR SECURITY

       

      [TRADEMARKS]
        [PATENTS] [COPYRIGHTS]

       

      WHEREAS,
        ______________________________ (the “Assignor”) [has
        adopted, used and is using, and holds all right, title and interest in and
        to,
        the trademarks and service marks listed on the annexed Schedule 1A,
        which trademarks and service marks are registered or applied for in the United
        States Patent and Trademark Office (the “Trademarks”)] [holds all right,
        title and interest in the letter patents, design patents and utility patents
        listed on the annexed Schedule 1A, which patents are issued or
        applied for in the United States Patent and Trademark Office (the
“Patents”)] [holds all right, title and interest in the copyrights listed
        on the annexed Schedule 1A, which copyrights are registered in the United
        States Copyright Office (the “Copyrights”)];

       

      WHEREAS,
        the Assignor has entered into an Amended and Restated Security Agreement,
        dated
        as of April 5, 2007 (as amended, restated or otherwise modified from time
        to
        time the “Security Agreement”), in favor IMPERIUM ADVISERS, LLC, as
        collateral agent for certain purchasers (the “Assignee”);

       

      


      WHEREAS,
        pursuant to the Security Agreement, the Assignor has assigned to the Assignee
        and granted to the Assignee for the benefit of the Holders (as defined in
        the
        Security Agreement) a continuing security interest in all right, title and
        interest of the Assignor in, to and under the [Trademarks, together with,
        among
        other things, the good-will of the business symbolized by the Trademarks]
        [Patents] [Copyrights] and the applications and registrations thereof, and
        all
        proceeds thereof, including, without limitation, any and all causes of action
        which may exist by reason of infringement thereof and any and all damages
        arising from past, present and future violations thereof (the
“Collateral”), to secure the payment, performance and observance of the
“Obligations” (as defined in the Security Agreement);

       

      NOW,
        THEREFORE, for good and valuable consideration, the receipt and sufficiency
        of
        which are hereby acknowledged, the Assignor does hereby pledge, convey, sell,
        assign, transfer and set over unto the Assignee and grants to the Assignee
        for
        the benefit of the Holders a continuing security interest in the Collateral
        to
        secure the prompt payment, performance and for the benefit of the Holders
        observance of the Obligations.

       

      The
        Assignor does hereby further acknowledge and affirm that the rights and remedies
        of the Assignee with respect to the Collateral are more fully set forth in
        the
        Security Agreement, the terms and provisions of which are hereby incorporated
        herein by reference as if fully set forth herein.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed
        by
        its officer thereunto duly authorized as of _____________, 20__

       

      
        	 	
                [GRANTORS] 

              
	 	 
	 	 
	 	
                By:

              	 	 
	 	 	
                Name:

              
	 	 	
                Title:

              


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      STATE
        OF
        ____________

      ss.:

      COUNTY
        OF
        __________

       

       

      On
        this
        ____ day of _______________, 20__, before me personally came ________________,
        to me known to be the person who executed the foregoing instrument, and who,
        being duly sworn by me, did depose and say that s/he is the ________________
        of
        _______________________________________, a ____________________, and that
        s/he
        executed the foregoing instrument in the firm name of
        _______________________________________, and that s/he had authority to sign
        the
        same, and s/he acknowledged to me that he executed the same as the act and
        deed
        of said firm for the uses and purposes therein mentioned.

       

       

      
        	 	 


      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      


      SCHEDULE
        1A TO ASSIGNMENT FOR SECURITY

       

      


      [Trademarks
        and Trademark Applications]

      [Patent
        and Patent Applications]

      [Copyright
        and Copyright Applications]

      
        	
                Owned
                  by

              	 	 


      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      EXHIBIT
        B

      ASSUMPTION
        AGREEMENT

      


      ASSUMPTION
        AGREEMENT, dated as of _________, _____ made by __________________, a __________
        corporation (the “Additional Grantor”), in favor of the Holders pursuant to the
        Amendment Agreement referred to below. All capitalized terms not defined
        herein
        shall have the meaning ascribed to them in such Amendment
        Agreement.

      


      W
        I T N E
        S S E T H :

      


      WHEREAS,
        Charys Holding Company, Inc.,
        a Delaware corporation (the “Company”), and the Holders have entered into an
        Amendment Agreement, dated as of April 5, 2007 (as amended, supplemented
        or
        otherwise modified from time to time, the “Amendment Agreement”);

      


      WHEREAS,
        in connection with the
        Amendment Agreement, the Company and its subsidiaries (other than the Additional
        Grantor) have entered into an amended and restated Security Agreement, dated
        as
        of the date of the Amendment Agreement (as amended, supplemented or otherwise
        modified from time to time, the “Security Agreement”) in favor of the
        Holders;

      


      WHEREAS,
        the Amendment Agreement
        requires the Additional Grantor to become a party to the Security Agreement;
        and

      


      WHEREAS,
        the Additional Grantor has
        agreed to execute and deliver this Assumption Agreement in order to become
        a
        party to the Security Agreement;

      


      NOW,
        THEREFORE, IT IS AGREED:

      


      1.           Security
        Agreement.  By executing and delivering this Assumption Agreement,
        the Additional Grantor hereby becomes a party to the Security Agreement as
        a
        Grantor thereunder with the same force and effect as if originally named
        therein
        as a Grantor and, without limiting the generality of the foregoing, hereby
        expressly assumes all obligations and liabilities of a Grantor
        thereunder.  The Additional Grantor hereby represents and warrants
        that each of the representations and warranties contained in Section 4 of
        the
        Security Agreement is true and correct on and as the date hereof as to such
        Additional Grantor (after giving effect to this Assumption Agreement) as
        if made
        on and as of such date.

      


      2.           Governing
        Law. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
        INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE
        TO
        CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW
        YORK.

      


      3.           Controlling
        Agreement.  In the event of any conflict between the provisions of
        this Assumption Agreement, the Amendment Agreement, and any of the other
        Transaction Documents, the terms of the Amendment Agreement shall
        control.


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      IN
        WITNESS WHEREOF, the undersigned has
        caused this Assumption Agreement to be duly executed and delivered as of
        the
        date first above written.

      


      


      
        	 	
                [ADDITIONAL
                  GRANTOR]

              
	 	 	 
	 	 	 
	 	
                By:

              	 
	 	 	
                Title:

              
	 	 	
                Name:

              


      

    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      Schedule
        3(a)

    

    
      Subsidiaries

    

    
      


    

    
      See
        attached.

    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        3(a)

    

    
      


    

    
      Company
        and Subsidaries

    

    
      


    

    
      	
              Charys
                Holding Company, Inc.

            	 
	
              1117
                Perimeter Center West

            	 
	
              Suite
                N415

            	 
	
              Atlanta,
                GA 30338

            	 
	 	 
	
              Personnel
                Resources of Georgia, Inc.

            	 
	
              669
                N Academy St

            	 
	
              Greenville,
                NC 29607

            	 
	 	 
	
              CCI
                Telecom, Inc.

            	 
	
              2100
                Couch Drive

            	 
	
              McKinney,
                TX 75069

            	 
	 	 
	
              Method
                IQ, Inc. 

            	 
	
               1750
                Founders Pkwy

            	 
	
               Suite
                180

            	 
	
               Alpharetta,
                GA 30004

            	 
	 	 
	
              Viasys
                Services, Inc.

            	 
	
              2944
                Drane Field

            	 
	
              Lakeland,
                FL 33811

            	 
	 	 
	
              Viasys
                Network Services, Inc.

            	 
	
              2944
                Drane Field

            	 
	
              Lakeland,
                FL 33811

            	 
	 	 
	
              Crochet
                & Borel Services, Inc.

            	 
	
              346
                Twin City Hwy

            	 
	
              Port
                Neches,TX 77651

            	 
	 	 
	
              Digital
                Communication Services, Inc.

            	 
	
              96
                North 5th

            	 
	
              Delray
                Beach, FL 33483

            	 
	 	 
	
              Ayin
                Holding Company Inc.

            	 
	
              17314
                SH 249

            	 
	
              Suite
                230

            	 
	
              Houston,
                TX 77064

            	 
	 	 
	
              Ayin
                Tower Management Services,

            	 
	
              Inc.

            	 
	
              17314
                SH 249

            	 
	
              Suite
                230

            	 
	
              Houston,
                TX 77064

            	 


    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      


    

    
      	
              LFC,
                Inc.

            	 
	
              17314
                SH 249

            	 
	
              Suite
                230

            	 
	
              Houston,
                TX 77064

            	 
	 	 
	
              Aeon
                Technologies, Inc.

            	 
	
              2100
                Couch Drive

            	 
	
              McKinney,
                TX 75069

            	 
	 	 
	
              Berkshire
                Wireless, Inc.

            	 
	
              480
                Pleasant St

            	 
	
              Lee,
                MA 01238

            	 
	 	 
	
              CCI
                Integrated Solutions, Inc.

            	 
	
              2100
                Couch Drive

            	 
	
              McKinney,
                TX 75069

            	 
	 	 
	
              Complete
                Tower Sources, Inc

            	 
	
              765
                Vatican Road

            	 
	
              Carencro,
                LA 70520

            	 
	 	 
	
              Mitchell
                Site Acq., Inc.

            	 
	
              119
                Veterinarian Rd

            	 
	
              Lafayette,
                LA 70507

            	 
	 	 
	
              Cotton
                Restoration of Central

            	 
	
              Texas,
                LP

            	 
	
              14345
                NW Freeway

            	 
	
              Houston,
                TX 77040

            	 
	 	 
	
              Cotton
                Commercial USA, LP

            	 
	
              14345
                NW Freeway

            	 
	
              Houston,
                TX 77040

            	 
	 	 
	
              Cotton
                Holdings 1, Inc.

            	 
	
              14345
                NW Freeway

            	 
	
              Houston,
                TX 77040

            	 


    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      


    

    
      Schedule
        3(e)

    

    
      Consents

    

    
      


    

    
      The
        various lender consents needed due to the pre-existing security interests
        in
        favor of:

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  New Stream Commercial Finance, LLC financing of accounts receivable
                  of
                  Crochet & Borel Services, Inc., as described in filings by the Company
                  with the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  New Stream Commercial Finance, LLC financing of accounts receivable
                  of
                  Ayin Tower Management Services Inc., as described in filings by
                  the
                  Company with the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  New Stream Commercial Finance, LLC financing with respect to Complete
                  Tower Sources, Inc. as described in filings by the Company with
                  the
                  Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  financing with respect to the Cotton Sellers identified in filings
                  by the
                  Company with the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                Capco
                  Financial Company - A Division of Greater Bank N.A., financing
                  with
                  respect to CCI Telecom, Inc. as described in filings by the Company
                  with
                  the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                Capco
                  Financial Company - A Division of Greater Bank N.A., financing
                  with
                  respect to Method IQ, Inc. as described in filings by the Company
                  with the
                  Securities and Exchange
                  Commission.

              


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(m)

    Exceptions
      to Equity Capital

     

    See
      attached.


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Charys
        Holding Company, Inc.

    

    
      Capitalization
        Table

    

    
      As
        of
        3/31/07

    

    
       

      
        
          	
                  SUMMARY:

                	 	
                   

                	 
	
                   

                	 	
                   

                	 
	
                  Preferred
                    Shares Authorized, par value $0.001

                	 	 	
                  5,000,000

                	 
	
                  Preferred
                    Shares Issued and Outstanding as of 3/31/07

                	 	 	
                  1,500,900

                	 
	
                   

                	 	 	 	 
	
                  Common
                    Shares Authorized, par value $0.001

                	 	 	
                  300,000,000

                	 
	
                  Common
                    Shares Issued and Outstanding as of 3/31/07

                	 	 	
                  44,266,775

                	 


        

      

       

      
        
          	
                  Fully
                    Diluted Summary:

                	 	
                  Fully
                    Diluted

                	 	 	
                  Shares

                	 	 	
                  Options

                	 	 	
                  Conversion

                	 	 	
                  Warrants

                	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  COMMON
                    STOCK:

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Public
                    Stockholders

                	 	 	
                  6,342,290

                	 	 	 	
                  6,342,290

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Management
                    & Officers & Directors Shares (detail below)

                	 	 	
                  7,053,379

                	 	 	 	
                  3,049,492

                	 	 	 	
                  4,003,887

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	
                  (A)

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                   

                
	
                  Employees
                    and Consultants:

                	 	 	
                  22,818,205

                	 	 	 	
                  18,628,216

                	 	 	 	
                  3,339,989

                	 	 	 	
                  0

                	 	 	 	
                  850,000

                	 	
                  (B)

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Financing
                    Sources

                	 	 	
                  280,525,796

                	 	 	 	
                  16,246,777

                	 	 	 	
                  750,000

                	 	 	 	
                  84,276,389

                	 	 	 	
                  179,252,630

                	 	
                  (C)

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  TOTAL
                    OUTSTANDING Common Stock. Options and Warrants

                	 	 	
                  316,739,670

                	 	 	 	
                  44,266,775

                	 	 	 	
                  8,093,876

                	 	 	 	
                  84,276,389

                	 	 	 	
                  180,102,630

                	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Transactions
                    Pending Post 3/31/07:

                	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	
                  (
                    I )

                
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  PREFERRED
                    STOCK:

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Series
                    A Preferred Stock - Billy V. Ray

                	 	 	
                  1,000,000

                	 	 	 	
                  1,000,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	
                  (G)

                
	
                  Series
                    B Preferred Stock - Frost Bank

                	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	
                  (D)

                
	
                  Series
                    C Preferred Stock - Frost Bank

                	 	 	
                  500,000

                	 	 	 	
                  500,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	
                  (E)

                
	
                  Series
                    D Preferred Stock - Gotterbetter

                	 	 	
                  16,018,674

                	 	 	 	
                  900

                	 	 	 	
                  0

                	 	 	 	
                  4,000,000

                	 	 	 	
                  12,017,774

                	 	 
	
                  TOTAL
                    PREFERRED STOCK

                	 	 	
                  17,518,674

                	 	 	 	
                  1,500,900

                	 	 	 	
                  0

                	 	 	 	
                  4,000,000

                	 	 	 	
                  12,017,774

                	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  TOTAL
                    OUTSTANDING

                	 	 	
                  334,258,344

                	 	 	 	
                  45,767,675

                	 	 	 	
                  8,093,876

                	 	 	 	
                  88,276,389

                	 	 	 	
                  192,120,404

                	 	 


        

      

       

    

    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

    
      
        	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                EXERCISE
                  PRICE  

              	 
	
                NOTES:

              	 	
                Total

              	 	 	
                Shares

              	 	 	
                Options

              	 	 	
                Conversion

              	 	 	
                Warrants

              	 	 	
                Options

              	 	 	
                Conversion

              	 	 	
                Warrants

              	 
	
                (A) 
                  Management
                  (Officers & Directors) Shares:

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Richard
                  Mangiarelli - Former Director

              	 	 	
                87,500

              	 	 	 	
                87,500

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 
	
                Ray
                  Smith - Officer

              	 	 	
                600,000

              	 	 	 	
                0

              	 	 	 	
                600,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	
              	 	 	 	
              	 
	
                    Ray
                  Smith - Officer

              	 	 	
                25,000

              	 	 	 	
                0

              	 	 	 	
                25,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                8.15

              	 	 	 	 	 	 	 	 	 
	
                    Michael
                  Oyster - Director

              	 	 	
                185,000

              	 	 	 	
                85,000

              	 	 	 	
                100,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                1.05

              	 	 	 	 	 	 	 	 	 
	
                    Michael
                  Oyster - Director

              	 	 	
                300,000

              	 	 	 	
                0

              	 	 	 	
                300,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                1.09

              	 	 	 	 	 	 	 	 	 
	
                    Michael
                  Oyster - Director

              	 	 	
                25,000

              	 	 	 	
                0

              	 	 	 	
                25,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                8.15

              	 	 	 	 	 	 	 	 	 
	
                    Alec
                  McLarty - Director

              	 	 	
                85,000

              	 	 	 	
                85,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Catherine
                  McKee - Director

              	 	 	
                20,000

              	 	 	 	
                20,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	 	 	 	 	 	 
	
                    Gisle
                  Larsen - Director

              	 	 	
                20,000

              	 	 	 	
                20,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	 	 	 	 	 	 
	
                    John
                  Jordon - Director

              	 	 	
                87,842

              	 	 	 	
                87,842

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                    Ed
                  Acosta - Former Officer

              	 	 	
                100,000

              	 	 	 	
                0

              	 	 	 	
                100,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	 	 	 	 	 	 
	
                    Benjamin
                  Holcomb - Former Officer

              	 	 	
                300,000

              	 	 	 	
                0

              	 	 	 	
                300,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	 	 	 	 	 	 
	
                    David
                  Gergacz - Director

              	 	 	
                85,000

              	 	 	 	
                85,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	 	 	 	 	 	 
	
                    Billy
                  Ray -Officer and Director

              	 	 	
                4,422,372

              	 	 	 	
                2,185,150

              	 	 	 	
                2,237,222

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.40

              	 	 	 	 	 	 	 	 	 
	
                    Billy
                  Ray -Officer and Director

              	 	 	
                16,665

              	 	 	 	
                0

              	 	 	 	
                16,665

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                8.15

              	 	 	 	 	 	 	 	 	 
	
                    Ralph
                  DeLucia - Former Director

              	 	 	
                630,000

              	 	 	 	
                330,000

              	 	 	 	
                300,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	
                (F)

              	 	 	 	 	 	 	 	 	 
	
                    Dennis
                  Hayes - Director

              	 	 	
                64,000

              	 	 	 	
                64,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Total
                  Management (Officers & Directors) Shares /Options

              	 	 	
                7,053,379

              	 	 	 	
                3,049,492

              	 	 	 	
                4,003,887

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 


      

    

    
    

     

    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    
      
        
          	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                  EXERCISE
                    PRICE

                	 
	 	 	
                  Total

                	 	 	
                  Shares

                	 	 	
                  Options

                	 	 	
                  Conversion

                	 	 	
                  Warrants

                	 	 	
                  Options

                	 	 	
                  Conversion

                	 	 	
                  Warrants

                	 
	
                  (B) 
                    Employees and Consultants:

                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Subsidiary
                    Employees

                	 	 	
                  1,183,207

                	 	 	 	
                  716,941

                	 	 	 	
                  466,266

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	$	
                  0.23

                	 	 	 	 	 	 	 	 
	
                  Michael
                    Brenner

                	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	$	
                  0.40

                	 	 	 	 	 	 	 	 
	
                  Michael
                    Brenner

                	 	 	
                  25,000

                	 	 	 	
                  0

                	 	 	 	
                  25,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	$	
                  8.15

                	 	 	 	 	 	 	 	 
	
                  Nat'l
                    Financial Communication

                	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	$	
                  2.00

                	 	 	 	 	 	 	 	 
	
                  Spiderboy
                    Consultants

                	 	 	
                  4,300,000

                	 	 	 	
                  1,851,277

                	 	 	 	
                  2,448,723

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	$	
                  0.00

                	 	 	 	 	 	 	 	 
	
                  Larry
                    Hogue

                	 	 	
                  500,000

                	 	 	 	
                  500,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Whonor,
                    Inc.

                	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  100,000

                	 	 	$	
                  1.22

                	 	 	 	 	 	 	 	 
	
                  Steven
                    Posner

                	 	 	
                  650,000

                	 	 	 	
                  650,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Ron
                    Berkovitz

                	 	 	
                  250,000

                	 	 	 	
                  250,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Platinum
                    Advisors Services

                	 	 	
                  2,400,000

                	 	 	 	
                  2,400,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Gunn
                    Allen

                	 	 	
                  1,900,000

                	 	 	 	
                  1,550,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  350,000

                	 	 	 	 	 	 	 	 	 	 	$	
                  2.00

                	 
	
                  Sam
                    Del Presto

                	 	 	
                  425,000

                	 	 	 	
                  25,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  400,000

                	 	 	 	 	 	 	 	 	 	 	$	
                  1.50

                	 
	
                  Joseph
                    Gourlay

                	 	 	
                  300,000

                	 	 	 	
                  300,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Your
                    Equity Advisor

                	 	 	
                  12,500

                	 	 	 	
                  12,500

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Scott
                    Boruff

                	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Even
                    Blum

                	 	 	
                  40,000

                	 	 	 	
                  40,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Schaeffer - consulting svcs. (Cotton)

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  New
                    Century Capital - consulting svcs. (C&B)

                	 	 	
                  1,300,000

                	 	 	 	
                  1,300,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Norman
                    Reynolds - pmt. for legal services

                	 	 	
                  70,300

                	 	 	 	
                  70,300

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Mel
                    Harris - consulting svcs. (VSI)

                	 	 	
                  479,805

                	 	 	 	
                  479,805

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Posner - consulting svcs. (VSI)

                	 	 	
                  245,195

                	 	 	 	
                  245,195

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Joseph
                    Gourlay - consulting svcs. (MSAI/CTSI)

                	 	 	
                  225,000

                	 	 	 	
                  225,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Posner - consulting svcs. (C&B)

                	 	 	
                  375,000

                	 	 	 	
                  375,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Michael
                    Thomas - consulting svcs. (C&B)

                	 	 	
                  250,000

                	 	 	 	
                  250,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Sam
                    Del Presto - consulting svcs. (New Stream/Gottbetter)

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Greater
                    Bay Bank

                	 	 	
                  630,499

                	 	 	 	
                  630,499

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Frank
                    Pellegrino (S-8)

                	 	 	
                  50,000

                	 	 	 	
                  50,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Schaeffer (S-8)

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Richard
                    Schmidt

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Francis
                    Zubrowski

                	 	 	
                  31,912

                	 	 	 	
                  31,912

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Sam
                    Del Presto

                	 	 	
                  300,000

                	 	 	 	
                  300,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Gideon
                    Taylor

                	 	 	
                  40,000

                	 	 	 	
                  40,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Shawn
                    Posner

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Norm
                    Reynolds

                	 	 	
                  24,500

                	 	 	 	
                  24,500

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Ronald
                    Berkovitz

                	 	 	
                  375,000

                	 	 	 	
                  375,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Larry
                    Hogue

                	 	 	
                  9,800

                	 	 	 	
                  9,800

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Dale
                    Ponder

                	 	 	
                  5,140

                	 	 	 	
                  5,140

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Troutman
                    Sander

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Michael
                    J Novak

                	 	 	
                  20,000

                	 	 	 	
                  20,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Stites
                    and Harbison PLLP

                	 	 	
                  120,300

                	 	 	 	
                  120,300

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  York
                    Equity Analyst

                	 	 	
                  12,500

                	 	 	 	
                  12,500

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Sam
                    Del Presto

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Norman
                    Reynolds

                	 	 	
                  56,000

                	 	 	 	
                  56,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Morris
                    Gore

                	 	 	
                  25,000

                	 	 	 	
                  25,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Mel
                    Harris

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    S. Posner

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  S.
                    Posner/M. Harris

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Richard
                    Schmidt

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Schaeffer

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Richard
                    Chancis

                	 	 	
                  50,000

                	 	 	 	
                  50,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Sound
                    Capital

                	 	 	
                  375,000

                	 	 	 	
                  375,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Dale
                    Ponder

                	 	 	
                  4,728

                	 	 	 	
                  4,728

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Evan
                    Blum

                	 	 	
                  40,000

                	 	 	 	
                  40,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Douglas
                    Topkis

                	 	 	
                  248,819

                	 	 	 	
                  248,819

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Sound
                    Capital

                	 	 	
                  375,000

                	 	 	 	
                  375,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Michael
                    Thomas

                	 	 	
                  80,000

                	 	 	 	
                  80,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Norm
                    Reynolds

                	 	 	
                  59,000

                	 	 	 	
                  59,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Richard
                    Chancis

                	 	 	
                  50,000

                	 	 	 	
                  50,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Ron
                    Berkovitz

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Ron
                    Berkovitz

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Ron
                    Berkovitz

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Ron
                    Berkovitz

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Posner

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Posner

                	 	 	
                  200,000

                	 	 	 	
                  200,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  New
                    Century Capital Consultants

                	 	 	
                  1,500,000

                	 	 	 	
                  1,500,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Gregory
                    A. Buchholz

                	 	 	
                  42,000

                	 	 	 	
                  42,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Jerry
                    J. Harrison Jr.

                	 	 	
                  25,000

                	 	 	 	
                  25,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Michael
                    Novak

                	 	 	
                  20,000

                	 	 	 	
                  20,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Stite
                    & Harbison

                	 	 	
                  12,000

                	 	 	 	
                  12,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Kenneth
                    Brown

                	 	 	
                  5,000

                	 	 	 	
                  5,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Jimmy
                    Taylor

                	 	 	
                  100,000

                	 	 	 	
                  100,000

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
                  0

                	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	
                  0

                	 	 	 	 
                   	 	 	 	 
                   	 	 	 	  
                   	 	 	 	 
                   	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                  Total
                    Employees and Consultants

                	 	 	
                  22,818,205

                	 	 	 	
                  18,628,216

                	 	 	 	
                  3,339,989

                	 	 	 	
                  0

                	 	 	 	
                  850,000

                	 	 	 	 	 	 	 	 	 	 	 	 	 


        

      

       

    

    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    
      
      

      


      
        	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
                EXERCISE
                  PRICE

              	 
	 	 	
                Total

              	 	 	
                Shares

              	 	 	
                Options

              	 	 	
                Conversion

              	 	 	
                Warrants

              	 	 	
                Options

              	 	 	
                Conversion

              	 	 	
                Warrants

              	 
	
                (C)  Financing
                  / Acquisitions:

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Venture
                  Banking Group

              	 	 	
                821,133

              	 	 	 	
                821,133

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	$	
                0.35

              	 
	
                Greater
                  Bay Bank

              	 	 	
                28,400

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                28,400

              	 	 	 	 	 	 	 	 	$	
                1.69

              	 
	
                Highgate

              	 	 	
                1,966,370

              	 	 	 	
                966,370

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                1,000,000

              	 	 	 	 	 	 	 	 	
                (H)

              	 
	
                M
                  Harris and S Posner

              	 	 	
                250,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                250,000

              	 	 	 	 	 	 	 	 	$	
                0.80

              	 
	
                Jadeco
                  / Schwarrtz

              	 	 	
                500,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                500,000

              	 	 	 	 	 	 	 	 	$	
                1.10

              	 
	
                T
                  Crochet

              	 	 	
                8,008,000

              	 	 	 	
                7,258,000

              	 	 	 	
                750,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	$	
                0.00

              	 	 	 	 	 	 	 	 
	
                Harris,
                  Posner, Posner

              	 	 	
                350,000

              	 	 	 	
                250,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                100,000

              	 	 	 	 	 	 	 	 	 	$	
                5.00

              	 
	
                W
                  Clark / Acquisition

              	 	 	
                309,768

              	 	 	 	
                309,768

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                L
                  Ford Clark / Acquisition

              	 	 	
                1,817,019

              	 	 	 	
                1,817,019

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                New
                  Stream

              	 	 	
                2,000,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                2,000,000

              	 	 	 	 	 	 	 	 	 	$	
                4.80

              	 
	
                Shaw
                  / Acquisition

              	 	 	
                62,500

              	 	 	 	
                62,500

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Gotterbetter
                  / Warrant

              	 	 	
                11,030,614

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                11,030,614

              	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	
                Aries
                  Equity Corp.

              	 	 	
                250,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                250,000

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                CSH
                  Advisors Inc.

              	 	 	
                250,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                250,000

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Cotton
                  / Acquisition

              	 	 	
                2,355,532

              	 	 	 	
                2,355,532

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Rock
                  Creek

              	 	 	
                1,250,000

              	 	 	 	
                1,250,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Lubermanns

              	 	 	
                500,000

              	 	 	 	
                500,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 
	
                Vision
                  Capital

              	 	 	
                422,222

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                422,222

              	 	 	 	
                0

              	 	 	 	 	 	 	$	
                2.25

              	 	 	 	 	 
	
                Vision
                  Capital

              	 	 	
                19,983,330

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                19,983,330

              	 	 	 	 	 	 	 	 	 	 	
                see
                  note

              	 
	
                Imperium
                  Master Fund, LTD

              	 	 	
                551,531

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                551,531

              	 	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	
                New
                  Stream Commercial Finance, LLC - New Stream II

              	 	 	
                600,000

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                600,000

              	 	 	 	 	 	 	 	 	 	 	$	
                4.00

              	 
	
                Mathew
                  Mitchell

              	 	 	
                72,939

              	 	 	 	
                72,939

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Lori
                  Mitchell

              	 	 	
                583,516

              	 	 	 	
                583,516

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Alan
                  Streiter

              	 	 	
                2,562,667

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                2,562,667

              	 	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	
                McMahan
                  Securities Co., L.P.

              	 	 	
                4,271,111

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                4,271,111

              	 	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	
                McMahan
                  Securities Co., L.P.

              	 	 	
                67,083,266

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                67,083,266

              	 	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	
                McMahan
                  Securities Co., L.P.

              	 	 	
                67,083,266

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                67,083,266

              	 	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	
                McMahan
                  Securities Co., L.P.

              	 	 	
                83,854,167

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                83,854,167

              	 	 	 	
                0

              	 	 	 	 	 	 	$	
                2.40

              	 	 	 	 	 
	
                Seth
                  Appel

              	 	 	
                1,708,445

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                1,708,445

              	 	 	 	 	 	 	 	 	 	 	$	
                2.25

              	 
	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Total
                  Financing / Acquisitions

              	 	 	
                280,525,796

              	 	 	 	
                16,246,777

              	 	 	 	
                750,000

              	 	 	 	
                84,276,389

              	 	 	 	
                179,252,630

              	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                (D)  Series
                  B Preferred Stock held by Frost Bank converts in a 1 to 1 ratio
                  into
                  common stock at the holders election.    

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Conversion
                  Right expires April, 2015.   

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                (E)  
                  Series C Preferred Stock held by Frost Bank converts in
                  a 1 to 1
                  ratio into common stock at the holders election.    

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Conversion
                  Right are effective starting April, 2007 and expire April,
                  2009.    

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Holder
                  has a Put Option to Michael Novak @ $3.50 per share   

              	 	 	 	
                725,000

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                (F)   100,000
                  at $1.50

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                100,000
                  at $3.00

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                100,000
                  at $5.00

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                (G)  
                  No conversion rights.

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                (H)  
                  200,000 at $0.25

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                400,000
                  at $0.50

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                200,000
                  at $0.75

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                200,000
                  at $1.00

              	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                (I)   
                  Transactions Pending

              	 	
                Total

              	 	 	
                Shares

              	 	 	
                Options

              	 	 	
                Conversion

              	 	 	
                Warrants

              	 	 	
                Options

              	 	 	
                Conversion

              	 	 	
                Warrants

              	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                Total
                  Transactions Pending :

              	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	
                0

              	 	 	 	 	 	 	 	 	 	 	 	 	 


      

    

    
    

     

    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        3(n) Indebtedness and Other Contracts

    

    
      See
        attached.

    

    
      Notwithstanding
        anything herein contained to the contrary, it is expressly understood and
        agreed, without obtaining any prior consent of the Holder:

    

    
      


    

    
      
        	
                •

              	
                That
                  the Company and any Subsidiary may execute any General Agreement
                  of
                  Indemnity, Indemnity Agreement, or Surety Agreement, whereby the
                  Company
                  or any Subsidiary desires to execute bonds, undertakings, and/or
                  obligations of suretyship or guarantee, including undertakings
                  and other
                  obligations, including any bond or bonds (severally, the "Bond")
                  on its
                  behalf and on behalf of any of its present or future, directly
                  or
                  indirectly owned or controlled subsidiaries or affiliates, whether
                  alone
                  or in joint venture with others whether or not named herein, and
                  any
                  corporation, partnership or person upon the written request of
                  the issuer
                  of any such Bond.

              


      

    

    
      


    

    
      
        	
                •

              	
                That
                  the Company and any Subsidiary may refinance, renegotiate or restructure
                  any existing Indebtedness or Liens, so long as the principal amount
                  of any
                  such Indebtedness is not increased beyond that amount which is
                  due on the
                  date of this Agreement.

              


      

    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Charys
        Holding Company, Inc.

    

    
      Debt
        Schedule

       

    

    
      
        
          

        

      

    

    
      ($
        in
        thousands)

    

    
      


    

    
      	
              Obligation:

            	
              Due
                To:

            	 	
              Amount

            	 
	
              HOLDING
                COMPANY

            	 	 	 	 
	
              8.75
                Senior Convertible Notes

            	
              McMahan

            	 	$	
              201,250

            	 
	
              Due
                2/16/12

            	 	 	 	 	 
	
              9.5%
                Unsecured Promissory Note

            	
              Harris,
                Posner, Posner

            	 	$	
              1,000

            	 
	
              Due
                5/1/07, subject to other conditions

            	 	 	 	 	 
	
              Interest

            	 	 	$	
              71

            	 
	
              15%
                Promissory Note

            	
              HarPos

            	 	$	
              800

            	 
	
              Interest
                & Other

            	 	 	$	
              200

            	 
	
              10%
                Convertible Debenture

            	
              Various

            	 	$	
              4,267

            	 
	
              Maturity
                8/30/08

            	 	 	 	 	 
	
              Interest

            	 	 	 	 	 
	
              Redemption
                Premium

            	 	 	 	 	 
	
              Liquidated
                Damages

            	 	 	 	 	 
	
              Series
                D Convertible Preferred Stock

            	
              Various

            	 	$	
              9,000

            	 
	
              Maturity
                11/19/08

            	 	 	 	 	 
	
              Dividens

            	 	 	$	
              1,554

            	 
	
              Liquidated
                Damages

            	 	 	$	
              900

            	 
	
              Redemption
                Premium

            	 	 	$	
            	 
	
              8%
                Subordinated Note

            	
              Vision,

            	 	$	
              950

            	 
	
              4%
                Subordinated Convertible Note

            	
              Jade
                Securities

            	 	$	
              380

            	 
	
              Due
                12/31/07

            	
               

            	 	 	 	 
	
              TOTAL
                FINANCING DEBT

            	
               

            	 	$	
              220,372

            	 
	
              8%
                Note

            	
              Seller
                of Aeon

            	 	$	
              473

            	 
	
              Due:
                $158 on 4/9/07

            	 	 	 	 	 
	
              Due:
                $158 on 4/9/08

            	 	 	 	 	 
	
              Due;
                $157 on 4/9/09

            	 	 	 	 	 
	
              10%
                Unsecured Promissory Note

            	
              Sellers
                of DCI

            	 	$	
              840

            	 
	
              8.75%
                Promissory Note

            	
              Seller
                of MSAI

            	 	$	
              2,210

            	 
	
              Due
                2/16/12

            	 	 	 	 	 
	
              9%
                Promissory Note

            	
              Seller
                of MSAI

            	 	$	
              5,400

            	 
	
              Due:
                $2,700 on 2/15/08

            	 	 	 	 	 
	
              Due:
                $2,700 on 2/15/09

            	 	 	 	 	 
	
              8.75%
                Promissory Note

            	
              Seller
                of CTSI

            	 	$	
              5,790

            	 
	
              Due
                2/16/12

            	 	 	 	 	 
	
              9%
                Promissory Note

            	
              Seller
                of CTSI

            	 	$	
              14,200

            	 
	
              Due:
                $7,100 on 2/15/08 Due: $7,100 on 2/15/09

            	 	 	 	 	 
	
              4.74%
                Unsecured Promissory Note

            	
              Sellers
                of C&B Services

            	 	$	
              47,632

            	 
	
              Due
                1/31/09

            	 	 	 	 	 
	
              Note

            	
              Cotton

            	 	$	
              5,100

            	 
	
              Payment

            	
              Florida
                Tel Con

            	 	$	
              3,350

            	 
	
              TOTAL
                SELLERS NOTES

            	
               

            	 	$	
              84,795

            	 


    

    
       

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    
      	
              Personnel
                Recourses of Georgia

            	 	 	 	 
	
              Unsecured
                Note [No Due Date]

            	
              C
                Sauls

            	 	$	
              15

            	 
	
              Unsecured
                Note [No Due Date]

            	
              J
                Coyle

            	 	$	
              29

            	 
	
              Unsecured
                Note [No Due Date]

            	
              B Cutchin
                (Related Party)

            	 	$	
              58

            	 
	 	 	 	 	 	 
	
              CC1
                Telecom

            	 	 	 	 	 
	
              Credit
                Facility expires 8/29/06

            	
              CAPCO
                Capital

            	 	$	
              2,200

            	 
	
              Secured
                by Accounts Receivable and certain other assets

            	 	 	 	 	 
	 	 	 	 	 	 
	
              Viasvs
                Services

            	 	 	 	 	 
	
              Letter
                of Credit

            	 	 	$	 	 
	 	 	 	 	 	 
	
              Ayln
                Holding Company

            	 	 	 	 	 
	
              LIBOR
                + 485 Basis Points (10.16%) Secured Promissory
                Note    New Stream Commerical Finance
                II    $

            	 	 	 	
              6,500

            	 
	
              Due
                11/7/08

            	 	 	 	 	 
	 	 	 	 	 	 
	
              Method
                IQ

            	 	 	 	 	 
	
              Credit
                Facility expires 8/29/06

            	
              CAPCO
                Capita!

            	 	$	
              220

            	 
	
              Secured
                by Accounts Receivable and certain other assets

            	 	 	 	 	 
	 	 	 	 	 	 
	
              LFC

            	 	 	 	 	 
	 	 	 	 	 	 
	
              Digital
                Communication Services

            	 	 	 	 	 
	
              Line
                of Credit

            	
              Various

            	 	$	
              1,000

            	 
	 	 	 	 	 	 
	
              C&B
                Services

            	 	 	 	 	 
	
              $35
                million credit facility

            	
              New
                Stream Commerical Financel

            	 	$	
              2,400

            	 
	 	 	 	 	 	 
	
              CTSI

            	 	 	 	 	 
	
              New
                Stream

            	 	 	 	 	 
	
              TOTAL
                DEBT

            	 	$	
              317,589

            	 


    

    
       

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        3(o) Ranking of the Note

    

    
      The
        following indebtedness will be pari passu or senior to the
        Note:

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  New Stream Commercial Finance, LLC financing of accounts receivable
                  of
                  Crochet & Borel Services, Inc., as described in filings by the Company
                  with the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  New Stream Commercial Finance, LLC financing of accounts receivable
                  of
                  Ayin Tower Management Services Inc., as described in filings by
                  the
                  Company with the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  New Stream Commercial Finance, LLC financing with respect to Complete
                  Tower Sources, Inc. as described in filings by the Company with
                  the
                  Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  financing with respect to the Cotton Sellers identified in filings
                  by the
                  Company with the Securities and Exchange
                  Commission.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                Capco
                  Financial Company - A Division of Greater Bank N.A., financing
                  with
                  respect to CCI Telecom, Inc. as described in filings by the Company
                  with
                  the Securities and Exchange
                  Commission.

              


      

    

    
       

    

    
      
        	
              	
                •

              	
                Capco
                  Financial Company - A Division of Greater Bank N.A., financing
                  with
                  respect to Method IQ, Inc. as described in filings by the Company
                  with the
                  Securities and Exchange
                  Commission.

              


      

    

    
      
        
           

          
            	
                  	
                    •

                  	
                    Troy
                      D. Crochet as described in filings by the Company with the
                      Securities and
                      Exchange
                      Commission.

                  


          

        

      

    

     

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        3(p)

    

    
      Exceptions
        to SB-2 Eligibility

    

    
      


    

    
      After
        April 30, 2007, the Company is no longer eligible to use a Form SB-2
        registration statement. It must use a Form S-l registration statement or
        some
        other available form.

    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        3(s)

    

    
      Exceptions
        to SEC Filing Requirements

    

    
      


    

    
      None.

    

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        4(h)

    

    
      Exceptions
        to Restrictions on Redemptions and Cash Dividends

    

    
      


    

    
      The
        proposed refinancing of the Company's remaining outstanding Series D preferred
        stock by issuance of convertible debentures in the amount of $14,799,304,
        upon
        the following proposed terms:

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  debentures will be unsecured and subordinated to the McMahan notes,
                  convertible into shares of the Company's Common
                  Stock.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  issue price of the debentures will be at 95% of par or $15,578,214,
                  and
                  will be payable in 12 months from the date of
                  closing.

              


      

    

    
       

    

    
      
        	
              	
                •

              	
                The
                  interest rate will be 8.75% per annum and will be paid monthly
                  in
                  cash.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  investors may at their sole option convert any or all of the face
                  amount
                  of the debentures plus accrued and unpaid interest thereon, from
                  the date
                  of closing to the date of
                  conversion.

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  number of shares of the Company Common Stock to be received upon
                  conversion will be determined by dividing the Conversion Amount
                  by the
                  Conversion Price, to be
                  defined.

              


      

    

    
       

    

    
      
        	
              	
                •

              	
                The
                  investors may not be the beneficial owners of collectively more
                  than 4.99%
                  of the total outstanding shares of Common Stock of the Company
                  at any
                  given time (the "Conversion
                  Amount").

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                At
                  the investors1
                  sole option,
                  the debentures are convertible into shares of Common Stock at $2.25
                  (the
                  "Conversion Price").

              


      

    

    
      


    

    
      
        	
              	
                •

              	
                The
                  other terms of the redemption will be upon such terms as the Company
                  and
                  the investors may agree.

              


      

    

    
       

    

    
      
        
          
            	
                  	
                    •

                  	
                    The
                      issuance of Default Warrants.

                  


          

        

        
           

        

        
          
            	
                  	
                    •

                  	
                    The
                      debentures will also be subordinated to the Notes issued hereunder
                      and
                      which may be reissued
                      hereafter.

                  


          

        

        
           

        

      

    

    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      Schedule
        4(q)

    

    
      Subsidiaries
        Not Party to Security Documents

    

    
      


    

    
      The
        various lender consents needed due to the pre-existing security interests
        in
        favor of:

       

    

    
      
        
          	
                	
                  •

                	
                  The
                    New Stream Commercial Finance. LLC financing of accounts receivable
                    of
                    Crochet & Borel Services, Inc., as described in filings by
                    the Company with the Securities and Exchange
                    Commission.

                


        

      

      
        


      

      
        
          	
                	
                  •

                	
                  The
                    New Stream Commercial Finance, LLC financing of accounts receivable
                    of
                    Ayin Tower Management Services Inc., as described in filings
                    by the
                    Company with the Securities and Exchange
                    Commission.

                


        

      

      
        


      

      
        
          	
                	
                  •

                	
                  The
                    New Stream Commercial Finance, LLC financing with respect to
                    Complete
                    Tower Sources, Inc. as described in filings by the Company with
                    the
                    Securities and Exchange
                    Commission.

                


        

      

      
        


      

      
        
          	
                	
                  •

                	
                  The
                    financing with respect to the Cotton Sellers identified in filings
                    by the
                    Company with the Securities and Exchange
                    Commission.

                


        

      

      
        


      

      
        
          	
                	
                  •

                	
                  Capco
                    Financial Company - A Division of Greater Bank N.A., financing
                    with
                    respect to CCI Telecom, Inc. as described in filings by the Company
                    with
                    the Securities and Exchange
                    Commission.

                


        

      

      
        


      

      
        
          	
                	
                  •

                	
                  Capco
                    Financial Company — A Division of Greater Bank N.A., financing with
                    respect to Method IQ, Inc. as described in filings by the Company
                    with the
                    Securities and Exchange
                    Commission.