Exhibit 10.5


    
      

    


    SECURITY
      AGREEMENT

     

    SECURITY
      AGREEMENT,
      dated
      January ___, 2007 (this “Agreement”)
      is
      made by CHARYS
      HOLDING COMPANY, INC.,
      a
      Delaware corporation (the “Company”)
      and
      the undersigned subsidiaries of the Company (each a “Grantor”
and
      collectively and together with the Company the “Grantors”),
      in
      favor of
      TROY D.
      CROCHET
      (“Crochet”) as Secured Party.

    


    WHEREAS,
      Grantor is indebted to Crochet as described in Section 3 below.

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements herein, the
      Grantors agree with Crochet as follows:

    

      
        	 	
                SECTION
                  1.

              	
                Definitions.

              


      

    

     

    Reference
      is hereby made to the Renewal Promissory Note of even date herewith (the “Note”)
      for a statement of certain of the terms hereof. All terms used in this Agreement
      and the recitals hereto which are defined in the Note or in Articles 8 or 9
      of
      the Uniform Commercial Code as in effect from time to time in the State of
      Texas
      (the “Code”),
      and
      which are not otherwise defined herein shall have the same meanings herein
      as
      set forth therein; provided
      that
      terms used herein which are defined in the Code as in effect
      in
      the State of Texas on the date hereof shall continue to have the same meaning
      notwithstanding any replacement or amendment of such statute except as Crochet
      may otherwise determine.

     

    The
      following terms shall have the respective meanings provided for in the Code:
      “Accounts,” “Cash Proceeds,” “Chattel Paper,” “Commodity Account,” “Commodity
      Contracts,” “Deposit Account,” “Documents,” “Equipment,” “Fixtures,” “General
      Intangibles,” “Goods,” “Instruments,” “Inventory,” “Investment Property,”
“Letter-of-Credit Rights,” “Noncash Proceeds,” “Payment Intangibles,”
“Proceeds,” “Promissory Notes,” “Security,” “Record,” “Security Account,”
“Software,” and “Supporting Obligations.”

     

    As
      used
      in this Agreement, the following terms shall have the respective meanings
      indicated below, such meanings to be applicable equally to both the singular
      and
      plural forms of such terms:

     

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

     

    “Insolvency
      Proceeding”
means
      any proceeding commenced by or against any Person under any provision of the
      Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or under
      any other bankruptcy or insolvency law, assignments for the benefit of
      creditors, formal or informal moratoria, compositions, or extensions generally
      with creditors, or proceedings seeking reorganization, arrangement, or other
      similar relief.

     

    “Lien”
      means
      any
      mortgage, deed of trust, pledge, lien (statutory or otherwise), security
      interest, charge or other encumbrance or security or preferential arrangement
      of
      any nature, including, without limitation, any conditional sale or title
      retention arrangement, any capitalized lease and any assignment, deposit
      arrangement or financing lease intended as, or having the effect of,
      security.

     

    “Permitted
      Liens”
      means
      all liens and security interests held on or in any of the assets of the Grantors
      securing any debt owed in connection with (a) the New Stream Commercial Finance,
      LLC financing of accounts receivable of Crochet & Borel Services, Inc., as
      described in an 8-K filed by the Company with the Securities and Exchange
      Commission on September 8, 2006, and the New Stream Commercial Finance, LLC
      financing of accounts receivable of Ayin Tower Management Services Inc., as
      described in an 8-K filed by the Company with the Securities and Exchange
      Commission on September 8, 2006, (b) the Gottbetter Capital Finance, LLC
      financing as described in an 8-K filed by the Company with the Securities and
      Exchange Commission on September 6, 2006, (c) the Cotton Sellers, and the other
      parties to the loan agreements identified in an 8-K filed by the Company with
      the Securities and Exchange Commission on December 14, 2006, or (d) any other
      Lien on any Collateral of any Grantor existing on the date hereof. All of the
      Permitted Liens are more fully described in Schedule
      1
      attached
      hereto.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    SECTION
      2.    Grant
      of Security Interest.
      As
      collateral security for all of the “Obligations” (as defined in Section
      3
      hereof),
      each Grantor, subject to the Permitted Liens, hereby pledges and assigns to
      Crochet and grants to Crochet a continuing security interest in, all personal
      property of each Grantor, wherever located and whether now or hereafter existing
      and whether now owned or hereafter acquired, of every kind and description,
      tangible or intangible (collectively, the “Collateral”),
      including, without limitation, the following:

     

    
      	 	
              (a)

            	
              All
                Accounts;

            


    

     

    
      	 	
              (b)

            	
              All
                Chattel Paper (whether tangible or
                electronic);

            


    

    


    (c)    All
      Deposit Accounts, all cash and other property from time to time deposited
      therein and the monies and property in the possession or under the control
      of
      Crochet or any affiliate, representative, agent or correspondent of
      Crochet;

    


    
      	 	
              (d)

            	
              All
                Documents;

            


    

    


    
      	 	
              (e)

            	
              All
                Equipment;

            


    

    


    
      	 	
              (f)

            	
              All
                Fixtures;

            


    

    


    
      	 	
              (g)

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

            


    

    


    
      	 	
              (h)

            	
              All
                Goods;

            


    

    


    (i)    All
      Instruments (including, without limitation, Promissory Notes and each
      certificated Security);

    


    
      	 	
              (j)

            	
              All
                Inventory;

            


    

    


    
      	 	
              (k)

            	
              All
                Investment Property;

            


    

    


    
      	 	
              (l)

            	
              All
                Supporting Obligations;

            


    

    


    (m)   All
      other
      tangible and intangible personal property of each Grantor (whether or not
      subject to the Code), including, without limitation, all bank and other accounts
      and all cash and all investments therein, all proceeds, products, accessions,
      rents, profits, income, benefits, substitutions and replacements of and to
      any
      of the property of any Grantor described in the preceding clauses of this
Section
      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,
      data
      in the possession or under the control of any Grantor or any other Person from
      time to time acting for any Grantor, in each case, to the extent of such
      Grantor’s rights therein, that at any time evidence or contain information
      relating to any of the property described in the preceding clauses of this
      Section
      2
      or are
      otherwise necessary or helpful in the collection or realization
      thereof;
      and

    


    (n)    All
      Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of
      any
      and all of the foregoing Collateral;

    


    in
      each
      case howsoever any Grantor’s interest therein may arise or appear (whether by
      ownership, security interest, claim or otherwise).

    


    SECTION
      3.          Security
      for Obligations.
      The
      security interest created hereby in the Collateral constitutes continuing
      collateral security for all of the following obligations, whether now existing
      or hereafter incurred (collectively, the “Obligations”): that certain Renewal
      Promissory Note in the original principal amount of $77,932,514.15 dated
      November 30, 2006, executed by Charys Holding Company, Inc. as Maker and
      guaranteed by Grantors payable to Crochet as provided therein.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    SECTION
      4.          Representations
      and Warranties.
      With the
      exception of Crochet & Borel Services, Inc., each Grantor represents and
      warrants as of the date of this Agreement as follows:

     

    (a)    There
      is
      no pending or, to its knowledge, written notice threatening any action, suit,
      proceeding or claim affecting any Grantor before any governmental authority
      or
      any arbitrator, or any order, judgment or award issued by any governmental
      authority or arbitrator, in each case, that may adversely affect the grant
      by
      any Grantor, or the perfection, of the security interest purported to be created
      hereby in the Collateral, or the exercise by Crochet of any of its rights or
      remedies hereunder.

    


    (b)    The
      exercise by Crochet of any of its rights and remedies hereunder will not
      contravene any law or any contractual restriction binding on or otherwise
      affecting each Grantor or any of its properties and will not result in or
      require the creation of any Lien, upon or with respect to any of its
      properties.

    


    SECTION
      5.   Covenants
      as to the Collateral.
      So long
      as any of the Obligations shall remain outstanding, unless Crochet shall
      otherwise consent in writing, and subject to the Permitted Liens:

    


    (a)    Further
      Assurances.
      Each
      Grantor will at its expense, at any time and from time to time, promptly execute
      and deliver all further instruments and documents and take all further action
      that Crochet may reasonably request in order to: (i) perfect and protect
      the security interest purported to be created hereby; (ii) enable Crochet
      to exercise and enforce his rights and remedies hereunder in respect of the
      Collateral; or (iii) otherwise effect the purposes of this Agreement,
      including, without limitation: (A) marking conspicuously all Chattel Paper
      and, at the request of Crochet, each of its Records pertaining to the Collateral
      with a legend, in form and substance satisfactory to Crochet, indicating that
      such Chattel Paper or Collateral is subject to the security interest created
      hereby, (B)  delivering and pledging to Crochet pursuant to a Pledge each
      Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter
      owned by any Grantor, duly endorsed and accompanied by executed instruments
      of
      transfer or assignment, all in form and substance satisfactory to Crochet,
      (C) executing and filing (to the extent, if any, that any Grantor’s
      signature is required thereon) or authenticating the filing of, such financing
      or continuation statements, or amendments thereto, as may be necessary or that
      Crochet may reasonably request in order to perfect and preserve the security
      interest purported to be created hereby, (D) furnishing to Crochet from
      time to time statements and schedules further identifying and describing the
      Collateral and such other reports in connection with the Collateral in each
      case
      as Crochet may reasonably request, all in reasonable detail, (E) if any
      Collateral shall be in the possession of a third party, notifying such Person
      of
      Crochet’s security interest created hereby and obtaining a written
      acknowledgment from such Person that such Person holds possession of the
      Collateral for
      the
      benefit of Crochet, which such written acknowledgement shall be in form and
      substance reasonably satisfactory to Crochet, and (F)  taking all actions
      required by any earlier versions of the Uniform Commercial Code or by other
      law,
      as applicable, in any relevant Uniform Commercial Code jurisdiction, or by
      other
      law as applicable in any foreign jurisdiction.

    


    (b)    Taxes,
      Etc.
      Each
      Grantor agrees to pay promptly when due all property and other taxes,
      assessments and governmental charges or levies imposed upon, and all claims
      (including claims for labor, materials and supplies) against, the Equipment
      and
      Inventory, except to the extent the validity thereof is being contested in
      good
      faith by proper proceedings which stay the imposition of any penalty, fine
      or
      Lien resulting from the non-payment thereof and with respect to which adequate
      reserves in accordance with GAAP have been set aside for the payment
      thereof.

    

      
        	 	
                (c)

              	
                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 Crochet. To the extent requested
      by Crochet at any time and from time to time, each such policy for liability
      insurance shall provide for all losses to be paid on behalf of Crochet and
      any
      Grantor as their respective interests may appear, and each policy for property
      damage insurance shall provide for all losses to be adjusted with, and paid
      directly to, Crochet. To the extent requested by Crochet at any time and from
      time to time, each such policy shall in addition (A) name Crochet as an
      additional insured party thereunder (without any representation or warranty
      by
      or obligation upon Crochet) as his interests may appear, (B) contain an
      agreement by the insurer that any loss thereunder shall be payable to Crochet
      on
      his own account notwithstanding any action, inaction or breach of representation
      or warranty by any Grantor, (C) provide that there shall be no recourse against
      Crochet for payment of premiums or other amounts with respect thereto, and
      (D)
      provide that at least 30 days’ prior written notice of cancellation, lapse,
      expiration or other adverse change shall be given to Crochet by the insurer.
      Any
      Grantor will, if so requested by Crochet, deliver to Crochet original or
      duplicate policies of such insurance and, as often as Crochet may reasonably
      request, a report of a reputable insurance broker with respect to such
      insurance. Any Grantor will also, at the request of Crochet, execute and deliver
      instruments of assignment of such insurance policies and cause the respective
      insurers to acknowledge notice of such assignment.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    (ii)    Reimbursement
      under any liability insurance maintained by any Grantor pursuant to this
Section
      5(b)
      may be
      paid directly to the Person who shall have incurred liability covered by such
      insurance. In the case of any loss involving damage to Equipment or Inventory,
      any proceeds of insurance maintained by any Grantor pursuant to this
Section
      5(b)
      shall be
      paid to Crochet (except as to which paragraph (iii) of this Section
      5(b)
      is not
      applicable),
      any
      Grantor will make or cause to be made the necessary repairs to or replacements
      of such Equipment or Inventory, and any proceeds of insurance maintained by
      any
      Grantor pursuant to this Section
      5(b)
      shall be
      paid by Crochet to any Grantor as reimbursement for the costs of such repairs
      or
      replacements.

    


    (iii)    All
      insurance payments in respect of such Equipment or Inventory shall be paid
      to
      Crochet and applied as specified in Section
      7(b)
      hereof.

    

      
        	 	
                (d)

              	
                Provisions
                  Concerning the Accounts.

              


      

    

    


    (i)     Any
      Grantor will (A) give Crochet at least 30 days’ prior written notice of any
      change in such Grantor’s name, identity or organizational structure, (B)
      maintain its jurisdiction of incorporation, organization or formation, (C)
      immediately notify Crochet upon obtaining an organizational identification
      number, if on the date hereof such Grantor did not have such identification
      number, and (D) keep adequate records concerning the Accounts and Chattel Paper
      and permit representatives of Crochet during normal business hours on reasonable
      notice to such Grantor, to inspect and make abstracts from such Records and
      Chattel Paper.

    


    (ii)   Each
      Grantor will, except as otherwise provided in this subsection (d), continue
      to collect, at its own expense, all amounts due or to become due under the
      Accounts. In connection with such collections, any Grantor may (and, at
      Crochet’s direction, will) take such action as any Grantor or Crochet may deem
      necessary or advisable to enforce collection or performance of the Accounts;
      provided,
      however,
      that
      Crochet shall have the right at any time, upon the occurrence and during the
      continuance of an Event of Default, to notify the account debtors or obligors
      under any Accounts of the assignment of such Accounts to Crochet and to direct
      such account debtors or obligors to make payment of all amounts due or to become
      due to any Grantor thereunder directly to Crochet or its designated agent and,
      upon such notification and at the expense of any Grantor and to the extent
      permitted by law, to enforce collection of any such Accounts and to adjust,
      settle or compromise the amount or payment thereof, in the same manner and
      to
      the same extent as any Grantor might have done. After receipt by any Grantor
      of
      a notice from Crochet that Crochet has notified, intends to notify, or has
      enforced or intends to enforce any Grantor’s rights against the account debtors
      or obligors under any Accounts as referred to in the proviso to the immediately
      preceding sentence, (A) all amounts and proceeds (including Instruments)
      received by any Grantor in respect of the Accounts shall be received in trust
      for the benefit of Crochet hereunder, shall be segregated from other funds
      of
      any Grantor and shall be forthwith paid over to Crochet in the same form as
      so
      received (with any necessary endorsement) to be applied as specified in
Section
      7(b)
      hereof,
      and (B) no Grantor will adjust, settle or compromise the amount or payment
      of
      any Account or release wholly or partly any account debtor or obligor thereof
      or
      allow any credit or discount thereon. In addition, upon the occurrence and
      during the continuance of an Event of Default, Crochet may (in his sole and
      absolute discretion) direct any or all of the banks and financial institutions
      with which any Grantor either maintains a Deposit Account or a lockbox or
      deposits the proceeds of any Accounts to send immediately to Crochet by wire
      transfer (to such account as Crochet shall specify, or in such other manner
      as
      Crochet shall direct) all or a portion of such securities, cash, investments
      and
      other items held by such institution. Any such securities, cash, investments
      and
      other items so received by Crochet shall be applied as specified in accordance
      with Section
      7(b)
      hereof.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    
      	 	
              (e)

            	
              Transfers
                and Other Liens.

            


    

    


    (i)     No
      Grantor will sell, assign (by operation of law or otherwise), lease, license,
      exchange or otherwise transfer or dispose of any of the Collateral,
      except
      such Grantor may (A) sell or dispose of Inventory (including, without
      limitation, As-extracted Collateral) in the ordinary course of business, and
      (B)
      sell or dispose of assets such Grantor has determined, in good faith, not to
      be
      useful in the conduct of its business, and (C) sell or dispose of accounts
      in
      the course of collection in the ordinary course of business consistent with
      past
      practice.

    


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

    


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

    


    (g)    Inspection
      and Reporting.
      Each
      Grantor shall permit Crochet, or any agent or representatives thereof or such
      professionals or other Persons as Crochet may designate, during normal business
      hours, after reasonable notice in the absence of an Event of Default and not
      more than once a year in the absence of an Event of Default, (i) to examine
      and make copies of and abstracts from any Grantor’s records and books of
      account, (ii) to visit and inspect its properties, (iii) to verify
      materials, leases, Instruments, Accounts, Inventory and other assets of any
      Grantor from time to time, and (iv) to conduct audits, physical counts,
      appraisals and/or valuations, examinations at the locations of any Grantor.
      Each
      Grantor shall also permit Crochet, or any agent or representatives thereof
      or
      such professionals or other Persons as Crochet may designate to discuss such
      Grantor’s affairs, finances and accounts with any of its directors, officers,
      managerial employees, independent accountants or any of its other
      representatives.

    


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

    


    
      	 	
              SECTION
                6.

            	
              Additional
                Provisions Concerning the Collateral.

            


    

     

    (a)    Each
      Grantor hereby (i) authorizes Crochet to file one or more Uniform Commercial
      Code financing or continuation statements, and amendments thereto, relating
      to
      the Collateral and (ii) ratifies such authorization to the extent that Crochet
      has filed any such financing or continuation statements, or amendments thereto,
      prior to the date hereof. A photocopy or other reproduction of this Agreement
      or
      any financing statement covering the Collateral or any part thereof shall be
      sufficient as a financing statement where permitted by law.

     

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

    


    (c)    The
      powers conferred on Crochet hereunder are solely to protect his interest in
      the
      Collateral and shall not impose any duty upon him to exercise any such powers.
      Except for the safe custody of any Collateral in his possession and the
      accounting for moneys actually received by him hereunder, Crochet shall have
      no
      duty as to any Collateral or as to the taking of any necessary steps to preserve
      rights against prior parties or any other rights pertaining to any
      Collateral.

    


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


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    (a)    Crochet
      may exercise in respect of the Collateral, in addition to any other rights
      and
      remedies provided for herein or otherwise available to him, all of the rights
      and remedies of a secured party upon default under the Code (whether or not
      the
      Code applies to the affected Collateral), and also may (i) take absolute
      control of the Collateral, including, without limitation, transfer into
      Crochet’s name or into the name of his nominee or nominees (to the extent
      Crochet has not theretofore done so) and thereafter receive, for the benefit
      of
      Crochet, all payments made thereon, give all consents, waivers and ratifications
      in respect thereof and otherwise act with respect thereto as though he were
      the
      outright owner thereof, (ii) require each Grantor to, and each Grantor
      hereby agrees that it will at its expense and upon request of Crochet forthwith,
      assemble all or part of its respective Collateral as directed by Crochet and
      make it available to Crochet at a place or places to be designated by Crochet
      that is reasonably convenient to both parties, and Crochet may enter into and
      occupy any premises owned or leased by any Grantor where the Collateral or
      any
      part thereof is located or assembled for a reasonable period in order to
      effectuate Crochet’s rights and remedies hereunder or under law, without
      obligation to any Grantor in respect of such occupation, and (iii) without
      notice except as specified below and without any obligation to prepare or
      process the Collateral for sale, (A) sell the Collateral or any part
      thereof in one or more parcels at public or private sale, at any of Crochet’s
      offices or elsewhere, for cash, on credit or for future delivery, and at such
      price or prices and upon such other terms as Crochet may deem commercially
      reasonable and/or (B) lease, license or dispose of the Collateral or any
      part thereof upon such terms as Crochet may deem commercially reasonable. Each
      Grantor agrees that, to the extent notice of sale or any other disposition
      of
      its respective Collateral shall be required by law, at least ten (10) days’
notice to any Grantor of the time and place of any public sale or the time
      after
      which any private sale or other disposition of its respective Collateral is
      to
      be made shall constitute reasonable notification. Crochet shall not be obligated
      to make any sale or other disposition of any Collateral regardless of notice
      of
      sale having been given. Crochet may adjourn any public or private sale from
      time
      to time by announcement at the time and place fixed therefor, and such sale
      may,
      without further notice, be made at the time and place to which it was so
      adjourned. Each Grantor hereby waives any claims against Crochet arising by
      reason of the fact that the price at which its respective Collateral may have
      been sold at a private sale was less than the price which might have been
      obtained at a public sale or was less than the aggregate amount of the
      Obligations, even if Crochet accepts the first offer received and does not
      offer
      such Collateral to more than one offeree, and waives all rights that any Grantor
      may have to require that all or any part of such Collateral be marshaled upon
      any sale (public or private) thereof. Each Grantor hereby acknowledges that
      (i) any such sale of its respective Collateral by Crochet shall be made
      without warranty, (ii) Crochet may specifically disclaim any warranties of
      title, possession, quiet enjoyment or the like, and (iii) such actions set
      forth in clauses (i) and (ii) above shall not adversely affect the
      commercial reasonableness of any such sale of Collateral.

    


    (b)    Any
      cash
      held by Crochet as Collateral and all Cash Proceeds received by Crochet in
      respect of any sale of or collection from, or other realization upon, all or
      any
      part of the Collateral shall be applied (after payment of any amounts payable
      to
      Crochet pursuant to Section
      8
      hereof)
      by Crochet against, all or any part of the Obligations in such order as Crochet
      shall elect, consistent with the provisions of the Securities Purchase
      Agreement. Any surplus of such cash or Cash Proceeds held by Crochet and
      remaining after the indefeasible payment in full in cash of all of the
      Obligations shall be paid over to whomsoever shall be lawfully entitled to
      receive the same or as a court of competent jurisdiction shall
      direct.

    


    (c)    In
      the
      event that the proceeds of any such sale, collection or realization are
      insufficient to pay all amounts to which Crochet is legally entitled, each
      Grantor shall be liable for the deficiency, together with interest thereon
      at
      the highest rate specified in the Note for interest on overdue principal thereof
      or such other rate as shall be fixed by applicable law, together with the costs
      of collection and the reasonable fees, costs, expenses and other client charges
      of any attorneys employed by Crochet to collect such deficiency.

    


    (d)    Each
      Grantor hereby acknowledges that if Crochet complies with any applicable state,
      provincial or federal law requirements in connection with a disposition of
      the
      Collateral, such compliance will not adversely affect the commercial
      reasonableness of any sale or other disposition of the Collateral.

    


    (e)    Crochet
      shall not be required to marshal any present or future collateral security
      (including, but not limited to, this Agreement and the Collateral) for, or
      other
      assurances of payment of, the Obligations or any of them or to resort to such
      collateral security or other assurances of payment in any particular order,
      and
      all of Crochet’s rights hereunder and in respect of such collateral security and
      other assurances of payment shall be cumulative and in addition to all other
      rights, however existing or arising. To the extent that any Grantor lawfully
      may
      agree, each Grantor hereby agrees that it will not invoke any law relating
      to
      the marshaling of collateral which might cause delay in or impede the
      enforcement of Crochet’s rights under this Agreement or under any other
      instrument creating or evidencing any of the Obligations or under which any
      of
      the Obligations is outstanding or by which any of the Obligations is secured
      or
      payment thereof is otherwise assured, and, to the extent that it lawfully may,
      each Grantor hereby irrevocably waives the benefits of all such
      laws.


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    
      	 	
              SECTION
                8.

            	
              Indemnity
                and Expenses.

            


    

    


    (a)    Each
      Grantor agrees, jointly and severally, to defend, protect, indemnify and hold
      Crochet harmless from and against any and all claims, damages, losses,
      liabilities, obligations, penalties, fees, costs and expenses (including,
      without limitation, reasonable legal fees, costs, expenses, and disbursements
      of
      such Person’s counsel) to the extent that they arise out of or otherwise result
      from this Agreement (including, without limitation, enforcement of this
      Agreement), except to the extent resulting from such Person’s gross negligence
      or willful misconduct, as determined by a final judgment of a court of competent
      jurisdiction.

     

    (b)    Each
      Grantor agrees, jointly and severally, to pay to Crochet upon demand the amount
      of any and all costs and expenses, including the reasonable fees, costs,
      expenses and disbursements of counsel for Crochet and of any experts and agents
      (including, without limitation, any collateral trustee which may act as agent
      of
      Crochet), which Crochet may incur in connection with (i) the preparation,
      negotiation, execution, delivery, recordation, administration, amendment, waiver
      or other modification or termination of this Agreement, (ii) the custody,
      preservation, use or operation of, or the sale of, collection from, or other
      realization upon, any Collateral, (iii) the exercise or enforcement of any
      of the rights of Crochet hereunder, or (iv) the failure by any Grantor to
      perform or observe any of the provisions hereof.

    


    SECTION
      9.   Notices,
      Etc.
      All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be mailed (by certified mail, postage prepaid and return receipt
      requested), telecopied, e-mailed or delivered, if to any Grantor at its address
      specified below and if to Crochet to it, at its address specified on the
      signature pages below; or as to any such Person, at such other address as shall
      be designated by such Person in a written notice to all other parties hereto
      complying as to delivery with the terms of this Section
      9.
      All
      such notices and other communications shall be effective (a) if sent by
      certified mail, return receipt requested, when received or three days after
      deposited in the mails, whichever occurs first, (b) if telecopied or e-mailed,
      when transmitted (during normal business hours) and confirmation is received,
      and otherwise, the day after the notice or communication was transmitted and
      confirmation is received, or (c) if delivered in person, upon
      delivery.

    

      
        	 	
                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 and Crochet, and no waiver of any provision
      of this Agreement, and no consent to any departure by each Grantor therefrom,
      shall be effective unless it is in writing and signed by each Grantor and
      Crochet, and then such waiver or consent shall be effective only in the specific
      instance and for the specific purpose for which given.

     

    (b)    No
      failure on the part of Crochet to exercise, and no delay in exercising, any
      right hereunder or under any of the other Transaction Documents shall operate
      as
      a waiver thereof; nor shall any single or partial exercise of any such right
      preclude any other or further exercise thereof or the exercise of any other
      right. The rights and remedies of Crochet provided herein and in the other
      Transaction Documents are cumulative and are in addition to, and not exclusive
      of, any rights or remedies provided by law. The rights of Crochet under any
      of
      the other Transaction Documents against any party thereto are not conditional
      or
      contingent on any attempt by such Person to exercise any of its rights under
      any
      of the other Transaction Documents against such party or against any other
      Person, including but not limited to, any Grantor.

    


    (c)    Any
      provision of this Agreement that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining portions
      hereof or thereof or affecting the validity or enforceability of such provision
      in any other jurisdiction.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    (d)    This
      Agreement, subject to the Permitted Liens, shall create a continuing security
      interest in the Collateral and shall (i) remain in full force and effect until
      the indefeasible payment in full in cash of the Obligations, and (ii) be binding
      on each Grantor and all other Persons who become bound as debtor to this
      Agreement in accordance with Section 9-203(d) of the Code and shall inure,
      together with all rights and remedies of Crochet hereunder, to the benefit
      of
      Crochet and his permitted successors, transferees and assigns. Without limiting
      the generality of clause (ii) of the immediately preceding sentence, without
      notice to any Grantor, Crochet may assign or otherwise transfer his rights
      and
      obligations under this Agreement and any of the other Transaction Documents,
      to
      any other Person and such other Person shall thereupon become vested with all
      of
      the benefits in respect thereof granted to Crochet or otherwise. Upon any such
      assignment or transfer, all references in this Agreement to Crochet shall mean
      the assignee of Crochet. None of the rights or obligations of any Grantor
      hereunder may be assigned or otherwise transferred without the prior written
      consent of Crochet, and any such assignment or transfer without the consent
      of
      Crochet
      shall be
      null and void.

    


    (e)    Upon
      the
      indefeasible payment in full in cash of the Obligations, (i) this Agreement
      and
      the security interests created hereby shall terminate and all rights to the
      Collateral shall revert to the respective Grantor that granted such security
      interests hereunder, and (ii) Crochet will, upon any Grantor’s request and at
      such Grantor’s expense, (A) return to such Grantor such of the Collateral as
      shall not have been sold or otherwise disposed of or applied pursuant to the
      terms hereof, and (B) execute and deliver to such Grantor such documents as
      such
      Grantor shall reasonably request to evidence such termination, all without
      any
      representation, warranty or recourse whatsoever.

    


    (f)     THIS
      AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
      THE
      LAWS OF THE STATE OF TEXAS, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW
      AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION
      AND
      THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED
      HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
      GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF
      TEXAS.

    


    (g)    ANY
      LEGAL
      ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT
      RELATED HERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS IN JEFFERSON
      COUNTY, TEXAS OR THE UNITED STATES OF AMERICA FOR THE EASTERN DISTRICT OF TEXAS,
      AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
      EACH GRANTOR HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
      AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH GRANTOR
      HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
      LAW,
      ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF
      VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
      WHICH
      IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR
      PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF
      SUCH
      LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

    


    (h)    EACH
      GRANTOR AND CROCHET WAIVE ANY RIGHT THEY MAY HAVE TO TRIAL BY JURY IN RESPECT
      OF
      ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
      AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT,
      COURSE OF DEALING, ORAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES
      HERETO.

    


    (i)     Each
      Grantor irrevocably consents to the service of process of any of the aforesaid
      courts in any such action, suit or proceeding by the mailing of copies thereof
      by registered or certified mail (or any substantially similar form of mail),
      postage prepaid, to any Grantor at its address provided herein, such service
      to
      become effective 10 days after such mailing.


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    (j)     Nothing
      contained herein shall affect the right of Crochet to serve process in any
      other
      manner permitted by law or commence legal proceedings or otherwise proceed
      against any Grantor or any property of any Grantor in any other
      jurisdiction.

    


    (k)   Each
      Grantor irrevocably and unconditionally waives any right it may have to claim
      or
      recover in any legal action, suit or proceeding referred to in this Section
      any
      special, exemplary, punitive or consequential damages.

    


    (l)     Section
      headings herein are included for convenience of reference only and shall not
      constitute a part of this Agreement for any other purpose.

    


    (m)   This
      Agreement may be executed in any number of counterparts and by different parties
      hereto in separate counterparts, each of which shall be deemed to be an
      original, but all of which taken together constitute one in the same
      Agreement. 

    


    (n)    Notwithstanding
      anything herein contained to the contrary, as a condition precedent to any
      obligation of a Grantor hereunder, the Grantor must first receive the consent
      of
      certain investors in the Grantor described in Schedule
      2
      hereto.

     

    IN
      WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and
      delivered by its officer thereunto duly authorized, as of the date first above
      written.

     

    
      	 	
              CHARYS
                HOLDING COMPANY, INC.

            
	 	 	 
	 	 	 
	 	
              By

            	 
	 	 	
              Billy
                V. Ray, Jr., Chief Executive Officer

            
	 	 	
              1117
                Perimeter Center West, Suite N415

            
	 	 	
              Atlanta,
                Georgia 30338

            
	 	 	
              Telephone:
                678-443-2300

            
	 	 	
              Facsimile:
                678-443-2320

            
	 	 	
              Email:
                bray@charys.com

            
	 	 	 
	 	 	 
	 	
              C
                & B HOLDINGS, INC.

            
	 	 	 
	 	 	 
	 	
              By

            	 
	 	 	
              Billy
                V. Ray, Jr., President

            
	 	 	
              Billy
                V. Ray, Jr., Chief Executive Officer

            
	 	 	
              1117
                Perimeter Center West, Suite N415

            
	 	 	
              Atlanta,
                Georgia 30338

            
	 	 	
              Telephone:
                678-443-2300

            
	 	 	
              Facsimile:
                678-443-2320

            
	 	 	
              Email:
                bray@charys.com

            


    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      	 	
              CROCHET
                AND BOREL SERVICES. INC.

            
	 	 	 
	 	 	 
	 	
              By

            	 
	 	 	
              Troy
                Crochet, Chief Executive Officer

            
	 	 	
              346
                Twin City Highway,

            
	 	 	
              Port
                Neches, Texas 77651

            
	 	 	
              Telephone:
                409-722-9697

            
	 	 	
              Facsimile:
                409-722-7273

            
	 	 	 
	 	 	 
	 	
              AYIN
                HOLDING COMPANY, INC.

            
	 	 	 
	 	 	 
	 	
              By

            	 
	 	 	
              Jimmy
                Taylor, President

            


    

    


     

    ACCEPTED
      BY:

     

    
      	 	 
	
              Troy
                D. Crochet

            	 
	
              Address:
                202 Castle Circle

            	 
	
              Port
                Neches, Texas 77651

            	 
	 	 
	
              Attachments:

            	 
	
              Schedule
                1 - Permitted Liens

            	 
	
              Schedule
                2 - Consent of Lien Holders

            	 


    

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    


    Schedule
      1

    Permitted
      Liens

     

    
      Permitted
        Liens include all liens and security interests (a) disclosed in all filings
        by
        the Company with the United States Securities Exchange Commission; (b) disclosed
        in the attachment to this Schedule
        1;
        (c) all
        liens and security interests held on or in any of the assets of the Grantors
        securing any debt owed in connection with (i) the New Stream Commercial Finance,
        LLC financing of accounts receivable of Crochet & Borel Services, Inc., as
        described in an 8-K filed by the Company with the Securities and Exchange
        Commission on September 8, 2006, and the New Stream Commercial Finance, LLC
        financing of accounts receivable of Ayin Tower Management Services Inc.,
        as
        described in an 8-K filed by the Company with the Securities and Exchange
        Commission on September 8, 2006, (ii) the Gottbetter Capital Finance, LLC
        financing as described in an 8-K filed by the Company with the Securities
        and
        Exchange Commission on September 6, 2006, (iii) the Cotton Sellers, and the
        other parties to the loan agreements identified in an 8-K filed by the Company
        with the Securities and Exchange Commission on December 14, 2006, which include
        Cotton Holdings I, Inc., Cotton Commercial USA, LP, Cotton Restoration, LP,
        Chad
        Weigman, Blake Stansell, Bryan Michalsky, James Scaife, Randall Thompson,
        Pete
        Bell, Daryn Ebrecht, Russell White and Johnny Slaughter.

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Schedule
      2

    Consent
      of Lien Holders

     

    
      Consents
        must be obtained from the following:

      


      Cotton
        Holdings I, Inc.

      


      Cotton
        Commercial USA, LP

      


      Cotton
        Restoration, LP

      


      Chad
        Weigman

      


      Blake
        Stansell

      


      Bryan
        Michalsky

      


      James
        Scaife

      


      Randall
        Thompson

      


      Pete
        Bell

      


      Daryn
        Ebrecht

      


      Russell
        White

      


      Johnny
        Slaughter

      


      Imperium
        Master Fund, Ltd.

      


      New
        Stream Commercial Finance, LLC

      


      Gottbetter
        Capital Finance, LLC

      


      Fort
        Mason Master, LP

      


      UBS
        Alternative & Quantitative Investments, LLC

      


      Fort
        Mason Partners, LP

      


      GCA
        Strategic Investment Fund Limited

      


      PCM
        II,
        LLC