EXHIBIT 10.4


CHARYS HOLDING COMPANY, INC.


8.75% SENIOR CONVERTIBLE NOTE DUE FEBRUARY 16, 2012


THIS NOTE AND THE COMMON STOCK
ISSUABLE UPON CONVERSION OF THIS NOTE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION,
BUT HAVE BEEN ACQUIRED BY THE REGISTERED OWNER HEREOF FOR PURPOSES OF
INVESTMENT AND IN RELIANCE ON THE STATUTORY EXEMPTIONS CONTAINED IN SECTION 4(2)
OF THE SECURITIES ACT AND IN COMPARABLE EXEMPTIONS IN THE
SECURITIES LAWS OF OTHER JURISDICTIONS TO THE EXTENT
APPLICABLE. SUCH SECURITIES MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT IN A TRANSACTION THAT IS EXEMPT
UNDER SUCH SECURITIES ACT AND SUCH OTHER LAWS, OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT THEREUNDER OR IN A
TRANSACTION OTHERWISE IN COMPLIANCE WITH SUCH
ACTS AND OTHER LAWS, AND IN THE CASE
OF AN EXEMPTION OR OTHER SUCH TRANSACTION
OTHERWISE IN COMPLIANCE, UNLESS THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL, SATISFACTORY
TO IT, OR A COMMUNICATION FROM THE SECURITIES AND EXCHANGE COMMISSION AND ANY OTHER GOVERNMENTAL AUTHORITY
EMPOWERED TO INTERPRET THE SECURITIES LAWS OF STATES OR OTHER JURISDICTIONS THAT ARE APPLICABLE TO SUCH TRANSACTION, THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION OF THE SECURITIES UNDER THE SECURITIES
ACT OR UNDER SUCH OTHER LAWS, AS THE
CASE MAY BE.


1.             Interest
and Payments.


Charys Holding Company, Inc., a Delaware corporation (the “Company”),
for value received, promises to pay to Lori H. Mitchell or to a permitted
successor or transferee as the holder of record 
(the “Holder”) of this Senior Convertible Note (the “Note”)
the principal amount of FIVE MILLION SEVEN HUNDRED NINETY THOUSAND FOUR HUNDRED
SEVENTY-SIX and 19/100 DOLLARS ($5,790,476.19) plus accrued interest on the
principal amount of this Note at the rate of 8.75% per annum.  The Company will pay interest to the Holder
quarterly in arrears on May 16, August 16, November 16 and February 16 of each
year (each an “Interest Payment Date”), with the first payment to be
made on May 16, 2007.  Interest on this
Note will accrue on the principal amount from February 16, 2007.  Interest will be computed on the basis of a
360-day year of twelve 30-day months. 
Unless previously converted into securities of the Company pursuant to
Section 6 below, and subject to the earlier redemption or repurchase pursuant
to Sections 4 and 5 below, the Company shall pay to the Holder all accrued and
unpaid interest and principal on this Note in full on the Maturity Date (as
defined below).  


2.             Maturity.


This Note will mature on February 16, 2012 (the “Maturity Date”).



3.             Method
Of Payment.  


The Company will pay interest on this Note to the Holder at the close
of business on the business day next preceding the applicable Interest Payment
Date. The Company will pay, in money of the United States that at the time of
payment is legal tender for payment of public and private debts, all amounts
due













in
cash with respect to this Note, which amounts shall be paid by wire transfer of
immediately available funds to the account specified by the Holder hereof or,
if no such account is specified, by mailing a check to such Holder’s address
specified in Section 13.    


4.             Provisional
Redemption.


The Company shall have the right, at its option, at
any time, and from time to time, on or after the dates set forth below (any
date selected by the Company in accordance with the terms of this Section 4, a “Redemption
Date”), to redeem (a “Provisional Redemption”) up to the
corresponding percentage of this Note set forth below, in any case, at the
Redemption Price (as defined below), plus the Make-Whole Payment (as defined
below):


	
  Date

  	
   

  	
  Percentage of Principal

  
	
  March 8, 2009

  	
   

  	
  25%

  
	
  March 8, 2010

  	
   

  	
  50% (including any previously redeemed percentage of
  this Note)

  
	
  March 8, 2011

  	
   

  	
  100% (including any previously redeemed percentage
  of this Note)

  



 


provided,
that, the Company may not exercise such redemption right unless: (a) the volume
weighted average price for at least 20 trading days in the 30 consecutive
trading day period ending on, and including, the trading day immediately
preceding the date of mailing of the notice of Provisional Redemption (the “Notice
Date”), the Closing Sale Price (as defined below) exceeds 200% of the
Conversion Price (as defined below) in effect on such trading day; and (b) no
continuing  Event of Default (defined
below) exists that has not been cured or waived in accordance herewith on or
before such Redemption Date.  With
respect to this Note, the following terms have the following meanings: 


“Redemption Price” means an amount equal to
the then outstanding principal amount of this Note, plus accrued and unpaid
interest, if any, through the applicable Redemption Date multiplied by the
percentage of this Note to be redeemed.


“Make-Whole Payment” means an amount equal to
the “present value” of 50% of all remaining scheduled interest payments on this
Note with respect to the percentage of this Note to be redeemed from, and
including, the applicable Redemption Date through the Maturity Date.  For purposes hereof, the “present value” will
be calculated using the bond equivalent yield on U.S. Treasury notes or bills
having a term nearest in length to that of the remaining period from the date
preceding the Notice Date to the Maturity Date; provided, however, that if the
period from the Redemption Date to the third anniversary of the issuance of
this Note is less than one year, the weekly average yield on actually-traded U.S.
Treasury notes or bills adjusted to a constant maturity of one year shall be
used.  


“Closing Sale Price” means the price of a share of the Company’s
common stock, par value $0.001 per share (“Common Stock”), on the
relevant date, determined on the basis of the closing per share sale price (or
if no closing sale price is reported, the average of the bid and ask prices or,
if more than one in either case, the average of the average bid and the average
ask prices) on such date on the principal trading market on which the Common
Stock is then listed or quoted; provided, that, if the Common Stock is not then
listed or quoted, the Closing Sale Price shall be such price as the Board of
Directors shall reasonably determine on the basis most accurately reflecting the
price that a fully informed buyer, acting on his own accord, would pay to a
fully informed seller, acting on his own accord, in an arms-length transaction,
for a share of such Common Stock.


The
Make-Whole Payment may be paid for, in whole or in part, at the election of the
Company, in cash or shares of Common Stock or in any combination of cash and
shares of Common Stock; provided, however, that no portion of the Make-Whole
Payment shall be paid in shares of Common Stock



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unless such shares shall
have been (a) duly qualified or registered under applicable federal and
state securities laws or shall be qualified for an available exemption from
such qualification and registration and (b) validly issued, fully paid and
non-assessable and free from any preemptive rights.  Shares of Common Stock issued as payment for
any portion of the Make-Whole Payment shall be valued at 90% of the volume
weighted average price for the 20 consecutive trading days ending on and
including the trading day immediately preceding the Redemption Date, which
average shall be appropriately adjusted in the good faith determination of the
Board of Directors (whose determination shall be described in a Board
Resolution) to account for the occurrence, during such twenty (20) trading day
period, of a stock split, stock dividend or a subdivision or combination of the
Company’s Common Stock or a similar event.


As soon as practicable after the time the amount of the Make-Whole
Payment shall have been calculated, but no later than the second business day
immediately preceding such Redemption Date, the Company shall notify the Holder
of the amount of the Make-Whole Payment. The Make-Whole Payment shall be paid
by the Company with respect to the percentage of this Note called for
Provisional Redemption, including, without limitation, the percentage of this
Note that has been converted into shares of Common Stock on or after the Notice
Date and before such Redemption Date. In no event shall the Make-Whole Payment
with respect to this Note be reduced by any amount of accrued and unpaid
interest; provided, however, that in the event such Redemption Date is an
interest payment date, then the Make-Whole Payment shall be reduced by any
accrued and unpaid interest to, and including, the Redemption Date, which
accrued and unpaid interest shall instead be paid by the Company on the
Redemption Date to the Holder at the close of business on the record date for
such interest payment. 


Upon surrender to the Company of this Note following a Provisional
Redemption, the Redemption Price shall be paid to the Holder surrendering this
Note.  If the Redemption Date is an
Interest Payment Date, the Company shall pay, on such Redemption Date, the
accrued and unpaid interest, if any, to, but excluding, the Redemption Date to the
Holder of this Note at the close of business on the record date for such
interest payment, and such accrued and unpaid interest shall not be paid to the
Holder submitting this Note for Provisional Redemption (unless such Holder was
the Holder of record of this Note at the close of business on the record date
for such interest payment). 


Notice of Redemption will be mailed, by first-class mail, at least 30
days but not more than 60 days before the Redemption Date, to the Holder. 


5.             Repurchase
at Option Of Holder Upon a Change In Control. 


In the event of a Change in Control (as defined below), the Holder
shall have the right, at the Holder’s option, to require the Company to
repurchase this Note on a date selected by the Company (the “Repurchase Date”),
which date shall be no later than 45 days after the date of the Change in
Control, at a price payable in cash equal to 105% of the principal amount of
this Note, plus accrued and unpaid interest to, but excluding the Repurchase
Date (such amount, the “Repurchase Price”). 


“Change in Control” shall be deemed to have occurred at such
time as: 


(a)           any “person” or “group” (as such
terms are used for purposes of Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the “Exchange Act”)) is or becomes the “beneficial owner” (as such
term is used in Rule 13d-3 under the Exchange Act), directly or indirectly, of
50% or more of the total voting power of all classes of the Company’s capital stock
entitled to vote generally in the election of directors calculated on a
fully-diluted basis; or



 3
 









(b)           any change in the size or composition
of the Company’s Board of Directors, the effect of which is that the members of
the Company’s Board of Directors immediately prior to such change (the “Incumbent
Directors”) do not represent a majority of the members of the Company’s
Board of Directors following such change, unless such change was approved by a
majority of the Incumbent Directors; or


(c)           the Company consolidates with, or
merges with or into, another person or any person consolidates with, or merges
with or into, the Company, in any such event other than pursuant to a
transaction where the persons that “beneficially owned,” directly or
indirectly, the shares of the Company’s capital stock immediately prior to such
transaction, “beneficially own,” directly or indirectly, immediately after such
transaction, shares of the continuing, surviving or acquiring corporation’s
capital stock representing at least a majority of the total voting power of all
outstanding classes of the of the continuing, surviving or acquiring
corporation’s capital stock; or 


(d)           the sale, transfer, lease, exchange,
conveyance or other disposition of all or substantially all of the assets of
the Company to any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), including any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act; 


provided, however, that a
Change in Control will not be deemed to have occurred if at least 90% of the
consideration (other than cash payments for fractional shares or pursuant to
statutory appraisal rights) in the merger or consolidation otherwise
constituting the Change in Control consists of common stock and any associated
rights traded on a U.S. national securities exchange (or which will be so
traded or quoted when issued or exchanged in connection with such Change in Control),
and, as a result of such transaction or transactions, this Note becomes
convertible solely into such common stock and associated rights.


Within 15 days after the occurrence of the Change in
Control, the Company must mail, or cause to be mailed, notice of the occurrence
of such Change in Control to each Holder. 
Such notice shall include, among other things, a description of the
procedure that a Holder must follow to exercise the Repurchase Right.


6.             Conversion.


This Note shall be convertible into shares of Common
Stock at any time prior to the close of business on the Maturity Date, in
accordance with the terms set forth below. 
This Note may be surrendered for conversion into a number of shares of
Common Stock of the Company equal to the then outstanding principal and any
accrued and unpaid interest thereon divided by $2.25 (subject to adjustment as
provided below, the “Conversion Price”); provided, however, that this
Note may be surrendered for conversion pursuant to this paragraph only until
the close of business on the second business day immediately preceding the
Redemption Date or Repurchase Date, unless the Company fails to pay the
Redemption Price or Repurchase Price, as applicable.


The Conversion Price shall be adjusted as follows:


(a)           In case the Company
pays any cash dividend (including regularly scheduled cash dividends) or other
cash distribution to holders of its Common Stock, then on and after the record
date for the determination of holders of Common Stock entitled to such dividend
or distribution, the Conversion Price shall be decreased by multiplying the
Conversion Price in effect immediately prior to such record date by a fraction
of which (i) the numerator shall be (A) Closing Sale Price of the Common Stock
in effect at the close of business on such record date, minus (B) the per share
amount of such dividend or other distribution, and (ii) the denominator shall
be the Closing Sale Price of the Common Stock in effect at the close of
business on such record date.  Such
decrease shall become effective immediately prior to



 4
 









the
opening of business on the day following such record date.


(b)           In case the Company
shall (i) pay a dividend in shares of Common Stock to all holders of Common
Stock, (ii) make a distribution in shares of Common Stock to all holders of
Common Stock, (iii) subdivide the outstanding shares of Common Stock into a
greater number of shares of Common Stock, or (iv) combine the outstanding
shares of Common Stock into a smaller number of shares of Common Stock, the
Conversion Price in effect immediately prior to such action shall be adjusted
so that the Holder of this Note shall be entitled to receive the number of
shares of Common Stock that such Holder would have owned immediately following
such action had this Note been converted immediately prior thereto.  Any adjustment made pursuant to this
subsection (b) shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately after
the effective date in the case of a subdivision or combination.  If any dividend or distribution of the type
described in this subsection (b) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price that would
then be in effect if such dividend or distribution had not been declared.


(c)           In case the Company
shall dividend or distribute to all holders of Common Stock shares of capital
stock of the Company (other than Common Stock), evidences of indebtedness or
other assets (other than cash dividends or distributions covered by subsection
(a)), or shall dividend or distribute to all holders of Common Stock warrants,
options or rights to subscribe for or purchase securities, then, in each such
case, the Conversion Price shall be decreased by multiplying the Conversion
Price in effect immediately prior to the close of business on the record date
for the determination of holders of Common Stock entitled to such dividend or
distribution by a fraction of which (i) the numerator shall be an amount equal
to (A) the Closing Sale Price of Common Stock on the trading day immediately
preceding such record date less (B) the fair market value (as determined in
good faith by the Board of Directors), on such record date, of the portion of
the shares of capital stock, evidences of indebtedness, assets, warrants,
options or rights to be dividended or distributed applicable to one share of
Common Stock, and (ii) the denominator shall be the Closing Sale Price on the
record date, such decrease to become effective immediately prior to the opening
of business on the day following such record date; provided, however, that if
such denominator is equal to or less than one, then, in lieu of the foregoing
adjustment to the Conversion Price, adequate provision shall be made so that
the Holder shall have the right to receive upon conversion of this Note, in
addition to the shares of Common Stock issuable (and cash, if any, payable)
upon such conversion, an amount of shares of capital stock, evidences of
indebtedness, assets, options, warrants or rights that such Holder would have
received had such Holder converted this Note on such record date. In the event
that such dividend or distribution is not so paid or made, the Conversion Price
shall again be adjusted to be the Conversion Price that would then be in effect
if such dividend or distribution had not been declared.


To convert this Note, a Holder must (i) provide the Company a notice of
conversion and provide any additional information regarding the Holder
reasonably requested by the Company to comply with applicable law; (ii)
surrender this Note to the Company; and (iii) furnish appropriate endorsements
and transfer documents if required by the Company in its reasonable discretion.



Any
shares of Common Stock issued upon conversion of this Note shall bear a legend
substantially in the form set forth above on the face of this Note.


7.             Subordination.


The payment of principal plus accrued and unpaid
interest on this Note will be subordinate in right of payment to the prior payment
in full of all Designated Secured Indebtedness as set forth in the Indenture,
dated as of February 16, 2007, by and among (i) the Company, (ii) the
Guarantors (as defined



 5
 









therein), and (iii) The Bank
of New York Corporate Trust Company, N.A., a national banking association, as
trustee.


8.             Assignment
or Transfer.


(a)           Neither this Note
nor any of the rights, interests or obligations hereunder may be assigned, in
whole or in part, by the Company without the prior written consent of the
Holder.


(b)           Holder may not
transfer or assign this Note without the Company’s prior written consent,
except to such Holder’s devisees, legatees or heirs or a family trust
established by such Holder, in each case, in compliance with the legend set
forth on the face of this Note.  This
Note may be transferred or assigned only upon its surrender to the Company for
registration of transfer, duly endorsed, accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company.  Thereupon, this Note shall be reissued to,
and registered in the name of, the transferee as the Holder, or a new Note for
like principal amount and interest shall be issued to, and registered in the
name of, the transferee as the Holder.  Interest
and principal shall be paid solely to the registered holder of this Note. 


9.             Amendments,
Supplements and Waivers. 


This Note may be amended or supplemented only upon the written consent
of the Company and the Holder. 


10.          Defaults
and Remedies. 


For purposes of this Note an “Event Of Default” means: 


(a)           the Company’s  failure to pay the principal on this Note
when the same becomes due and payable;


(b)           the Company fails to
pay interest on the Note when due, if such failure continues for 10 days after
the date when due; 


(c)           the Company defaults
in the performance of its obligations under this Note (other than a payment
default specified in subsections (a) and (b)) and such default continues for 30
days after written notice to the Company by the Holder; 


(d)           the Company pursuant to, or within
the meaning of, any bankruptcy law, insolvency law or other similar law now or
hereafter in effect or otherwise:


(i)            commences
a voluntary case of bankruptcy;


(ii)           consents
to the entry of an order for relief against it in an involuntary case of bankruptcy;


(iii)          consents
to the appointment of a custodian of it or for all or substantially all of its
property or assets; 


(iv)          makes
a general assignment for the benefit of its creditors; or


(v)           a
court of competent jurisdiction enters an order or decree under any bankruptcy
law that:



 6
 









(A)          is
for relief against the Company in an involuntary case or proceeding, or
adjudicates the Company insolvent or bankrupt;


(B)           appoints
a custodian of the Company for all or substantially all of the property or
assets of the Company; or


(C)           orders
the winding up or liquidation of the Company; and in the case of each of the
foregoing clauses (A), (B) and (C), the order or decree remains unstayed and in
effect for at least 60 consecutive days.


If
an Event of Default occurs and is continuing, the Holder by notice to the
Company may declare this Note to be immediately due and payable in full.  Upon such declaration, the principal and any
accrued and unpaid interest on this Note shall be due and payable
immediately.  


11.          No Recourse Against Others. 


No
past, present or future director, officer, employee or stockholder, as such, of
the Company shall have any liability for any obligations of the Company under
this Note or for any claim based on, in respect of, or by reason of, such
obligations or their creation. The Holder, by accepting this Note, waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.


12.          Governing
Law. 


THIS
NOTE WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.


13.          Notices.



All
notices, requests and other communications hereunder must be in writing and
will be deemed to have been duly given (a) when sent if delivered personally
against written receipt or by facsimile or email transmission against
electronic facsimile or email confirmation, (b) the following day if mailed by
overnight courier, or (c) three business days after mailing if mailed by prepaid
first class certified mail, return receipt requested, in each case to the
parties at the following addresses or facsimile numbers:


	
  If to the Company:

  	
   

  	
  Charys Holding Company, Inc.

  1117 Perimeter Center West, Suite N-415

  Atlanta, Georgia 30338

  Attn: Mr. Billy V. Ray, Jr., President

  Facsimile: (678) 443-2320

  bray@Charys.com

  
	
   

  	
   

  	
   

  
	
  with a copy
  (which shall not constitute notice) to:

  	
   

  	
  Larry W. Shackelford, Esq.

  Morris, Manning & Martin, LLP

  1600 Atlanta Financial Center

  3343 Peachtree Road, N.E.

  Atlanta, Georgia 30326 

  Facsimile: (404) 365-9532 

  lws@mmmlaw.com

  



 



 7
 









 


	
  If to Holder:

  	
   

  	
  Lori H. Mitchell

  537 West Broussard Road

  Lafayette, LA 70506

  Facsimile: (337) 993-8999

  
	
   

  	
   

  	
   

  
	
  with a copy
  (which shall not constitute notice) to:

  	
   

  	
  G. Frederick Seemann, Esq.

  Attorney at Law, L.L.C.

  401 Audubon Boulevard

  Suite 103A 

  Lafayette, Louisiana 70503

  Facsimile: (337) 234-4046

  gfsee@msn.com

  



 


Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties.


[Signatures follows on next page.]



 8















IN WITNESS WHEREOF, the Company has executed and delivered this
Note as of the date first written above.


	
  

  	
  CHARYS HOLDING COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/

  	
   Billy V. Ray,
  Jr.

  	
   

  
	
   

  	
  Name:

  	
  Billy V. Ray, Jr.

  
	
   

  	
  Title:

  	
  Chairman & CEO