ex10_2.htm




 

THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE PLAN. ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THIS DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT.

 





UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE





 


	  	  	  
	
In re
	  	
Chapter 11 Case No.

	  	  	  
	
CHARYS HOLDING COMPANY, INC., and CROCHET & BOREL SERVICES, INC.
	  	
08-10289 (BLS)

	  	  	  
	
Debtors.
	  	
(Jointly Administered)

	  	  	  












  PROPOSED DISCLOSURE STATEMENT FOR FIRST AMENDED JOINT PLAN OF



  REORGANIZATION OF DEBTORS AND CERTAIN NONDEBTOR



  AFFILIATES UNDER CHAPTER 11 OF THE BANKRUPTCY CODE






 


	
WEIL, GOTSHAL & MANGES LLP
	
RICHARDS, LAYTON & FINGER, P.A.

	
Co-Attorneys for Debtors and
	
Co-Attorneys for Debtors and

	
Debtors in Possession
	
Debtors in Possession

	
767 Fifth Avenue
	
One Rodney Square

	
New York, New York 10153
	
920 North King Street

	
(212)310-8000
	
Wilmington, Delaware 19801

	  	
(302)651-7700

	
Dated: December 8, 2008
	  







  



  







  





TABLE OF CONTENTS





 


	  	  	
Page

	 	 	 
	
I.
	
INTRODUCTION
	
1

	  	
A.
	
HOLDERS OF CLAIMS ENTITLED TO VOTE
	
3

	  	
B.
	
VOTING PROCEDURES
	
4

	  	
C
	
CONFIRMATION HEARING
	
5

	
II.
	
OVERVIEW OF THE PLAN
	
6

	  	
A.
	
OVERVIEW OF CHAPTER 11
	
11

	
III.
	
GENERAL INFORMATION REGARDING CHARYS
	
12

	  	
A.
	
BACKGROUND
	
12

	  	  	
1.
	
History
	
12

	  	  	
2.
	
Remediation & Reconstruction Operations
	
14

	  	  	
3.
	
Telecommunications Infrastructure
	
14

	  	  	
4.
	
Employees and Labor Matters
	
15

	  	  	
5.
	
Properties and Assets
	
15

	  	
B.
	
CORPORATE STRUCTURE
	
16

	  	
C.
	
SIGNIFICANT PREPETITION INDEBTEDNESS
	
16

	  	  	
1.
	
8.75% Senior Convertible Notes Due 2012
	
16

	  	  	
2.
	
Mirror Notes
	
17

	  	  	
3.
	
Seller Notes
	
17

	  	  	
4.
	
Other Secured Notes
	
17

	  	  	
5.
	
Unsecured Notes and Subordinated Notes
	
18

	  	  	
6.
	
Credit Agreements...
	
18

	
IV.
	
KEY EVENTS LEADING TO THE COMMENCEMENT OF THE CHAPTER 11 CASES
	
18

	  	
A.
	
DECLINE IN FINANCIAL PERFORMANCE
	
18

	  	
B.
	
THE RESTRUCTURING NEGOTIATIONS
	
19

	
V.
	
THE CHAPTER 11 CASES
	
20

	  	
A.
	
FIRST DAY ORDERS
	
20

	  	  	
1.
	
Case Administration Orders
	
20

	  	  	
2.
	
Critical Obligations
	
20

	  	  	
3.
	
Business Operations
	
20

	  	  	
4.
	
Financial Operations
	
20

	  	
B.
	
CREDITORS' COMMITTEE
	
21

	  	
C.
	
SIGNIFICANT EVENTS DURING CHAPTER 11 CASES
	
22








  



i







  





TABLE OF CONTENTS

(continued)





 


	  	  	  	  	
Page

	 	 	 	 	 
	  	  	
1.
	
Execution of Term Sheets With Certain Seller Noteholders
	
22

	  	  	
2.
	
Negotiations With Troy Crochet
	
24

	  	  	
3.
	
Schedules and Bar Date
	
24

	  	  	
4.
	
Extensions of Time
	
25

	  	  	
5.
	
Settlement With Imperium
	
25

	
VI.
	
THE PLAN OF REORGANIZATION
	
26

	  	
A.
	
INTRODUCTION
	
26

	  	
B.
	
CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN OF REORGANIZATION
	
27

	  	  	
1.
	
Unclassified
	
29

	  	  	
2.
	
Classified
	
32

	  	
C.
	
MEANS OF IMPLEMENTING THE PLAN
	
40

	  	  	
1.
	
Means of Implementation Applicable to Both Charys Holding and C&B
	
40

	  	  	
2.
	
Means of Implementation Specific to Charys Holding
	
...41

	  	  	
3.
	
Means of Implementation Specific to C&B
	
46

	  	
D.
	
PLAN PROVISIONS GOVERNING DISTRIBUTIONS
	
50

	  	  	
1.
	
Distributions on Account of Allowed General Unsecured Claims
	
50

	  	  	
2.
	
Delivery of Distributions
	
50

	  	  	
3.
	
No Fractional Shares
	
51

	  	  	
4.
	
No Fractional Notes
	
51

	  	  	
5.
	
Setoffs and Recoupment
	
51

	  	  	
6.
	
Interest on Claims; Dividends
	
52

	  	  	
7.
	
Allocation of Plan Distributions Between Principal and Interest
	
52

	  	
E.
	
PROCEDURES FOR TREATING DISPUTED CLAIMS
	
52

	  	  	
1.
	
Objections
	
52

	  	  	
2.
	
No Distributions Pending Allowance
	
52

	  	  	
3.
	
Distributions After Allowance
	
52

	  	  	
4.
	
Resolution of Administrative Expense Claims and Claims
	
53

	  	  	
5.
	
Estimation of Claims
	
53

	  	  	
6.
	
Interest
	
53

	  	
F.
	
PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED LEASES
	
53








  



ii







  





TABLE OF CONTENTS

(continued)





 


	  	  	  	  	
Page

	 	 	 	 	 
	  	  	
1.
	
Assumption or Rejection of Executory Contracts
	
53

	  	  	
2.
	
Approval of Assumption or Rejection of Executory Contracts and Unexpired Leases
	
54

	  	  	
3.
	
Cure of Defaults
	
54

	  	  	
4.
	
Bar Date for Filing Proofs of Claim Relating to Executory Contracts and Unexpired Leases Rejected Pursuant to the Plan
	
54

	  	  	
5.
	
Indemnification and Reimbursement Obligations
	
55

	  	  	
6.
	
Insurance Policies
	
55

	  	  	
7.
	
Compensation and Benefit Plans
	
55

	  	
G.
	
CORPORATE GOVERNANCE AND MANAGEMENT OF NEW HOLDCO
	
56

	  	  	
1.
	
Board of New Holdco
	
56

	  	  	
2.
	
Officers of New Holdco
	
56

	  	  	
3.
	
New Employment Agreements
	
56

	  	
H.
	
CONDITIONS PRECEDENT TO EFFECTIVE DATE
	
56

	  	  	
1.
	
Conditions Precedent to Effectiveness
	
56

	  	  	
2.
	
Waiver of Conditions
	
57

	  	  	
3.
	
Satisfaction of Conditions
	
57

	  	
I.
	
EFFECT OF CONFIRMATION
	
58

	  	  	
1.
	
Binding Effect
	
58

	  	  	
2.
	
Discharge of Claims and Termination of Equity Interest
	
58

	  	  	
3.
	
Discharge of Debtors
	
58

	  	  	
4.
	
Injunction or Stay
	
59

	  	  	
5.
	
Terms of Injunction or Stay
	
59

	  	  	
6.
	
Injunction Against Interference with Plan of Reorganization
	
59

	  	  	
7.
	
Exculpation
	
59

	  	  	
8.
	
Releases
	
60

	  	  	
9.
	
Avoidance Actions/Objections
	
60

	  	  	
10.
	
Retention of Causes of Action/Reservation of Rights
	
60

	  	
J.
	
MISCELLANEOUS PROVISIONS
	
61

	  	  	
1.
	
Withholding and Reporting Requirements
	
61

	  	  	
2.
	
Corporate Action
	
61

	  	  	
3.
	
Modification of Plan
	
61








  



iii







  





TABLE OF CONTENTS

(continued)





 


	  	  	  	  	
Page

	 	 	 	 	 
	  	  	
4.
	
Revocation or Withdrawal of the Plan
	
62

	  	  	
5.
	
Plan Supplement
	
62

	  	  	
6.
	
Dissolution of the Creditors' Committee
	
62

	  	  	
7.
	
Exemption from Transfer Taxes
	
63

	
VII.
	
PROJECTIONS AND VALUATION ANALYSIS
	
63

	  	
A.
	
CONSOLIDATED CONDENSED PROJECTED FINANCIAL STATEMENTS
	
63

	  	  	
1.
	
Responsibility for and Purpose of the Projections
	
63

	  	  	
2.
	
Pro Forma Financial Projections
	
63

	  	  	
3.
	
Summary of Significant Assumptions
	
66

	  	  	
4.
	
Business Strategy of New Holdco
	
66

	  	  	
5.
	
Income Statement Assumptions
	
67

	  	  	
6.
	
Balance Sheet Assumptions
	
69

	  	
B.
	
VALUATION
	
70

	  	  	
1.
	
DCF Analysis
	
71

	  	  	
2.
	
Comparable Public Company Analysis
	
71

	
VIII.
	
CERTAIN FACTORS AFFECTING THE DEBTORS
	
73

	  	
A.
	
CERTAIN BANKRUPTCY LAW CONSIDERATIONS
	
73

	  	  	
1.
	
Risk of Non-Confirmation of the Plan of Reorganization
	
73

	  	  	
2.
	
Non-Consensual Confirmation
	
73

	  	  	
3.
	
Risk of Non-Occurrence of the Effective Date
	
73

	  	
B.
	
ADDITIONAL FACTORS TO BE CONSIDERED
	
74

	  	  	
1.
	
The Plan Proponents Have No Duty to Update
	
74

	  	  	
2.
	
No Representations Outside This Disclosure Statement Are Authorized
	
74

	  	  	
3.
	
Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary
	
74

	  	  	
4.
	
No Legal or Tax Advice Is Provided to You by This Disclosure Statement
	
74

	  	  	
5.
	
No Admission Made
	
74

	  	  	
6.
	
Business Factors and Competitive Conditions
	
74

	  	  	
7.
	
Access to Financing and Trade Terms
	
76

	  	  	
8.
	
Variances from Projections
	
76

	  	
C.
	
CERTAIN TAX MATTERS
	
76








  



iv







  





TABLE OF CONTENTS

(continued)





 


	  	  	  	  	
Page

	 	 	 	 	 
	
IX.
	
CONFIRMATION OF THE PLAN OF REORGANIZATION
	
77

	  	
A.
	
CONFIRMATION HEARING
	
77

	  	
B.
	
REQUIREMENTS FOR CONFIRMATION OF THE PLAN OF REORGANIZATION
	
77

	  	  	
1.
	
Requirements of Section 1129(a) of the Bankruptcy Code
	
77

	  	  	
2.
	
Requirements of Section 1129(b) of the Bankruptcy Code
	
81

	  	  	
3.
	
Mr. Crochet's Claims and his Objections to Confirmation
	
82

	
X.
	
FINANCIAL INFORMATION
	
84

	
XI.
	
ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN OF REORGANIZATION
	
84

	  	
A.
	
LIQUIDATION UNDER CHAPTER 7
	
84

	  	
B.
	
ALTERNATIVE PLAN OF REORGANIZATION
	
84

	
XII.
	
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
	
85

	  	
A.
	
CONSEQUENCES TO THE PLAN PROPONENTS
	
86

	  	  	
1.
	
Consequences to the Debtors
	
86

	  	  	
2.
	
Consequences to the Affiliated Plan Proponents
	
87

	
B.
	
CONSEQUENCES TO CERTAIN HOLDERS OF CLAIMS
	
88

	  	  	
1.
	
Consequences to Holders of 8.75% Senior Convertible Note Claims, and Holders of General Unsecured Claims Against Charys Holding
	
89

	  	  	
2.
	
Consequences to Holders of Other Secured Claims Against C&B and General Unsecured Against C&B
	
92

	  	  	
3.
	
Distributions in Discharge of Accrued and Unpaid Interest
	
93

	  	  	
4.
	
Ownership and Disposition of New Equity Interests
	
93

	  	  	
5.
	
Ownership and Disposition of New Secured Notes
	
94

	  	  	
6.
	
Tax Treatment of the Liquidating Trusts and Holders of Beneficial Interests
	
95

	  	
C.
	
INFORMATION REPORTING AND WITHHOLDING
	
97

	
XIII.
	
CONCLUSION
	
98








  



v







  





NO PERSON MAY GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DISCLOSURE STATEMENT, REGARDING THE CHAPTER 11 PLAN OF REORGANIZATION OR THE SOLICITATION OF ACCEPTANCES OF THE PLAN.

 

THE DEADLINE FOR VOTING TO ACCEPT OR REJECT THE PLAN IS 4:00 P.M. (PREVAILING EASTERN TIME) ON [DATE], UNLESS EXTENDED. TO BE COUNTED, YOUR BALLOT MUST BE DULY COMPLETED, EXECUTED, AND ACTUALLY RECEIVED BY SUCH DEADLINE.

 

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH SECTION 1125 OF THE BANKRUPTCY CODE AND NOT IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS OR OTHER NON- BANKRUPTCY LAW. PERSONS OR ENTITIES TRADING IN, OR OTHERWISE PURCHASING, SELLING, OR TRANSFERRING SECURITIES OF CHARYS HOLDING COMPANY, INC. OR CROCHET & BOREL SERVICES,
INC. SHOULD NOT RELY UPON THIS DISCLOSURE STATEMENT FOR SUCH PURPOSES AND SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE FOR WHICH THEY WERE PREPARED.

 

THIS DISCLOSURE STATEMENT HAS NEITHER BEEN REVIEWED, APPROVED NOR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE U.S. SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN.

 

THIS DISCLOSURE STATEMENT SUMMARIZES CERTAIN PROVISIONS OF THE PLAN, STATUTORY PROVISIONS, DOCUMENTS RELATED TO THE PLAN, EVENTS IN THESE CHAPTER 11 CASES AND FINANCIAL INFORMATION. ALTHOUGH THE PLAN PROPONENTS BELIEVE THAT THE PLAN AND RELATED DOCUMENT SUMMARIES ARE FAIR AND ACCURATE, SUCH SUMMARIES ARE QUALIFIED TO THE EXTENT THAT THEY
DO NOT SET FORTH THE ENTIRE TEXT OF SUCH DOCUMENTS OR STATUTORY PROVISIONS. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE DATE HEREOF UNLESS ANOTHER TIME IS SPECIFIED HEREIN, AND THE DELIVERY OF THIS DISCLOSURE STATEMENT SHALL NOT CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION STATED SINCE THE DATE HEREOF. HOLDERS OF CLAIMS SHOULD CAREFULLY READ THIS DISCLOSURE STATEMENT IN ITS ENTIRETY, INCLUDING THE PLAN, PRIOR TO VOTING ON THE PLAN.

 

FOR THE CONVENIENCE OF HOLDERS OF CLAIMS AND EQUITY INTERESTS, THIS DISCLOSURE STATEMENT SUMMARIZES THE TERMS OF THE PLAN. IF ANY INCONSISTENCY EXISTS BETWEEN THE PLAN AND THE DISCLOSURE STATEMENT, THE TERMS OF THE PLAN ARE CONTROLLING. THE DISCLOSURE STATEMENT MAY NOT BE RELIED ON FOR ANY PURPOSE OTHER THAN TO DETERMINE WHETHER TO VOTE TO
ACCEPT OR REJECT THE PLAN, AND NOTHING STATED HEREIN SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR LIABILITY BY ANY PARTY, OR BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE PLAN PROPONENTS OR ANY OTHER PARTY, OR BE DEEMED CONCLUSIVE EVIDENCE OF THE TAX OR OTHER LEGAL EFFECTS OF THE PLAN ON THE DEBTORS OR HOLDERS OF CLAIMS OR EQUITY INTERESTS. CERTAIN OF THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT, BY NATURE, ARE FORWARD-LOOKING AND CONTAIN ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH
STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES.





  



  







  





ALL HOLDERS OF CLAIMS SHOULD CAREFULLY READ AND CONSIDER FULLY THE RISK FACTORS SET FORTH IN SECTION VIII OF THIS DISCLOSURE STATEMENT BEFORE VOTING TO ACCEPT OR REJECT THE PLAN.

 

SUMMARIES OF CERTAIN PROVISIONS OF AGREEMENTS REFERRED TO IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE COMPLETE AND ARE SUBJECT TO, AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO, THE FULL TEXT OF THE APPLICABLE AGREEMENT, INCLUDING THE DEFINITIONS OF TERMS CONTAINED IN SUCH AGREEMENT.

 

THE DEBTORS BELIEVE THAT THE PLAN WILL ENABLE THEM TO ACCOMPLISH THE OBJECTIVES OF CHAPTER 11 AND THAT ACCEPTANCE OF THE PLAN IS IN THE BEST INTERESTS OF THE DEBTORS AND THEIR CREDITORS.

 

THE PLAN PROPONENTS URGE CREDITORS TO VOTE TO ACCEPT THE PLAN. THE CREDITORS' COMMITTEE ALSO STRONGLY ENCOURAGES ALL CREDITORS TO VOTE IN FAVOR OF THE PLAN. THE CREDITORS' COMMITTEE WAS ACTIVELY INVOLVED IN THE FORMULATION OF THE PLAN AND BELIEVES THAT THE PLAN PROVIDES THE HIGHEST AND BEST RECOVERIES FOR THE DEBTORS' CREDITORS.

 

IRS CIRCULAR 230 NOTICE: TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, HOLDERS OF CLAIMS AND EQUITY INTERESTS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES CONTAINED
OR REFERRED TO IN THIS DISCLOSURE STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY HOLDERS OF CLAIMS OR EQUITY INTERESTS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON THEM UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING BY THE DEBTORS OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) HOLDERS OF CLAIMS AND EQUITY INTERESTS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX
ADVISOR.

 




  



  







  








1.

 

INTRODUCTION

 

Charys Holding Company, Inc. ("Charys Holding") and Crochet & Borel Services, Inc. ("C&B" and together with Charys Holding, the "Debtors"
and together with all of the non-debtor subsidiaries and affiliates ("Charys")), debtors and debtors-in-possession, filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as amended, the "Bankruptcy Code") on Februaiy 14, 2008 (the "Commencement Date")
in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). The Debtors, along with their non-debtor affiliates, Complete Tower Sources, Inc. ("CTSI"), LFC, Inc. ("LFC"), Mitchell Site Acq. Inc. ("MSAI"), and Cotton Commercial USA, Inc. ("Cotton", and together with CTSI, LFC, and MSAI, the "Affiliated Plan Proponents," and together with the Debtors,
the "Plan Proponents"), submit this Disclosure Statement pursuant to section 1125 of the Bankruptcy Code to holders of equity interests in and claims against the Debtors in connection with (i) the solicitation of acceptances of the First Amended Joint Plan of Reorganization of Debtors and Certain Nondebtor Affiliates Under Chapter 11 of the Bankruptcy Code (the "Plan")
filed by the Plan Proponents with the Bankruptcy Court and (ii) the hearing to consider confirmation of the Plan (the "Confirmation Hearing") scheduled for [________], 2008 at [ ](prevailing Eastern Time). All capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Plan. Headings are for convenience of reference and will not affect the meaning or interpretation of the Disclosure Statement.

 

The Plan represents a compromise and settlement (the "Plan Settlement") of various significant claims against Charys Holding and its Affiliates that benefits all of its creditors. The Plan Settlement seeks to preserve value of the Affiliated Plan Proponents for Charys Holding's
creditors while recognizing and balancing the fact that the 8.75% Senior Convertible Notes have direct guarantee claims against these Affiliates (and others) that would significantly reduce - if not completely eliminate - any value for the benefit of other Charys Holding's creditors. In addition, the Plan Settlement addresses other significant claims, including those of the holders of the Mirror Notes, Lori Mitchell, Matthew Mitchell, Carrol Castille and the Cotton Sellers (defined below). Attempts to settle
certain other claims have proven unsuccessful, and the Debtors will address those claims, to the extent necessary, in due course.

 

As noted above, absent a plan to which the holders of the 8.75% Senior Convertible Notes have consented, such holders would be entitled to enforce remedies directly against the Affiliated Plan Proponents and receive almost all - if not all - of the value of the Affiliated Plan Proponents. Assuming, for argument's sake, that the intercompany
claims reflected on Charys Holding's books and records against the Affiliated Plan Proponents are respected when the holders exercise their remedies, Charys Holding's pro-rata share of equity of the Affiliated Plan Proponents (assuming such equity is contributed to a holding company as is the case under the Plan) is slightly less than 3%. Further, absent the Plan Settlement, the Cotton Sellers, Lori Mitchell, Matthew Mitchell, and Carrol Castille would have claims against Charys Holding and Cotton Telecom, Inc.
arising out of the Seller Notes issued in connection with their respective sale transactions. In order to preserve as much value as possible for creditors, the parties propose the settlements embodied in the Plan, which result in, among other things, the Cotton Sellers, Lori Mitchell, Matthew Mitchell, and Carrol Castille waiving their claims against Charys Holding and Cotton Telecom, Inc. and entering into new employment arrangements to continue operating their respective companies, and the Charys Liquidating
Trust receiving for the benefit of Charys Holding's creditors 6% (i.e., more than double than it would be entitled to based upon Charys Holding's outstanding intercompany claims) of the equity of New Holdco (whose assets mainly consist of equity in the Affiliated Plan Proponents).





  



  







  





This solicitation is being conducted at this time in order to obtain sufficient votes to enable the Plan to be confirmed by the Bankruptcy Court.

 

The Plan sets forth how Claims against and Equity Interests in the Debtors will be treated upon the Debtors' emergence from chapter 11 if the Plan is confirmed by the Bankruptcy Court and is thereafter consummated. This Disclosure Statement describes certain aspects of the Plan, Charys' business
operations, significant events leading to the chapter 11 cases and related matters. FOR A COMPLETE UNDERSTANDING OF THE PLAN AND DISTRIBUTIONS TO BE MADE THEREUNDER, YOU SHOULD READ THIS DISCLOSURE STATEMENT, THE PLAN, AND ALL OF THEIR RELATED EXHIBITS AND SCHEDULES IN THEIR ENTIRETY.

 

Annexed as Exhibits to this Disclosure Statement are copies of the following documents:

 


	
  
	
•
	
The Plan (Exhibit A);




 



	
  
	
•
	
Order of the Bankruptcy Court, dated _______ [__], 2008 (the "Disclosure Statement Order"), approving, among other things, this Disclosure Statement and establishing certain procedures with respect to the solicitation and tabulation of votes to accept or reject the Plan (attached hereto without exhibits) (Exhibit B);




 



	
  
	
•
	
Charys Holding's Annual Report on Form 10-KSB for the fiscal year ended April 30, 2007 (Exhibit C);




 


	
  
	
•
	
The Debtors' Projected Financial Information (Exhibit D); and




 


	
  
	
•
	
The Debtors' Liquidation Analysis (Exhibit E).




 

THE DEBTORS BELIEVE THAT THE PLAN COMPLIES WITH ALL PROVISIONS OF THE BANKRUPTCY CODE AND WILL ENABLE THEM TO RESTRUCTURE THEIR DEBT SUCCESSFULLY AND ACCOMPLISH THE OBJECTTIVES OF CHAPTER 11 AND THAT ACCEPTANCE OF THE PLAN IS IN THE BEST INTERESTS OF THE DEBTORS, THE AFFILIATED PLAN PROPONENTS, THE DEBTORS' ESTATES, CREDITORS
AND EQUITY INTEREST HOLDERS.

 

A ballot for the acceptance or rejection of the Plan ("Ballot") is enclosed with the Disclosure Statement mailed to the holders of Claims that the Debtors believe may be entitled to vote to accept or reject the Plan.

 

On ______ [__], 2008, after notice and a hearing, the Bankruptcy Court signed the Disclosure Statement Order, approving this Disclosure Statement as containing adequate information of a kind and in sufficient detail to enable a hypothetical investor of the relevant classes to make an informed judgment whether to accept or reject the Plan.
APPROVAL OF THIS DISCLOSURE STATEMENT DOES NOT, HOWEVER, CONSTITUTE A DETERMINATION BY THE BANKRUPTCY COURT AS TO THE FAIRNESS OR MERITS OF THE PLAN.





  



2







  





The Disclosure Statement Order, a copy of which is annexed hereto as Exhibit B, sets forth in detail, among other things, the deadlines, procedures and instructions for voting to accept or reject the Plan and for filing objections to confirmation of the Plan, the record date for voting purposes and the applicable standards for tabulating
Ballots. In addition, detailed voting instructions accompany each Ballot, Each holder of a Claim entitled to vote on the Plan should read this Disclosure Statement, the Plan, the Disclosure Statement Order and the instructions accompanying the Ballots in their entirety before voting on the Plan. These documents contain important information concerning the classification of Claims and Equity Interests for voting purposes and the tabulation of votes. No solicitation of votes to accept the Plan may be made except
pursuant to section 1125 of the Bankruptcy Code.

 


	
A.
	
HOLDERS OF CLAIMS ENTITLED TO VOTE




 

Pursuant to the provisions of the Bankruptcy Code, only holders of allowed claims or equity interests in classes of claims or equity interests that are impaired and that are not deemed to have rejected a proposed plan are entitled to vote to accept or reject a proposed plan. Classes of claims or equity interests in which the holders of claims
or equity interests are unimpaired under a chapter 11 plan are deemed to have accepted the plan and are not entitled to vote to accept or reject the plan and classes of claims or equity interests that will receive no distribution under a plan are deemed to have rejected the plan and are not entitled to vote thereon. For a detailed description of the treatment of Claims and Equity Interests under the Plan, see Section VLB of this Disclosure Statement.

 

Charys Holding Claims in Class 5 (Cotton Seller Note Claims), Class 6 (CTSI/MSAI Seller Note Claims and Mirror Note Claims), Class 7 (8.75% Senior Convertible Note Claims), Class 8 (General Unsecured Claims Against Charys Holding); as well as C&B Claims in Class 3 (Other Secured Claims Against C&B), and Class 4A (General Unsecured
Claims Against C&B), are unpaired and, to the extent Claims in such Classes are Allowed, the holders of such Claims will receive distributions under the Plan. As a result, holders of Claims in those Classes are entitled to vote to accept or reject the Plan. Charys Holding Claims in Class 1 (Other Priority Claims Against Charys Holding), Class 2 (Secured Tax Claims Against Charys Holding), Class 3 (Secured Working Capital Facility Claims Against Charys Holding), and Class 4 (Other Secured Claims Against Charys
Holding), as well as C&B Claims in Class 1 (Other Priority Claims Against C&B) and Class 2 (Secured Tax Claims Against C&B), are unimpaired. As a result, holders of Claims in those Classes are conclusively presumed to have accepted the Plan and are not entitled to vote to accept or reject the Plan. Charys Holding Claims in Class 9 (Subordinated Debt Claims), Class 10 (Charys Holding Securities Claims), Class 11 (Charys Holding Equity Interests), as well as C&B Claims in Class 4B (C&B 8.75%
Senior Convertible Note Claims), C&B Claims in Class 5 (C&B Securities Claims) and Class 6 (C&B Equity Interests) will receive no distribution pursuant to the Plan and, therefore, are conclusively presumed to have rejected the Plan and are not entitled to vote to accept or reject the Plan.

 

The Bankruptcy Code defines "acceptance" of a plan by a class of claims as acceptance by creditors in that class that hold at least two-thirds in dollar amount and more than one-half in number of the claims that cast ballots for acceptance or rejection of the plan. For a more detailed description of the requirements for confirmation of the
Plan, see Section IX of this Disclosure Statement.





  



3







  





If a Class of Claims entitled to vote on the Plan rejects the Plan, the Debtors reserve the right to amend the Plan or request confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy Code or both. Section 1129(b) of the Bankruptcy Code permits the confirmation of a plan of reorganization notwithstanding the rejection of a plan
by one or more impaired classes of claims or equity interests. Under that section, a plan may be confirmed by a bankruptcy court if it does not "discriminate unfairly" and is "fair and equitable" with respect to each rejecting class. For a more detailed description of the requirements for confirmation of a nonconsensual plan, see Section 1X.B.2 of this Disclosure Statement.

 

Holders of Charys Holding Subordinated Debt Claims (Charys Holding Class 9), Charys Holding Securities Claims (Charys Holding Class 10), Charys Holding Equity Interests (Charys Holding Class 11), C&B 8.75% Senior Convertible Note Claims (C&B Class 4B), C&B Securities Litigation Claims (C&B Class 5) and C&B Equity Interest
(C&B Class 6) will not receive any distribution under the Plan and are therefore deemed to have rejected the Plan. With respect to the Classes of Claims and Equity Interests that are deemed to have rejected the Plan, i.e., Charys Holding Class 9, Charys Holding Class 11, Charys Holding Class 11, C&B Class 4B, C&B Class 5 and C&B Class 6, the Debtors intend to request confirmation of the Plan pursuant to section 1129(b) of the Bankruptcy
Code.

 

The Plan Proponents are commencing this solicitation after extensive negotiations with the Creditors' Committee.

 

THE PLAN PROPONENTS AND THE CREDITORS' COMMITTEE RECOMMEND THAT HOLDERS OF CHARYS HOLDING CLAIMS IN 5, 6, 7, AND 8, AND HOLDERS OF C&B CLAIMS IN CLASSES 3 AND 4A VOTE TO ACCEPT THE PLAN.

 

The Debtors' legal advisors are Weil, Gotshal & Manges LLP and Richards, Layton & Finger, P.A., and their financial advisor is AlixPartners, LLP. They can be contacted at:

 


	
Weil, Gotshal & Manges LLP
	
AlixPartners, LLP

	
767 Fifth Avenue
	
9 West 57th Street, Suite 3420

	
New York, New York 10153
	
New York, New York 10019

	
Phone: (212)310-8000
	
Phone: (212)490-2500

	
Attn:    Stephen Karotkin, Esq.
	
Attn:   Alan D. Holtz

	  	  
	
Richards, Layton & Finger, P,A.
	  
	
One Rodney Square
	  
	
920 North King Street
	  
	
Wilmington, DE 19801
	  
	
Phone: (302)651-7700
	  
	
Attn:   Mark D. Collins, Esq.
	  
	
Paul N. Heath, Esq.
	  








	
B.
	
VOTING PROCEDURES




 

If you are entitled to vote to accept or reject the Plan, a Ballot is enclosed for the purpose of voting on the Plan. If you hold Claims in more than one Class and you are entitled to vote Claims in more than one Class, you will receive separate Ballots, which must be used for each separate Class
of Claims. Ballots and master ballots ("Master Ballots") should be returned to:





  



4







  





In re Charys Holding Company, Inc. and 

Crochet & Borel Services, Inc., Ballot Processing 

c/o Kurtzman Carson Consultants, LLC 

1180 Avenue of the Americas, Suite 1400 

New York, New York 10036

 

If the return envelope provided with your Ballot was addressed to your bank or brokerage firm, please allow sufficient time for that firm to process your vote on a Master Ballot before the Voting Deadline (4:00
p.m., prevailing Eastern Time,[ ], 2008).

 

Do not return any other documents with your Ballot.

 

TO BE COUNTED, YOUR EXECUTED BALLOT INDICATING ACCEPTANCE OR REJECTION OF THE PLAN
MUST BE RECEIVED BY NO LATER THAN 4:00 P.M. (PREVAILING EASTERN TIME) ON [_____], 2008. ANY EXECUTED BALLOT RECEIVED THAT DOES NOT INDICATE EITHER AN ACCEPTANCE OR A REJECTION OF THE PLAN
SHALL NOT BE COUNTED.

 

Any Claim in an impaired Class as to which an objection or request for estimation is pending or which is listed on the Schedules as unliquidated, disputed or contingent is not entitled to vote unless the holder of such Claim has obtained an order of the Bankruptcy Court temporarily allowing such Claim for the purpose of voting on the Plan.

 

Pursuant to the Disclosure Statement Order, the Bankruptcy Court set [_____], 2008 as the record date for holders of Claims entitled to vote on the Plan.  Accordingly, only holders of record as of such date that otherwise are entitled to vote under the Plan will receive a Ballot and may vote on the Plan.

 

If you are a holder of a Claim entitled to vote on the Plan and you did not receive a Ballot, received a damaged Ballot or lost your Ballot or if you have any questions concerning the Disclosure Statement, the Plan or the procedures for voting on the Plan, please call Kurtzman Carson Consultants, LLC at (866) 381-9100.

 


	
C.
	
CONFIRMATION HEARING




 

Pursuant to section 1128 of the Bankruptcy Code, the Confirmation Hearing will be held on [___], 2008 at [___] a.m. (prevailing Eastern Time) before the Honorable Brendan L. Shannon, Courtroom #1, United States Bankruptcy Court for the District of Delaware, 824 Market: Street, Wilmington, Delaware 19801. The Bankruptcy Court has directed
that objections, if any, to confirmation of the Plan must be served and filed so that they are received on or before [__], 2008 at 4:00 p.m. (prevailing Eastern Time) in the maimer described in Section IX.A of this Disclosure Statement. The Confirmation Hearing may be adjourned from time to time without further notice except for the announcement of the adjournment date made at the Confirmation Hearing or at any subsequent adjourned Confirmation Hearing.





  



5







  





II.

 

OVERVIEW OF THE PLAN

 

The following table briefly summarizes the classification and treatment of Administrative Expense Claims, Claims and Equity Interests under the Plan. For a more detailed description of the classification and treatment for all Classes, please refer to the discussion in Section VLB of
the Disclosure Statement and to the Plan itself:1

 


	
Class
	 	
Type of Claim or Equity Interest
	 	
Treatment
	 	
Approximate Percentage Recovery

	  	 	
Administrative Expense Claims
	 	
Each Administrative Expense Claim will be paid in full, in Cash, by the applicable Liquidating Trustee on the later of the Effective Date, when such Claim becomes Allowed, or when such Claim becomes payable under any agreement relating thereto. Claims incurred in the ordinary course of business will be paid when due in the ordinary course
of business.
	 	
100%

	  	 	
Professional Compensation and Reimbursement Claims
	 	
Each Professional Compensation and Reimbursement Claim will be paid in full by the applicable Liquidating Trustee, in Cash, in accordance with the order allowing any such Claim,
	 	
100%

	  	 	
Indenture Trustee Fees
	 	
The Indenture Trustee Fees will be paid in full, in Cash, by New Holdco on the Effective Date. To the extent that the Indenture Trustee provides services related to distributions pursuant to the Plan, payment for such services will be made on terms agreed to by the Indenture Trustee and the Charys Trustee.
	 	
100%

	  	 	
Priority Tax Claims
	 	
Priority Tax Claims will either be (i) paid in full in Cash by the applicable Liquidating Trust, on the Effective Date or
	 	
Not applicable








____________

1   This table is only a summary of the classification, impairment and entitlement to vote of Administrative Expense Claims, Claims and Interests under the Plan. Reference should be made to the entire Disclosure Statement and the Plan and all exhibits
thereto for a complete description of the classification and treatment of Claims and Interests. Accordingly, this summary is qualified in its entirety by reference to the entire Disclosure Statement and the Plan and all exhibits thereto.





  



6







  






	  	 	
(Approximately $0)2
	 	
(ii) paid in full in Cash by the applicable Liquidating Trust, over a period not exceeding five years from and after the Commencement Date, in equal annual Cash payments with interest at the applicable rate under non-bankruptcy law.
	 	  
	
Charys Holding Class 1
	 	
Other Priority Claims Against Charys Holding (Approximately
$33,000)
	 	
Unimpaired. Other Priority Claims Against Charys Holding will be paid in full, in Cash, by the Charys Liquidating Trust on the later of the Effective Date, the date such Claim becomes an Allowed Other Priority Claim, or the date for payment provided by any agreement or understanding between Charys Holding and the holder of such Claim.
	 	
100%

	
Charys Holding Class 2
	 	
Secured Tax Claims Against Charys Holding (Approximately
$0)
	 	
Unimpaired. Secured Tax Claims Against Charys Holding will either (i) be paid in full, in Cash, on the later of the Effective Date or the date such Claim becomes Allowed, (ii) receive equal annual Cash payments commencing on the Effective Dale in an aggregate amount equal to such Allowed Secured Tax Claim, or (iii) receive deferred Cash
payments upon such other terms determined by the Bankruptcy Court to provide the holder of such Allowed Secured Tax Claim having a value, as of the Effective Date, equal to such Allowed Secured Tax Claim. All such payments will be made by the Charys Liquidating Trust,
	 	
Not applicable








____________

2   The claim amounts set forth herein are the Debtors' estimates based on the Debtors' books and records. Actual amounts will depend on final reconciliation and resolution of all Administrative Expense Claims and Claims, and the negotiation of cure
amounts, if any. Accordingly, the actual amounts may vary from the amounts set forth herein.






  



7







  




 


	
Charys Holding Class 3
	 	
Secured Working Capital Facility 

Claims Against Charys Holding (Approximately $0)3
	 	
Unimpaired, Each Secured Working Capital Facility Claim Against Charys Holding will either (i) be paid in full, in Cash; (ii) receive the proceeds from the sale of the Collateral securing the Claim to the extent of the holder's secured interest in the Collateral; (iii) receive the Collateral securing such Claim; or (iv) receive such other
distribution as necessary to satisfy section 1124 of the Bankruptcy Code. All such payments will be made by the Charys Liquidating Trust.
	 	
Not applicable

	
Charys Holding Class 4
	 	
Other Secured Debt Claims Against Charys Holding (Approximately
$0)4
	 	
Unimpaired. Each Other Secured Debt Claim Against Charys Holding will either (i) be paid in full, in Cash; (ii) receive the proceeds from the sale of the Collateral securing the Claim to the extent of the holder's secured interest in the
Collateral; (iii) receive the Collateral securing such Claim; or (iv) receive such other distribution as necessary to satisfy section 1124 of the Bankruptcy Code. All such payments will be made by the Charys Liquidating Trust.
	 	
100%

	
Charys Holding Class 5
	 	
Cotton Seller Note Claims (Approximately $5.4 million)
	 	
Impaired. Each holder a Cotton Seller Note Claim will receive the treatment provided for in the Cotton Settlement Agreement.
	 	
Not applicable








____________

3   Charys Holding has guaranteed two working capital facility claims of two non-debtor subsidiaries. Charys Holding estimates that in view of inter alia, the rights of prior lienholders, there
is no remaining collateral value securing such claims.





4   This does not include the Imperium Claims described below, which are being paid pursuant to a settlement agreement approved by the Bankruptcy Court.





  



8







  






	
Charys Holding Class 6
	 	
CTSI/MSAI Seller Note Claims (approximately $19.5 million) and Mirror Note Claims (approximately $8 million)
	 	
Impaired. Each holder of a CTSI/MSAI Seller Note Claim and Mirror Note Claim will receive the treatment provided for in the CTSI/MSAI Settlement Agreement which shall include receipt of its Class 6/7 Pro Rata Share of the New Secured Notes.
	 	
Not applicable

	
Chary Holding Class 7
	 	
8.75% Senior Convertible Note Claims (Approximately $210 million)
	 	
Impaired. Each holder of an 8.75% Senior Convertible Note Claim will receive, in accordance with the Restructuring Transactions, (i) its Class 6/7 Pro Rata Share of the New Secured Notes, (ii) its Class 7 Pro Rata Share of 94% of
the New Equity Interests and (iii) its Class B Charys Beneficial Interest in the Charys Liquidating Trust.
	 	
32.5%

	
Charys Holding Class 8
	 	
General Unsecured Claims Against Charys Holding (Approximately $44.2 million) (exclusive of intercompany claims)
	 	
Impaired. Each holder of a General Unsecured Claim Against Charys Holding will receive its Class B Charys Beneficial Interest in the Charys Liquidating Trust.
	 	
0% - 15%

	
Charys Holding Class 9
	 	
Subordinated Debt Claims (Approximately $14 million)
	 	
Impaired. Holders of Subordinated Debt Claims Against Charys Holding will not receive any distribution.
	 	
0%

	
Charys Holding Class 10
	 	
Securities Claims Against Charys Holding (Approximately $0)
	 	
Impaired. Holders of Securities Claims Against Charys Holding will not receive any distribution.
	 	
Not applicable








  



9







  






	
Chary Holding Class 11
	 	
Equity Interests in Charys Holding
	 	
Impaired. Equity Interests in Charys Holding will not receive any distribution.
	 	
0%

	
C&B Class 1
	 	
Other Priority Claims Against C&B (Approximately $0)
	 	
Unimpaired. On the later of the Effective Date and the date such Claim becomes Allowed, each Other Priority Claim Against C&B will be paid in full in Cash by the C&B Liquidating Trust.
	 	
Not applicable

	
C&B Class 2
	 	
Secured Tax Claims Against C&B (Approximately $0)
	 	
Unimpaired. Each Secured Tax Claim Against C&B will either (i) be paid in full, in Cash, on the later of the Effective Date or the date such Claim becomes Allowed (ii) be paid in full, in Cash, over a period not exceeding five years from and after the Commencement Date, in equal annual Cash payments with interest at the applicable
rate under non-bankruptcy law. All such payments will be made by the C&B Liquidating Trust,
	 	
Not applicable

	
C&B Class 3
	 	
Other Secured Clams Against C&B (Approximately $400,000)3
	 	
Impaired. On the later of the Effective Date or the date such Claim becomes Allowed, each Other Secured Debt Claim Against C&B will receive the proceeds from the sale of the Collateral securing the Claim to the extent of the holder's secured interest in the Collateral. All such payments will be made by the C&B Liquidating Trust.
	 	
100%

	
C&B Class 4A
	 	
General Unsecured Claims Against C&B (Approximately $63 million)
	 	
Impaired. On the later of the Effective Dale or the date such Claim becomes Allowed, each General Unsecured Claim Against C&B will receive its Class B Beneficial Interest in the C&B Liquidating Trust.
	 	
0% -15%








____________

5   This does not include the Imperium Claims described below, which are being paid pursuant to a Settlement Agreement approved by the Bankruptcy Court.





  



10







  






	
C&B Class 4B
	 	
C&B 8.75% Senior Convertible Note Claims (Approximately $210 million)
	 	
Impaired. No distribution.
	 	
0%

	
C&B Class 5
	 	
C&B Securities Claims (Approximately $0)
	 	
Impaired. No distribution.
	 	
Not applicable

	
C&B Class 6
	 	
C&B Equity Interests
	 	
Impaired. No distribution.
	 	
0%








For detailed historical and projected financial information and valuation estimates, see Section VII below, entitled "PROJECTIONS AND VALUATION ANALYSIS," and Exhibits C and D to this Disclosure Statement.

 


	
A.
	
OVERVIEW OF CHAPTER 11




 

Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code. Under chapter 11 of the Bankruptcy Code, a debtor is authorized to reorganize its business for the benefit of itself, its creditors and its equity interest holders. In addition to permitting the rehabilitation of a debtor, another goal of chapter 11 is to
promote equality of treatment for similarly situated creditors and similarly situated equity interest holders with respect to the distribution of a debtor's assets.

 

The commencement of a chapter 11 case creates an estate that is comprised of all of the legal and equitable interests of the debtor as of the commencement date. The Bankruptcy Code provides that the debtor may continue to operate its business and remain in possession of its property as a "debtor in possession."

 

The consummation of a plan of reorganization is the principal objective of a chapter 11 reorganization case, A plan of reorganization sets forth the means for satisfying claims against and interests in a debtor. Confirmation of a plan of reorganization by the bankruptcy court binds the debtor, any issuer of securities under the plan, any
person acquiring property under the plan and any creditor or equity interest holder of a debtor. Subject to certain limited exceptions, the order confirming a plan discharges a debtor from any debt that arose prior to the date of confirmation of the plan and substitutes therefor the obligations specified under the confirmed plan.

 

After a plan of reorganization has been filed, certain holders of claims against and interests in a debtor are permitted to vote to accept or reject the plan. Prior to soliciting acceptances of the proposed plan, however, section 1125 of the Bankruptcy Code requires a debtor to prepare a disclosure statement containing adequate information
of a kind, and in sufficient detail, to enable a hypothetical investor of the relevant classes to make an informed judgment regarding the plan.





  



11







  





The Plan Proponents are submitting this Disclosure Statement to holders of Claims against and Equity Interests in the Debtors to satisfy the requirements of section 1125 of the Bankruptcy Code. This Disclosure Statement sets forth specific information regarding the Debtors' and certain of their affiliates' pre-bankruptcy history, the nature
of the chapter 11 cases, and the anticipated organizational and capital structure and operations of the Plan Proponents after confirmation of the Plan and emergence from chapter 11. This Disclosure Statement also describes the Plan, alternatives to the Plan, effects of confirmation of the Plan, certain risk factors associated with the debt and equity securities that will be issued to holders of certain Classes of Claims and Equity Interests and the manner in which distributions will be made under the Plan to
holders of Allowed Claims. In addition, this Disclosure Statement discusses the confirmation process and the voting procedures that holders of Claims and Equity Interests entitled to vote must follow for their votes to be counted.

 

III.

 

GENERAL INFORMATION REGARDING CHARYS

 


	
A.
	
BACKGROUND




 


	
  
	
1.
	
History




 

Charys Holding was initially incorporated in Minnesota in February, 1959 under the name Rogers Hardware and Lumber Company. Through a share exchange on October 12, 2000, it became Spiderboy International, Inc. On February 27, 2004, as a result of a change of control transaction, it changed its business to that of a holding company. On June
25, 2004 it changed its state of incorporation from Minnesota to Delaware. Since June, 2004, Charys Holding has acquired a number of operating companies in targeted industries.

 

In 2005 and 2006, Charys Holding acquired a number of businesses:

 


	
  
	
■
	
The CTSI Transaction. On June 20, 2006 and amended August 15, October 27 and December 14, Charys and Ayin Holding Company, Inc. ("Ayin"), a wholly- owned subsidiary of Charys, entered into a stock purchase agreement with CTSI and Lori Mitchell, CTSI's sole shareholder, whereby Ayin agreed to purchase all of the issued and outstanding
capital stock of CTSI for the aggregate purchase price (including contingent amounts) of approximately $76 million, consisting of notes, cash and Charys Holding stock. CTSI is a cell tower construction company, providing full service, in-house tower construction, installation and maintenance services to the wireless industry in the gulf coast region.




 


	
  
	

■

	
MSAI Transaction. On June 20, 2006 and amended August 15, October 27 and December 14, Charys Holding and Ayin entered into a stock purchase agreement with MSAI and Matthew Mitchell, MSAI's sole shareholder, whereby Ayin agreed to purchase all of the issued and outstanding capital stock of MSAI for
the aggregate purchase price (including contingent amounts) of approximately $29 million, consisting of notes, cash and Charys Holding stock. MSAI is a site acquisition, zoning, permitting, and project management services provider to the wireless industry in the gulf coast region.








  



12







  






	
  
	

■

	
C&B Acquisition. On May 1, 2006, Charys Holding acquired all outstanding capital stock of C&B from Troy Crochet, pursuant to a stock purchase agreement, for approximately $179 million, consisting of Charys Holding stock, cash and notes. C&B provided property owners with restoration and maintenance services in residential, commercial, industrial,
marine and institutional markets during times of distress. C&B is no longer an operating business.




 


	
  
	

■

	
The Cotton Companies Acquisition. On September 1, 2006 and amended October 6, October 19, October 31, December 8 and February 23, 2007, Charys Holding entered into a stock and limited partnership purchase agreement with certain sellers to purchase the Cotton Companies (as hereinafter defined) for
approximately $80 million, payable in the form of cash, promissory notes and shares of Charys Holding stock, The Cotton Companies have since been merged into a single company, Cotton Commercial USA, Inc., which is a disaster recovery firm specializing in fire and water restoration services ranging from initial project assessment and planning through catastrophe management, reconstruction, restoration and environmental remediation.




 


	
  
	

■

	
Other Acquisitions. On April 24, 2006, Charys Holding acquired LFC for approximately $11 million. LFC provides professional consulting support services to the wireless communications, petroleum exploration, industrial, commercial and residential industries. It primary services include site acquisition
and architecture and engineering services for the wireless industry as well as materials testing for the commercial and residential sectors. On November 1, 2005, Charys Holding acquired all of the outstanding common stock of Viasys Services, Inc. ("Viasys") for approximately $20.6 million. Viasys designs, installs and maintains wired and wireless communication networks and infrastructure, installs intelligent transportation systems, provides industrial
maintenance services, and provides underground utility construction services to government, telecommunications and industrial customers. On November 1, 2005, Charys Holding acquired all of the outstanding common stock of Method IQ, Inc. ("MIQ") for approximately $ 10 million. MIQ provides technical support, hardware/software sales and professional services to telecommunications companies. Substantially all of the assets of Method IQ were sold to
Phoenix Transformational Technologies, LLC on January 17, 2008 and it is no longer an operating business. On March 4, 2005, Charys acquired Aeon Technologies Group, Inc. ("ATG") for an aggregate value of common stock of $3.1 million. ATG supplies design, deployment and maintenance services to the telecommunications industry. ATG was sold October 31, 2007 and is no longer an operating business.




 

Currently, Charys Holdings' material subsidiaries are organized in two primary business lines: (i) remediation and reconstruction (the "Remediation Business"), and (ii) telecommunications infrastructure (the "Telecommunications
Business"). Charys' business operations are nationwide, and Charys employs approximately 500 people. Charys' customers include a number of major United States corporations, including, AT&T, Verizon, Home Depot, Marriott, and Wal-Mart, and Charys is also a supplier to the United States government,





  



13







  






	
  
	
2.
	
Remediation & Reconstruction Operations




 

The Remediation Business includes several entities, including C&B/Cotton Holdings, Inc., Cotton Commercial USA, Inc. and C&B. Only C&B is a debtor in these chapter 11 cases, and, as stated, C&B no longer is an operating business. C&B/Cotton Holdings, Inc. is a first tier subsidiary of Charys Holding and is the holding
company of Cotton Commercial USA, Inc. d/b/a Cotton USA, which is the operating entity.

 

The Remediation Business provides emergency planning and coordination, response to catastrophic losses, reconstruction and restoration and environmental remediation. The remediation and reconstruction services cover the restoration and maintenance of commercial, industrial, marine, residential and institutional properties that have suffered
catastrophic or other casualty loss as a result of, among other things, fires, earthquakes or hurricanes.

 

The sendees provided by the Remediation Business include:

 


	
  
	
■
	
Emergency planning and coordination services designed to minimize the human and asset risk in unexpected catastrophic incidents. Services include developing responses for emergencies ranging from minor calamities to major disasters.




 


	
  
	
■
	
Fire restorative services which remove hazardous contaminants, restore structures and equipment to full productivity, assess and implement effective and timely reconstruction procedures, and decontaminate and restore facilities and equipment.




 


	
  
	
■
	
Water restoration services which include rapid response to water damage and extraction of water in order to minimize losses and subsequent reconstruction.




 


	
  
	
■
	
Demolition and reconstruction services related to commercial and residential properties damaged by catastrophic events.




 


	
  
	
■
	
Additional services which include a range of professional catastrophic emergency services. Charys also assists clients in complying with the financial procedures required for acceptance of their claims by federal government agencies and insurance providers.




 


	
  
	
3
	
Telecommunications Infrastructure




 

The Telecommunications Business also encompasses several subsidiaries, including Cotton Telecom, Inc. (f/k/a Ayin Holding Company, Inc.), the parent of Ayin Tower Management Services, Inc.; Aeon Technologies Group, Inc. (f/k/a CCI Telecom, Inc.), the parent of Aeon Technologies, Inc.; Berkshire Wireless, Inc.; CCI Integrated Solutions, Inc.;
CTSI; MSAI; LFC; Digital Communication Services, Inc.; the Viasys Companies; VSI Real Estate Holdings, Inc.; and Method IQ, Inc.

 





______________

6   The following companies currently have no ongoing operations: Ayin Tower Management Services, Inc., Aeon Technologies Group, Inc. (f/k/a CCI Telecom, Inc.); Berkshire Wireless, Inc., CCI Integrated Solutions, Inc.; Digital Communication Services,
Inc.; and Method IQ, Inc. VSI Real Estate Holdings, Inc. never had operations.





  



14







  





The Telecommunications Business provides an array of telecommunications infrastructure services to large service providers and other business enterprises. The Telecommunications Business provides engineering services, program management, construction, installation and maintenance services, premise wiring services, tower and radio infrastructure
services, and technology implementation and integration services. Additionally, the Telecommunications Business provides rapid deployment and restoration services in support of the Remediation Business.

 

These services include:

 


	
  
	
■
	
Engineering and project management services, including outside plant, civil and environmental engineering and design of towers, and aerial, underground fiber optic, and copper cable systems. Project management sendees for nationwide wireless installations include site survey and acquisition, site zoning and permitting, site environmental engineering and tower engineering and evaluation.




 


	
  
	
■
	
Construction, installation and maintenance sendees which include placing and splicing cable, excavation and placement of conduit and cable systems, placing of structures such as poles, cabinets and closures and installation and maintenance of transmission and central office equipment. Tower and infrastructure services include site acquisition, engineering, construction, build to suit, electronics installation and maintenance.




 


	
  
	
4.
	
Employees and Labor Matters




 

Charys Holding is the only debtor in these chapter 11 cases that currently has active employees. As of the Commencement Date, Charys Holding had approximately 11 full- time employees, of which ten are salaried employees and one is an hourly employee. Charys Holding also utilizes the services of temporary employees and one independent contractor.
None of Charys Holding's employees are represented by labor unions. As stated above, the Charys enterprise employs approximately 500 people.

 


	
  
	
5.
	
Properties and Assets




 

Charys Holding's main asset is its interest in its subsidiaries. Charys Holding does not own any real property, but it does lease office space in Atlanta, Georgia, C&B has no ongoing business operations. Its principal asset consists of accounts receivable arising from services rendered prior to the Commencement Date.





  



15







  






	
B.
	
CORPORATE STRUCTURE




 

The following constitutes a brief description of Charys Holding's principal subsidiaries:

 

Cotton Commercial USA, Inc. (formerly Cotton Holdings 1, Inc., Cotton Commercial USA, L.P., and Cotton Restoration of Central Texas, LP (collectively, the "Cotton Companies")) is a disaster recovery company with offices in Texas, Georgia, North Carolina, the District of Columbia,
Illinois, Arizona, Florida and Colorado.

 

C&B formerly operated out of offices in Texas and Louisiana and provided property owners with restoration and maintenance services in residential, commercial, industrial, marine, and institutional markets, specializing in restoration and recovery operations following large catastrophes. After Charys Holding acquired 40% of Cotton it created
C&B/Cotton Holdings to house the operations of both Cotton and C&B. After Charys Holding completed the acquisition of Cotton by acquiring the remaining 60% February 14, 2007, Charys Holding began the process of merging the operations of Cotton and C&B, into one disaster and remediation unit with headquarters located at Cotton's offices in Katy, Texas.

 


	
  
	
Ÿ
	
In July 2007, substantially all of the employees of C&B were transferred to Cotton.




 


	
  
	
Ÿ
	
Leases of certain rolling stock assets of C&B were assigned to and assumed by Cotton; and




 


	
  
	
Ÿ
	
Title to certain ordinary course of business commercial equipment such as dryers and generators was not transferred to Cotton but was utilized in the operation of the combined business unit.




 


	
  
	
Ÿ
	
Receivables generated by C&B remained on the books of C&B and C&B maintained responsibility for the collection thereof.




 

Cotton Telecom, Inc. (formerly Ayin Holding Company, Inc.) acts as a holding company for the Charys wireless communications service companies, including CTSI, MSAI, LFC and Ayin Tower Management Services, Inc., which focus on acquisition, development, and construction of telecommunications infrastructure. As stated above, Ayin Tower Management
Services, Inc. has no ongoing operations.

 

Viasys Network Services, Inc. and Viasys Services, Inc. (collectively, the "Viasys Companies") are headquartered in Florida with offices in Florida and South Carolina, and provide a variety of services to the transportation, utility, telecommunication and manufacturing industries,

 

MIQ sold substantially all of its assets on January 17, 2008 and has no ongoing operations.

 


	
C.
	
SIGNIFICANT PREPETITION INDEBTEDNESS




 


	
  
	
1.
	
8.75% Senior Convertible Notes Due 2012




 

In February 2007, Charys Holding issued $201,250,000 in original principal amount of 8.75% Senior Convertible Notes due 2012 (the "8.75 % Senior Convertible Notes") pursuant to that certain Indenture, dated as of February
16, 2007, by and between The Bank of New York Mellon Trust. Company, N.A. (f/k/a The Bank of New York Trust Company, N.A.), as trustee, and Charys Holding (the "Indenture"). Proceeds of the 8.75 % Senior Convertible Notes were used toward certain of the payments due in respect of the Seller Notes (defined below), to refinance and/or pay off other indebtedness, complete acquisitions described above and for working capital and other general corporate
puiposes. As of the Commencement Date, the aggregate amount due and outstanding with respect to the Notes was approximately $210,000,000. The obligations under the 8.75 % Senior Convertible Notes are guaranteed by each of the material subsidiaries of Charys Holding, including C&B and each of the Affiliated Plan Proponents.





  



16







  






	
  
	
2.
	
Mirror Notes




 

In connection with the acquisitions of MSAI and CTSI, as described above, Charys Holding issued 8.75% Senior Convertible Notes due 2012 to Lori Mitchell, Matthew Mitchell, and Carrol Castille (the "Mirror Notes"). The Mirror Notes contained terms similar to those contained in
the 8.75% Senior Secured Notes and in the Indenture. The notes consist of: (a) a Mirror Note payable to Matthew Mitchell in the original principal amount of $2,590,476; (b) a Mirror Note payable to Lori Mitchell in the original principal amount of $2,569,524; and (c) a Mirror Note payable to Carrol Castille in the original principal amount of $2,840,000.

 


	
  
	
3.
	
Seller Notes




 

Charys Holding is currently obligated on notes (described below) that were issued in connection with the acquisitions in the aggregate amount of approximately $80 million (collectively, the "Seller Notes").

 

In connection with the acquisition of C&B described above, Charys Holding issued a note to Troy Crochet in the amount of $77.9 million (the "C&B Note"). On April 13, 2007, Charys paid $31.1 million of amounts outstanding on the C&B Note. The remaining balance is
$46.8 million. Mr. Crochet has asserted that the C&B Note is secured by certain assets of the Debtors. The Debtors believe that any security interests claimed by Mr. Crochet are either invalid, unenforceable, and/or otherwise avoidable. The Debtors also believe they have other claims against Mr. Crochet and with respect to the C&B Note. To the extent Mr. Crochet has an Allowed Claim against Charys Holding with respect to the C&B Note, the obligations of Charys Holding in respect of the 8.75% Senior
Convertible Notes are contractually subordinated to such Allowed Claim.

 

In connection with the acquisition of the Cotton Companies described above, Charys Holding has outstanding a secured promissory note to the Cotton Sellers in the amount of $5.2 million (the "Cotton Seller Note").

 

In connection with the acquisitions of MSAI and CTSI, Charys has outstanding notes to Lori Mitchell and Matthew Mitchell totaling $14.2 million and $5.4 million, respectively. The terms of these notes provide that payment of half of each note is conditioned on MSAI and CTSI achieving certain EBITDA targets.

 


	
  
	
4.
	
Other Secured Notes




 

Charys Holding also issued secured notes to Imperium Master Fund, Ltd. ("IMF"), the JED Family Trust and John Michaelson, totaling approximately $8.3 million (the"Imperium Notes"),
which are guaranteed by each of Charys Holding's subsidiaries and are secured by liens on and security interests in substantially all of the assets of Charys Holding and its subsidiaries. As detailed below, Charys Holding has entered into a settlement with IMF and certain of its affiliates (collectively, "Imperium") with respect to the treatment of the Imperium Notes.





  



17







  





5.             Unsecured Notes and Subordinated Notes

 

Charys Holding also has outstanding as of the Commencement Date unsecured notes in the aggregate amount of approximately $16.6 million. Of this amount, approximately $15 million in principal amount are subordinated in right of payment to the 8.75% Senior Convertible Notes.

 

6.             Credit Agreements

 

As of the Commencement Date, Charys Holding was a guarantor of obligations owing under certain credit agreements. The aggregate outstanding balance on such credit agreements was approximately $2.3 million.

 

IV.

 

KEY EVENTS LEADING TO THE

COMMENCEMENT OF THE CHAPTER 11 CASES

 


	
A.
	
DECLINE IN FINANCIAL PERFORMANCE




 

During the year preceding the Commencement Date, Charys faced a number of challenges, which, taken together, had a negative impact on their overall financial performance and ultimately necessitated the commencement of these chapter 11 cases.

 

Charys Holding acquired companies in two business sectors to leverage certain synergies created by these acquisitions. In connection with these acquisitions, Charys Holding incurred significant debt obligations, as described above. Subsequent to the acquisitions, however, revenue and cash flow generation did not attain projected levels, thereby
leaving Charys Holding in a position where it did not have adequate resources to service its debt.

 

Several factors were responsible for these circumstances in the Remediation Business. These factors included the inability to commence work on several anticipated large projects as a result of circumstances beyond Charys' control (such as third party litigation involving the related customers) and a higher degree of price competition in early
2007 to which Charys did not immediately react. More significantly, the regions in which the Remediation Business has its primary operations saw fewer hurricanes and other natural disasters in 2006 and 2007 than anticipated.

 

The Telecommunications Business experienced a major negative impact as a consequence of the December 2006 merger of AT&T and Bell South. In the wake of this merger, the combined entity significantly deferred its capital spending, including for the acquisition of cellular tower sites and construction of cellular towers, which had a significant
negative impact on the revenues of the Telecommunications Business. Additionally, the Telecommunications Business was negatively impacted by the inability to obtain bonding for certain construction contracts due to Charys' financial condition.





  



18







  





As a result of the forgoing circumstances, Charys Holding was unable to make the interest payment due on November 16, 2007, with respect to the 8.75 % Senior Convertible Notes and commenced restructuring negotiations with certain holders of the 8.75 % Senior Convertible Notes and holders of the Seller Notes, as described below.

 

In furtherance of their efforts to improve the financial performance of their business, the Debtors hired AlixPartners, LLP ("AlixPartners") as management advisors in September 2007. AlixPartners continues in the role.

 


	
B.
	
THE RESTRUCTURING NEGOTIATIONS




 

Beginning in the late fall of 2007, Charys Holding began negotiations with: (a) an ad hoc committee (the "Ad Hoc Committee") consisting of certain individual holders of or managers of accounts that hold the 8.75 % Senior Convertible Notes;7 (b)
the holders of the Seller Notes; and (c) Billy V. Ray, Jr., the former Chief Executive Officer of Charys Holding and the controlling stockholder,

 

After protracted, good faith negotiations, Charys Holding and the members of the Ad Hoc Committee reached an agreement on the terms of a restructuring of the Debtors to be effectuated pursuant to a plan of reorganization, which agreement was memorialized in a term sheet and restructuring agreement entered into by the parties.

 

Specifically, prior to the Commencement Date, the Debtors and the Ad Hoc Committee agreed that Charys Holding would propose a plan of reorganization that would contain the following principal elements:

 


	
  
	
•
	
Each holder of a claim under a Seller Note would (a) (i) waive its claim and receive no distribution and (ii) receive a release of all claims arising under chapter 11 of the Bankruptcy Code or (b) receive such other treatment as may be agreed upon.




 


	
  
	
•
	
Each holder of a 8.75% Senior Convertible Note Claim would receive its pro rata share of new secured notes in the principal amount of $40 million and its pro rata share of 93% of the stock of reorganized Charys Holding.




 


	
  
	
•
	
Unsecured trade claims would be paid in full.




 


	
  
	
•
	
Holders of General Unsecured Claims (other than holders of the 8.75% Senior Convertible Notes and the Mirror Notes) would receive either a share in a percentage of the stock of reorganized Charys Holding or payment in full.




 


	
  
	
•
	
Subordinated Debt Claims would not receive any distribution.








__________________

7   Subsequent to the Commencement Date, the Ad Hoc Committee disbanded.





  



19







  






	
  
	
•
	
Existing equity interest in Charys Holding would receive no distributions.




 

At the time of the Commencement Date, the Debtors and the Ad Hoc Committee believed that they had agreements in principal with each of the holders of the Seller Notes, and that such agreements were subject only to definitive documentation. Since that time, however, Mr. Crochet has indicated that he no longer is willing to resolve his Seller
Note obligation in the manner described above.

 

In addition, in conjunction with the foregoing, the Debtors, the Ad Hoc Committee and Billy V. Ray, Jr., entered into an agreement in principle. The conditions on which this agreement in principle were premised have not been satisfied because, among other things, the plan of reorganization on which this agreement in principle was premised
was not achieved. In addition, issues have been raised as to whether Mr. Ray has breached his obligations under the agreement in principle.

 

V.

 

THE CHAPTER 11 CASES

 


	
A.
	
FIRST DAY ORDERS




 

On the Commencement Date, the Debtors filed a series of motions seeking various relief from the Bankruptcy Court designed to minimize any disruption of business operations and to facilitate their reorganization.

 


	
  
	
1.
	
Case Administration Orders.




 

The Bankruptcy Court issued orders: (i) authorizing the joint administration of the chapter 11 cases and (ii) authorizing retention of Kurtzman Carson Consulting LLC as claims and noticing agent for the Debtors.

 

2.             Critical Obligations.

 

The Bankruptcy Court authorized the Debtors to satisfy certain critical prepetition obligations including those relating to wages, compensation, and employee benefits.

 

3.             Business Operations.

 

Among other things, the Bankruptcy Court (i) authorized the Debtors to continue certain workers' compensation and other insurance policies, and (ii) prohibited the Debtors' utilities sendee providers from altering, refusing or discontinuing service and established certain procedures for determining adequate assurance of payment.

 

4.           Financial Operations.

 

The Bankruptcy Court authorized the Debtors to (i) maintain their existing bank accounts and forms and (ii) continue their centralized cash management system.





  



20







  






	
B.
	
CREDITORS' COMMITTEE




 

On February 27, 2008, the U.S. Trustee, pursuant to its authority under section 1102(a)(1) of the Bankruptcy Code, appointed the Creditors' Committee.

 

The current members of the Creditors' Committee are:

 


	
AQR Capital Management
	  	
Morgan Stanley & Co., Inc.

	
Attn: Todd Pulvino
	  	
Attn: Andrew Brenner

	
2 Greenwich Plaza, 1 st Floor
	  	
1585 Broadway

	
Greenwich, CT 06830
	  	
New York, NY 10036

	  	  	  
	
LVI Environmental Services, Inc.
	  	
Aristeia Capital LLC

	
Attn: Burton T. Fried
	  	
Attn: Robert Lynch

	
877 Post Road East, Suite 4
	  	
136 Madison Avenue, 3rd Floor

	
Westport, CT 06880
	  	
New York, NY 10016

	  	  	  
	
The Bank of New York Mellon Trust
	  	  
	
Company, N.A, as Trustee
	  	  
	
Attn: Gary Bush
	  	  
	
c/o The Bank of New York Mellon
	  	  
	
101 Barclay Street, 8 West
	  	  
	
New York, NY 10286
	  	  







There are also two ex officio members.

 

The Creditors' Committee has the following advisors:

 

Attorneys

 

Milbank, Tweed, Hadley &

McCloy LLP

1 Chase Manhattan Plaza

New York, NY 10005





Morris, Nichols, Arsht &

Tunnell, LLP

1201 North Market Street

P.O.Box 1347

Wilmington, DE 19899-1347





 

Since the appointment of the Creditors' Committee, the Debtors have consulted with the Creditors' Committee concerning the administration of the Debtors' chapter 11 cases. The Debtors have informed the Creditors' Committee with respect to their operations and have sought concurrence of the Creditors' Committee for actions and transactions
outside of the ordinary course of business.





  



21







  





In addition, the Debtors and the Creditors' Committee have negotiated the Plan, which the Creditors' Committee fully supports.

 


	
C.
	
SIGNIFICANT EVENTS DURING CHAPTER 11 CASES




 


	
  
	
1.
	
Execution of Term Sheets With Certain Seller Noteholders.




 

During the chapter 11 cases, the Debtors and the Creditors' Committee continued to negotiate with the holders of the Seller Note Claims in order to memorialize the agreements in principle reached prior to the Commencement Date. As a result, the Debtors entered into term sheets setting forth agreements in principal with (i) Lori Mitchell,
(ii) Matthew Mitchell, (iii) Carrol Castille and (iv) the Cotton Sellers as to the treatment of their claims under a plan of reorganization.3

 

The term sheets with Lori Mitchell, Matthew Mitchell and Carrol Castille provide, in principal part, that:

 



	 	
Ÿ
	
The holders of the Mirror Notes will receive a pro rata share of New Secured Notes together with the holders of the 8.75% Senior Convertible Notes under the Plan.





 



	 	
Ÿ
	
Upon the Effective Date, each of Lori Mitchell, Matthew Mitchell and Carrol Castille will waive his/her Seller Note Claim and receive no distribution under the Plan on account thereof.





 



	 	
Ÿ
	
Lori Mitchell, Matthew Mitchell, and Carrol Castille will receive a release from the Debtors' estates for all claims (including those arising under chapter 5 of the Bankruptcy Code), other than claims arising from fraud, willful misconduct, or gross negligence.





 

In addition to the foregoing such term sheets provide that each of Lori Mitchell, Matthew Mitchell and Carrol Castille will enter into, effective as of the date(s) stated therein, but subject to the occurrence of the Effective Date, new employment, consulting and non-compete agreements with CTSl and MSAI, as applicable, which will supersede
existing agreements, and will contain, among others, the following provisions:

 

Lori Mitchell CTSI Employment Agreement. Term of two years commencing May 1, 2008. Ms. Mitchell will serve as Executive Vice President for Sales and Marketing of CTSI. She will receive customary employee benefits,
the CTSI Incentive Payments (as defined in the term sheet and based on CTSI projected EBITDA), and will participate in the CTSI Employee Bonus Plan, described below. No salary shall be paid.





________________

8   The agreements in principal will be embodied in the Cotton Settlement Agreement and the CTSI/MSAI Settlement Agreement which will be in the Plan Supplement, and
the following description is qualified in its entirety by the actual term of such Agreements.






  



22







  






Lori Mitchell CTSI Consulting Agreement. Term of three years commencing on expiration of CTSI Employment Agreement. Ms. Mitchell shall assist CTSI as reasonably requested for no consideration other than normal health insurance benefits and the CTSI Incentive
Payments earned during the term of the consulting agreement.

 

Carrol Castille CTSI Employment Agreement.
Term of two years commencing May 1, 2008. Mr. Castille will serve as President of CTSI. Mr. Castille will receive an annual salary of $275,000, customary employee benefits, the CTSI Incentive Payments and will participate in the CTSI Employee Bonus Plan. The Agreement also will contain certain "change of control provisions."

 

Carrol Castille CTSI Consulting Agreement. Term of three years commencing on expiration of CTSI Employment Agreement. Mr. Castille shall assist CTSI
as reasonably requested for no consideration other than normal health insurance benefits and the CTSI Incentive Payments earned during the term of the consulting agreement.

 

Matthew Mitchell MSAI Employment Agreement. Term of two years commencing May 1, 2008. Mr. Mitchell shall serve as the President of MSAI. Mr. Mitchell will receive an annual salary of $275,000, customary employee benefits, the MSAI
Incentive Payments (as defined in the term sheet and based upon MSAI projected EBITDA), and will participate in the MSAI Bonus Plan described below.

 

Matthew Mitchell MSAI Consulting Agreement. Term
of three years commencing on expiration of MSAI Employment Agreement. Mr. Mitchell shall assist MSAI as reasonably requested for no consideration other than normal health insurance benefits and the MSAI Incentive Payments earned during the term of the consulting agreement.

 

Lori Mitchell MSAI Employment Agreement. Term of two years commencing May 1, 2008. Ms. Mitchell will serve as Vice-President of MSAI, Ms. Mitchell will receive an annual salary of $275,000 and no other compensation
or benefits.

 

Each of the foregoing agreements will contain certain non-compete and non-solicitation provisions. The CTSI and MSAI Incentive Payments cover fiscal years 2009-2013 and are based on projected EBITDA. Under the Employee Bonus Plans for each of the fiscal years 2009 and 2010, 10% of actual EBITDA for each of CTSI and MSAI shall be available
for an incentive pool for key employees, with Mr. Castille and Ms. Mitchell to share in 85% of such amount in the case of CTSI, and Mr. Mitchell to receive 85% of such amount in the case of MSAI.

 

In addition, the employment agreements will provide that Ms. Mitchell and Mr. Mitchell shall be entitled to receive additional cash compensation up to an aggregate maximum amount of$1,000,000 during fiscal years 2009-2013 based upon projected New Holdco EBITDA; and Mr. Castille shall be entitled to receive additional cash compensation
up to an aggregate maximum amount of $550,000 during fiscal years 2009-2013 based upon projected New Holdco EBITDA. Under the employment agreements, Ms. Mitchell, Mr. Mitchell and Mr. Castille also shall receive on the Effective Date options to acquire 2.367% of the common stock of New Holdco at a price per share equal to approximately the per share value as of the Effective Date based upon the midpoint value of New Holdco as set forth in section VII hereof, with the options vesting 20% a year on the first through
fifth anniversaries of the Effective Date.





  



23







  





The term sheet with the Cotton Sellers provides, in principal part, that:

 


	
  
	
Ÿ
	
Upon the Effective Date, each Cotton Seller will waive in writing its Cotton Seller Note Claim and receive no distribution of property or assets under the Plan on account such claims.




 


	
  
	
Ÿ
	
The Cotton Sellers will receive a release from the Debtors' estates for all claims (including those arising under chapter 5 of the Bankruptcy Code), other than claims arising from fraud, willful misconduct, or gross negligence.




 


	
  
	
Ÿ
	
One member of Cotton's senior management (designated by Cotton's CEO) will be a member of New Holdco's board of directors.




 

In addition to the foregoing, such term sheet (as amended) provides that certain of the Cotton Sellers will enter into, effective as of the Effective Date, new employment agreements with Cotton, which will supersede any existing agreements, and will contain, among others, the following provisions:

 


	
  
	
Ÿ
	
The term of employment shall continue until April 30, 2011, subject to extension on a year to year basis with the consent of both the employee and Cotton;




 


	
  
	
Ÿ
	
Base salaries for the employees shall range from $150,000 to $240,000, per year;




 


	
  
	
Ÿ
	
Participation in a Management Incentive Plan based on the amount by which Cotton operating cash flow exceeds projections for [Cotton] for the fiscal years 2009-2011.




 


	
  
	
2.
	
Negotiations With Troy Crochet




 

Negotiations with Troy Crochet regarding the C&B Note and his treatment under the Plan were not successful and no settlement has been reached with Mr. Crochet.

 


	
  
	
3.
	
Schedules and Bar Date




 

On April 14, 2008, the Debtors filed their schedules of assets and liabilities, schedules of current income and expenditures, schedules of executory contracts and unexpired leases, and statements of financial affairs. Additionally, on April 14, 2008, the Bankruptcy Court entered an order establishing May 12, 2008 at 5:00 p.m. (prevailing
Pacific Time) as the last date and time (the "Bar Date") for each person or entity to file proofs of Claim based on prepetition Claims against any of the Debtors, and August 12, 2008 at 5:00 p.m. (prevailing Pacific Time) as the last date and time for governmental entities to file proofs of Claim based upon prepetition Claims against any of the Debtors.





  



24







  






	
  
	
4.
	
Extensions of Time




 

On June 17, 2008, the Bankruptcy Court entered an order extending the Debtors' exclusive period to file a proposed chapter 11 plan until July 15, 2008 and extended the Debtors' exclusive period to solicit acceptances and rejections of a plan until September 13, 2008. On July 9, 2008, the Debtors filed a motion seeking a further extension
of the exclusive period to file a chapter 11 plan to August 4, 2008 and exclusive period to solicit acceptances until October 3, 2008. Also on June 17, 2008, the Bankruptcy Court entered orders (i) extending the period in which the Debtors may elect to remove civil actions in which it is a party to the Bankruptcy Court to August 12, 2008 and (ii) extending the period in which the Debtors may assume or reject leases of real property until September 11, 2008.

 


	
  
	
5.
	
Settlement With Imperium




 

By motion dated July 30, 2008, the Debtors requested that the Bankruptcy Court approve a settlement (the "Imperium Settlement") they and certain of their affiliates had reached with Imperium regarding the Debtors' use of lmperium's cash collateral and the satisfaction of secured
obligations owing to Imperium. The proposed Imperium Settlement provides that (i) the Debtors acknowledge that Imperium holds an $8.3 million allowed secured claim; (ii) Charys will release to Imperium approximately $5,4 million of collateral proceeds which had been placed in escrow in connection with the sale of certain cell towers by a non-Debtor affiliate of Charys Holdings (thus, Imperium would have a remaining secured claim of $2.9 million); (iii) the Debtors will pay Imperium (on a current basis) interest
at 12% per annum (beginning retroactively on May 1, 2008); and (iv) Imperium must be paid in full by the earlier of November 15, 2008 and the effective date of a Plan, but may choose to receive new notes in lieu of a cash payment.

 

Under the Imperium Settlement, Imperium consents to the Debtors using lmperium's cash collateral to pay certain expenses, provided that Imperium will receive replacement liens and superpriority claims for any diminution in the value of its cash collateral. The Imperium Settlement also contains certain financial covenants relating to liquidity
and sales which limit the ability of upstreaming moneys to Charys Holding; and the failure to comply with a sales covenant for three consecutive months constitutes an event of default. A hearing on the motion took place on August 18, 2008 thereafter and an order granting the relief requested was entered.

 

On November 14, 2008, the Imperium Settlement was amended to reflect that lmperium's remaining secured claims of $1,664,367.94 (including accrued interest) is to be paid by January 20, 2009, with interest accruing and payable thereon at the rate of 14% per annum.





  



25







  





VI.

 

THE PLAN OF REORGANIZATION

 


	
A.
	
INTRODUCTION




 

THIS SECTION PROVIDES A SUMMARY OF THE PLAN, AND OF THE CLASSIFICATION AND TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE PLAN, WHICH ACCOMPANIES THIS DISCLOSURE STATEMENT, TO THE EXHIBITS ATTACHED THERETO, AND TO THE PLAN SUPPLEMENT.

 

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT INCLUDE SUMMARIES OF THE PROVISIONS CONTAINED IN THE PLAN AND IN DOCUMENTS REFERRED TO THEREIN. THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT DO NOT PURPORT TO BE PRECISE OR COMPLETE STATEMENTS OF ALL THE TERMS AND PROVISIONS OF THE PLAN OR DOCUMENTS REFERRED TO THEREIN, AND REFERENCE
IS MADE TO THE PLAN AND TO SUCH DOCUMENTS FOR THE FULL AND COMPLETE STATEMENTS OF SUCH TERMS AND PROVISIONS.

 

THE PLAN ITSELF AND THE DOCUMENTS REFERRED TO THEREIN CONTROL THE ACTUAL TREATMENT OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS AND UPON THE EFFECTIVE DATE, THE PLAN WILL BE BINDING UPON HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTORS AND OTHER PARTIES IN INTEREST.

 

The Plan is being jointly proposed by the Debtors and the Affiliated Plan Proponents. As such, in addition to the claims and interests of the creditors and equity security holders of the Debtors, the Plan also addresses the claims of the holders of the 8.75% Senior Convertible Notes against Affiliated Plan Proponents which have guaranteed
such claims.

 

The Plan provides for the creation of a new holding company ("New Holdco") which will hold all of the common stock of each of the Affiliated Plan Proponents. Upon consummation of the Plan, the equity interests in New Holdco will be held by the holders of 8.75% Senior Convertible Notes and by the Charys Liquidating Trust. Additionally, New
Holdco will issue new secured notes(the "New Secured Notes") to the holders of the 8.75% Senior Convertible Notes and Mirror Notes. The New Secured Notes will have an aggregate face amount of $20 million, pay interest at a rate of 15% per annum, and mature four years from issuance.

 

Pursuant to the Plan, all assets of Charys Holding (other than the assets to be distributed to holders of Mirror Note Claims), including the equity interests in the Affiliated Plan Proponents received by Charys Holding (which would be exchanged for equity interests in New Holdco), will be transferred to a liquidating trust (the "Charys
Liquidating Trust") for the benefit of the creditors of Charys Holding. Other than the equity interests in New Holdco, these assets consist primarily of potential litigation claims that Charys Holding's estate holds against third parties. In order to fund certain payments required to be made on the Effective Date, as well as to provide certain initial funding for the Charys Trustee, on or about the Effective Date, New Holdco will enter into
the Funding Agreement with the Charys Liquidating Trust. The Charys Liquidating Trust will make payments under the Funding Arrangement to New Holdco from proceeds generated by the Charys Liquidating Trust. The Charys Liquidating Trust will be governed by the Charys Liquidating Trust Agreement and administered by the Charys Trustee. The holders of Subordinated Debt Claims against Charys Holding, Charys Holding Securities Claims, and Charys Holding Equity Interests will receive no distribution from Charys Holding
or the Charys Liquidating Trust on account of their claims or interests, and such claims and interests will be extinguished under the Plan.





  



26







  





All assets of C&B will be transferred to a liquidating trust (the "C&B Liquidating Trust") for the benefit of the creditors of C&B. The holders of 8.75% Senior Convertible Notes are waiving their right to share,
pro rata with holders of General Unsecured Claims against C&B, in the distributions from the C&B Liquidating Trust. The assets of the C&B Liquidating Trust will consist primarily of outstanding accounts receivable of C&B as of the Effective Date. In order to fund certain payments required to be made on the Effective Date, as well as to provide certain initial funding for the C&B Trustee, New Holdco will enter into the Funding Agreement with the C&B Liquidating Trust. The C&B Liquidating
Trust will make payments under the Funding Arrangement to New Holdco from proceeds generated by the C&B Liquidating Trust. The C&B Liquidating Trust will be governed by the C&B Liquidating Trust Agreement and administered by the C&B Trustee. The holders of C&B Securities Claims, C&B Equity Interests and the holders of the 8.75% Senior Convertible Notes will receive no distribution from C&B or the C&B Liquidating Trust on account of their claims or interests, and such claims and
interests will be extinguished under the Plan.

 

The Plan is annexed hereto as Exhibit A and forms a part of this Disclosure Statement. The summary of the Plan set forth below is qualified in its entirety by reference to the provisions of the Plan.

 

Statements as to the rationale underlying the treatment of Claims and Equity Interests under the Plan are not intended to, and shall not, waive, compromise or limit any rights, claims or causes of action in the event the Plan is not confirmed.

 


	
B.
	
CLASSIFICATION AND TREATMENT OF CLAIMS AND EQUITY INTERESTS UNDER THE PLAN OF REORGANIZATION




 

One of the key concepts under the Bankruptcy Code is that only claims and equity interests that are "allowed" may receive distributions under a chapter 11 plan. This term is used throughout the Plan and the descriptions below. In general, an "allowed" claim or "allowed" equity interest simply means that the debtor agrees, or in the event
of a dispute, that the Bankruptcy Court determines, that the claim or equity interest, and the amount thereof, is in fact a valid obligation of or interest in the debtor. Section 502(a) of the Bankruptcy Code provides that a timely filed claim or equity interest is automatically "allowed" unless the debtor or other party in interest objects. However, section 502(b) of the Bankruptcy Code specifies certain claims that may not be "allowed" in bankruptcy even if a proof of claim is filed. These include, but are
not limited to, claims that are unenforceable under the governing agreement between a debtor and the claimant or applicable non-bankruptcy law, claims for unmatured interest, property tax claims in excess of the debtor's equity in the property, claims for services that exceed their reasonable value, real property lease and employment contract rejection damage claims in excess of specified amounts, late-filed claims and contingent claims for contribution and reimbursement. Additionally, Bankruptcy Rule 3003(c)(2)
prohibits the allowance of any claim or equity interest that either is not listed on the debtor's schedules or is listed as disputed, contingent or unliquidated, if the holder has not filed a proof of claim or equity interest before the established deadline.





  



27







  





The Bankruptcy Code requires that, for purposes of treatment and voting, a chapter 11 plan divide the different claims against, and equity interests in, the debtor into separate classes based upon their legal nature. Claims of a substantially similar legal nature are usually classified together, as are equity interests of a substantially
similar legal nature. Because an entity may hold multiple claims and/or equity interests which give rise to different legal rights, the "claims" and "equity interests" themselves, rather than their holders, are classified.

 

Under a chapter 11 plan of reorganization, the separate classes of claims and equity interests must be designated either as "impaired" (affected by the plan) or "unimpaired" (unaffected by the plan), If a class of claims is "impaired," the Bankruptcy Code affords certain rights to the holders of such claims, such as the right to vote on the
plan, and the right to receive, under the chapter 11 plan, no less value than the holder would receive if the debtor were liquidated in a case under chapter 7 of the Bankruptcy Code. Under section 1124 of the Bankruptcy Code, a class of claims or interests is "impaired" unless the plan (i) does not alter the legal, equitable and contractual rights of the holders or (ii) irrespective of the holders' acceleration rights, cures all defaults (other than those arising from the debtor's insolvency, the commencement
of the case or nonperformance of a non-monetary obligation), reinstates the maturity of the claims or interests in the class, compensates the holders for actual damages incurred as a result of their reasonable reliance upon any acceleration rights, and does not otherwise alter their legal, equitable and contractual rights. Typically, this means that the holder of an unimpaired claim will receive on the later of the consummation date or the date on which amounts owing are actually due and payable, payment in full,
in cash, with postpetition interest to the extent appropriate and provided for under the governing agreement (or if there is no agreement, under applicable non-bankruptcy law), and the remainder of the debtor's obligations, if any, will be performed as they come due in accordance with their terms. Thus, other than its right to accelerate the debtor's obligations, the holder of an unimpaired claim will be placed in the position it would have been in had the debtor's case not been commenced.

 

Pursuant to 1126(f) of the Bankruptcy Code, holders of unimpaired claims or interests are "conclusively presumed" to have accepted the plan. Accordingly, their votes are not solicited. Under the Debtors' Plan, the Claims in Charys Holding Class 1 (Other Priority Claims Against Charys Holding), Charys Holding Class 2 (Secured Tax Claims Against.
Charys Holding), Charys Holding Class 3 (Secured Working Capital Facility Claims Against Charys Holding), Charys Holding Class 4 (Other Secured Claims Against Charys Holding), C&B Class 1 (Other Priority Claims Against C&B), and C&B Class 2 (Secured Tax Claims Against C&B) are unimpaired, and therefore, the holders of such Claims are "conclusively presumed" to have voted to accept the Plan.

 

Under certain circumstances, a class of claims or equity interests may be deemed to reject a plan of reorganization. For example, a class is deemed to reject a plan of reorganization under section 1126(g) of the Bankruptcy Code if the holders of claims or interests in such class do not receive or retain property under the plan on account
of their claims or equity interests. Under this provision of the Bankruptcy Code, the holders of Claims in Charys Holding Class 9 (Subordinated Debt Claims) Charys Holding Class 10 (Charys Holding Securities Claims) and Charys Holding Class 11 (Charys Holding Equity Interests), C&B Class 4B (C&B 8.75% Senior Convertible Note Claims), C&B Class 5 (C&B Securities Claims) and C&B Class 6 (C&B Equity Interests) are deemed to reject the Plan because they receive no distribution and retain no
property interest under the Plan, Because such classes are deemed to reject the Plan, the Debtors are required to demonstrate that the Plan satisfies the requirements of section 1129(b) of the Bankruptcy Code with respect to such Classes. Among these are the requirements that the plan be "fair and equitable" with respect to, and not "discriminate unfairly" against, the Claims and the equity interests in such Classes. For a more detailed description of the requirements for confirmation, see Section IX.B below,
entitled "CONFIRMATION OF THE PLAN OF REORGANIZATION; Requirements for Confirmation of the Plan of Reorganization."





  



28







  





Consistent with these requirements, the Plan divides the Allowed Claims against, and Equity Interest in, the Debtors into the following Classes:

 


	
Charys Holding Class
	
Claims

	
1
	
Other Priority Claims

	
2
	
Secured Tax Claims

	
3
	
Secured Working Capital Facility Claims

	
4
	
Other Secured Claims

	
5
	
Cotton Seller Note Claims

	
6
	
CTSI/MSAI Seller Note Claims

	
7
	
8.75% Senior Convertible Note Claims

	
8
	
General Unsecured Claims

	
9
	
Subordinated Debt Claims

	
10
	
Charys Holding Securities Claims

	
11
	
Charys Holding Equity Interests

	  	  
	
C&B Class
	
Claims

	
1
	
Other Priority Claims

	
2
	
Secured Tax Claims

	
3
	
Other Secured Claims

	
4A
	
General Unsecured Claims

	
4B
	
C&B 8.75% Senior Convertible Note Claims

	
5
	
C&B Securities Claims

	
6
	
C&B Equity Interests









	
  
	
1.
	
Unclassified




 

Administrative Expense Claims

 

Administrative Expense Claims are the actual and necessary costs and expenses of the Debtors' Chapter 11 Cases that are allowed under and in accordance with sections 330, 365, 503(b), 507(a)(2) and 507(b) of the Bankruptcy Code. Such expenses will include, but are not limited to, actual and necessary costs and expenses of preserving the Debtors'
estates, actual and necessary costs and expenses of operating the Debtors' businesses, indebtedness or obligations incurred or assumed by the Debtors in Possession during the Chapter 11 Cases and compensation for professional services rendered and reimbursement of expenses incurred. Specifically excluded from Administrative Expense Claims are any fees or charges assessed against the estates of the Debtors under section 1930 of chapter 123 of title 28 of the United States Code, which fees or charges, if any, will
be paid in accordance with Section 13.7 of the Plan.





  



29







  





Except to the extent that, any entity entitled to payment of any Allowed Administrative Expense Claim agrees to a different treatment, on the latest of (i) the Effective Date, (ii) the date on which its Administrative Expense Claim becomes an Allowed Administrative Expense Claim, or (iii) the date on which its Administrative Expense Claim
becomes payable under any agreement relating thereto, or as soon as practicable thereafter, each holder of an Allowed Administrative Expense Claim shall receive from the applicable Liquidating Trustee, in full satisfaction, settlement, and release of and in exchange for such Allowed Administrative Expense Claim, Cash equal to the unpaid portion of its Allowed Administrative Expense Claim. Notwithstanding the forgoing, (a) any Allowed Administrative Expense Claim based on a liability incurred by the Debtors in
the ordinary course of business during the Reorganization Cases shall be paid by the applicable Liquidating Trustee in the ordinary course of business, in accordance with the terms and conditions of any agreement relating thereto and (b) any Allowed Administrative Expense Claim may be paid on such other terms as may be agreed on between the holder of such Claim and the Debtors, with the prior consent of the Creditors' Committee.

 

All Administrative Expense Claims not otherwise paid in the ordinary course of the Debtors' business must be filed with the Bankruptcy Court before the Administrative Claims Bar Date. For purposes hereof and for the Reorganization Cases, the "Administrative Claims Bar Date" shall be twenty (20) days before the date scheduled for the Confirmation
Hearing. Unless the applicable Liquidating Trustee objects to an Administrative Claim within thirty-five (35) days after receipt, such Administrative Claim shall be deemed Allowed in the amount requested (to the extent such amount is a liquidated amount). In the event that an objection is filed to an Administrative Claim, the Bankruptcy Court shall determine the Allowed amount, if any, of such Administrative Claim,

 

Professional Compensation and Reimbursement Claims

 

Professional Compensation and Reimbursement Claims are all Claims of entities seeking compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under sections 330, 331, 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code. All such entities must file, on or before the
date that is forty- five (45) days after the Effective Date their respective applications for final allowances of compensation for services rendered and reimbursement of expenses incurred.

 

All entities seeking awards by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under sections 330, 331, 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code shall be paid in full by the applicable Liquidating Trustee, in Cash, in such
amounts as are Allowed by the Bankruptcy Court in accordance with the order relating to or allowing any such Administrative Expense Claim or upon such other terms as may be mutually agreed upon between the holder of such Administrative Expense Claim and the Debtors, with the prior consent of the Creditors' Committee, or, if on or after the Effective Date, the applicable Liquidating Trustee. The Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Confirmation
Date in the ordinary course of business and without the need for Bankruptcy Court approval.





  



30







  





Indenture Trustee Fees

 

Indenture Trustee Fees are the reasonable and customary fees and expenses of the Indenture Trustee and its counsel and advisors, as provided by the Indenture, including, without limitation, reasonable attorneys' fees and disbursements incurred by the Indenture Trustee whether prior to or after the Effective Date. The Indenture Trustee shall
retain all rights provided for under the Indenture and related documents to recover its fees and expenses and those of its counsel and advisors from distributions made pursuant to the Plan to holders of Allowed 8.75% Senior Convertible Note Claims.

 

The Indenture Trustee Fees shall be paid in Cash on the Effective Date by New Holdco, without the need for application to, or approval of, the Bankruptcy Court. To the extent that the Indenture Trustee provides services related to distributions pursuant to the Plan (including, but not limited to, the services referenced in Section 6.10(a)
of the Plan), such Indenture Trustee will receive from the Charys Trustee, without further Bankruptcy Court approval, reasonable compensation for such services and reimbursement of reasonable expenses, including, but not limited to, reasonable attorneys' fees and expenses, incurred in connection with such services. These payments will be made on terms agreed to by the Indenture Trustee and the Charys Trustee.

 

Priority Tax Claims

 

A Priority Tax Claim is any Claim of a governmental unit of the kind entitled to priority in payment, as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.

 

On the later of (i) the Effective Date or (ii) the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, or as soon as practicable thereafter, each holder of an Allowed Priority Tax Claim shall receive from the applicable Liquidating Trustee in full satisfaction, settlement, and
release of and in exchange for such Allowed Priority Tax Claim, in the sole discretion of the Debtors, with the prior consent of the Creditors Committee, (a) Cash in an amount equal to such Allowed Priority Tax Claim, (b) equal annual Cash payments aggregating an amount equal to such Allowed Priority Tax Claim, together with interest for a period after the Effective Date at the applicable non-bankruptcy rate over a period not exceeding five (5) years after the Commencement Date, subject to the applicable Liquidating
Trustee's sole option to prepay the entire amount of the Allowed Priority Tax Claim; provided that the payments under this clause (b) shall represent a percentage recovery at least equal to that expected to be received by the most favored Class of nonpriority unsecured Claims against Charys Holding or C&B, as applicable, or (c) such other treatment as to which the Debtors, with the prior consent
of the Creditors' Committee, or the Liquidating Trustees, as applicable, and such holder shall have agreed upon in writing; provided, however, that no holder of an Allowed Priority Tax Claim shall be entitled to any payments on account of any pre-Effective Date interest or penalty accrued on, or after the Commencement Date with respect to or in connection with such Allowed Priority Tax Claim. The applicable Liquidating Trustee's or the applicable
Disbursing Agent's failure to make any required payment to the holder of an Allowed Priority Tax Claim in accordance with the terms of this paragraph shall be an event of default. The holder of any Allowed Priority Tax Claim on which required payments have not been made shall provide written notice to the applicable Liquidating Trustee and counsel for New Holdco of such default, which default may be cured within twenty (20) days from the receipt of such notice.





  



31







  






	
  
	
2.
	
Classified




 

Charys Holding Class 1 - Other Priority Claims Against Charys Holding

 

Other Priority Claims in this Class include certain claims that are granted priority in payment under section 507(a)(4), (5), (6) or (7) of the Bankruptcy Code, including certain wage, salary and other compensation obligations to employees of the Debtors up to a statutory cap of $10,950 per employee. Charys Holding estimates that on the Effective
Date, the allowed amount of such claims will aggregate approximately $33,000.

 

Charys Holding Class 1 is unimpaired by the Plan, Each holder of an Allowed Other Priority Claim is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan.

 

Except to the extent that a holder of an Allowed Other Priority Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee, each holder of an Allowed Other Priority Claim against Charys Holding shall receive from the Charys Liquidating Trust, in full satisfaction of
such Claim, Cash in an amount equal to the Allowed amount of such Claim on, or as soon as reasonably practicable after, the later of (i) the Effective Date, (ii) the date such Claim becomes Allowed, and (iii) the date for payment provided by any agreement or understanding between Charys Holding and the holder of such Claim.

 

Charys Holding Class 2 - Secured Tax Claims Against Charys Holding

 

Secured Tax Claims in this Class include any Secured Claim that, absent its secured status, would be entitled to priority in right of payment under section 507(a)(8) of the Bankruptcy Code (determined irrespective of any time limitations therein and including any related Secured Claim for penalties). Charys Holding estimates that on the Effective
Date, the Allowed amount of such Claims will aggregate approximately $0.

 

Charys Holding Class 2 is unimpaired by the Plan. Each holder of an Allowed Secured Tax Claim is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan.

 

Except to the extent that a holder of an Allowed Secured Tax Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee, each holder of an Allowed Secured Tax Claim against Charys Holding shall receive from the Charys Liquidating Trust, at the option of Charys Holding,
with the consent of the Creditors' Committee on the later of the Effective Date or the date such Secured Tax Claim becomes an Allowed Secured Tax Claim, or as soon as practicable thereafter, (i) Cash in an amount equal to such Allowed Secured Tax Claim, including any interest on such Allowed Secured Tax Claim required to be paid pursuant to section 506(b) of the Bankruptcy Code, or (ii) equal annual Cash payments commencing on the above date in an aggregate amount equal to such Allowed Secured Tax Claim, together
with interest for the period after the Effective Date at the applicable non-bankruptcy rate, over a period through the fifth (5th) anniversary of the Commencement Date, subject to the Charys Trustee's sole option to prepay the entire amount of the Allowed Secured Tax Claim, provided that the first payment shall represent a percentage recovery at least equal to that expected to be received by the most favored Class of nonpriority unsecured Claims against Charys Holding, or (iii) deferred Cash Payments upon such
other terms determined by the Bankruptcy Court to provide the holder of such Allowed Secured Tax Claim a value, as of the Effective Date, equal to such Allowed Secured Tax Claim. In the event Charys Holding treats a Claim under clause (i) of this Section, any Liens securing such Secured Tax Claim shall be deemed released as of the Effective Date.





  



32







  





Charys Holding Class 3 - Secured Working Capital
Facility Claims Against Charys Holding

 

Secured Working Capital Facility Claims in this Class include all claims arising under the Working Capital Facility. Charys Holding estimates that on the Effective Date, the allowed amount of such claims will aggregate approximately $0.

 

Charys Holding Class 3 is unimpaired by the plan, Each holder of a Secured Working Capital Facility Claim against Charys Holding is conclusively presumed to have accepted the Plan and is not entitled to vote or reject the Plan.

 

Except to the extent that a holder of an Allowed Secured Working Capital Facility Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee, each holder of an Allowed Secured Working Capital Facility Claim against Charys Holding shall receive from the Charys Liquidating
Trust on or as soon as practicable after the later of the (a) Effective Date or (b) date on which such Claim becomes Allowed, in full satisfaction of such Claim, at the option of Charys Holding, with the consent of the Creditors' Committee (i) Cash in an amount equal to the Allowed amount of such Allowed Secured Working Capital Facility Claim; (ii) the proceeds of the sale or disposition of the Collateral securing such Allowed Secured Working Capital Facility Claim to the extent of the value of the holder's secured
interest in such Collateral, (iii) the Collateral securing such Allowed Secured Working Capital Facility Claim, or (iv) such other distribution as necessary to satisfy the requirements of section 1124 of the Bankruptcy Code. In the event such a Claim is treated under clauses (i) or (ii) above, the Liens securing such Secured Working Capital Facility Claim shall be deemed released as of the Effective Date. In the event that such a Claim is to be satisfied under clause (ii) above, each holder of an Allowed Secured
Working Capital Facility Claims against Charys Holding shall, for federal income tax purposes, be treated as having received on the Effective Date a Class A Charys Beneficial Interest in the Charys Liquidating Trust and all parties (including the Debtors, the Charys Trustee, and the Charys Liquidating Trust Beneficiaries) shall report consistently therewith for federal income tax purposes.

 

Charys Holding Class 4 - Other Secured Claims Against Charys Holding

 

Other Secured Claims in this Class include any Secured Claim other than a Secured Tax Claim or a Secured Working Capital Facility Claim. Charys Holding estimates that on the Effective Date, the Allowed Claims in this Class will be approximately $8.2 million.

 

Charys Holding Class 4 is unimpaired by the Plan. Each holder of an Allowed Other Secured Claim is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan.

 

Except to the extent that a holder of an Allowed Other Secured Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee, each holder of an Allowed Other Secured Claim against Charys Holding shall receive from the Charys Liquidating Trust on or as soon as practicable
after the later of the (a) Effective Date or (b) date on which such Claim becomes Allowed, in full satisfaction of such Claim, at the option of Charys Holding, with the consent of the Creditors' Committee (i) Cash in an amount equal to one hundred percent (100%) of the Allowed amount of such Allowed Other Secured Claim; (ii) the proceeds of the sale or disposition of the Collateral securing such Allowed Other Secured Claim to the extent of the value of the holder's secured interest in such Collateral, (iii) the
Collateral securing such Allowed Other Secured Claim, or (iv) such other distribution as necessary to satisfy the requirements of section 1124 of the Bankruptcy Code, In the event Charys Holding treats such a Claim under clauses (i) or (ii) above, the Liens securing such Secured Other Secured Claim shall be deemed released as of the Effective Date. In the event that such a Claim is to be satisfied under clause (ii) above, each holder of an Allowed Other Secured Claim against Charys Holding shall, for federal
income tax purposes, be treated as having received on the Effective Date a Class A Charys Beneficial Interest in the Charys Liquidating Trust and all parties (including the Debtors, the Charys Trustee, and the Charys Liquidating Trust Beneficiaries) shall report consistently therewith for federal income tax purposes.





  



33







  





Charys Holding Class 5 - Cotton Seller Note Claims

 

Cotton Seller Note Claims mean all Claims arising under or related to any note, debt, claim, earn-out agreement or other payment obligation incurred by Charys Holding in connection with its purchase of that certain business now operated by Cotton Commercial USA, Inc. Charys Holding estimates that on the Effective Date, the amount of such
Claims will aggregate approximately $5.4 million.

 

Class 5 is impaired by the Plan. Each holder of a Cotton Seller Note Claim is entitled to vote to accept or reject the Plan.

 

Each holder of an Allowed Cotton Seller Note Claim shall receive, in full satisfaction of such Allowed Claim, the treatment provided for in the Cotton Settlement Agreement. The Cotton Settlement Agreement essentially provides that the Cotton Seller Note Claims shall be released by the holders and that employment agreements will be entered
into with the holders of the Cotton Seller Note Claims and the subsidiary by which they currently are employed. The Cotton Settlement Agreement also provides that the Debtors' estates shall release the holders of such claims from any and all claims including claims under chapter 5 of the Bankruptcy Code. Each holder of a Cotton Seller Note Claim, effective as of the Effective Date, waives and releases, and shall be deemed to have waived and released any
and all Claims against C&B and each non-Debtor Subsidiary (including, all Affiliated Plan Proponents) with respect to or in any way related to the Cotton Seller Note Claims, including, without limitation, any guaranty obligations with respect thereto.

 

Charys Holding Class 6 - CTSI/MSAI Seller Note Claims and Mirror Note Claims

 

CTSI/MSAI Seller Note Claims include all Claims arising under or related to any note, debt, claim, earn-out agreement or other payment obligation guaranteed by Charys Holding in connection with its purchase of Complete Tower Sources, Inc. and Mitchell Site Acq. Inc. The Debtors estimate that on the Effective Date, the amount of such Claims
will aggregate approximately $19.5 million.

 

The Mirror Note Claims include, collectively, (i) the 8.75% Senior Convertible Note due 2012 to Lori Mitchell in the approximate original principal amount of $2,569 million, (ii) the 8.75% Senior Convertible Note due 2012 to Matthew Mitchell in the approximate original principal amount of $2,590 million, and (iii) the 8.75% Senior Convertible
Note due 2012 to Carrol Castille in the approximate original principal amount of $2.84 million, each issued under the Indenture.





  



34







  





Class 6 is impaired by the Plan. Each holder of a CTSI/MSAI Seller Note Claim or Mirror Note Claim is entitled to vote to accept or reject the Plan.

 

Each holder of an Allowed CTSI / MSAI Seller Note Claim and Allowed Mirror Note Claim shall receive, in full satisfaction of such Allowed Claim, the treatment provided for in the CTSI / MSAI Settlement Agreement. The CTSI/MSAI Settlement Agreement essentially provides that (a) the CTSI/MSAI Seller Note Claims shall be released; (b) the holders
of such claims shall enter into new employment agreements with the subsidiary by which they currently are employed; and (c) the Debtors' estates shall release the holders of such claims from any and all claims, including claims under chapter 5 of the Bankruptcy Code. In addition, the holders of such Claims shall receive in accordance with the Restructuring Transactions their Class 6/7 Pro Rata Share of the New Secured Notes. The Plan also provides for a release of claims against Lori Mitchell, Matthew Mitchell
and Carrol Castille other than for claims based upon fraud, willful misconduct or gross negligence. Each holder of a CTSI / MSAI Seller Note Claim and Mirror Note Claim, effective as of the Effective Date, waives and releases, and shall be deemed to have waived and released any and all Claims against C&B and each non-Debtor Subsidiary (including, all Affiliated Plan Proponents) with respect to or in any way related to the CTSI / MSAI Seller Note Claim or the Mirror Notes, including, without limitation, any
guaranty obligations with respect, thereto.

 

Charys Holding Class 7 - 8.75% Senior Convertible Note Claims

 

The 8.75% Senior Convertible Note Claims include the Charys 8.75% Senior Convertible Note Claims and the Affiliated Plan Proponent 8.75% Senior Convertible Note Claims. The 8.75% Senior Convertible Note Claims shall be deemed Allowed in the amount of [$210 million].

 

Class 7 is impaired by the Plan. Each holder of a 8.75% Senior Convertible Note Claim is entitled to vote to accept or reject the Plan.

 

Each holder of an Allowed 8,75% Senior Convertible Note Claim shall receive on the Effective Date, in accordance with the Restructuring Transactions, in full satisfaction of such Claim (i) its Class 6/7 Pro Rata Share of the New Secured Notes, (ii) its Class 7 Pro Rata Share of 94% of the New Equity Interests, and (iii) its Class B Charys
Beneficial Interests; Each holder of a 8.75% Senior Convertible Note Claim, effective as of the Effective Date, waives and releases, and shall be deemed to have waived and released any and all Claims against C&B and each non-Debtor Subsidiary with respect to or in any way related to the 8.75% Senior Convertible Notes, including, without limitation, any guaranty obligations with respect thereto.

 

Charys Holding Class 8 - General Unsecured Claims Against Charys Holding

 

General Unsecured Claims in this Class include any Claim against Charys Holding other than an Administrative Expense Claim, Priority Tax Claim, Other Priority Claim, Secured Tax Claim, Secured Working Capital Facility Claim, Other Secured Claim, Cotton Seller Note Claim, CTSI/MSAI Seller Note Claims, 8.75% Senior Convertible Note Claim, Subordinated
Note Claim, Mirror Note Claim, or Intercompany Claim. The Debtors estimate that on the Effective Date, the Allowed amount of such Claims will aggregate approximately $55.6 million.





  



35







  





Class 8 is impaired by the Plan. Each holder of a General Unsecured Claim Against Charys Holding is entitled to vote to accept or reject the Plan.

 

On the later of the Effective Date or the date on which a General Unsecured Claim against Charys Holding becomes an Allowed Claim, or, in each case, as soon thereafter as is reasonably practicable, each holder of an Allowed General Unsecured Claim against Charys Holding shall receive, in full satisfaction of such Claim, a Class B Charys Beneficial
Interest in the Charys Liquidating Trust,

 

Charys Holding Class 9 - Subordinated Debt Claims Against Charys Holding

 

Subordinated Debt Claims Against Charys Holding include all Claims arising under (i) the Subordinated Unsecured Convertible Note executed on May 18, 2007, but effective as of April 30, 2007, by Charys Holding Company, Inc. payable to Gottbetter Capital Master, Ltd. in the amount of $8,354,043.00; (ii) the Subordinated Unsecured Convertible
Note executed on May 18, 2007, but effective as of April 30, 2007, by Charys Holding Company, Inc. payable to Castlerigg Master Investments, Ltd. in the amount of $5,012,426.00; (iii) the Subordinated Unsecured Convertible Note executed on May 18, 2007, but effective as of April 30, 2007, by Charys Holding Company, Inc. payable to UBS O'Connor LLC F/B/O/ O'Connor Pipes Corporate Strategies Master Ltd. in the amount of $1,670,809.00; and (iv) the Subordinated Unsecured Convertible Note issued January 1, 2007,
by Charys Holding Company, Inc. payable to Jade Special Strategy, LLC in the amount of $380,000. The Debtors estimate that on the Effective Date, the Allowed amount of such Claims will aggregate approximately $15 million.

 

Charys Holding Class 9 is impaired by the Plan. Each holder of an Allowed Subordinated Debt Claim against Charys Holding is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.

 

Each holder of an Allowed Subordinated Debt Claim against Charys Holding shall not receive or retain any interest or property under the Plan.

 

Charys Holding Class 10 - Charys Holding Securities Claims

 

Charys Holding Securities Claims include any Claim against Charys Holding, whether or not the subject of an existing lawsuit, arising from the rescission of a purchase or sale of a debt security, for damages arising from the purchase or sale of any such security, or for reimbursement or contribution allowed under section 502 of the Bankruptcy
Code on account of any such Claim. [The Debtors estimate that on the Effective Date, the Allowed amount of such Claims will aggregate approximately $0.

 

Charys Holding Class 10 is impaired by the Plan. Each holder of a Charys Holding Securities Claim is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.





  



36







  





Each holder of an Allowed Charys Holder Securities Claim shall not receive or retain any interest or property under the Plan.

 

Charys Holding Class 11 - Charys Holding Equity Interests

 

Charys Holding Equity Interests include all shares of common or preferred stock or any other instrument evidencing an ownership interest in Charys Holding, whether or not transferable, and all options, warrants or rights, contractual or otherwise, to acquire any such interests.

 

Charys Holding Class 11 is impaired by the Plan. Each holder of a Charys Holding Equity Interest is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.

 

Each holder of a Charys Holding Equity Merest shall not receive or retain any interest or property under the Plan and all Charys Holding Equity Interests shall be cancelled and extinguished.

 

C&B Class 1 - Other Priority Claims Against C&B

 

Other Priority Claims against C&B include any Claims against C&B entitled to priority in payment as specified in section 507(a)(4), (5), (6) or (7) of the Bankruptcy Code. The Debtors estimate that on the Effective Date, the Allowed amount of such Claims will aggregate approximately $0 million.

 

C&B Class 1 is Unimpaired by the Plan. Each holder of an Allowed Other Priority Claim against C&B is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan.

 

Except to the extent that a holder of an Allowed Other Priority Claim against C&B agrees to a different treatment with C&B, with the prior consent of the Creditors' Committee, each holder of an Allowed Other Priority Claim against C&B shall receive from the C&B Liquidating Trust, in full satisfaction of such Claim, Cash in
an amount equal to the Allowed amount of such Claim on, or as soon as reasonably practicable after the later of (i) the Effective Date, (ii) the date such Claim becomes Allowed, and (iii) the date for payment provided by any agreement or understanding between C&B and the holder of such Claim.

 

C&B Class 2 - Secured Tax Claims Against C&B

 

Secured Tax Claims against C&B include any Secured Claim against C&B that, absent its secured status, would be entitled to priority in right of payment under section 507(a)(8) of the Bankruptcy Code (determined irrespective of any time limitations therein and including any related Secured Claim for penalties). The Debtors estimate
that on the Effective Date, the Allowed amount of such Claims will aggregate approximately $0.

 

C&B Class 2 is Unimpaired by the Plan. Each holder of an Allowed Secured Tax Claim against C&B is conclusively presumed to have accepted the Plan and is not entitled to vote to accept or reject the Plan.





  



37







  





Except to the extent that a holder of an Allowed Secured Tax Claim against C&B agrees to a different treatment with C&B, with the prior consent of the Creditors' Committee, each holder of an Allowed Secured Tax Claim against C&B shall receive from the C&B Liquidating Trust, at the option of C&B, with the consent of the
Creditors' Committee, on the later of the (a) Effective Date or (b) date such Secured Tax Claim becomes an Allowed Secured Tax Claim, or as soon as practicable thereafter, (i) Cash in an amount equal to such Allowed Secured Tax Claim, including any interest on such Allowed Secured Tax Claim required to be paid pursuant to section 506(b) of the Bankruptcy Code, or (ii) equal annual Cash payments commencing on the above date in an aggregate amount equal to such Allowed Secured Tax Claim, together with interest
for the period after the Effective Date at the applicable non- bankruptcy rate, over a period through the fifth (5th) anniversary of the Commencement Date, subject to the C&B Liquidating Trust's sole option to prepay the entire amount of the Allowed Secured Tax Claim, provided that the first payment shall represent a percentage recovery at least equal to that expected to be received by the most favored Class of nonpriority unsecured Claims against C&B,
or (iii) deferred Cash payments upon such other terms determined by the Bankruptcy Court to provide the holder of such Allowed Secured Tax Claim a value, as of the Effective Date, equal to such Allowed Secured Tax Claim. In the event C&B treats a Claim under clause (i) above, any Liens securing such Secured Tax Claim shall be deemed released as of the Effective Date.

 

C&B Class 3 - Other Secured Claims Against C&B

 

Other Secured Claims against C&B include any Claim that is secured by a Lien on property in which C&B's estate has an interest to the extent of the value of such property, as determined in accordance with section 506(a) of the Bankruptcy Code, or, in the event that such Claim is subject to a permissible setoff under section 553 of
the Bankruptcy Code, to the extent of such permissible setoff, or, in either case as otherwise agreed upon in writing by C&B (with the consent of the Creditors' Committee), or the C&B Liquidating Trust and the holder of such Claim. The Debtors estimate that on the Effective Date, the Allowed amount of such Claims will aggregate approximately $400,000.

 

C&B Class 3 is impaired by the Plan. Each holder of an Allowed Other Secured Claim against C&B as of the Voting Record Date is entitled to vote to accept or reject the Plan.

 

Except to the extent that a holder of an Allowed Other Secured Claim against C&B agrees to a different treatment with C&B, with the prior consent of the Creditors' Committee, each holder of an Allowed Other Secured Claim against C&B shall receive, in the order of priority of such holder's security interest in the Collateral securing
such Allowed Other Secured Claim, the net proceeds of the sale or disposition of such Collateral to the extent of the value of the holder's secured interest in the value of such Collateral, pursuant to the terms and provisions of the C&B Liquidating Trust Agreement. Upon the disposition of such Collateral pursuant to the terms of the Liquidating Trust Agreement, the Liens securing such Secured Claim shall be released. Each holder of an Allowed Other Secured Claim shall, for federal income tax purposes, be
treated as having received on the Effective Date a Class A Beneficial Interest in the C&B Liquidating Trust and all parties (including the Debtors, the C&B Trustee, and the C&B Liquidating Trust Beneficiaries) shall report consistently therewith for federal income tax purposes.





  



38







  





C&B Class 4 A - General Unsecured Claims Against C&B

 

General Unsecured Claims against C&B include any Claim against C&B other than an Administrative Expense Claim, a Priority Tax Claim, C&B 8.75% Senior Convertible Note Claim, an Other Priority Claim, a Secured Tax Claim, a Secured Claim, Intercompany Claim, or a C&B Securities Claim. The Debtors estimate that on the Effective
Date, the Allowed amount of such Claims will aggregate approximately $63 million.

 

C&B Class 4A is impaired by the Plan. Each holder of an Allowed General Unsecured Claim against C&B as of the Voting Record Date is entitled to vote to accept or reject the Plan.

 

On the later of (i) the Effective Date, and (ii) the date on which a General Unsecured Claim against C&B becomes an Allowed Claim, or, in each case, as soon thereafter as is reasonably practicable, each holder of an Allowed General Unsecured Claim against C&B shall receive in full settlement and satisfaction thereof, a Class B Beneficial
Interest in the C&B Liquidating Trust.

 

C&B Class 4B - C&B 8.75% Senior Convertible Note Claims Against
C&B

 

The C&B 8.75% Senior Convertible Note Claims are the Charys 8.75% Senior Convertible Note Claims which are guaranteed by C&B.

 

C&B Class 4B is impaired by the Plan. Each holder of an Allowed Claim in C&B Class 4B is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.

 

Each holder of an Allowed Claim in C&B Class 4B shall not receive or retain an interest or property under the Plan.

 

C&B Class 5 - C&B Securities Claims

 

C&B Securities Claims include any Claim against C&B, whether or not the subject of an existing lawsuit, arising from the rescission of a purchase or sale of a debt security, for damages arising from the purchase or sale of any such security, or for reimbursement or contribution allowed under section 502 of the Bankruptcy Code on account
of any such Claim. The Debtors currently are not aware of any such Claims.

 

C&B Class 5 is impaired by the Plan. Each holder of a C&B Securities Claim is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.

 

Each holder of an Allowed C&B Securities Litigation Claim shall not receive or retain any interest or property under the Plan.

 

C&B Class 6 - C&B Equity Interests

 

C&B Equity Interests include all shares of common or preferred stock or any other instrument evidencing an ownership interest in C&B whether or not transferable, and all options, warrants conversion rights, rights of first refusal or other rights, contractual or otherwise, to acquire or receive any such interests.





  



39







  





C&B Class 6 is impaired by the Plan. Charys Holding, as the sole holder of any C&B Equity Interests, is deemed to reject the Plan.

 

The holder of the C&B Equity Interest shall not receive or retain any interest or property under the Plan and all C&B Equity Interests shall be cancelled and extinguished.

 


	
C.
	
MEANS OF IMPLEMENTING THE PLAN




 


	
  
	
1.
	
Means of Implementation Applicable to Both Charys Holding and C&B




 


	
  
	
(a)
	
Liquidating Trusts Funding Arrangements




 

On the Effective Date, New Holdco shall enter into the Funding Arrangement Agreement pursuant to which New Holdco shall advance amounts to the Charys Liquidating Trust and the C&B Liquidating Trust to enable the Liquidating Trustees to make all Cash payments required to be made on the Effective Date under the Plan as well as to provide
certain capital for the functioning of the Liquidating Trusts (the "Funding Arrangement"). The Funding Arrangement will be secured by all of the assets of the Liquidating Trusts, including the proceeds of actions arising under chapter 5 of the Bankruptcy Code, and obligations under the Funding Arrangement will be required to be repaid before the holders of the beneficial interests in the Liquidating Trusts will receive distributions
on account of such interests. The Funding Arrangement will be substantially in the form annexed to the Plan Supplement.

 

(b)           Intercompany Claims

 

Notwithstanding anything in the Plan to the contrary, Intercompany Claims will be adjusted, continued or discharged to the extent determined appropriate by the Debtors, with the prior consent of the Creditors' Committee. Any such transaction may be effected on or subsequent to the Effective Date without any further action by the stockholders
of any of the Debtors or the Debtors in Possession.

 


	
  
	
(c)
	
Cancellation of Existing Securities and Agreements




 

(i)             Except (w) as otherwise expressly provided in the Plan, (x) with respect to executory contracts or unexpired leases that have been assumed by the Debtors, (y) for purposes of evidencing a right to distributions under the Plan, or (z) with respect to any Claim that
is reinstated and rendered Unimpaired under the Plan, on the Effective Date, the 8.75% Senior Convertible Notes (and all documents and instruments related thereto), the Mirror Notes, all instruments and documents representing or evidencing the Cotton Seller Note Claims, CTSI/MSAI Seller Note Claims, Mirror Note Claims, all instruments and documents representing or evidencing the subordinated debt, the Indentures and other instruments or documents evidencing any Claims or Equity Interests shall be deemed automatically
cancelled and deemed surrendered without further act or action under any applicable agreement, law, regulation, order or rule and the obligations of the Debtors under the agreements, instruments and other documents, indentures, and certificates of designations governing such Claims and Equity Interests, as the case may be, shall be discharged; provided, however, that the 8.75% Senior Convertible Notes, the Mirror Notes, and the Indenture shall continue
in effect solely for the purposes of (x) allowing the holders of the 8.75% Senior Convertible Notes and the Mirror Notes to receive their distributions under the Plan, and (y) allowing the Disbursing Agent or the Indenture Trustee, as the case may be, to make such distributions, if any, to be made on account of the 8.75% Senior Convertible Notes Claims and Mirror Note Claims.





  



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(ii)           Subsequent to performance by the Indenture Trustee or its agents of any duties that are expressly required under the Plan and the Confirmation Order, the Indenture Trustee and its agents shall be relieved of, and released from, all responsibilities and obligations associated
with the 8.75% Senior Convertible Notes arising under the Indenture or under other applicable agreements or law and the Indenture shall be deemed discharged.

 



	 	
(d)
	
Merger/Dissolution/Consolidation





 

On or as of the Effective Date or as soon as practicable thereafter (or, in case of clause (ii), at any time following the Confirmation Date), and without the need for any further action, the Debtors may, with the prior consent of the Creditors' Committee (i) cause any of the Debtors to be merged with and into the other Debtor, dissolved
or otherwise consolidated, (ii) cause C&B to be merged with, or converted into, a limited liability company, or (iii) engage in any other transaction in furtherance of the Plan.

 


	
  
	
(e)
	
Imperium Claims




 

The Imperium Claims shall be treated pursuant to the terms and provisions of that certain Settlement and Cash Collateral Agreement, dated as of June 25, 2008 (as amended), by and among Charys Holding, C&B, Ayin Tower Management Services, Inc., the Guarantors signatory thereto, the Noteholders signatory thereto and Imperium Advisors, LLC,
which agreement was approved by Order of the Bankruptcy Court, dated August 19, 2008.

 


	
  
	
2.
	
Means of Implementation Specific to Charys Holding




 


	
  
	
(a)
	
Issuance of New Equity Interests
and New Securities




 

(i)            Restructuring Transactions. On the Effective Date, the following transactions (the "Restructuring Transactions")
shall be effectuated in the order set forth below:

 

(A)           Simultaneously, (1) CTSI shall issue 954,845.3 new shares, MSAI shall issue 999,900 new shares, Cotton shall issue 885,245.4 new shares, and LFC, Inc. shall issue 858,471.7 new shares, in each case, to the Indenture Trustee on behalf of the holders of 8.75% Senior Convertible
Note Claims in full satisfaction of their Affiliated Plan Proponent 8.75 % Senior Convertible Note Claims, and (2) CTSI shall issue 45,054.7 new shares, Cotton shall issue 114,654,6 new shares and LFC, Inc. shall issue 141,428.3 new shares, in each case, to Charys Holding in satisfaction of certain intercompany claims owed by them to Charys Holding and on account of the settlement: contained within this Plan.

 

(B)           Simultaneously, (1) Charys Holding shall transfer 8,394.9 CTSI shares, 105,004.8 Cotton shares and 108,560 LFC shares and the other Charys Liquidating Trust Assets to the Charys Trustee for the benefit of the Charys Liquidating Trust Beneficiaries in full satisfaction of
their Claims against Charys Holding, and (2) Charys Holding shall transfer 9,649.8 CTSI shares, 36,659.8 Cotton shares and 32,868.3 LFC, Inc. shares to the Disbursing Agent on behalf of holders of Mirror Note Claims in accordance with their pro rata share of the Mirror Note Claims in full satisfaction of their Claims.





  



41







  





(C)           Simultaneously, (1) the Indenture Trustee shall, on behalf of the holders of Affiliated Plan Proponent 8.75% Senior Convertible Note Claims, contribute all of the shares issued pursuant to clause (1)(A) above to New Holdco in exchange for 94% of the New Equity Interests
and $19,227,000 of the New Secured Notes, (2) the Charys Trustee shall contribute all of the shares transferred pursuant to clause (B)(1) to New Holdco in exchange for 6% of the New Equity Interests, and (3) the Disbursing Agent shall, on behalf of the holders of Mirror Note Claims, contribute all of the shares issued pursuant to clause (B)(2) above to New Holdco in exchange for $773,000 of the New Secured Notes.

 

(D)           The Indenture Trustee shall distribute the New Equity Interests and the New Secured Notes received pursuant to clause (C)(1) to the holders of Affiliated Plan Proponent. 8.75% Senior Convertible Note Claims.

 

(E)           The Disbursing Agent shall distribute the New Secured Notes received pursuant to clause (C)(3) to the holders of Mirror Note Claims.

 


	
  
	
(ii)
	
Consistent Tax Reporting




 

(A)           All parties (including the Debtors, the Charys Trustee, the holders of 8.75% Senior Convertible Note Claims, the Mirror Note Claims and General Unsecured Claims against Charys Holding and New Holdco) shall report for all federal income tax purposes consistent with the form
of the Restructuring Transactions, subject to definitive guidance from the Internal Revenue Service or a court of competent jurisdiction to the contrary (including, without limitation, the receipt by the Charys Trustee or New Holdco of a private letter ruling if the Charys Trustee or New Holdco so requests one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not contested).

 

(B)           As soon as possible after the Effective Date, but in no event later than thirty (30) days thereafter, the Board of New Holdco shall determine the value of the stock of CTSI, MSAI, Cotton, and LFC, and the New Equity Interests as of the Effective Date. The Board of New Holdco
shall apprise, in writing or on a website established by New Holdco, all parties of such valuation. The valuation shall be used consistently by all parties (including the Debtors, the Charys Trustee, the holders of 8.75% Senior Convertible Note Claims, the Mirror Note Claims, and General Unsecured Claims against Charys Holding and New Holdco) for all federal income tax purposes.

 


	
  
	
(b)
	
Section 1145 Exemption




 

To the maximum extent provided in section 1145 of the Bankruptcy Code and applicable nonbankruptcy law, the issuance under the Plan of the New Equity Interests, New Secured Notes and beneficial interests in Liquidating Trusts will be exempt from registration under the Securities Act of 1933, as amended, and all rules and regulations promulgated
thereunder.

 


	
  
	
(c)
	
Hart-Scott-Rodino Compliance




 

Any shares of New Equity Interests to be distributed under the Plan to any entity required to file a Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, shall not be distributed until the notification and waiting periods applicable under such Act to such entity shall have expired
or been terminated.





  



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(d)
	
Charys Liquidating Trust




 

(i)            Execution of the Charys Liquidating Trust Agreement. On
or before the Effective Date, the Charys Liquidating Trust Agreement shall be executed by Charys Holding and the Charys Trustee, and all other necessary steps shall be taken to establish the Liquidating Trust and the beneficial interests therein which shall be for the benefit of the Charys Liquidating Trust Beneficiaries as provided in Section 4.3, Section 4.4, Section 4.7, and Section 4.8 of the Plan, whether then Claims are Allowed on or after the Effective Date. In the event of any conflict between the terms
of Section 5.2(d) of the Plan and the terms of the Charys Liquidating Trust Agreement, the terms of the Charys Liquidating Trust Agreement shall govern. The Charys Liquidating Trust Agreement may provide powers, duties and authorities in addition to those explicitly stated in the Plan, but only to the extent that such powers, duties and authorities do not affect the status of the Charys Liquidating Trust as a liquidating trust for United States federal income tax purposes.

 

(ii)           Purpose of the Charys Liquidating Trust. The Charys Liquidating Trust shall be established or the sole purpose of liquidating and distributing its assets,
in accordance with Treasury Regulation section 301.7701 4(d), with no objective to continue or engage in the conduct of a trade or business.

 

(iii)           Charys Liquidating Trust Assets. The Charys Liquidating Trust shall consist of the Charys Liquidating Trust Assets.
On the Effective Date, Charys Holding shall transfer all of the Charys Liquidating Trust Assets to the Charys Liquidating Trust subject to the Administrative Expense Claims, Other Priority Claims, Priority Tax Claims, Secured Tax Claims, and the obligations under the Funding Arrangement Agreement which shall be paid by the Charys Liquidating Trust. Such transfer shall be exempt from any stamp, real estate transfer, mortgage reporting, sales, use or other similar tax. Upon delivery of the Charys Liquidating Trust
Assets to the Charys Liquidating Trust, Charys Holding and its successors and assigns shall be released of all liability with respect to the delivery of such distributions.

 

(iv)           Governance of the Charys Liquidating Trust. The Charys Liquidating Trust shall be governed by the Charys
Trustee. The Charys Trustee shall be designated by Charys Holding with the consent of the Creditors' Committee.

 

(v)           Nontransferability of Charys Liquidating Trust Interests. The beneficial
interests in the Charys Liquidating Trust shall not be certificated and shall not be transferable.

 

(vi)           Cash. The Charys Trustee may invest Cash (including any earnings thereon or proceeds therefrom) as permitted by section 345 of the Bankruptcy Code, provided,
however, that such investments are investments permitted to be made by a liquidating trust within the meaning of Treasury Regulation section 301.7701-4(d), as reflected therein, or under applicable Internal Revenue Service guidelines, rulings, or other controlling authorities.

 

(vii)          Distribution of Charys Liquidating Trust Assets. At least quarterly, the Charys Trustee shall make distributions to the beneficial holders of the Charys Liquidating Trust of all Cash on hand in accordance with
the Charys Liquidating Trust Agreement except such amounts (i) as would be distributable to a holder of a Disputed Claim if such Disputed Claim had been Allowed prior to the time of such distribution (but only until such Claim is resolved), (ii) as are reasonably necessary to meet contingent liabilities and to maintain the value of the Charys Liquidating Trust Assets during liquidation, (iii) to pay reasonable expenses (including, but not limited to, any taxes imposed on the Charys Liquidating Trust or in respect
of the Charys Liquidating Trust Assets), (iv) to pay amounts required under the Funding Arrangement Agreement between the Charys Trustee and New Holdco, and (iv) to satisfy other liabilities incurred by the Charys Liquidating Trust in accordance with this Plan or the Charys Liquidating Trust Agreement.





  



43







  





(viii)        Costs and Expenses of the Charys Liquidating Trust. The costs and expenses of the Charys Liquidating Trust,
including the fees and expenses of the Charys Trustee and its retained professionals, shall be paid out of the Charys Liquidating Trust Assets. Fees and expenses incurred in connection with the prosecution and settlement of any Claims shall be considered costs and expenses of the Charys Liquidating Trust.

 

(ix)           Federal income Tax
Treatment of the Charys Liquidating Trust

 

(A)           Charys Liquidating
Trust Assets Treated as Owned by Creditors. For all federal income tax purposes, all parties (including, without limitation, the Debtors, the Charys Trustee and the Charys Liquidating Trust Beneficiaries) shall treat the transfer of the Charys Liquidating Trust Assets to the Charys Liquidating Trust for the benefit of the Charys Liquidating Trust Beneficiaries, whether Allowed on or after the Effective Date as (A) a transfer of the Charys Liquidating Trust Assets directly to those holders of Allowed Claims
receiving the Charys Liquidating Trust beneficial interests (other than to the extent allocable to Disputed Claims) followed by (B) the transfer by such Persons to the Charys Liquidating Trust of the Charys Liquidating Trust Assets in exchange for beneficial interests in the Charys Liquidating Trust (and in respect of the Charys Liquidating Trust Assets allocable to the Charys Liquidating Trust Claims Reserve, as a transfer to the Charys Liquidating Trust Claims Reserve). Accordingly, those holders of Allowed
Claims receiving the Charys Liquidating Trust beneficial interests shall be treated for federal income tax purposes as the grantors and owners of their respective share of the Charys Liquidating Trust Assets. The foregoing treatment shall also apply, to the extent permitted by applicable law, for state and local income tax purposes.

 

(B)           Tax Reporting





(1)           The Charys Trustee shall file returns for the Charys Liquidating Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a) and in accordance with Section 5.2(d)(xiii)(2) of the Plan. The Charys Trustee shall also annually send to each holder of a beneficial
interest a separate statement setting forth the holder's share of items of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns or to forward the appropriate information to the beneficial holders with instructions to report such items on their federal income tax returns. Holders of beneficial interests may be required to identify themselves to the trustees of the Liquidating Trusts in order to receive this statement. The Charys Trustee
shall also file (or cause to be filed) any other statements, returns or disclosures relating to the Charys Liquidating Trust that are required by any governmental unit.





(2)           As soon as possible after the Effective Date, the Charys Trustee shall make a good-faith valuation of the Charys Liquidating Trust Assets, subject to the valuation of the Board of New Holdco referred to in Section 5.2(a)(ii)(2) of the Plan and such valuation shall be made
available from time to time, to the extent relevant, and shall be used consistently by all parties (including, without limitation, the Debtors, the Charys Trustee and the Charys Liquidating Trust Beneficiaries), for all federal income tax purposes.





  



44







  





(3)           Allocations of Charys Liquidating Trust taxable income amongst the Charys Liquidating Trust Beneficiaries shall be determined by reference to the manner in which an amount of Cash equal to such taxable income would be distributed (without regard to any restrictions on distributions
described herein) if, immediately prior to such deemed distribution, the Charys Liquidating Trust had distributed all its other assets (valued at their tax book value) to the holders of the Charys Liquidating Trust interests (treating all Disputed Claims as if they were Allowed Claims (see Section 5.2(d)(xiii)(2)(D) of the Plan)), in each case up to the tax book value of the assets treated as contributed by such holders, adjusted for prior taxable income and loss and taking into account all prior and concurrent
distributions from the Charys Liquidating Trust. Similarly, taxable loss of the Charys Liquidating Trust shall be allocated by reference to the manner in which an economic loss would be borne immediately after a liquidating distribution of the remaining Charys Liquidating Trust Assets. The tax book value of the Charys Liquidating Trust Assets for this purpose shall equal their fair market value on the Effective Date, adjusted in accordance with tax accounting principles prescribed by the Tax Code, the applicable
tax regulations, and other applicable administrative and judicial authorities and pronouncements.

 

(4)           Subject to definitive guidance from the Internal Revenue Service, or a court of competent jurisdiction to the contrary (including the receipt by the Charys Trustee of a private letter ruling if the Charys Trustee so requests one, or the receipt of an adverse determination
by the Internal Revenue Service upon audit if not contested by the Charys Trustee), the Charys Trustee shall (A) timely elect to treat any Charys Liquidating Trust Assets allocable to, or retained on account of, Disputed Claims (the "Charys Liquidating Trust Claims Reserve") as a "disputed ownership fund" governed by Treasury Regulation section 1.468B-9, and (B) to the extent permitted by applicable law, report consistent with the foregoing for state and local income tax purposes. All parties (including the Debtors,
the Charys Trustee, and the Liquidating Trust Beneficiaries) shall report for tax purposes consistent with the foregoing.

 

(5)           The Charys Trustee shall be responsible for payments, out of the Charys Liquidating Trust Assets, of any taxes imposed on the trust or its assets including the Charys Liquidating Trust Claims Reserve. In the event,
and to the extent, any Cash retained on account of Disputed Claims in the Charys Liquidating Trust Claims Reserve is insufficient to pay the portion of any such taxes attributable to the taxable income arising from the assets allocable to, or retained on account of, Disputed Claims, such taxes shall be (i) reimbursed from any subsequent Cash amounts retained on account of Disputed Claims, or (ii) to the extent such Disputed Claims have subsequently been resolved, deducted from any amounts distributable by the
Charys Trustee as a result of the resolutions of such Disputed Claims.

 

(6)           The Charys Trustee may request an expedited determination of taxes of the Charys Liquidating Trust, including the Charys Liquidating Trust Claims Reserve, under section 505(b) of the Bankruptcy Code for all returns filed for, or on behalf of, the Charys Liquidating Trust
for all taxable periods through the dissolution of the Charys Liquidating Trust.





  



45







  





(x)           The Charys Trustee and the Charys Liquidating Trust shall be discharged or dissolved, as the case may be, at such time as (i) all Disputed Claims have been resolved, (ii) the Charys Trustee determines, in its sole discretion, that the administration of the Charys Liquidating
Trust Assets is not, likely to yield sufficient additional Charys Liquidating Trust proceeds to justify further pursuit and (iii) all distributions required to be made by the Charys Trustee under the Plan and the Charys Liquidating Trust Agreement have been made, but in no event shall the Charys Liquidating Trust be dissolved later than three (3) years from the Effective Date unless the Bankruptcy Court, upon motion within the six month period prior to the third anniversary (or at least six (6) months prior to
the end of an extension period), determines that a fixed period extension (not to exceed three years, together with any prior extensions, without a favorable letter ruling from the Internal Revenue Service that any further extension would not adversely affect the status of the trust as a liquidating trust for federal income tax purposes) is necessary to facilitate or complete the recovery and liquidation of the Charys Liquidating Trust Assets. If at any time the Charys Trustee determines, in reliance upon such
professionals as the Charys Trustee may retain, that the expense of administering the Charys Liquidating Trust so as to make a final distribution to its beneficiaries is likely to exceed the value of the assets remaining in the Charys Liquidating Trust, the Charys Trustee may apply to the Bankruptcy Court for authority to (i) reserve any amounts necessary to dissolve the Charys Liquidating Trust, (ii) donate any balance to a charitable organization exempt from federal income tax under section 501(c)(3) of the
Tax Code that is unrelated to the Debtors, the Charys Liquidating Trust, and any insider of the Charys Trustee, and (iii) dissolve the Charys Liquidating Trust.

 

(xi)           The Charys Trustee or the individuals comprising the Trustee, as the case may be, and the Charys Trustee's agents and professionals, shall not be liable for actions taken or omitted in its capacity as, or on behalf of, the Charys Trustee, except those acts arising out of
its or their own willful misconduct or gross negligence, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of its actions or inactions in its capacity as, or on behalf of, the Charys Trustee, except for any actions or inactions involving willful misconduct or gross negligence. Any indemnification claim of the Charys Trustee (and the other parties entitled to indemnification under this subsection) shall be satisfied solely from the Charys Liquidating
Trust Assets. The Charys Trustee shall be entitled to rely, in good-faith, on the advice of its retained professionals.

 

Additional details with respect to the Charys Liquidating Trust are set forth in Section 5,2 of the Plan.

 


	
  
	
3.
	
Means of Implementation Specific to C&B




 


	
  
	
(a)
	
The C&B Liquidating Trust




 

(i)            Execution of C&B Liquidating
Trust Agreement. On or before the Effective Date, the C&B Liquidating Trust Agreement shall be executed by C&B and the C&B Trustee, and all other necessary steps shall be taken to establish the Liquidating Trust and the beneficial interests therein which shall be for the benefit of the C&B Liquidating Trust Beneficiaries, as provided in Section 4.14 and Section 4.15 of the Plan, whether their Claims Allowed on or after the Effective Date. In the event of any conflict between the terms of
Section 5.3(a) of the Plan and the terms of the C&B Liquidating Trust Agreement, the terms of the C&B Liquidating Trust Agreement shall govern. The C&B Liquidating Trust Agreement may provide powers, duties and authorities in addition to those explicitly stated herein, but only to the extent that such powers, duties and authorities do not affect the status of the C&B Liquidating Trust as a liquidating trust for United States federal income tax purposes.





  



46







  





(ii)           Purpose of the C&B Liquidating Trust. The C&B Liquidating Trust shall be established
for the sole purpose of liquidating and distributing its assets, in accordance with Treasury Regulation section 301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business.

 

(iii)           C&B Liquidating Trust Assets. The C&B Liquidating Trust shall consist of the C&B Liquidating Trust Assets. On the Effective Date, C&B shall transfer all of the C&B Liquidating Trust Assets
to the C&B Liquidating Trust subject to the Administrative Expense Claims, Other Priority Claims, Priority Tax Claims, Secured Tax Claims, and obligations under the Funding Arrangement which shall be paid by the C&B Liquidating Trust.

 

(iv)           Governance of the C&B Liquidating Trust. The C&B Liquidating Trust shall be governed by the C&B
Trustee. The C&B Trustee shall be designated by C&B with the consent of the Creditors' Committee.

 

(V)           Nontransferability of C&B Liquidating
Trust Interests. The beneficial interests in the C&B Liquidating Trust shall not be certificated and are not transferable.

 

(vi)           Cash. The C&B Trustee may invest Cash (including any earnings thereon or proceeds therefrom) as permitted by section 345 of the Bankruptcy Code, provided, however, that such investments are investments
permitted to be made by a liquidating trust within the meaning of Treasury Regulation section 301.7701 -4(d), as reflected therein, or under applicable Internal Revenue Service guidelines, rulings, or other controlling authorities,

 

(vii)           Distribution of C&B Liquidating
Trust Assets. At least quarterly, the C&B Trustee shall make distributions to the beneficial holders of the C&B Liquidating Trust of all Cash on hand in accordance with the C&B Liquidating Trust Agreement except such amounts (i) as would be distributable to a holder of a Disputed Claim if such Disputed Claim had been Allowed prior to the time of such distribution (but only until such Claim is resolved), (ii) as are reasonably
necessary to meet contingent liabilities and to maintain the value of the C&B Liquidating Trust Assets during liquidation, (iii) to pay reasonable expenses (including, but not limited to, any taxes imposed on the C&B Liquidating Trust or in respect of the C&B Liquidating Trust Assets), (iv) to pay amounts required under the Funding Arrangement between the C&B Trustee and New Holdco, and (v) to satisfy other liabilities incurred by the C&B Liquidating Trust in accordance with the Plan or the
C&B Liquidating Trust Agreement.

 

(viii)           Costs and Expenses of the C&B Liquidating Trust. The costs and expenses of the C&B Liquidating Trust, including the fees and expenses of the C&B
Trustee and its retained professionals, shall be paid out of the C&B Liquidating Trust Assets. Fees and expenses incurred in connection with the prosecution and settlement of any Claims shall be considered costs and expenses of the C&B Liquidating Trust.





  



47







  





(ix)           Federal Income Tax Treatment of the C&B Liquidating Trust

 

(A)           C&B Liquidating Trust Assets Treated as Owned by Creditors, For all federal income tax purposes, all parties (including,
without limitation, the Debtors, the C&B Trustee and the C&B Liquidating Trust Beneficiaries) shall treat the transfer of the C&B Liquidating Trust Assets to the C&B Liquidating Trust for the benefit of the C&B Liquidating Trust Beneficiaries, whether Allowed on or after the Effective Date as (A) a transfer of the C&B Liquidating Trust Assets directly to those holders of Allowed Claims receiving C&B Liquidating Trust beneficial interests (other than to the extent allocable to Disputed
Claims) followed by (B) the transfer by such Persons to the C&B Liquidating Trust of the C&B Liquidating Trust Assets in exchange for beneficial interests in the C&B Liquidating Trust (and in respect of the C&B Liquidating Trust Assets allocable to the C&B Liquidating Trust Claims Reserve, as a transfer to the C&B Liquidating Trust Claims Reserve). Accordingly, those holders of Allowed Claims receiving C&B Liquidating Trust beneficial interests shall be treated for federal income tax
purposes as the grantors and owners of their respective share of the C&B Liquidating Trust Assets. The foregoing treatment shall also apply, to the extent permitted by applicable law, for state and local income tax purposes.

 

(B)           Tax Reporting

 

(1)           The C&B Trustee shall file returns for the C&B Liquidating Trust as a grantor trust pursuant, to Treasury Regulation section 1.671-4(a) and in accordance with Section 5.3(a)(xiii)(2) of the Plan. The C&B Trustee shall also annually send to each holder of a beneficial
interest a separate statement setting forth the holder's share of items of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns or to forward the appropriate information to the beneficial holders with instructions to report such items on their federal income tax returns. Holders of beneficial interests may be required to identify themselves to the trustees of the Liquidating Trusts in order to receive this statement. The C&B Trustee
shall also file (or cause to be filed) any other statements, returns or disclosures relating to the C&B Liquidating Trust that are required by any governmental unit.

 

(2)           As soon as possible after the Effective Date, the C&B Trustee shall make a good-faith valuation of the C&B Liquidating Trust Assets, and such valuation shall be made available from time to time, to the extent relevant, and shall be used consistently by all parties
(including, without limitation, the Debtors, the C&B Trustee and the C&B Liquidating Trust Beneficiaries).

 

(3)           Allocations of C&B Liquidating Trust taxable income among the C&B Liquidating Trust Beneficiaries shall be determined by reference to the maimer in which an amount of Cash equal to such taxable income would be distributed (without regard to any restrictions on distributions
described herein) if, immediately prior to such deemed distribution, the C&B Liquidating Trust had distributed all its other assets (valued at their tax book value) to the holders of the C&B Liquidating Trust interests (treating all Disputed Claims as if they were Allowed Claims (see Section 5.3(a)(xiii)(2)(D) of the Plan)), in each case up to the tax book value of the assets treated as contributed by such holders, adjusted for prior taxable income and loss and taking into account all prior and concurrent
distributions from the C&B Liquidating Trust. Similarly, taxable loss of the C&B Liquidating Trust shall be allocated by reference to the maimer in which an economic loss would be borne immediately after a liquidating distribution of the remaining C&B Liquidating Trust Assets. The tax book value of the C&B Liquidating Trust Assets for this purpose shall equal their fair market value on the Effective Date, adjusted in accordance with tax accounting principles prescribed by the Tax Code, the applicable
tax regulations, and other applicable administrative and judicial authorities and pronouncements.

 



 



48







 



 

(4)           Subject to definitive guidance from the Internal Revenue Service, or a court of competent jurisdiction to the contrary (including the receipt by the C&B Trustee of a private letter ruling if the C&B Trustee so requests one, or the receipt of an adverse determination
by the Internal Revenue Service upon audit if not contested by the C&B Trustee), the C&B Trustee shall (A) timely elect to treat any C&B Liquidating Trust Assets allocable to, or retained on account of, Disputed Claims (the "C&B Liquidating Trust Claims Reserve") as a "disputed ownership fund" governed by Treasury Regulation section 1.468B-9, and (B) to the extent permitted by applicable law, report consistent with the foregoing for state and local income tax purposes. All parties (including New
Holdco, the C&B Trustee, the C&B Liquidating Trust Beneficiaries) shall report for tax purposes consistent with the foregoing.

 

(5)           The C&B Trustee shall be responsible for payments, out of the C&B Liquidating Trust Assets, of any taxes imposed on the trust or its assets including the C&B Liquidating Trust Claims Reserve. In the event, and to the extent, any Cash retained on account of Disputed
Claims in the C&B Liquidating Trust Claims Reserve is insufficient to pay the portion of any such taxes attributable to the taxable income arising from the assets allocable to, or retained on account of, Disputed Claims, such taxes shall be (i) reimbursed from any subsequent Cash amounts retained on account of Disputed Claims, or (ii) to the extent such Disputed Claims have subsequently been resolved, deducted from any amounts distributable by the C&B Trustee as a result of the resolutions of such Disputed
Claims.

 

(6)           The C&B Trustee may request an expedited determination of taxes of the C&B Liquidating Trust, including the C&B Liquidating Trust Claims Reserve, under section 505(b) of the Bankruptcy Code for all returns filed for, or on behalf of, the C&B Liquidating
Trust for all taxable periods through the dissolution of the C&B Liquidating Trust.

 

(x)            Dissolution. The C&B Trustee and the C&B Liquidating Trust shall be discharged or dissolved, as the case may be, at such time as (i) all Disputed Claims have been resolved, (ii) the C&B Trustee
determines, in its sole discretion, that the administration of the C&B Liquidating Trust Assets is not likely to yield sufficient additional C&B Liquidating Trust proceeds to justify further pursuit and (iii) all distributions required to be made by the C&B Trustee under the Plan and the C&B Liquidating Trust Agreement have been made, but in no event shall the C&B Liquidating Trust be dissolved later than three (3) years from the Effective Date unless the Bankruptcy Court, upon motion within
the six month period prior to the third anniversary (or at least six (6) months prior to the end of an extension period), determines that a fixed period extension (not to exceed three years, together with any prior extensions, without a favorable letter ruling from the Internal Revenue Service that any further extension would not adversely affect the status of the trust as a liquidating trust for federal income tax purposes) is necessary to facilitate or complete the recovery and liquidation of the C&B Liquidating
Trust Assets. If at any time the C&B Trustee determines, in reliance upon such professionals as the C&B Trustee may retain, that the expense of administering the C&B Liquidating Trust so as to make a final distribution to its beneficiaries is likely to exceed the value of the assets remaining in the C&B Liquidating Trust, the C&B Trustee may apply to the Bankruptcy Court for authority to (i) reserve any amounts necessary to dissolve the C&B Liquidating Trust, (ii) donate any balance to
a charitable organization exempt from federal income tax under section 501(c)(3) of the Tax Code that is unrelated to the Debtors, the C&B Liquidating Trust, and any insider of the C&B Trustee, and (iii) dissolve the C&B Liquidating Trust.





  



49







  





(xi)           Indemnification of C&B Trustee, The C&B Trustee or the individuals comprising the C&B Trustee, as the case may be, and the C&B
Trustee's agents and professionals, shall not be liable for actions taken or omitted in its capacity as, or on behalf of, the C&B Trustee, except those acts arising out of its or their own willful misconduct or gross negligence, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of its actions or inactions in its capacity as, or on behalf of, the C&B Trustee, except for any actions or inactions involving willful misconduct or gross negligence.
Any indemnification claim of the C&B Trustee (and the other parties entitled to indemnification under this subsection) shall be satisfied solely from the C&B Liquidating Trust Assets, The C&B Trustee shall be entitled to rely, in good-faith, on the advice of its retained professionals.

 

Additional details with respect to the C&B Liquidating Trust are set forth in Section 5.3 of the Plan.

 


	
D.
	
PLAN PROVISIONS GOVERNING DISTRIBUTIONS




 


	
  
	
1.
	
Distributions on Account of Allowed General Unsecured
Claims




 

All Allowed General Unsecured Claims or Allowed 8.75% Senior Convertible Note Claims held by a creditor shall be aggregated and treated as a single Claim, All distributions under the Plan of Allowed on account of Allowed Claims against Charys Holding shall be made by the Charys Trustee, as a Disbursing Agent in accordance with the Plan and
the Charys Liquidating Trust Agreement. All distributions under the Plan on account of Allowed Claims against C&B shall be made by the C&B Trustee as a Disbursing Agent in accordance with the Plan and the C&B Liquidating Trust Agreement. Notwithstanding the foregoing, the Indenture Trustee shall receive the distributions under the Plan for the holders of the Allowed 8.75%o Senior Convertible Note Claims and the Mirror Note Claims and shall make appropriate distribution thereof to such holders in accordance
with the terms of the Plan. Beneficial holders of Allowed 8.75%) Senior Convertible Note Claims may be required to identify themselves in order to receive distributions.

 


	
  
	
2.
	
Delivery of Distributions




 

(a)           Last Known Address. Subject
to Bankruptcy Rule 9010, all distributions to any holder of an Allowed Claim or Allowed Administrative Expense Claim shall be made at the address of such holder as set forth on the Schedules filed with the Bankruptcy Court or on the books and records of the Debtors or their agents, as applicable, unless the Debtors, and/or the Liquidating Trustees, as the case may be, have been notified in writing of a change of address, including, without limitation, by the filing of a proof of Claim by such holder that contains
an address for such holder different than the address of such holder as set forth on the Schedules, hi the event that any distribution to any holder is returned as undeliverable, the applicable Disbursing Agent shall use commercially reasonable efforts to determine the current address of such holder, but no distribution to such holder shall be made unless and until the applicable Disbursing Agent has determined the then-current address of such holder, at which time such distribution shall be made to such holder
without interest; provided that such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one (1) year from the Effective Date. After such date, all unclaimed property or interests in property shall be returned by the applicable Disbursing Agent to, and shall revert to, the applicable Liquidating Trust, and the Claim of any holder to such property or interest in property shall be discharged and
forever barred; provided, however, that unclaimed distributions made by (i) the Liquidating Trustees shall be redistributed in accordance with the priorities set forth in the applicable Liquidating Trust Agreement, and (ii) with respect to Allowed Claims in Charys Holding Class 7 shall be redistributed ratably as provided in Section 4.7 of the Plan.





  



50







  





(b)      Distribution Record
Date. With respect to holders of all Claims against the Debtors, on the Distribution Record Date, the claims register shall be closed. Neither the Debtors nor any other Person shall have any obligation to recognize any transfer of any Claims occurring after the close of business on such date.

 


	
  
	
3.
	
No Fractional Shares




 

No fractional shares of New Equity Interests shall be distributed and no Cash shall be distributed in lieu of such fractional shares. When any distribution pursuant to the Plan on account of an Allowed Claim would otherwise result in the issuance of a number of shares of New Equity Interests that is not a whole number, the actual distribution
of shares of New Equity Interests shall be rounded as follows: (a) fractions of one-half (Vi) or greater shall be rounded to the next higher whole number and (b) fractions of less than one-half (1⁄2) shall be rounded to the next lower whole number with no further payment therefor. The total number of authorized shares of New Equity Interests to be distributed to holders of Allowed Claims shall be adjusted as necessary to account for the foregoing rounding.

 


	
  
	
4.
	
No Fractional Notes




 

The New Secured Notes shall not be distributed in denominations of less than one thousand dollars ($1,000). When any distribution pursuant to the Plan of Reorganization on account of an Allowed Claim would otherwise result in the issuance of an amount of the New Secured Notes that is not a multiple of one thousand (1,000), the actual distribution
of the New Secured Notes shall be rounded as follows: (i) denominations of five hundred dollars ($500) or greater shall be rounded up to one thousand dollars ($1,000); and (ii) denominations less than five hundred dollars ($500) shall be rounded down to zero with no further payment therefor.

 


	
  
	
5.
	
Setoffs and Recoupment




 

The Debtors may, but shall not be required to, setoff against or recoup from any Claim any Claims of any nature whatsoever that the Debtors may have against the claimant, provided, however, that neither the failure to do so nor the allowance of any claim under the Plan shall constitute
a waiver or release by the Debtors or their respective successors of any such claim it may have against such claimant.





  



51







  






	
  
	
6.
	
Interest on Claims; Dividends




 

Unless otherwise specifically provided for in the Plan or the Confirmation Order, postpetition interest shall not accrue or be paid on any Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Commencement Date on any Claim. Unless otherwise specifically provided for in the Plan or the Confirmation Order,
interest shall not accrue or be paid upon any Claim in respect of the period from the Commencement Date to the date a final distribution is made thereon if and after such Claim becomes an Allowed Claim.

 

No holder of a Claim who is entitled to New Equity Interests shall be entitled to dividends on such shares unless such holder's Claim is an Allowed Claim as of the applicable record date for such dividends.

 


	
  
	
7.
	
Allocation of Plan Distributions Between Principal and Interest




 

To the extent that any Allowed Claim entitled to a distribution under the Plan consists of indebtedness and other amounts (such as accrued but unpaid interest thereon), such distribution shall be allocated first to the principal amount of the Claim (as determined for federal income tax purposes) and then, to the extent the consideration exceeds
the principal amount of the Claim, to such other amounts.

 


	
E.
	
PROCEDURES FOR TREATING DISPUTED CLAIMS




 


	
  
	
1.
	
Objections




 

The Liquidating Trustees (each as to Claims to be addressed by their respective Liquidating Trusts) shall be entitled to object to all Claims. Any objections shall be served on the respective claimant and filed with the Bankruptcy Court on or before the later of (a) ninety (90) days after the Effective Date, or (b) such later date as may
be fixed by the Bankruptcy Court.

 


	
  
	
2.
	
No Distributions Pending Allowance




 

Notwithstanding any other provision of the Plan, if any portion of an Administrative Expense Claim or Claim is Disputed, no payment or distribution provided pursuant to the Plan shall be made on account of such Administrative Expense Claim or Claim unless and until such Disputed Administrative Expense Claim or Disputed Claim becomes Allowed.

 


	
  
	
3.
	
Distributions After Allowance




 

To the extent that a Disputed Claim or Disputed Administrative Expense Claim becomes Allowed, distributions (if any) shall be made to the holder of such Claim in accordance with the provisions of the Plan. As soon as practicable after the date that the order or judgment of the Bankruptcy Court Allowing any Disputed Claim or Disputed Administrative
Expense Claim becomes a Final Order, the Disbursing Agent shall provide to the holder of such Administrative Expense Claim or Claim the distribution (if any) to which such holder is entitled under the Plan.





  



52







  






	
  
	
4.
	
Resolution of Administrative Expense Claims and Claims




 

On and after the Effective Date, the applicable Liquidating Trustees shall have the authority to compromise, settle, otherwise resolve or withdraw any objections to Administrative Expense Claims and Claims against the Debtors and to compromise, settle or otherwise resolve any Disputed Administrative Expense Claims and Disputed Claims against
the Debtors without approval of the Bankruptcy Court, other than with respect to Administrative Expense Claims relating to compensation of professionals for fees and expenses incurred prior to the Confirmation Date.

 


	
  
	
5.
	
Estimation of Claims




 

The Debtors, and, after the Effective Date with respect to Claims to receive distributions from the Liquidating Trusts, the applicable Liquidating Trustee, may at any time request that the Bankruptcy Court estimate any Contingent Claim, Unliquidated Claim or Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether
any of the Debtors or any other Person previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including, without limitation, during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any Contingent Claim, Unliquidated Claim or Disputed Claim, the amount so estimated shall
constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors, New Holdco, or the Liquidating Trustees, as the case may be, may pursue supplementary proceedings to object to the allowance of such Claim. All of the aforementioned objection, estimation and resolution procedures are intended to be cumulative and not exclusive of one another. Claims may
be estimated and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court.

 


	
  
	
6.
	
Interest




 

To the extent that a Disputed Claim becomes an Allowed Claim after the Effective Date, the holder of such Claim shall not be entitled to any interest thereon.

 


	
F.
	
PROVISIONS GOVERNING EXECUTORY CONTRACTS AND UNEXPIRED LEASES




 


	
  
	
1.
	
Assumption or Rejection of Executory Contracts




 

The Bankruptcy Code empowers the Debtors to assume or reject their executory contracts and unexpired leases. Pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, all executory contracts and unexpired leases that exist between the Debtors and any person or entity prior to the Commencement Date shall be deemed rejected by the
Debtors as of the Effective Date, except for any executory contract or unexpired lease (a) that has been assumed pursuant to an order of the Bankruptcy Court entered prior to the Effective Date, (b) as to which a motion for approval of the assumption of such executory contract or unexpired lease has been filed and served prior to the Confirmation Date or (c) that is specifically designated as a contract or lease to be assumed on Schedule 8.1, which Schedule shall be contained in the Plan Supplement; provided,
however, that the Debtors reserve the right, on or prior to the Confirmation Date, to amend, in consultation with the Creditors' Committee, such Schedule to delete any executory contract or unexpired lease therefrom or add any executory contract or unexpired lease thereto, in which event such executory contract(s) or unexpired lease(s) shall be deemed to be, respectively, either rejected or assumed as of the Effective Date. The Debtors shall provide notice of any such amendments to the parties to the executory
contracts and unexpired leases affected thereby. The listing of a document on Schedule 8.1 shall not constitute an admission by the Debtors that such document is an executory contract or an unexpired lease or that the Debtors have any liability thereunder.





  



53







  






	
  
	
2.
	
Approval of Assumption or Rejection of Executory Contracts and Unexpired
Leases




 

Entry of the Confirmation Order shall, subject to and upon the occurrence of the Effective Date, constitute (a) the approval, pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of the assumption of the executory contracts and unexpired leases assumed pursuant to Section 8.1 of the Plan, (b) the extension of time, pursuant
to section 365(d)(4) of the Bankruptcy Code, within which the Debtors may assume, assume and assign or reject the executory contracts and unexpired leases specified in Schedule 8.1 of the Plan through the date of entry of an order approving the assumption, assumption and assignment or rejection of such executoiy contracts and unexpired leases and (c) the approval, pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of the rejection of the executory contracts and unexpired leases rejected pursuant
to Section 8.1 of the Plan.

 


	
  
	
3.
	
Cure of Defaults




 

Except to the extent that different treatment has been agreed to by the non-debtor party or parties to any executory contract or unexpired lease to be assumed pursuant to Section 8.1 of the Plan, the Debtors shall, pursuant to the provisions of sections 1123(a)(5)(G) and 1123(b)(2) of the Bankruptcy Code and consistent with the requirements
of section 365 of the Bankruptcy Code, within at least twenty (20) days prior to the later of (a) the hearing on the Debtors' motion for assumption or assumption and assignment and (b) the Confirmation Hearing, file with the Bankruptcy Court and serve by first class mail on each non-debtor party to such executory contracts or unexpired leases to be assumed pursuant to Section 8.1 of the Plan, a notice, which shall list the cure amount as to each executory contract or unexpired lease to be assumed. The parties
to such executory contracts or unexpired leases to be assumed or assumed and assigned by the Debtors shall have twenty (20) days from the date of service of such notice to file and serve any objection to the cure amounts listed by the Debtors. If there are any objections filed, the Bankruptcy Court shall hold a hearing on a date to be set by the Bankruptcy Court. Notwithstanding Section 8.1 of the Plan, the Debtors shall retain their rights to reject any of their executory contracts or unexpired leases that are
subject to a dispute concerning amounts necessary to cure any defaults through the Effective Date,

 


	
  
	
4.
	
Bar Date for Filing Proofs of Claim Relating to Executory Contracts and Unexpired Leases Rejected Pursuant to the Plan




 

Proofs of Claim for damages arising out of the rejection of an executory contract or unexpired lease must be filed with the Bankruptcy Court and served upon the attorneys for the Debtors on or before the date that is thirty (30) days after the later of (a) the date of service of notice of the Confirmation Date, (b) notice of modification
to Schedule 8.1 of the Plan (solely with respect to the party directly affected by such modification) or (c) the date of service of notice of such later rejection date that occurs as a result of a dispute concerning amounts necessary to cure any defaults (solely with respect to the party directly affected by such rejection). In the event that the rejection of an executory contract or unexpired lease by the Debtors pursuant to the Plan results in damages to the other party or parties to such contract or lease,
a Claim for such damages, if not evidenced by a timely filed proof of Claim, shall be forever barred and shall not be enforceable against the Debtors or their successors, or their properties or interests in property as agents, successors or assigns.





  



54







  






	
  
	
5.
	
Indemnification and Reimbursement Obligations




 

The obligations of Charys Holding and/or C&B to indemnify and reimburse those officers, directors and employees set forth on an Exhibit contained in the Plan Supplement against and for any obligations pursuant to articles of incorporation, codes of regulations, bylaws, applicable state law, or specific agreement, or any combination of
the foregoing, shall survive confirmation of the Plan, irrespective of whether indemnification or reimbursement is owed in connection with an event occurring before, on, or after the Commencement Date and all such obligations shall be, and shall be deemed to be assumed by New Holdco as of the Effective Date; provided, however, that in no circumstance shall New Holdco assume any obligation to indemnify or reimburse any individual in connection with the fraud, willful misconduct, or gross negligence of such individual.
In furtherance of the foregoing, New Holdco will obtain a directors' and officers' insurance policy with tail coverage for a period of six years from an insurer whose rating with A.M. Best is no lower than that of the insurers of the policies in existence on the Effective Date for the current and former officers and directors of the Debtors, provided, however, that such policy shall have an aggregate cost of no more than an amount as agreed on by the Debtors and the Creditors' Committee.

 


	
  
	
6.
	
Insurance Policies




 

Notwithstanding anything contained in the Plan to the contrary, unless specifically rejected by order of the Bankruptcy Court, all of the Debtors' insurance policies and any agreements, documents or instruments relating thereto, are treated as executory contracts under the Plan and will be assumed pursuant to the Plan effective as of the
Effective Date. Nothing contained in this Section shall constitute or be deemed a waiver of any cause of action that the Debtors may hold against any entity, including, without limitation, the insurer, under any of the Debtors' policies of insurance.

 


	
  
	
7.
	
Compensation and Benefit Plans




 

All Benefit Plans of Charys Holding, including Benefit Plans and programs subject to sections 1114 and 1129(a)(l 3) of the Bankruptcy Code, entered into before or after the Commencement Date and not since terminated, shall be deemed to be, and shall be treated as if they were, executory contracts that are assumed pursuant to the Plan. Charys
Holding's obligations under such plans and programs shall survive confirmation of the Plan, and shall be and shall be deemed to be assumed by New Holdco, except for (a) executory contracts or Benefit Plans expressly rejected pursuant to the Plan (to the extent such rejection does not violate sections 1114 and 1129(a)(l 3) of the Bankruptcy Code), (b) executory contracts or employee Benefit Plans that have previously been rejected, are the subject of a motion to reject pending as of the Confirmation Date or have
been specifically waived by the beneficiaries of any employee Benefit Plan or contract and (c) such executory contracts or employee Benefit Plans to the extent they relate to former employees whose employment by the Debtors terminated prior to the Commencement Date. Notwithstanding anything to the contrary in the Plan or the Confirmation Order, no equity, stock, option or other similar plans in effect on or prior to the Commencement Date shall be assumed, and such plans shall be cancelled.





  



55







  






	
G.
	
CORPORATE GOVERNANCE AND MANAGEMENT OF NEW HOLDCO




 

1.             Board of New
Holdco

 

The initial Board of Directors of New Holdco shall consist of seven members, to be determined by the Creditors' Committee. The initial members of the such Board, together with biographical information, shall be set forth in the Plan Supplement.

 

2.             Officers of New Holdco

 

The initial officers of New Holdco shall be set. forth in the Plan Supplement. Such officers shall serve in accordance with applicable non-bankruptcy law, any employment agreement entered into with New Holdco on or after the Effective Date and the New Organizational Documents.

 

3.             New Employment
Agreements

 

On the Effective Date, New Holdco shall enter into the New Employment Agreements. Michael F. Oyster, the current CEO of Charys Holding will receive an employment agreement. In addition, certain current employees (other than Mr. Oyster) and Alec McClarty (a full-time, salary-paid director) shall be entitled to three months severance in the
event they are terminated. Michael Brenner, the outside attorney who effectively serves as in-house counsel for Charys Holding also is to receive three months severance pay if his services are terminated.

 

In addition, pursuant to the CTSEMSA1 Settlement Agreement, new employment and related agreements will be entered into with certain existing officers of CTSI and MSAI effective as of the Effective Date. Under such employment contracts, the officers will receive the compensation and stock options in New Holdco provided therein. Pursuant to
the Cotton Settlement Agreement, certain existing employees of Cotton will enter into a new employment agreements with Cotton effective as of the Effective Date and will receive the compensation provided for therein.

 


	
H.
	
CONDITIONS PRECEDENT TO EFFECTIVE DATE




 


	
  
	
1.
	
Conditions Precedent to Effectiveness




 

The Effective Date shall not occur and the Plan shall not become effective unless and until the following conditions are satisfied in full or waived in accordance with Section 10.2 of the Plan:

 

(a)           The Confirmation Order, in form and substance reasonably acceptable to the Debtors and the Creditors' Committee, shall have been entered and shall be in full force and effect and there shall not be a stay or injunction in effect with respect thereto;





  



56







  





(b)           All actions and all agreements, instruments or other documents necessary to implement the terms and provisions of the Plan are effected or executed and delivered, as applicable, in form and substance reasonably satisfactory to the Debtors and the Creditors' Committee; and

 

(c)           All authorizations, consents and regulatory approvals, if any, required by the Debtors in connection with the consummation of the Plan have been obtained and have not been revoked, including, if applicable, the expiration or termination of the notification and waiting periods
applicable under the Hart-Scott Rodino Antitrust Improvement Act of 1976, as amended, with respect to distributions of any shares of New Equity Interests pursuant to the Plan to any entity required to file a premerger notification and report form thereunder;

 

(d)           New Holdco shall have been organized and the New Organizational Documents of New Holdco required to be filed with the Secretary of State of Delaware shall have been filed;

 

(e)           The New Employment Agreements shall have become effective;

 

(f)            The Confirmation Order shall contain a finding that the aggregate amount of Cash necessary to satisfy Allowed Administrative Expense Claims shall not exceed $[   ]; and

 

(g)           Holders of 90% in principal amount of the 8.75% Senior Convertible Notes shall have voted to accept the Plan.

 


	
  
	
2.
	
Waiver of Conditions




 

Each of the conditions precedent in Section 10.1 of the Plan may be waived, in whole or in part, by the Debtors with the prior consent of the Creditors' Committee in each of their sole discretion. Any such waiver may be effected at any time, without notice, without leave or order of the Bankruptcy Court and must be in writing.

 


	
  
	
3.
	
Satisfaction of Conditions




 

In the event that one or more of the conditions specified in Section 10.1 of the Plan have not occurred or otherwise been waived pursuant to Section 10.2 of the Plan, within 60 days after the Confirmation Date, or such later date as may be agreed upon by the Debtors and the Creditors' Committee,
then (a) the Confirmation Order shall be vacated, (b) no distributions under the Plan shall be made, (c) the Debtors and all holders of Claims and interests including any Old Equity Interests shall be restored to the status quo ante as of the day immediately preceding the Confirmation Date as though the Confirmation Date never occurred and (d) the Debtors' obligations with respect to Claims and equity interests shall remain unchanged and nothing
contained herein shall constitute or be deemed a waiver or release of any Claims or equity interests by or against the Debtors or any other Person or to prejudice in any manner the rights of the Debtors or any Person in any further proceedings involving the Debtors.





  



57







  






	
I.
	
EFFECT OF CONFIRMATION




 


	
  
	
1.
	
Binding Effect




 

Subject to the occurrence of the Effective Date, on and after the Confirmation Date, the provisions of the Plan will bind any holder of a Claim against, or Equity Interest in, the Debtors and such holder's respective successors and assigns, whether or not such Claim or Equity Interest is impaired under the Plan, whether or not such holder
has accepted the Plan and whether or not such holder is entitled to a distribution under the Plan. Additionally, subject to the occurrence of the Effective Date, on and after the Confirmation Date, the provisions of the Plan shall bind any holder of a 8.75% Senior Convertible Note Claim, Mirror Note Claim, and the Indenture Trustee, and such holder's respective successors and assigns, whether or not such Claim or Equity Interest is impaired under the Plan, whether or not such holder has accepted the Plan and
whether or not such holder is entitled to a distribution under the Plan.

 


	
  
	
2.
	
Discharge of Claims and Termination
of Equity Interest




 

Except as provided in the Plan, the rights afforded in and the payments and distributions to be made under the Plan will terminate all Equity Interests and discharge all existing debts and Claims of any kind, nature or description whatsoever against or in the Debtors or any of their assets or properties to the fullest extent permitted by
section 1141 of the Bankruptcy Code. Except as provided in the Plan, upon the Effective Date, all existing Claims against the Debtors and Equity Interests will be, and will be deemed to be, discharged and terminated, and all holders of such Claims and Equity Interests will be precluded and enjoined from asserting against New Holdco, its successors or assigns or any of its assets or properties, or against the Liquidating Trusts or any of their assets or properties, any other or further Claim or Equity Interest
based upon any act or omission, transaction or other activity of any kind or nature that occurred prior to the Effective Date, whether or not such holder has filed a proof of Claim or proof of equity interest and whether or not the facts or legal bases therefor were known or existed prior to the Effective Date.

 


	
  
	
3.
	
Discharge of Debtors




 

(a)           Upon the Effective Date, in consideration of the distributions to be made under the Plan and except as otherwise expressly provided in the Plan, each holder (as well as any trustees and agents on behalf of each holder) of a Claim or Equity Interest and any Affiliate of such
holder will be deemed to have forever waived, released and discharged the Debtors, to the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Equity Interests, rights and liabilities that arose prior to the Effective Date. Upon the Effective Date, all such persons will be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting any such discharged Claim against or terminated Equity Interest in the Debtors.

 

(b)           In addition to the terms of (a) above, each holder of an 8.75% Senior Convertible Note Claim, each holder of a Mirror Note Claim, and the Indenture Trustee (as well as any trustees and agents on behalf of each holder) and any Affiliate of such holder will be deemed to have
waived, released and discharged the Affiliated Plan Proponents from any Liens, Claims, causes of action, rights of liabilities arising from notes issued under, and the guarantees issued pursuant to, the Indenture. In addition, the Confirmation Order will provide that the Indenture Trustee is authorized and directed to take all such actions necessary to effectuate the foregoing. Upon the Effective Date, all such persons will be forever precluded and enjoined from prosecuting or asserting any such discharged Claim
against the Affiliated Plan Proponents.





  



58







  






	
  
	
4.
	
Injunction or Stay




 

Except as otherwise expressly provided under the Plan or in the Confirmation Order, all Persons or entities who have held, hold or may hold Claims against or Equity Interests in either of the Debtors and all other parties in interest, along with their respective present and former employees, agents, officers, directors,
principals and affiliates, are permanently enjoined, from and alter the Effective Date, from (a) commencing or continuing in any manner any action or other proceeding of any kind on any such Claim or Equity Interest against any of the Debtors or the Liquidating Trusts (b) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against the Debtors or the Liquidating Trusts (c) creating, perfecting or enforcing any encumbrance of any kind against the Debtors
or the Liquidating Trusts or against the property or interests in property of the Debtors or the Liquidating Trusts, (d) asserting any right of setoff, subrogation or recoupment of any kind against any obligation due to the Debtors or against the property or interests in property of the Debtors or the Liquidating Trusts with respect to such Claim or Equity Interest or (e) pursuing any claim released pursuant to Section 11.6 of the Plan. Such injunction shall extend to any successors of the Debtors and the Liquidating
Trusts, including, without limitation, New Holdco, and their respective properties and interests in properties.

 


	
  
	
5.
	
Terms of Injunction or Stay




 

Unless otherwise provided in the Confirmation Order, all injunctions or stays arising under or entered during the Reorganization Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, that are in existence on the Confirmation Date will remain in full force and effect until the Effective Date.

 


	
  
	
6.
	
Injunction Against Interference with Plan of Reorganization




 

Upon the entry of the Confirmation Order, all holders of Claims and Equity Interests and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals and affiliates shall be enjoined from taking any actions to interfere with the implementation or consummation of the Plan.

 


	
  
	
7.
	
Exculpation




 

Notwithstanding anything to the contrary contained in the Plan, as of the Effective Date, none of the Debtors, New Holdco, the Affiliated Plan Proponents, the Liquidating Trusts, the Creditors' Committee, the Ad Hoc Noteholders Committee, and the Indenture Trustee, and their respective officers, directors, members, employees,
accountants, financial advisors, investment bankers, agents, restructuring advisors and attorneys and representatives (but, in each case, solely in their capacities as such) shall have or incur any liability for any Claim, cause of action or other assertion of liability for any act taken or omitted to be taken in connection with, or arising out of, the Reorganization Cases, the formulation, dissemination, confirmation, consummation or administration of the Plan, property to be distributed under the Plan or any
other act or omission in connection with the Reorganization Cases, the Plan, this Disclosure Statement or any contract, instrument, document or other agreement related thereto; provided, however, that the foregoing shall not affect the liability of any person that otherwise would result from any such act or omission to the extent such act or omission is determined by a Final Order to have constituted willful misconduct or gross negligence. Any of the foregoing
Persons in all respects shall be entitled to rely upon the advice of counsel with respect to any of the foregoing. The foregoing exculpation shall not apply to the Non-Released Parties.





  



59







  





8.             Releases

 

Effective as of the Confirmation Date but subject to the occurrence of the Effective Date, and in consideration of the services of (a) the present and former directors, officers, members, employees, affiliates, agents, financial advisors, restructuring advisors, attorneys and representatives of or to the Debtors who acted
in such capacities after the Commencement Date; (b) of the Indenture Trustee; and (c) the services of the members of the Creditors' Committee, and their respective professionals in connection with the Reorganization Cases; (x) the Debtors, the Affiliated Plan Proponents, and New Holdco; (y) each holder of a Claim that votes to accept the Plan (or is deemed to accept the Plan) and (z) to the fullest extent permissible under applicable law, as such law may be extended or integrated after the Effective Date, each
holder of a Claim or Equity Interest that does not vote to accept the Plan, shall release unconditionally and forever each present or former director, officer, member, employee, affiliate, agent, financial advisor, restructuring advisor, attorney and representative (and their respective affiliates) of the Debtors who acted in such capacity after the Commencement Date, the Affiliated Plan Proponents, the Indenture Trustee, the Creditors' Committee, and each of their respective members, officers, directors, agents,
financial advisors, attorneys, employees, equity holders, parent corporations, subsidiaries, partners, affiliates and representatives (but, in each case, solely in their capacities as such) from any and all Claims or causes of action whatsoever in connection with, related to, or arising out of the Reorganization Cases, the pursuit of confirmation of the Plan, the consummation thereof, the administration thereof or the property to be distributed thereunder; provided,
however, that the foregoing shall not operate as a waiver of or release from any causes of action arising out of the willful misconduct or gross negligence of any such person or entity; and provided further however, that the foregoing release shall not apply to the Non-Released Parties.

 


	
  
	
9.
	
Avoidance Actions/Objections




 

Other than any releases granted under the Plan, by the Confirmation Order and by Final Order of the Bankruptcy Court, as applicable, from and after the Effective Date, the Liquidating Trusts, as applicable, will have the right to prosecute any avoidance or equitable subordination or recovery actions under sections 105, 502(d), 510, 542 through
551, and 553 of the Bankruptcy Code that belong to the Debtors or Debtors in Possession, provided however, that the Debtors shall be deemed to have waived all causes of action including avoidance, equitable subordination, and recovery actions against the Indenture Trustee and holders of 8.75% Senior Convertible Note Claims and Mirror Note Claims.

 


	
  
	
10.
	
Retention of Causes of Action/Reservation of Rights




 

(a)      Except as provided in the Plan, nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or the relinquishment of any rights or causes of action that the Debtors or the Liquidating Trusts may have or which the Liquidating Trusts may choose to assert on behalf of the respective
Debtor's estate under any provision of the Bankruptcy Code or any applicable nonbankruptcy law, including, without limitation, (i) any and all Claims against any person or entity, to the extent, such person or entity asserts a crossclaim, counterclaim, and/or Claim for setoff which seeks affirmative relief against the Debtors, the Liquidating Trusts, their officers, directors, or representatives and (ii) the turnover of any property of the Debtors' estates.





  



60







  





(b)      Nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any claim, cause of action, right of setoff, or other legal or equitable defense which the Debtors had immediately prior to the Commencement Date, against or with respect to any Claim left Unimpaired
by the Plan. The Liquidating Trusts shall have, retain, reserve, and be entitled to assert all such claims, causes of action, rights of setoff, and other legal or equitable defenses which the Debtors had immediately prior to the Commencement Date fully as if the Reorganization Cases had not been commenced, and all of the Debtors' legal and equitable rights respecting any Claim left Unimpaired by the Plan may be asserted after the Confirmation Date by the Liquidating Trusts to the same extent as if the Reorganization
Cases had not been commenced.

 


	
J.
	
MISCELLANEOUS PROVISIONS




 


	
  
	
1.
	
Withholding and Reporting Requirements




 

In connection with the Plan and all instruments issued and distributed in connection with the Plan, any party issuing any instrument or making any distribution under the Plan must comply with all applicable withholding and reporting requirements imposed by any federal, state or local taxing authority, and all distributions under the Plan
will be subject to any such withholding or reporting requirements. Notwithstanding the above, each holder of an Allowed Claim that is to receive a distribution under the Plan will have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed on such holder by any governmental unit, including income, withholding and other tax obligations, on account of such distribution. Any party issuing any instrument or making any distribution under the Plan has the right, but not
the obligation, to not make a distribution until such holder has made arrangements satisfactory to such issuing or disbursing party for payment of any such tax obligations.

 


	
  
	
2.
	
Corporate Action




 

On the Effective Date, all matters provided for under the Plan that would otherwise require approval of the stockholders or directors of one or more of the Debtors shall be deemed to have occurred and shall be in effect from and after the Effective Date pursuant to the applicable general corporation law of the states in which the Debtors
are incorporated, without any requirement of further action by the stockholders or directors of the Debtors.

 


	
  
	
3.
	
Modification of Plan




 

Subject to the prior consent of the Creditors' Committee, alterations, amendments or modifications of or to the Plan may be proposed in writing by the Debtors at any time prior to the Confirmation Date, provided that the Plan, as altered, amended or modified satisfies the conditions of sections 1122 and 1123 of the Bankruptcy Code and the
Debtors shall have complied with section 1125 of the Bankruptcy Code. Subject to the prior consent of the Creditors' Committee, the Plan may be altered, amended or modified at any time after the Confirmation Date and before substantial consummation, provided that the Plan, as altered, amended or modified, satisfies the requirements of sections 1122 and 1123 of the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms the Plan, as altered, amended or modified, under section 1129 of the
Bankruptcy Code and the circumstances warrant such alterations, amendments or modifications. A holder of a Claim that has accepted the Plan shall be deemed to have accepted the Plan, as altered, amended or modified, if the proposed alteration, amendment or modification does not materially and adversely change the treatment of the Claim of such holder.





  



61







  





Prior to the Effective Date, the Debtors may, with the prior consent of the Creditors' Committee, make appropriate technical adjustments and modifications to the Plan without further order or approval of the Bankruptcy Court, provided that such technical adjustments and modifications do not adversely affect in a material way the treatment
of holders of Claims or Equity Interests.

 

For the avoidance of doubt, the foregoing shall not effect a waiver of any rights that any party may have with respect to modification of the Plan under section 1127 of the Bankruptcy Code.

 


	
  
	
4.
	
Revocation or Withdrawal of the Plan




 

The Debtors reserve the right to revoke or withdraw the Plan, in whole or in part, prior to the Confirmation Date. If the Debtors revoke or withdraw the Plan in whole prior to the Confirmation Date, then the Plan shall be deemed null and void. In such event, nothing contained therein shall constitute or be deemed a waiver or release of any
Claims or Equity Interests by or against, the Debtors or any other person or to prejudice in any maimer the rights of the Debtors or any person in any further proceedings involving the Debtors. The Debtors reserve the right to withdraw the Plan with respect to either Debtor and proceed with confirmation of the Plan with respect to the other Debtor. In such event, nothing contained therein shall constitute or be deemed a waiver or release of any Claims against or equity interests in the Debtor withdrawn from the
Plan or any other person or to prejudice in any manner the rights of such Debtor or any person in any further proceedings involving such withdrawn Debtor.

 


	
  
	
5.
	
Plan Supplement




 

The Plan Supplement and the documents contained therein shall be in form and substance reasonably satisfactory to the Debtors and the Creditors' Committee, and shall be filed with the Bankruptcy Court no later than five (5) Business Days before the deadline for voting to accept or reject the Visa,provided
that the documents included therein may thereafter be amended and supplemented prior to execution with the consent of the Creditors' Committee, where reasonably necessary. The Plan Supplement and the documents contained therein are incorporated into and made a part of the Plan as if set forth in full herein.

 


	
  
	
6.
	
Dissolution of the Creditors' Committee




 

On the Effective Date, the Creditors' Committee will be dissolved and the members thereof will be released and discharged of and from all further authority, duties, responsibilities and obligations related to and arising from and in connection with the Reorganization Cases, and the retention or employment of the Creditors' Committee's attorneys,
accountants and other agents, if any, will terminate other than for purposes of (i) filing and prosecuting applications for final allowances of compensation for professional services rendered and reimbursement of expenses incurred in connection therewith, and (ii) reviewing and objecting to the applications of other parties for the allowance of compensation for professional services rendered and reimbursement of expenses incurred in connection therewith,.





  



62







  






	
  
	
7.
	
Exemption from Transfer Taxes




 

Pursuant to section 1146(a) of the Bankruptcy Code, the issuance, transfer or exchange of notes or equity securities under or in connection with the Plan, the creation of any mortgage, deed of trust or other security interest, the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer
under, in furtherance of, or in connection with the Plan, including, without limitation, the New Secured Notes and New Equity Interests, any merger agreements or agreements of consolidation, deeds, bills of sale or assignments executed in connection with any of the transactions contemplated under the Plan, shall not be subject to any stamp, real estate transfer, mortgage recording or other similar tax.

 

VII.

 

PROJECTIONS AND VALUATION ANALYSIS

 


	
A.
	
CONSOLIDATED CONDENSED PROJECTED FINANCIAL STATEMENTS




 


	
  
	
1.
	
Responsibility for and Purpose of the Projections




 

As a condition to confirmation of a plan, the Bankruptcy Code requires, among other things, that the Bankruptcy Court determine that confirmation is not likely to be followed by the liquidation or the need for further financial reorganization of the debtor. In connection with the development of the Plan, and for purposes of determining whether
the Plan satisfies this feasibility standard, the management of Charys Holding has analyzed the ability of New Holdco to meet its obligations and retain sufficient liquidity and capital resources to conduct its business.

 


	
  
	
2.
	
Pro Forma Financial Projections




 

The Debtors believe that the Plan meets the Bankruptcy Code's feasibility requirement that Plan confirmation is not likely to be followed by liquidation or the need for further financial reorganization of the Debtors or any successor under the Plan.

 

In connection with the development of the Plan, and for the purposes of determining whether the Plan satisfies the feasibility standard, the Debtors analyzed the ability to satisfy financial obligations while maintaining sufficient liquidity and capital resources. In this regard, the Debtors' management together with their financial advisor
developed and refined a business plan and prepared financial projections for New Holdco for the three month period ending April 30, 2009 (the "Stub Period") and for the fiscal years ending April 30, 2010 through April 30, 2012 (collectively, the "Projections"). The Projections have been prepared on a consolidated basis. Charys does not, as a
matter of course, publish its business plans and strategies or projections or anticipated financial position or results of operations. Accordingly, it is not anticipated that there will be, and any obligation is disclaimed to, furnish updated business plans or projections to holders of Claims or interests after the Confirmation Date, or to include such information in documents, if any, required to be filed with the Securities and Exchange Commission, or otherwise make such information public. As of the date hereof,
Charys does not have the consolidated actual results for the year ending April 30, 2008.





  



63







  





In connection with the planning and development of the Plan, the Projections were prepared to present the anticipated impact of the Plan. The Projections assume that the Plan will be implemented in accordance with its stated terms. Since the Projections are based on forecasts of key economic variables such as the demand for the services of
New Holdco and its subsidiaries, the ability to achieve certain cost reductions in an efficient maimer, and the ability to maintain certain customers and pricing, the estimates and assumptions underlying the Projections are inherently uncertain. Though considered reasonable by Charys as of the date hereof, the Projections are subject to significant business, economic and competitive uncertainties. Accordingly, such projections, estimates and assumptions are not necessarily indicative of current values or future
performance, which may be significantly less favorable or more favorable than as set forth. The Projections were substantially completed on or about November 20, 2008.

 

THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD COMPLIANCE WITH THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS, THE PRACTICES RECOGNIZED TO BE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, OR THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION REGARDING
PROJECTIONS. FURTHERMORE, THE PROJECTIONS HAVE NOT BEEN AUDITED BY INDEPENDENT ACCOUNTANTS.

 

ALTHOUGH EVERY EFFORT WAS MADE TO BE ACCURATE, THE PROJECTIONS ARE ONLY AN ESTIMATE, AND ACTUAL RESULTS MAY VARY CONSIDERABLY FROM THE PROJECTIONS. IN ADDITION, THE UNCERTAINTIES WHICH ARE INHERENT IN THE PROJECTIONS INCREASE FOR LATER YEARS IN THE PROJECTION PERIOD, DUE TO INCREASED DIFFICULTY ASSOCIATED WITH FORECASTING
LEVELS OF ECONOMIC ACTIVITY AND NEW HOLDCO'S PERFORMANCE AT MORE DISTANT POINTS IN THE FUTURE. CONSEQUENTLY, THE PROJECTED INFORMATION INCLUDED HEREIN SHOULD NOT BE REGARDED AS A REPRESENTATION BY THE DEBTORS, THE DEBTORS' ADVISORS, OR ANY OTHER PERSON THAT THE PROJECTED RESULTS WILL BE ACHIEVED. THE PROJECTIONS WERE NOT PREPARED WITH A VIEW TOWARD PUBLIC DISCLOSURE OR COMPLIANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, THE PUBLISHED GUIDELINES OF THE SECURITIES AND EXCHANGE COMMISSION OR THE AMERICAN INSTITUTE
OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING PROJECTIONS OR FORECASTS. THE PROJECTIONS HAVE NOT BEEN AUDITED OR REVIEWED BY THE DEBTORS' INDEPENDENT CERTIFIED ACCOUNTANTS. IMPAIRED CREDITORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THE FOLLOWING PROJECTIONS IN DETERMINING WHETHER TO VOTE TO ACCEPT OR REJECT THE PLAN.

 

The Projections assume that (i) the Plan will be confirmed and consummated in accordance with its terms, (ii) there will be no material change in legislation or regulations, or the administration thereof, that will have an unexpected effect on the operations of Charys or New Holdco, (iii) there will be no change in generally accepted accounting
principles in the United States that will have a material effect on the reported financial results of Charys or New Holdco, (iv) the application of Fresh Start Reporting will not materially change the Debtors' revenue accounting procedures, and (v) there will be no material contingent or unliquidated litigation or indemnity claims applicable to New Holdco. To the extent that the assumptions inherent in the Projections are based upon future business decisions and objectives, they are subject to change. In addition,
although they are presented with numerical specificity and considered reasonable by the Debtors when taken as a whole, the assumptions and estimates underlying the Projections are subject to significant business, economic and competitive uncertainties and contingencies, many of which will be beyond the control of Charys or New Holdco. Accordingly, the Projections are only an estimate and, therefore, necessarily speculative in nature. It can be expected that some or all of the assumptions underlying the Projections
will not be realized and that actual results will vary from the Projections, which variations may be material and are likely to increase over time. The Projections should therefore not be regarded as a representation by the Debtors, Charys, New Holdco, or any other Person that the results set forth in the Projections will be achieved. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The Projections should be read together with the information, the assumptions, qualifications
and footnotes to tables containing the Projections (which include projected statements of operations, projected balance sheets, and projected statements of cash flows) set forth herein, and the historical consolidated financial information (including the notes and schedules thereto).





  



64







  





SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. The Projections contain statements which constitute "forward-looking statements" within the meaning of the Securities Act and the Securities Exchange Act of 1934 (the "Exchange
Act"), as amended by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" in the Projections include the intent, belief or current expectations of Charys and members of its management team with respect to the timing of, completion of and scope of the current restructuring, reorganization plan, strategic business plan, bank financing, and debt and equity market conditions and the Debtors' future liquidity, as well as the assumptions upon which such statements are based. While
Charys believes that the expectations are based on reasonable assumptions within the bounds of their knowledge of their business and operations, parties in interest are cautioned that any such forward-looking statements are not guarantees of future performance, and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those
contemplated by the forward-looking statements in the Projections include, but are not limited to, further adverse developments with respect to Charys' liquidity position or operations of Charys' business, adverse developments in Charys' efforts to renegotiate its funding and adverse developments in the bank financing or public or private markets for debt or equity securities, or adverse developments in the timing or results of Charys' strategic business plan (including the time line to emerge from chapter 11),
the ability of Charys and/or New Holdco to retain and attract new clients and maintain favorable vendor relationships, the difficulty in controlling industry costs and the ability of Charys and/or New Holdco to realize the anticipated general and administrative expense savings and overhead reductions presently contemplated, the ability of Charys and/or New Holdco to return its operations to profitability, the level and nature of any restructuring and other one-time charges, the difficulty in estimating costs
relating to exiting certain markets and consolidating and closing certain operations, and the possible negative effects of a change in applicable legislation.





  



65







  



 


	 	
3.
	
Summary of Significant Assumptions




 

Fresh Start Accounting. The Projections assume an Effective Date of January 31, 2009, and the estimated impact of Fresh Start Accounting has been applied for periods after the Effective
Date. Fresh Start Accounting principles are contained in the American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." Adoption of Fresh Start Accounting requires the determination of the reorganization value of the entity that emerges from bankruptcy. Reorganization value generally approximates fair value of the entity before considering long term liabilities. The actual impact of Fresh Start Accounting will be
determined after Charys emerges from bankruptcy, and this may differ, potentially by material amounts from the estimated impact assumed herein.

 

The following table represents Charys Holding's estimation of the balance sheet at the Effective Date.



 


	
IN THOUSANDS as of January 31, 2009
	 	
Before debt restructuring and fresh start
	 	 	
Debt restructuring
	 	 	
Fresh start
	 	 	
After debt restructuring and fresh start
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	
Current Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	
Cash and cash equivalents
	 	$	17,934	 	 	$	(6,461	)	 	$	 	 	 	$	11,473	 
	
Accounts receivable - net
	 	 	41,926	 	 	 	 	 	 	 	 	 	 	 	41,926	 
	
Inventory - net
	 	 	484	 	 	 	 	 	 	 	 	 	 	 	484	 
	
Net intercompany balance
	 	 	174,516	 	 	 	(174,516	)	 	 	 	 	 	 	 	 
	
Prepaid expenses
	 	 	1,320	 	 	 	(448	)	 	 	 	 	 	 	872	 
	
Total current assets
	 	 	236,180	 	 	 	(181,425	)	 	
-
	 	 	 	64,756	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Properly, plant & equipment - net
	 	 	4,977	 	 	 	 	 	 	 	 	 	 	 	4,977	 
	
Other intangibles - net
	 	 	153,164	 	 	 	 	 	 	 	(153.164	)	 	
_
	 
	
Reorganization value in excess of recorded amounts
	 	 	 	 	 	 	 	 	 	 	42,823	 	 	 	42.823	 
	
Other assets
	 	 	(1,465	)	 	 	1,482	 	 	 	 	 	 	 	17	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total assets
	 	$	392,858	 	 	$	(179,943	)	 	$	(110,341	)	 	$	102,572	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Liabilities and stockholder (deficit) equity:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Current liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Accounts payable - trade & other
	 	 	8,010	 	 	 	-	 	 	 	-	 	 	 	8,010	 
	
Revolving cash flow facility
	 	 	11,914	 	 	 	 	 	 	 	 	 	 	 	11,914	 
	
Accrued sales tax
	 	 	1,414	 	 	 	-	 	 	 	 	 	 	 	1,414	 
	
Billings in excess of cost
	 	 	252	 	 	 	 	 	 	 	-	 	 	 	252	 
	
Other current liabilities
	 	 	13,512	 	 	 	(6,461	)	 	 	-	 	 	 	7,051	 
	
Total current liabilities
	 	 	35,102	 	 	 	(6,461	)	 	 	-	 	 	 	28,641	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Long term debt:'
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Vehicle/capital leases
	 	 	1,831	 	 	 	 	 	 	 	-	 	 	 	1,831	 
	
Term Debt
	 	 	1,657	 	 	 	(1,657	)	 	 	-	 	 	 	 	 
	
Unsecured notes payable - unrelated parties
	 	 	315,508	 	 	 	(295,508	)	 	 	 	 	 	 	20,000	 
	
Unsecured notes payable - related parties
	 	 	17,404	 	 	 	(17,404	)	 	 	-	 	 	 	-	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total stockholder's (deficit) equity
	 	 	21,364	 	 	 	141,087	 	 	 	(110,341	)	 	 	62,100	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total liabilities and stockholder (deficit) equity
	 	$	392,856	 	 	$ 	
(179,943)
	 	 	$	(110,341	)	 	$	102,572	 



* Long term debt not bean adjusted to reflect The current portion of the outstanding amounts payable

 


	
  
	
4.
	
Business Strategy of New Holdco




 

Management has reviewed each of the subsidiaries currently owned by Charys Holding and has determined that certain subsidiaries should be discontinued in connection with the implementation of the Plan. Such determinations were made based on, among other things, management's estimates of potential revenues and EBITDA for each of the subsidiaries,
the competitive nature and current trends in each of the markets in which the subsidiaries operate and the operating profiles of each of the subsidiaries. Based on management's analysis, the following subsidiaries are expected to continue to operate as part of the reorganized entity: Cotton, CTSI, MSAI, and LFC.





  



66







  





Management anticipates at the Effective Date that Cotton, CTSI, MSAI and LFC will each operate as separate entities with their own management teams. Charys Holding management continues, however, to review the operations of each of these subsidiaries and may determine that the consolidation of certain operations will maximize the value of
these subsidiaries. Management's estimates do not include any potential upside from the consolidation of any of the operations of the subsidiaries.

 

The assets of all of the other subsidiaries are anticipated to be liquidated.

 


	
  
	
5.
	
Income Statement Assumptions




 


	
  
	
(a)
	
Revenues




 

The Projections for revenues from 2009 through 2011 show a decrease in full year revenues from $191.7 million in 2009 to $123.8 million in 2011. The Projections for fiscal year 2009 include significant revenue generated by unusual hurricane related activity experienced during this year. Additionally, fiscal year 2010 includes residual revenues
resulting from construction contracts related to this activity initiated but not completed in fiscal year 2009. Fiscal years 2011 and 2012 do not include any impact from similar unusual storm activity.

 

In the Remediation Business, the focus will continue to be on development of the commercial construction business. Fiscal year 2009 and 2010 construction results include a significant amount of storm related activity, with revenues projected to be $53.1 million and $56.0 million, respectively. The Company assumes a return to its normal baseline
construction business in 2011, with revenues projected to be $32,7 million versus a non-storm baseline in 2008 of $27.1 million. Cotton anticipates that it will achieve this baseline growth through an increase in its ability to receive bonding commitments for large construction contracts of publicly owned property. Cotton also anticipates expanding its construction licenses into states in which it is currently restricted from doing business due to the chapter 11 filing. In the traditional remediation business,
Cotton projects that its revenues will decrease from $92.3 million in fiscal year 2009 to $36.0 million in fiscal year 2011. This decrease is due to fact that significant unusual storm related activity was experienced in fiscal year 2009 and is not assumed in fiscal years 2010 and 2011. Cotton does anticipate, however, growth in its traditional day-to-day remediation business, which generated non-storm related revenues of $ 18.1 million in 2008.

 

In the Telecommunications Business, Charys Holding has made the following assumptions:

 

CTSI - Revenues are projected to increase from $29.5 million in fiscal year 2009 to $35.6 million in fiscal year 2011. CTSI anticipates that two of its lines of business should continue to create revenue growth. First, it estimates that its raw land development revenues will increase from $14.4 million in fiscal year 2009 to $17.4 million
in fiscal year 2011 as AT&T and Verizon evaluate their next generation services strategy and determine which markets are underserved for wireless services and require upgrades. During fiscal year 2009, CTSI has begun developing 3G capable cell-tower sites for one large customer in certain locations in the Mississippi and Louisiana markets. Second, CTSI anticipates a continued growth in generator installations, as wireless providers like AT&T and Verizon continue to make their cell sites self sufficient.
CTSI anticipates this revenue stream to increase from $9.5 million in fiscal year 2009 to $11. .5 million in fiscal year 2011.





  



67







  





MSAI - Revenues are anticipated to grow from $7.3 million in fiscal year 2009 to $9.0 million in fiscal year 2011. The primary driver of this growth is the projected development of the relationship with its primary customer outside of the Louisiana market in which MSAI has traditionally worked. This growth should be facilitated by the successful
bid by this customer for a major project in the Midwest. MSAI anticipates revenues increasing with respect to this customer from $5.0 million in fiscal year 2009 to $6.0 million in fiscal year 2011, MSAI also anticipates further developing its relationship with its second largest customer, with revenues with respect to this customer projected to increase from $1.3 million in fiscal year 2009 to $1.8 million in fiscal year 2011.

 

LFC - LFC's revenues are anticipated to increase approximately 5% annually. This growth is expected to come from the continued expansion of its construction materials testing services. LFC's plans include opening an office and expanding its services to the Dallas market. LFC will continue to evaluate other markets for the possibility of future
expansion of its services,

 


	
  
	
(b)
	
Operating Expenses




 

Sales and Administrative Costs - The Debtors anticipate a significant reduction in the costs ofthe operation of New Holdco due to a number of factors. It is expected that the number of employees will be reduced from eleven to five, with significant salary expenses eliminated as part of the plan. New Holdco also expects that the cost of auditing
and accounting functions will be reduced due to the conversion from a public entity to a private one. The Debtors estimate that $3.0 million-$4.0 million may be saved on sales and administrative costs based on these changes.

 


	
  
	
(c)
	
Interest Expense




 

Interest expense in the accompanying Projections has been calculated using a 12% interest rate for the revolving credit facilities at the subsidiary level. The interest on the second lien debt, at New Holdco is calculated using a 12% and 15% interest rate respectively.

 


	
  
	
(d)
	
Taxes




 

Charys Holding anticipates that New Holdco will not have the ability to utilize any significant amount of NOLs to offset future taxable income. See article XII for further details.

 

Below is management's estimates for the Income Statement for the three month period ending April 30, 2009 and for the full fiscal years ending April 30, 2010 through April 30, 2012.

 



 



68







 














	
IN THOUSANDS
	 	
3 Months
	 	 	
12 Months
	 	 	
12 Months
	 	 	
12 Months
	 
	
For the periods ended April 30,
	 	
Feb 2009 -April 2009
	 	 	
FY 2010
	 	 	
FY 2011
	 	 	
FY 2012
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Net sales
	 	$	26,782	 	 	$	140,204	 	 	$	123,754	 	 	$	129,144	 
	
Cost of goods sold
	 	 	17,350	 	 	 	90,691	 	 	 	76,471	 	 	 	79,643	 
	
Gross profit
	 	 	9,432	 	 	 	49,613	 	 	 	47,283	 	 	 	49,501	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Selling
	 	 	1,185	 	 	 	5,339	 	 	 	4,965	 	 	 	5,131	 
	
General and administrative
	 	 	4,847	 	 	 	20,714	 	 	 	20,830	 	 	 	21,480	 
	
Other expense
	 	 	5.229	 	 	 	3,613	 	 	 	1,598	 	 	 	1,695	 
	
Depreciation and amortization
	 	 	968	 	 	 	820	 	 	 	769	 	 	 	723	 
	
Operating income
	 	 	(2,797	)	 	 	19,027	 	 	 	19,121	 	 	 	20,472	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Interest Expense
	 	 	970	 	 	 	3,831	 	 	 	3,747	 	 	 	3,747	 
	
Income from operations before income tax
	 	 	(3,767	)	 	 	15,196	 	 	 	15,374	 	 	 	16,726	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Income Tax (@39%)*
	 	 	(1,469	)	 	 	5,926	 	 	 	5,996	 	 	 	6,523	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Income
	 	$	(2,298	)	 	$	9,270	 	 	$	9,378	 	 	$	10,202	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Adjusted EBITDA Reconciliation
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Earnings before interest and taxes
	 	$	(2.797	)	 	$	19,027	 	 	$	19,121	 	 	$	20,472	 
	
Other expenses (Including MIP)
	 	 	5,229	 	 	 	3,613	 	 	 	1,598	 	 	 	1,695	 
	
Depreciation and amortization
	 	 	254	 	 	 	020	 	 	 	769	 	 	 	723	 
	
Adjusted EBITDA
	 	$	2,686	 	 	$	23,460	 	 	$	21,488	 	 	$	22,890	 








* Estimated combined effective Federal, Texas, Louisiana and Georgia state tax rates






	
  
	
6.
	
Balance Sheet Assumptions









	
  
	
(a)
	
Capital Expenditures








Capital expenditures are anticipated to be minimal for the period between 2010 and 2011, with an estimated amount of $0.5 million per year,






	
  
	
(b)
	
Working Capital








Trade receivables, inventory and accounts payable levels are projected to be maintained at relatively consistent levels during the 2009-2011 projection periods. Trade receivables are forecasted at a level of 68-144 days. Trade payables are forecasted at a level between 29-40 days. Trade payables are expected to maintain at historical levels
due to the fact that the subsidiaries were not part of the chapter 11 cases.





Below is management's estimates for the Balance Sheet for the fiscal years ending April 30, 2009 through April 30, 2012:








  



69







  




 






	
IN THOUSANDS
	 	 	 	 	 	 	 	 	 	 	 	 
	
For period ending April 30,
	 	
2009
	 	 	
2010
	 	 	
2011
	 	 	
2012
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	
Current Assets:
	 	 	 	 	 	 	 	 	 	 	 	 
	
Cash and cash equivalents
	 	$	8,390	 	 	$	13,599	 	 	$	25,255	 	 	$	34,961	 
	
Accounts receivable-net
	 	 	31,615	 	 	 	29,082	 	 	 	30,869	 	 	 	32,248	 
	
Inventory - net
	 	 	738	 	 	 	799	 	 	 	775	 	 	 	751	 
	
Prepaid expenses
	 	 	831	 	 	 	835	 	 	 	835	 	 	 	835	 
	
Total current assets
	 	 	41,574	 	 	 	44,315	 	 	 	57,734	 	 	 	68,795	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Property, plant & equipment - net
	 	 	4,868	 	 	 	4,629	 	 	 	4,439	 	 	 	4,248	 
	
Reorganization value in excess of recorded amounts
	 	 	42,823	 	 	 	42,823	 	 	 	42,823	 	 	 	42,823	 
	
Other assets
	 	 	17	 	 	 	17	 	 	 	17	 	 	 	16	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total assets
	 	$	89,282	 	 	$	91,784	 	 	$	105,013	 	 	$	115,882	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Liabilities and stockholders' equity:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Current liabilities:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Accounts payable-trades other
	 	 	6,630	 	 	 	6,953	 	 	 	6,999	 	 	 	7,063	 
	
Revolving cash flow facility
	 	 	8,904	 	 	 	4,342	 	 	 	8,030	 	 	 	8,030	 
	
Accrued sales tax
	 	 	1,414	 	 	 	1,415	 	 	 	1,415	 	 	 	1,415	 
	
Billings in excess of cost
	 	 	317	 	 	 	341	 	 	 	368	 	 	 	397	 
	
Other current liabilities
	 	 	7,723	 	 	 	6,188	 	 	 	6,508	 	 	 	6,835	 
	
Total current liabilities
	 	 	24,888	 	 	 	19,239	 	 	 	23,320	 	 	 	23,740	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Long term debt:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Vehicle/capital leases
	 	 	1,820	 	 	 	1,753	 	 	 	1,719	 	 	 	1,698	 
	
Unsecured notes payable - unrelated parties
	 	 	20,000	 	 	 	20,000	 	 	 	20,000	 	 	 	20,000	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total stockholders' equity
	 	 	42,574	 	 	 	50,792	 	 	 	59,974	 	 	 	70,444	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total liabilities and stockholders' equity
	 	$	89,282	 	 	$	91,784	 	 	$	105,013	 	 	$	115,882	 







* Long term debt has not been adjusted to reflect the current portion of the outstanding amounts payable. Additionally amounts do not reflect debt inductions from excess cash that would likely occur if projected results are achieved.






	
B.
	
VALUATION








In connection with certain matters relating to the Plan, the Debtors directed AlixPartners to prepare a valuation analysis of the anticipated on-going businesses of the Debtors. The valuation analysis was prepared by AlixPartners based on the Projections and financial and market conditions prevailing as of November 20, 2008.





In preparing its analysis, AlixPartners has, among other things: (i) reviewed certain internal financial and operating data of Charys; (ii) discussed with certain senior executives the current operations and prospects of Charys; (iii) reviewed certain operating and financial forecasts prepared by Charys, including the Projections; (iv) discussed
with certain senior executives of Charys key assumptions related to the Projections; (v) prepared discounted cash flow analyses based on the Projections, utilizing various discount rates and terminal value multiples; (vi) considered the prevailing trading multiples of certain publicly-traded companies in businesses reasonably comparable to the operating businesses of Charys; (vii) considered the transaction multiples of acquisitions involving companies in businesses reasonably comparable to the operating businesses
of Charys; and (viii) considered such other analyses as AlixPartners deemed appropriate and necessary under the circumstances,





AlixPartners relied upon and assumed, without independent verification, the accuracy and completeness of the financial and other information provided to or discussed with it by Charys or obtained it from public sources. AlixPartners has not audited, reviewed or compiled the accompanying information in accordance with Generally Accepted Auditing
Standards, or otherwise. With respect to all projections furnished to it, AlixPartners has relied on representations that they were reasonably prepared on bases reflecting the best currently available estimates and judgments of the senior management of Charys as to the expected future performance of New Holdco. AlixPartners has not assumed any responsibility for the independent verification of any such information, including, without
limitation, the Projections, and has further relied upon the assurances of the senior management of Charys that they are unaware of any facts that would make the information and Projections incomplete or misleading.








  



70







  








In addition to the foregoing, AlixPartners relied upon the following assumptions in arriving at its estimated valuation: (i) the Effective Date occurs on or about January 31, 2009; (ii) Charys Holding is able to recapitalize as New Holdco and has adequate liquidity as of the Effective Date; (iii) the Debtors are able to implement the Plan
in the maimer described herein; (iv) the pro forma debt levels of New Holdco, net of cash and cash equivalents, would be approximately $34 million immediately following the Effective Date; (v) New Holdco will not have significant NOLs available to offset future taxable income as of the Effective Date; and (vi) general financial and market conditions as of the Effective Date will not differ materially from the conditions prevailing as of the date hereof.





AlixPartners has employed generally accepted valuation techniques in estimating the reorganization value of New Holdco, AlixPartners primarily relied on a Discounted Cash Flow ("DCF") analysis to value New Holdco's subsidiaries, but utilized a comparable public company analysis to verify its findings. These valuation methodologies reflect
both the market's current view of New Holdco's business plan and operations, as well as longer term focus on the intrinsic value of the cash flow projections in the New Holdco's business plan.






	
  
	
1.
	
DCF Analysis








A DCF valuation was the primary methodology used to determine the reorganization value of New Holdco. The discounted cash flow of an enterprise represents the present value of unleveraged, after-tax cash flows available to all providers of capital using an appropriate set of discount rates. The DCF approach takes into account the projected
operating cash flows of the subject company by using company projections as the basis for the financial model. The underlying concept of the DCF approach is that debt-free, after-tax cash flows are estimated for a projection period and a terminal value is estimated to determine the going concern value of the subject company from the end of the projection period forward. These cash flows are then discounted at an appropriate weighted average cost of capital, which is determined by referring to, among other things,
the average cost of debt and equity for the other participants throughout the industry.






	
  
	
2.
	
Comparable Public Company Analysis








AlixPartners also utilized a Comparable Public Company Analysis to verify its findings. In a Comparable Public Company Analysis, a subject company is valued by comparing it with publicly held companies in reasonably similar lines of business. The comparable public companies are chosen based on, among other attributes, their similarity to
the subject company's size, profitability and market presence. The price that an investor is willing to pay in the public markets for each company's publicly traded securities represents that company's current and future prospects as well as the rate of return required on the investment.





In selecting comparable public companies, AlixPartners considered factors such as the focus of the comparable companies' businesses as well as such companies' current and projected operating performance. Numerous financial multiples and ratios were developed to measure
each company's valuation and relative performance. Some of the specific analyses entailed comparing the enterprise value (defined as market value of equity plus market value of debt, book value of preferred stock and minority interest minus excess cash) for each of the comparable public companies to their projected revenue and EBITDA. These multiples were calculated on or around the date hereof and were then applied to the Debtors' financial projections to determine the range of enterprise value and equity value
using this methodology.








  



71







  








As a result of such analyses, review, discussions, considerations and assumptions, AlixPartners provided to the Debtors an estimate that the total enterprise value ("TEV") on a "reorganization value" basis of New Holdco is a range of approximately $72 million to $119 million with a utilized value of $86 million based on the DCF analysis (the
"TEV Range"). AlixPartners reduced such utilized TEV estimate by the estimated pro forma net debt levels of New Holdco of $34 million, in order to calculate the implied reorganized equity value of New Holdco. Accordingly, AlixPartners estimates that New Holdco's mid-point total reorganized equity value is $52 million.





Management's projections, and accordingly this valuation, reflect the impact of unusual storm related activity which has driven a significant increase in Cotton's actual revenues for fiscal year 2009 and its projected revenues for fiscal year 2010. The projections and valuation do not reflect any incremental revenue that could result from
additional unusual storm related events in fiscal year 2011 or thereafter. If such unusual storm related activity was assumed in perpetuity, the potential increase in enterprise value could range from $20 to $25 million.





The above estimated range of values represents a hypothetical value that reflects the estimated intrinsic value of the New Holdco derived through the application of various valuation methodologies. The equity value ascribed in AlixPartners' analysis does not purport to be an estimate of a post-reorganization trading value. To the extent a
market can be found for the New Holdco's equity securities, trading values may be materially different from the implied equity value ranges associated with AlixPartners' valuation analysis. AlixPartners' reorganization value estimate is based on economic, market, financial and other conditions as they exist, and on the information made available to AlixPartners as of November 20, 2008. It should be understood that, although subsequent developments may affect AlixPartners' conclusions, AlixPartners does not have
any obligation to update, revise or reaffirm its estimate.





The summary set forth above does not purport to be a complete description of the analyses performed by AlixPartners. The preparation of a valuation estimate involves various determinations as to the most appropriate and relevant methods of financial analysis and the application of these methods in the particular circumstances and, therefore,
such an estimate is not readily susceptible to summary description. The value of an operating business is subject to uncertainties and contingencies that are difficult to predict and will fluctuate with changes in factors affecting the financial results, financial condition and prospects of such a business. As a result, the estimate of implied equity value set forth herein is not necessarily indicative of actual outcomes, which may be significantly more or less favorable than those set forth herein. In addition,
estimates of implied equity value do not purport to be appraisals, nor do they necessarily reflect the values that might be realized if assets were sold. The estimates prepared by AlixPartners assume that New Holdco and its subsidiaries will continue as the owners and operators of their businesses and assets. Depending on the results of such operations or changes in the financial markets, actual total enterprise value and actual equity value may differ significantly from AlixPartners' valuation analysis set forth
herein.








  



72







  




 





	
Reorganization Value
	
$86 million

	
Less Net Debt
	
$34 million

	
New Equity Value
	
$52 million







 

VIII.





CERTAIN FACTORS AFFECTING THE DEBTORS






	
A.
	
CERTAIN BANKRUPTCY LAW CONSIDERATIONS









	
  
	
1.
	
Risk of Non-Confirmation of the Plan of Reorganization








Although the Plan Proponents believe that the Plan will satisfy all requirements necessary for confirmation by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will reach the same conclusion or that modifications of the Plan will not be required for confirmation or that such modifications would not necessitate resolicitation
of votes.






	
  
	
2.
	
Non-Consensual Confirmation








In the event any impaired class of claims or equity interests does not accept a plan of reorganization, a bankruptcy court may nevertheless confirm such plan at the proponent's request if at least one impaired class has accepted the plan (with such acceptance being determined without including the vote of any "insider" in such class), and
as to each impaired class that has not accepted the plan, the bankruptcy court determines that the plan "does not discriminate unfairly" and is "fair and equitable" with respect to the dissenting impaired Classes. See section IX.B.(2) below, entitled "CONFIRMATION OF THE PLAN OF REORGANIZATION; Requirements for Confirmation of the Plan of Reorganization; Requirements of Section 1129(b) of the Bankruptcy Code." Because Charys Holding Class 9 (Charys Holding Subordinated Debt Claims), Charys Holding Class 10 (Charys
Holding Securities Claims), Charys Holding Class 11 (Charys Holding Equity Interests), C&B Class 4B (C&B 8.75% Senior Convertible Note Claims), C&B Class 5 (C&B Securities Claims) and C&B Class 6 (C&B Equity Interests) are deemed to reject the Plan, these requirements must be satisfied with respect such Classes. The Debtors believe that the Plan satisfies these requirements.






	
  
	
3.
	
Risk of Non-Occurrence of the Effective Date








Although the Debtors believe that the Effective Date will occur soon after the Confirmation Date, there can be no assurance as to such timing. Moreover, if each of the conditions to consummation and the occurrence of the Effective Date has not been satisfied or duly waived on or before 60 days after the Confirmation Date, or such later date
as may be consented to by the parties, the Bankruptcy Court may vacate, the Confirmation Order, in which event the Plan would be deemed null and void.








  



73







  









	
B.
	
ADDITIONAL FACTORS TO BE CONSIDERED









	
  
	
1.
	
The Plan Proponents Have No Duty to Update








The statements contained in this Disclosure Statement are made by the Plan Proponents as of the date hereof, unless otherwise specified herein, and the delivery of this Disclosure Statement after that date does not imply that there has been no change in the information set forth herein since that date. The Plan Proponents have no duty to
update this Disclosure Statement unless otherwise ordered to do so by the Bankruptcy Court.






	
  
	
2.
	
No Representations Outside This Disclosure Statement Are Authorized








No representations concerning or related to the Plan Proponents, the Chapter 11 Cases, or the Plan are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement. Any representations or inducements made to secure your acceptance or rejection of the Plan that are other than as contained
in, or included with, this Disclosure Statement should not be relied upon by you in arriving at your decision.






	
  
	
3.
	
Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary








Certain of the information contained in this Disclosure Statement is, by nature, forward looking, and contains estimates and assumptions which might ultimately prove to be incorrect, and contains projections which may be materially different from actual future experiences. There are uncertainties associated with any projections and estimates,
and they should not be considered assurances or guarantees of the amount of funds or the amount of Claims in the various Classes that might be allowed.






	
  
	
4.
	
No Legal or Tax Advice Is Provided to You by This Disclosure Statement








The contents of this Disclosure Statement should not be construed as legal, business or tax advice. Each creditor or Equity Interest holder should consult his, her, or its own legal counsel and accountant as to legal, tax and other matters concerning his, her, or its Claim or Equity Interest.





This Disclosure Statement is not legal advice to you. This Disclosure Statement may not be relied upon for any purpose other than to determine how to vote on the Plan or object to confirmation of the Plan.






	
  
	
5.
	
No Admission Made








Nothing contained herein shall constitute an admission of, or be deemed evidence of, the tax or other legal effects of the Plan on the Plan Proponents or on holders of Claims or Equity Interests,






	
  
	
6.
	
Business Factors and Competitive Conditions








(a)            General Economic Conditions. The financial projections contained in this Disclosure Statement, assume, among other things, that the general economic conditions of the United States economy will be stable over
the next several years. The stability of economic conditions is subject to many factors outside the Plan Proponents' control, including interest rates, inflation, unemployment rates, consumer spending, war, terrorism and other such factors. Any one of these or other economic factors could have a significant impact on the operating performance of New Holdco and its subsidiaries.








  



74







  








(b)            Business Factors. The Plan Proponents believe that New Holdco and its subsidiaries will succeed in implementing and executing their business plan. However, there are risks that this will not be achieved. In such event, New
Holdco may be forced to sell all or parts of its business, develop and implement further restructuring plans not contemplated in the projections or become subject to further insolvency proceedings. In the event of further restructurings or insolvency proceedings, the equity interests in New Holdco could be substantially diluted or even cancelled.





(c)            Competitive Conditions. Both the remediation and reconstruction and telecommunications industries are highly competitive.





(d)            Reliance on Key Customer. Certain of the Charys entities are reliant on one key customer that provides the majority of that subsidiary's revenue. Although Charys believes each such entity's relationship with that customer
is strong, if a key customer were to breach or terminate its contracts with the relevant entity, such action likely would have a serious deleterious effect on the entity's business. Additionally, certain key customers are, in turn, reliant on their own key customers and if such relationships were to change, it could have a serious deleterious effect on the entity's business.





(e)            Reliance on Key Personnel. A critical asset of Charys is their personnel at their operating subsidiaries, who have the ability to leave Charys and deprive Charys of the manpower essential for performance of Charys' businesses.
Charys operates a business that is highly dependent on its clients' beliefs that these subsidiaries will perform tasks of the highest standards over an extended period of time. Deterioration of Charys' business, or loss of a significant number of personnel, will have a material adverse effect on New Holdco and may threaten its ability to survive as a going concern.





The success of the restructuring process is dependent in part on the ability to retain and motivate officers and employees. There can be no assurance that New Holdco will be able to retain or employ qualified management and personnel. While it is contemplated that the Affiliated Plan Proponents will enter into employment agreements with certain
members of their senior management, should any of these persons be unable or unwilling to continue their employment, the business prospects of New Holdco could be materially and adversely affected.





(f)             Customers. The Plan Proponents believe that the majority of their client relationships are strong. However, if the Plan Proponents' clients delay or stop paying the Plan Proponents for services performed, assert: unauthorized
or inappropriate deductions against payments due to the Plan Proponents, or refuse to continue to do business with the Plan Proponents on customary, ordinary course, or continuing terms, the Plan Proponents and New Holdco may be harmed. Additionally, the loss of a key client could have a material adverse impact on operating performance.





(g)            Other Factors. Other factors that holders of Claims should consider are potential regulatory and legal developments that may impact the Plan Proponents and New Holdco. Although these and other such factors are beyond the Plan
Proponents' and New Holdco's control and cannot be determined in advance, they could have a significant impact on the operating performance of New Holdco and its subsidiaries.








  



75







  









	
  
	
7.
	
Access to Financing and Trade Terms








The Plan Proponents' operations are dependent on the availability and cost of working capital financing and trade terms provided by vendors and may be adversely affected by any shortage or increased cost of such financing and trade vendor support. The Plan Proponents' operations have been financed from operating cash flow, the use of cash
collateral, and borrowings from credit facilities maintained by the Affiliated Plan Proponents. The Affiliated Plan Proponents believe that substantially all of their needs for funds necessary to consummate the Plan and for post-Effective Date working capital financing will be met by projected operating cash flow, a new "exit" financing agreement, and trade terms supplied by vendors. However, if New Holdco requires working capital and trade financing greater than that provided by such sources, it may be required
either to (i) obtain other sources of financing or (ii) curtail its operations,





No assurance can be given, however, that any additional financing will be available, if at all, on terms that are favorable or acceptable to New Holdco. The Plan Proponents believe that it is important to their going-forward business plan that their performance meet projected results in order to ensure continued support from vendors.






	
  
	
8.
	
Variances from Projections








The fundamental premise of the Plan is the deleveraging of the Plan Proponents and the implementation and realization of the Plan Proponents' business plan, as reflected in the projections contained in this Disclosure Statement. The projections reflect numerous assumptions concerning the anticipated future performance of New Holdco, some
of which may not materialize. Such assumptions include, among other items, assumptions concerning the general economy, the ability to make necessary capital expenditures, the ability to establish market strength, consumer purchasing trends and preferences, and the ability to stabilize and grow the company's sales base and control future operating expenses. The Plan Proponents believe that the assumptions underlying the projections are reasonable. However, unanticipated events and circumstances occurring subsequent
to the preparation of the projections may affect the actual financial results of New Holdco and it subsidiaries. Therefore, the actual results achieved throughout the periods covered by the projections necessarily will vary from the projected results, and such variations may be material and adverse.






	
C.
	
CERTAIN TAX MATTERS








For a summary of certain federal income tax consequences of the Plan to holders of Claims and to the Debtors, see Section XII below, entitled "CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN."








  



76







  








IX.





CONFIRMATION OF THE PLAN OF REORGANIZATION






	
A.
	
CONFIRMATION HEARING








Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court, after appropriate notice, to hold a hearing on confirmation of a plan of reorganization. As set forth in the Disclosure Statement Order, the Bankruptcy Court has scheduled the confirmation hearing for [           ,
2009]. The confirmation hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for an announcement of the adjourned date made at me confirmation hearing or any subsequent adjourned confirmation hearing.





Any objection to confirmation of the Plan must be in writing, must conform to the Bankruptcy Rules, must set forth the name of the objector, the nature and amount of Claims or interests held or asserted by the objector against the Debtors' estate(s) or property, the basis for the objection and the specific grounds therefor, and must be filed
with the Bankruptcy Court, with a copy to Chambers, together with proof of service thereof, and served upon (i) co-counsel for the Debtors, Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 (Attn: Stephen Karotkin, Esq.), (ii) co-counsel for the Debtors, Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington Delaware 19801 (Attn: Mark D. Collins, Esq.), (iii) co-counsel to the Creditors' Committee, Milbank, Tweed, Hadley & McCloy LLP, One Chase Manhattan
Plaza, New York, New York 10005 (Attn: Matthew S. Barr, Esq.), (iv) co- counsel to the Creditors' Committee, Morris, Nichols, Arsht & Tunnell LLP, 1201 North Market Street, 18th Floor, P.O. Box 1347, Wilmington, Delaware 1.9899, Attn: Gregory W. Werkheiser, Esq.), (v) the United States Trustee for the District of Delaware, 844 King Street, Suite 2207, Lockbox 35, Wilmington, Delaware 19801 (Attn: Mark Kenney, Esq.), so as to be received no later than 4:00 p.m. (prevailing Eastern Time) on [_____], 2008.





Objections to confirmation of the Plan are governed by Bankruptcy Rule 9014. UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT.






	
B.
	
REQUIREMENTS FOR CONFIRMATION OF THE PLAN OF REORGANIZATION









	
  
	
1.
	
Requirements of Section 1129(a) of the Bankruptcy Code








(a)           General Requirements. At the confirmation hearing, the Bankruptcy Court will determine whether the following confirmation requirements specified in section 1129 of the Bankruptcy Code have been satisfied:





(1)            The Plan complies with the applicable provisions of the Bankruptcy Code.





(2)            The Debtors have complied with the applicable provisions of the Bankruptcy Code.





(3)            The Plan has been proposed in good faith and not by any means proscribed by law,








  



77







  








(4)            Any payment made or promised by the Debtors or by a Person issuing securities or acquiring property under the Plan for services or for costs and expenses in, or in connection with, the chapter 11 cases, or in connection with the Plan and incident to the chapter 11 cases,
has been disclosed to the Bankruptcy Court, and any such payment made before confirmation of the Plan is reasonable, or if such payment is to be fixed after confirmation of the Plan, such payment is subject to the approval of the Bankruptcy Court as reasonable.





(5)            The Debtors have disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the Plan, as a director or officer of the Debtors, an affiliate of the Debtors participating in a Plan with the Debtors, or a successor to the Debtors under
the Plan, and the appointment to, or continuance in, such office of such individual is consistent with the interests of creditors and equity holders and with public policy, and the Debtors have disclosed the identity of any insider that will be employed or retained by the Debtors, and the nature of any compensation for such insider.





(6)            With respect to each class of claims or equity interests, each holder of an impaired claim or impaired equity interest either has accepted the Plan or will receive or retain under the Plan on account of such holder's claim or equity interest, property of a value, as of
the Effective Date, that is not less than the amount such holder would receive or retain if the Debtors were liquidated on the Effective Date under chapter 7 of the Bankruptcy Code. See discussion of "Best Interests Test" below.





(7)            Except to the extent the Plan meets the requirements of section 1129(b) of the Bankruptcy Code (discussed below), each class of claims or equity interests has either accepted the Plan or is not impaired under the Plan.





(8)            Except to the extent that the holder of a particular claim has agreed to a different treatment of such claim, the Plan provides that administrative expenses and priority claims other than priority tax claims will be paid in full on the Effective Date and that priority
tax claims will receive on account of such claims installment payments in cash, over a period not exceeding five years after the Commencement Date, of a value, as of the Effective Date, equal to the allowed amount of such claims, and in a manner not less favorable than the most favored nonpriority unsecured claim provided for by the Plan.





(9)            At least one class of impaired claims has accepted the Plan, determined without including any acceptance of the Plan by any insider holding a claim in such class.





(10)          Confirmation of the Plan is not likely to be followed by the liquidation or the need for farther financial reorganization of the Debtors or any successor to the Debtors under the Plan, unless such liquidation or reorganization is proposed in the Plan. See discussion of "Feasibility"
below.





(11)          The Plan provides for the continuation after the Effective Date of payment of all "retiree benefits" (as defined in section 1114 of the Bankruptcy Code), at the level established pursuant to subsection 1114(e)(1)(B) or 1114(g) of  the
Bankruptcy Code at any time prior to confirmation of the Plan, for the duration of the period the Debtors have obligated themselves to provide such benefits, if any.








  



78







  








(b)            Best Interests Test. As described above, the Bankruptcy Code requires that each holder of an impaired claim or equity interest either (i) accepts the Plan or (ii) receives or retains under the Plan property
of a value, as of the Effective Date, that is not less than the value such holder would receive or retain if the Debtors were liquidated under chapter 7 of the Bankruptcy Code on the Effective Date.





The first step in meeting this test is to determine the dollar amount that would be generated from the liquidation of the Debtors' assets and properties in the context of a chapter 7 liquidation case. The gross amount of Cash available would be the sum of the proceeds from the disposition of the Debtors' assets and the Cash held by the Debtors
at the time of the commencement of the chapter 7 case. The next step, is to reduce that total by the amount of any claims secured by such assets, the costs and expenses of the liquidation, and such additional administrative expenses and priority claims that may result from the termination of the Debtors' business and the use of chapter 7 for the purposes of liquidation. Any remaining net Cash would be allocated to creditors and shareholders in strict priority in accordance with section 726 of the Bankruptcy Code
(see discussion below). Finally, taking into account the time necessary to accomplish the liquidation, the present value of such allocations may be compared to the value of the property that is proposed to be distributed under the Plan on the Effective Date.





The Debtors' costs of liquidation under chapter 7 would include the fees payable to a chapter 7 trustee in bankruptcy, as well as those that might be payable to attorneys and other professionals that such a trustee may engage, plus any unpaid expenses incurred by the Debtors during the chapter 11 case and allowed in the chapter 7 case, such
as compensation for attorneys, financial advisors, appraisers, accountants and other professionals, and costs and expenses of members of any statutory committee of unsecured creditors appointed by the United States Trustee pursuant to section 1102 of the Bankruptcy Code and any other committee so appointed. Moreover, in a chapter 7 liquidation, additional claims would arise by reason of the breach or rejection of obligations incurred by the Debtors both prior to, and during the pendency of, the Chapter 11 Cases.





The foregoing types of claims, costs, expenses, fees and such other claims that may arise in a liquidation case would be paid in full from the liquidation proceeds before the balance of those proceeds would be made available to pay pre-chapter 11 priority and unsecured claims. Under the absolute priority rale, no junior creditor would receive
any distribution until all senior creditors are paid in full, with interest, and no equity holder receives any distribution until all creditors are paid in full, with interest. The Debtors believe that in a chapter 7 case, holders of General Unsecured Claims would receive no distributions of property.





After consideration of the effects that a chapter 7 liquidation would have on the ultimate proceeds available for distribution to creditors in a chapter 11 case, including (i) the increased costs and expenses of a liquidation under chapter 7 arising from fees payable to a trustee in bankruptcy and professional advisors to such trustee, (ii)
the erosion in value of assets in a chapter 7 case in the context of the expeditious liquidation required under chapter 7 and the "forced sale" atmosphere that would prevail and (iii) significant increases in claims which would be satisfied on a priority basis, the Debtors have determined that confirmation of the Plan will provide each creditor and equity holder with a recovery that is not less than it would receive pursuant to a liquidation
of the Debtors under chapter 7 of the Bankruptcy Code.








  



79







  








Moreover, the Debtors believe that the value of any distributions from the liquidation proceeds to each class of allowed claims in a chapter 7 case would be the same or less than the value of distributions under the Plan because such distributions in a chapter 7 case may not occur for a substantial period of time. In this regard, it is possible
that distribution of the proceeds of the liquidation could be delayed for a year or more after the completion of such liquidation in order to resolve the claims and prepare for distributions. In the event litigation were necessary to resolve claims asserted in the chapter 7 case, the delay could be further prolonged and administrative expenses further increased.





The Debtors' liquidation analysis is an estimate of the proceeds that may be generated as a result of a hypothetical chapter 7 liquidation of the assets of the Debtors. The analysis is based upon a number of significant assumptions which are described. The liquidation analysis does not purport to be a valuation of the Debtors'
assets and is not necessarily indicative of the values that may be realized in an actual liquidation.





(c)            Liquidation Analysis. The Debtors' chapter 7 liquidation analysis and assumptions are set forth in Exhibit E to this Disclosure Statement.





(d)            Feasibility. The Bankruptcy Code requires a debtor to demonstrate that confirmation of a plan of reorganization is not likely to be followed by the liquidation or the need for further financial reorganization
of a debtor unless so provided by the plan of reorganization, For purposes of determining whether the Plan meets this requirement, the Plan Proponents have analyzed their ability to meet their financial obligations as contemplated thereunder. As part of this analysis, the Plan Proponents have prepared the projections contained in section VII above, entitled "PROJECTIONS AND VALUATION ANALYSIS," and in Exhibit D to this Disclosure Statement. These projections are based upon the assumption that the Plan will be
confirmed by the Bankruptcy Court, and for projection purposes, that the Effective Date of the Plan and its substantial consummation will take place on September 30, 2008. The projections include balance sheets, statements of operations and statements of cash flows. Based upon the projections, the Plan Proponents believe they will be able to make all payments required to be made pursuant to the Plan.





(e)            New Stream Commercial Finance, LLC. New Stream Commercial Finance, LLC ("New Stream") has asserted the following:





(i)             the issuance by either CTSI or Cotton of new shares of capital stock to the Indenture Trustee will constitute an event of default under those entities' loan agreements with New Stream9;









____________________

9 See, e.g., that certain Loan and Security Agreement dated March 6, 2007 with CTSI (the "CTSI. Loan Agreement"), and that certain Loan and Security Agreement dated October 30, 2007 with Cotton ("Cotton
Loan Agreement"), pursuant to which New Stream made certain loans and advances and provided other financial accommodations to each company in accordance with the terms and conditions thereof.








  



80







  








(ii)            the issuance by either CTSI or Cotton of new shares of capital stock to Charys Holding will constitute an event of default under those entities' loan agreements with New Stream;





(iii)           the transfer by Charys Holding of shares of capital stock of CTSI or Cotton to the Charys Trustee may constitute an event of default under those entities' loan agreements;





(iv)           the transfer by Charys Holding of shares of capital stock of CTSI or Cotton to the Disbursing Agent may constitute an event of default under those entities' loan agreements;





(v)            New Stream has sent notices of default to both CTSI and Cotton;





(vi)           the values of any newly issued CTSI or Cotton shares will be materially affected by New Stream (a) determining to terminate or suspend its obligation to make any further revolving credit advances under the respective loan agreements; and/or (b) declaring all or any portion
of CTSI or Cotton's obligations under the loan agreements to be forthwith due and payable; and





(vii)          because neither CTSI nor Cotton are debtors, this Court can not approve the issuance and/or transfer of any CTSI or Cotton stock in violation of the loan agreements.





The Debtors reserve all of their rights with respect to the foregoing assertions by New Stream.






	
  
	
2.
	
Requirements of Section 1129(b) of the Bankruptcy Code








The Bankruptcy Court may confirm the Plan over the rejection or deemed rejection of the Plan by a class of claims or equity interests if the Plan "does not discriminate unfairly" and is "fair and equitable" with respect to such class.





(a)            No Unfair Discrimination. This test applies to classes of claims or equity interests that are of equal priority and are receiving different treatment under a plan of reorganization. The test does not require
that the treatment be the same or equivalent, but that such treatment be "fair."





(b)            Fair and Equitable Test. This test applies to classes of different priority (e.g., unsecured versus secured) and includes the general requirement that no class of claims receive more than 100% of the allowed
amount of the claims in such class. As to the dissenting class, the test sets different standards, depending on the type of claims or interests in such class:






	
  
	
•
	
Secured Claims. Each holder of an impaired secured claim either (i) retains its Liens on the property (or if sold, on the proceeds thereof) to the extent of the allowed amount of its secured claim and receives deferred cash payments having a value, as of the effective date of the plan, of at least the allowed amount of such claim, has the right, to credit
bid the amount of its claim if its property is sold and retains its liens on the proceeds of the sale, or (ii) receives the "indubitable equivalent" of its allowed secured claim.











  



81







  









	
  
	
•
	
Claims. Either (i) each holder of an impaired unsecured claim receives or retains under the plan property of a value equal to the amount of its allowed unsecured claim or (ii) the holders of claims and interests that are junior to the claims of the dissenting class will not receive or retain any property under the plan of reorganization.









	
  
	
•
	
Equity Interests. Either (i) each equity interest holder will receive or retain under the plan of reorganization property of a value equal to the greater of (a) the fixed liquidation preference or redemption price, if any, of such stock and (b) the value of the stock, or (ii) the holders of interests that are junior to the equity interests of the dissenting
class will not receive or retain any property under the plan of reorganization.








The Plan Proponents believe the Plan satisfies both the "no unfair discrimination" requirement and the "fair and equitable" requirement with respect to all Classes that are deemed to reject the Plan and with respect to any impaired Class that may not accept the Plan.






	
  
	
3.
	
Mr. Crochet's Claims and his Objections to Confirmation








As stated, prior to the Commencement Date and in connection with the acquisition of C&B, Charys Holding issued a note to Troy Crochet in the amount of $77.9 million (the "C&B Note"). Prior to the Commencement Date and on or about April 13, 2007, Charys paid to Mr. Crochet $31.1 million on account of the C&B Note and, as of the
Commencement Date, the remaining principal balance of the C&B Note was approximately $46.8 million. Mr. Crochet has asserted that the C&B Note is secured by certain assets of Charys Holding, C&B, C&B Holdings, Inc., an entity that was never officially formed or incorporated ("CBH"), and Cotton Telecom, Inc. f/k/a Ayin Holding Company, Inc. ("Ayin"), a subsidiary of Charys Holding that is not a debtor in these cases. Additionally, as stated above, the obligations of Charys Holding in respect of
the 8.75% Senior Convertible Notes are contractually subordinated to Mr. Crochet's claim in respect of the C&B Note to the extent Mr. Crochet's claim is an Allowed Claim, All obligations under the 8.75% Senior Convertible Notes are guaranteed by each of the material subsidiaries of Charys Holding, including C&B and each of the Affiliated Plan Proponents (collectively, the "Guarantors"). The obligations under the C&B Note are guaranteed by C&B and Ayin but are not guaranteed by the Affiliated Plan
Proponents or any other Guarantors. In addition, it is the position of the Debtors and the holders of the 8.75% Senior Convertible Notes that the obligations of the Guarantors in respect of the 8.75% Senior Convertible Notes are not contractually subordinated in any respect to any claims of Mr. Crochet under the C&B Note or otherwise. Mr. Crochet has advised the Debtors that he disagrees with the position set forth in the preceding sentence, and this issue is expected to be resolved in connection with confirmation
of the Plan.





The Debtors believe that Mr. Crochet's claim under the C&B Note is unsecured because various consents expressly required to be obtained under the terms of the C&B Note and the security agreement entered into with Mr. Crochet were not obtained. Mr. Crochet has advised the Debtors that he disputes these assertions and that the consents
were obtained either in writing or by implication.








  



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The Debtors also believe that they have the following claims against Mr. Crochet under Chapter 5 of the Bankruptcy Code:






	
  
	
(a)
	
Preferential Transfers. During the one year period prior to the Commencement Date, Mr. Crochet was paid $31.1 million in respect of the C&B Note. The Debtors believe that Mr, Crochet is an "insider" for purposes of recovering voidable preferences under section 547 of the Bankruptcy Code and that the foregoing payment is fully recoverable from Mr. Crochet
under the provisions of section 547 of the Bankruptcy Code.









	
  
	
(b)
	
Fraudulent Transfer. The Debtors also believe that all transfers to Mr. Crochet prior to the Commencement Date in connection with the acquisition of his company by Charys Holding (including, without limitation, cash and any collateral security) constitute fraudulent conveyances under section 548 of the Bankruptcy Code. More specifically, the Debtors believe
that in exchange for such transfers to Mr. Crochet, Charys Holding received less than reasonably equivalent value and that Charys Holding:









	
  
	
(i)
	
was insolvent on the date of such transfers or became insolvent as a result thereof;









	
  
	
(ii)
	
was engaged in business or was about to engage in business for which any property remaining with Charys Holding was an unreasonably small capital; or









	
  
	
(iii)
	
intended to incur, or believed it would incur debts that would be beyond its ability to pay as such debts matured.








In other words, the Debtors believe that the value of the business they purchased from Mr. Crochet was significantly less than what was transferred to Mr. Crochet in exchange therefor and, at the time of such transfers, Charys Holding was "insolvent" within the purview of section 548 of the Bankruptcy Code. The Debtors also believe that Mr.
Crochet may have made certain misrepresentations with respect to the business he sold to Charys Holding, including with respect to the value of the accounts receivable on C&B's books, for which Charys Holding and other parties may have affirmative claims against Mr. Crochet.





The Debtors believe that even if Mr. Crochet has an Allowed Claim and such Allowed Claim is secured by valid liens on the assets of the Debtors and Ayin, the value of the collateral subject to such liens is de minimis. The only material assets Charys Holding has is the stock of its subsidiaries which has little value, if any, because of the
outstanding indebtedness of such subsidiaries. The only remaining material assets of C&B are accounts receivable which, as Mr. Crochet has acknowledged, are subject to superior liens. And the only assets of Ayin is the stock of its subsidiaries which has little or no value because of the outstanding indebtedness of such entities. Accordingly, even if Mr. Crochet has enforceable liens and claims, the value of his collateral security is insignificant and the balance of any such Allowed Claim would therefore
be a general unsecured claim which would be treated with all other Allowed General Unsecured Claims against Charys Holding under Charys Holding Class 8 under the Plan and with all other General Unsecured Claims against C&B under C&B Class 4A under the Plan, as applicable.








  



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Further, to the extent Mr. Crochet has an Allowed Claim against Charys Holding, the Plan does not in any way affect any rights of subordination he may have with respect to such Allowed Claim against the holders of the 8.75% Senior Convertible Notes.





In sum, the Debtors believe that the Plan is confirmable despite any objection thereto filed by Mr. Crochet.





X.





FINANCIAL INFORMATION





Charys Holding's Annual Report on Form 10-KSB for the fiscal year ended April 30, 2007, is contained in Exhibits C to this Disclosure Statement, and is incorporated herein by reference.





XI.





ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN OF REORGANIZATION





If the Plan is not confirmed and consummated, the alternatives to the Plan include (i) liquidation of the Debtors under chapter 7 of the Bankruptcy Code and (ii) an alternative chapter 11 plan of reorganization.






	
A.
	
LIQUIDATION UNDER CHAPTER 7








If no plan can be confirmed, the Debtors' Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed to liquidate the assets of the Debtors for distribution in accordance with the priorities established by the Bankruptcy Code. A discussion of the effects that a chapter
7 liquidation would have on the recovery of holders of claims and equity interests and the Debtors' liquidation analysis are set forth in Section IX above, entitled "CONFIRMATION OF THE PLAN OF REORGANIZATION; Requirements for Confirmation of the Plan of Reorganization; Consensual Confirmation; Best Interests Test." The Debtors believe that liquidation under chapter 7 would result in smaller distributions being made to creditors than those provided for in the Plan because of (i) the likelihood that the assets
of the Debtors would have to be sold or otherwise disposed of in a less orderly fashion over a shorter period of time, (ii) additional administrative expenses involved in the appointment of a trustee and (iii) additional expenses and claims, some of which would be entitled to priority, which would be generated during the liquidation under chapter 7.






	
B.
	
ALTERNATIVE PLAN OF REORGANIZATION








If the Plan is not confirmed, the Debtors (or if the Debtors' exclusive period in which to file a plan of reorganization has expired, any other party in interest) could attempt to formulate a different plan of reorganization. Such a plan of reorganization might involve either a reorganization and continuation of the Debtors' business or an
orderly liquidation of its assets under chapter 11. With respect to an alternative plan, the Debtors have explored various alternatives in connection with the formulation and development of the Plan. The Debtors believe that the Plan, as described herein, enables creditors and equity holders to realize the most value under the circumstances.








  



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XII.





CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN





The following discussion summarizes certain federal income tax consequences of the implementation of the Flan to the Debtors, the Affiliated Plan Proponents (as subsidiaries of the Debtors), and to certain holders of Claims. The following summary does not address the U.S. federal income tax consequences to holders whose Claims are not impaired
(e.g., Other Priority Claims, Secured Tax Claims, Secured Working Capital Facility Claims against Charys Holding and Other Secured Claims against Charys Holding). In addition, the following summary does not address the federal income tax consequences to holders whose Claims or Equity Interests are extinguished without a distribution in exchange therefor (e.g., Subordinated Debt Claims against Charys Holding, Charys Holding Securities Claims, C&B Securities Claims and Equity Interests), or generally those
holders who negotiated their own settlements with the Debtors (e.g., the Mirror Note Claims, the CTSI/MSAI Seller Note Claims and Cotton Seller Note Claims).





The following summary is based on the Internal Revenue Code of 1986, as amended (the "Tax Code"), Treasury Regulations promulgated thereunder, judicial decisions, and published administrative rules and pronouncements of the Internal Revenue Service (the "IRS"), all as in effect on the date hereof. Changes in such rules or new interpretations
thereof may have retroactive effect and could significantly affect the federal income tax consequences described below.





The federal income tax consequences of the Plan are complex and are subject to significant uncertainties. The Debtors have not requested a ruling from the FRS or an opinion of counsel with respect to any of the tax aspects of the Plan. Thus, no assurance can be given as to the interpretation that the IRS will adopt. In addition, this summary
generally does not address foreign, state or local tax consequences of the Plan, nor does it address the federal income tax consequences of the Plan to special classes of taxpayers (such as foreign taxpayers, broker-dealers, banks, mutual funds, insurance companies, other financial institutions, small business investment companies, regulated investment companies, tax-exempt organizations (including, without limitation, certain pension funds), persons holding a Claim as part of an integrated constructive sale
or straddle or part of a conversion transaction, and investors in pass-through entities).





Accordingly, the following summary of certain federal income tax consequences is for informational purposes only and is not a substitute for careful tax planning and advice based upon the individual circumstances pertaining to a holder of a Claim.





IRS Circular 230 Notice: To ensure compliance with IRS Circular 230, holders of Claims and Equity Interest are hereby notified that: (A) any discussion of federal tax issues contained or referred to in this Disclosure Statement is not intended
or written to be used, and cannot be used, by holders of Claims and Equity Interests for the purpose of avoiding penalties that may be imposed on them under the Tax Code; (b) such discussion is written in connection with the promotion or marketing by the Debtors of the transactions or matters addressed herein; and (c) holders of Claims and Equity Interests should seek advice based on their particular circumstances from an independent tax advisor.








  



85







  









	
A.
	
CONSEQUENCES TO TOE PLAN PROPONENTS









	
  
	
1.
	
Consequences to the Debtors








For federal income tax purposes, the Debtors and the Affiliated Plan Proponents are members of an affiliated group of corporations of which Charys Holding is the common parent (the "Charys Group"), and join in the filing of a consolidated federal income tax return. The Debtors estimate that, as of April 30, 2007, the Charys Group had incurred
consolidated net operating loss ("NOL") carryforwards of approximately $95 million. The Charys Group has incurred additional NOLs since April 30, 2007, and the Debtors expect that the Charys Group will continue to incur additional losses through the Effective Date. The amount of such losses, and any limitations with respect to the utilization of such losses, remain subject to audit by the IRS.





Pursuant to the Restructuring Transactions that will be effectuated in connection with the implementation of the Plan, the Affiliated Plan Proponents will issue stock to the Indenture Trustee on behalf of holders of certain Claims and to Charys Holding in respect of intercompany Claims held by Charys Holding. Charys Holding will, in turn,
transfer its stock in the Affiliated Plan Proponents to the Charys Liquidating Trust (on behalf of the holders of certain Claims) and to the Disbursing Agent (on behalf of holders of Mirror Note Claims), following which all the stock of the Affiliated Plan Proponents will be contributed to New Holdco in exchange for the New Equity Interests and New Secured Notes. Any other assets of Charys Holding will be transferred to the Charys Liquidating Trust and all assets of C&B will be transferred to the C&B
Liquidating Trust. Thereafter, the debtors and their subsidiaries, other than the Affiliated Plan Proponents, will dissolve. Pursuant to the Plan, all parties (including the Debtors) are required to report consistent with the form of the Restructuring Transactions for all federal income tax purposes, subject to definitive guidance from the IRS or a court of competent jurisdiction to the contrary (including, without limitation, the receipt by the Charys Trustee or New Holdco of a private letter ruling if the Charys
Trustee or New Holdco so requests one, or the receipt of an adverse determination by the IRS upon audit if not contested). As structured, the Debtors' transfer of their assets (including Charys Holding's stock in the Affiliated Plan Proponents) to the Liquidating Trusts and Disbursing Agent (on behalf of holders of Mirror Note Claims) would effectuate liquidations of the Debtors, as a result of which the Debtors expect to incur significant losses. As discussed below, such losses would be substantially reduced
or eliminated as a result of the cancellation of debt ("COD") incurred by the Debtors pursuant to the Plan, or otherwise expire upon the liquidation and dissolution of the Debtors,





There is no assurance, however, that the form of the Restructuring Transactions will be respected by the IRS. Were the IRS to challenge the characterization of the Restructuring Transactions and treat Charys Holding as transferring the stock of the Affiliated Plan Proponents directly to New Holdco and distributing New Equity Interests to
the Chary Liquidating Trust and New Secured Notes to (he holders of Mirror Note Claims, it is possible that such transfer and distribution may be regarded as effectuating a "reorganization" of Charys Holding with and into New Holdco for federal income tax purposes. In such event, New Holdco would carryover any tax attributes of Charys Holding remaining after reduction for the COD incurred by the Debtors, and subject to the limitations imposed by section 382 of the Tax Code following an ownership change.





In connection with the implementation of the Plan, it is expected that the Debtors will incur a significant amount of COD for federal income tax purposes. COD is the amount by which indebtedness discharged (reduced by any unamortized original issue discount) exceeds
any consideration given in exchange therefor. Certain statutory or judicial exceptions can apply to limit the amount of COD (such as where the payment of the cancelled debt would have given rise to a tax deduction). Although any COD incurred will be excluded from the Charys Group's taxable income for federal income tax purposes under a special bankruptcy exception contained in the Tax Code, the Tax Code provides that a debtor in a bankruptcy case generally must reduce certain of its (and, as discussed in the
next section, possibly certain of its consolidated subsidiaries') tax attributes - such as NOL carryforwards and current year NOLs, capital loss carryforwards, tax credits, and tax basis in assets - by the amount of the excluded COD, Any reduction in tax attributes in respect of excluded COD income does not occur until after the computation of tax for the taxable year in which the COD is incurred.








  



86







  









	
  
	
2.
	
Consequences to the Affiliated Plan Proponents








Where a debtor that incurs COD joins in the filing of a consolidated federal income tax return, applicable Treasury Regulations require, in certain circumstances, that the tax attributes of the other members of the group also be reduced. As a result, it is possible that any NOL carryforwards and current year losses of the Affiliated Plan
Proponents may be reduced or eliminated as a result of COD incurred by the Debtors. In addition, in the event that the Restructuring Transactions are treated as a reorganization of Charys Holding for federal income tax purposes, it is possible that the Affiliated Plan Proponents may be required to reduce the tax basis of their assets as a result of the COD incurred by the Debtors.





Moreover, under the Treasury Regulations, certain of the Affiliated Plan Proponents may be required to reduce their tax attributes to the extent of the loss recognized by the Charys Group upon the transfer of the stock of the Affiliated Plan Proponents to the creditors and the Charys Liquidating Trust.





Following the Effective Date, any remaining NOL carryforwards and certain other tax attributes of the Affiliated Plan Proponents (collectively, "pre-change losses") will be subject to an annual limitation under section 382 of the Tax Code, possibly on a consolidated basis, as a result of the change in ownership of the Affiliated Plan Proponents.
Under section 382, if a corporation (or a consolidated group or subgroup of corporations, including in this case the Affiliated Plan Proponents, provided New Holdco elects to treat the Affiliated Plan Proponents as a subgroup for this purpose) undergoes an ownership change, the amount of its pre-change losses that may be utilized in a year to offset future taxable income is generally limited to (i) the fair market value of its stock (or, in the case of a subgroup, the equity value of the group) immediately before
the ownership change multiplied by (ii) the "long term tax exempt rate" in effect for the month in which the ownership change occurs (5.40% for ownership changes occurring in December 2008). The fair market value of a corporation's stock for this calculation may be adjusted to exclude substantial non-business assets and certain capital contributions, and to take into account any post-change redemptions and other corporate contractions in connection with the ownership change.





Any portion of the annual limitation that is not used in a given year may be carried forward, thereby adding to the annual limitation for the subsequent taxable year. However, if the corporation (or group) does not continue its historic business or use a significant portion of its historic assets in a new business for at least two years after
the ownership change, the annual limitation resulting from the ownership change is reduced to zero, thereby precluding any utilization of the corporation's pre-change losses, absent any increases due to recognized built in gains as discussed below.








  



87







  








Section 382 can operate to limit the deduction of built-in losses recognized subsequent to the date of the ownership change. If a loss corporation has a net unrealized built-in loss at the time of an ownership change (taking into account most assets and items of "built-in" income and deductions), then generally built-in losses recognized
during the following five years (up to the amount of the original net unrealized built-in loss) will be treated as part of the pre-change losses subject to the annual limitation. Conversely, if the loss corporation (or group) has a net unrealized built-in gain at the time of an ownership change, any built-in gains recognized during the following five years (up to the amount of the original net unrealized built-in gain) generally will increase the annual limitation in the year recognized, such that the loss corporation
(or group) would be permitted to use its pre-change losses against such built-in gain income in addition to its regular annual allowance. Although the rule applicable to net unrealized built-in losses generally applies on a consolidated basis, certain corporations that join the group within the preceding five years may not be able to be taken into account in the group computation of net unrealized built-in loss. In general, a loss corporation's (or group's) net unrealized built-in gain or loss will be deemed
to be zero unless it is greater than the lesser of (i) $10,000,000 or (ii) 15% of the fair market value of its assets (with certain adjustments) before the ownership change.





In general, an alternative minimum tax ("AMT") is imposed on a corporation's alternative minimum taxable income at a 20% tax rate if and to the extent such tax exceeds the corporation's regular federal income tax. For purposes of computing taxable income for AMT purposes, certain tax deductions and other beneficial allowances are modified
or eliminated. For example, a corporation is generally not allowed to offset more than 90% of its taxable income for AMT purposes by available NOL carryforwards (as computed for AMT purposes).





In addition, if a corporation (or a consolidated group or subgroup) undergoes an "ownership change" within the meaning of section 382 of the Tax Code and is in a net unrealized built-in loss position (as determined for AMT purposes) on the date of the ownership change, the corporation's (or group's) aggregate tax basis in its assets would
be reduced for certain AMT purposes to reflect the fair market value of such assets as of the change date.





Any AMT that a corporation pays generally will be allowed as a nonrefundable credit against its regular federal income tax liability in any future taxable year when the corporation is no longer subject to AMT and otherwise becomes subject to regular tax,






	
B.
	
CONSEQUENCES TO CERTAIN HOLDERS OF CLAIMS








Pursuant to the Plan, holders of certain Claims will receive a beneficial interest in either the Charys liquidating Trust or the C&B Liquidating Trust. For federal income tax purposes, the Liquidating Trusts have been structured to qualify as "grantor trusts," as discussed below (see section XII.B.6., "Tax Treatment of Liquidating Trusts
and Holders of Beneficial Interests"). As a result, the receipt by a holder of a beneficial interest in one of the Liquidating Trusts should be treated for federal income tax purposes as the receipt of a direct undivided interest in the underlying assets of the Liquidating Trust, subject to any obligations of the Liquidating Trust, and all holders are required to report consistent therewith. In addition, pursuant to the Plan, the Liquidating Trustees will make a good-faith valuation of the assets of their respective
liquidating trusts, subject to the valuation of the Board of New Holdco, and all parties must consistently use such valuation for all federal income tax purposes.








  



88







  









	
  
	
1.
	
Consequences to Holders of 8,75% Senior Convertible Note Claims, and Holders of General Unsecured Claims Against Charys Holding








Pursuant to the Plan, each holder of an Allowed 8.75% Senior Convertible Note Claim against Charys Holding will receive, in respect of such Claims and in respect of their Claims against the Affiliated Plan Proponents, as guarantors, and in accordance with the Restructuring Transactions, (i) a Class B Charys Beneficial Interest, (ii) stock
of the Affiliated Plan Proponents which will be exchanged for New Secured Notes and New Equity Interests as described in the Plan and below. Each holder of a General Unsecured Claim against Charys Holding will receive a Class B Charys Beneficial Merest in full satisfaction of its Claims,





(a)            Restructuring Transactions. On the Effective Date, the following Restructuring Transactions will occur in the order indicated:





(i)             First, simultaneously, (A) the Affiliated Plan Proponents will each issue new shares (the Noteholder Shares) to the Indenture Trustee on behalf of the holders of Affiliated Plan Proponent 8.75% Senior Convertible Note Claims (i.e., in respect of holders' Claims against
the Affiliated Plan Proponents as guarantors of the 8.75% Senior Convertible Note Claims), and (B) certain of the Affiliated Plan Proponents will each issue new shares (the Intercompany Claims Shares) to Charys Holding in satisfaction of certain intercompany Claims owed by them to Charys Holding.





(ii)            Second, simultaneously, (A) Charys Holding will transfer a portion of the Intercompany Claims Shares and the other Charys Liquidating Trust Assets to the Charys Trustee for the benefit of the Charys Liquidating Trust Beneficiaries, and (B) Charys Holding will transfer
the remainder of the Intercompany Claims Shares to the Disbursing Agent on behalf of holders of Mirror Note Claims in accordance with their pro rata share of the Mirror Note Claims.





(iii)           Third, simultaneously, (A) the Indenture Trustee will, on behalf of the holders of Affiliated Plan Proponent 8.75% Senior Convertible Note Claims, contribute all of the Noteholder Shares to New Holdco in exchange for New Secured Notes and New Equity Interests, (B) the
Charys Trustee will contribute all of the Intercompany Claims Shares it received to New Holdco in exchange for New Equity Interests, and (C) the Disbursing Agent will, on behalf of the holders of Mirror Note Claims, contribute all of the Intercompany Claims Shares it received to New Holdco in exchange for New Secured Notes,





Pursuant to the Plan, all parties (including the Debtors, the Charys Trustee, the holders of Mirror Note Claims, 8.75% Senior Convertible Note Claims, and General Unsecured Claims against Charys Holding and New Holdco) arc required to report consistent with the form of the Restructuring Transactions for all federal income tax purposes, subject
to definitive guidance from the IRS or a court of competent jurisdiction to the contrary (including, without limitation, the receipt by the Charys Trustee or New Holdco of a private letter ruling if the Charys Trustee or New Holdco so requests one, or the receipt of an adverse determination by the IRS upon audit if not contested). Unless otherwise indicated, the following discussion assumes that the Restructuring Transactions will be respected for federal income tax purposes as set forth in the Plan.








  



89







  








(b)            Gain or Loss.





(i)             With Respect to Initial Satisfaction of Claims. In general, each holder of a Charys 8,75% Senior Convertible Note Claim and General Unsecured Claim against Charys Holding should recognize gain or loss
in respect of its Claim in an amount equal to the difference, if any, between (i) the "amount realized" in satisfaction of its Claim (other than in respect of any Claim for accrued but unpaid interest), and (ii) the holder's adjusted tax basis in its Claim (other than any tax basis attributable to accrued but unpaid interest). For a discussion of the tax consequences of any Claim for accrued but unpaid interest, see section XII.B.3. below, "Distributions in Discharge of Accrued and Unpaid Interest."





The Charys 8.75% Senior Convertible Note Claims also give rise to secondary liability Claims against the Affiliate Plan Proponents and C&B under the Guarantees by such entities. As such, no separable gain or loss generally should be recognized by the holders of such Claims against the Affiliated Plan Proponents or C&B; rather, any
amounts received should be taken into account as additional amount realized in respect of each holder's underlying Claim against Charys Holding, and any resulting gain or loss should be in respect of such Claim. Accordingly, the amount realized by a holder of Charys 8.75% Senior Convertible Note Claims generally should equal the sum of the fair market value of Noteholder Shares received and its undivided interest in the Charys Liquidating Trust Assets, regardless of whether such shares or interest were received
in respect of its Claims against Charys Holding or its corresponding Claims against the Affiliated Plan Proponents.





In the case of a holder of a General Unsecured Claim against Charys Holding, the amount realized will equal the fair market value of its undivided interest in the Charys Liquidating Trust Assets.





Due to the possibility that a holder of a previously Allowed Claim may become entitled to an increased share of the assets of the Charys Liquidating Trust as any Disputed Claims are resolved, any loss, and a portion of any gain, realized by such holder in respect of its Claim may be deferred until all Disputed Claims are resolved. Holders
of Allowed Claims are urged to consult their tax advisors regarding the possible deferral of any loss or a portion of any gain.





Where gain or loss is recognized by a holder of an 8.75% Senior Convertible Note Claim or General Unsecured Claim against Charys Holding in respect of its Claim, the character of such gain or loss as long-term or short-term capital gain or loss or as ordinary income or loss will be determined by a number of factors, including, among others,
the tax status of the holder, whether the Claim constitutes a capital asset in the hands of the holder and how long it has been held, whether the Claim was acquired at a market discount, and whether and to what extent the holder previously had claimed a bad debt deduction.





As discussed above, the structure of the Restructuring Transactions is such that the initial transfers of Affiliated Plan Proponent stock to holders of Claims (through the Indenture Trustee, Charys Trustee or Disbursing Agent on behalf of holders) are treated as taxable transactions for federal income tax purposes, followed by a contribution
to New Holdco for New Equity Interests and New Secured Notes (as discussed below). The discussion herein regarding the tax consequences to holders of Claims assumes that the form of the Restructuring Transactions are respected for federal income tax purposes, Were the IRS to successfully challenge the characterization of the Restructuring Transactions, such transactions could be considered part of a tax-free reorganization of Charys
Holding, in which event certain of the tax consequences to the holders of Claims could differ from those described herein (including, without limitation, the non-recognition of any loss and all or part of any gain).








  



90







  








(ii)            With Respect to Contribution of Shares to New Holdco. The subsequent contribution to New Holdco of the Noteholder Shares (by the Indenture Trustee on behalf of the holders of the 8.75% Senior Convertible Note Claims) and the Intercompany Claims Shares (by the Charys Trustee,
on behalf of holders of Claims who received beneficial interests in the Charys Liquidating Trust) in exchange for New Secured Notes and New Equity Interests is expected to qualify under section 351 of the Tax Code. Accordingly, a holder of an 8.75% Senior Convertible Note Claim should not recognize a loss, but (due to the receipt of the New Secured Notes) may recognize gain (as computed below) in respect of such exchange. No gain or loss generally should be recognized by a holder of a General Unsecured Claim
against Charys Holding in respect of such exchange. See section XII.B.3. below, "Tax Treatment of the Liquidating Trusts and Holders of Beneficial Interests," regarding the treatment of holders of beneficial interests in a Liquidating Trust as a direct owner of an undivided interest in the underlying assets for federal income tax purposes.





The gain, if any, recognized by a holder of an 8.75% Senior Convertible Note Claim in respect of the contribution of shares to New Holdco would be equal to the excess of (i) the sum of the issue price of the New Secured Notes received (which, as discussed in section XII,B.5.a., below, would be equal to either the fair market value or the
stated principal amount of such notes) and the fair market value of New Equity Interests received (including its undivided interest in the New Equity Interests received in respect of Intercompany Claim Shares by the Charys Liquidating Trust) over (ii) its aggregate tax basis in the Noteholder Shares and the Intercompany Claims Shares exchanged therefor (which would be equal to the fair market value of the Noteholder Shares and of its undivided interest in the Intercompany Claims Shares). If the issue price of
the New Secured Notes is equal to their fair market value (in contrast to the principal amount of the New Secured Notes, which amount may differ from, and thus may be above, fair market value), a holder should have little, if any, gain in respect of the contribution to New Holdco.





The character of such gain may be treated as short-term capital gain depending in part on the holder's personal circumstances. In general, a creditor that receives stock of a debtor corporation in satisfaction of its claim against the debtor is required to treat as ordinary income any gain recognized on a subsequent disposition of the stock
to the extent of (i) any bad debt deductions (or additions to a bad debt reserve) claimed with respect to the claim for which stock was received and any ordinary loss deductions incurred upon satisfaction of the claim, less any income (other than interest income) recognized by the holder upon satisfaction of the claim, and (ii) with respect to a cash-basis holder, also any amounts which would have been included in its gross income if the holder's claim had been satisfied in full but which was not included by
reason of the cash method of accounting. In the present case, in accordance with the Restructuring Transactions, the holders of 8.75% Senior Convertible Note Claims will receive the Noteholder Shares in satisfaction of their Claims against the Affiliated Plan Proponents. Such Claims are secondary liability claims under guarantees of Claims against Charys Holding. As a result, no prior deductions will be claimed in respect of the Claims against the Affiliated Plan Proponents nor, as discussed above, should any
gain or loss be considered to be recognized in respect of the satisfaction of the Claims against the Affiliated Plan Proponents. Thus, it appears that any gain recognized in respect of the contribution to New Holdco should not be recharacterized under this provision as ordinary income.








  



91







  








(iii)           Later Distributions From the Liquidating Trust, After the Effective Date, any amounts that a holder receives as a distribution from the Liquidating Trusts in respect of its beneficial interests in the Liquidating Trusts (other than possibly as a result of the subsequent
disallowance of a Disputed Claim) should not be included in the holder's amount realized in respect of its Claim for federal income tax purposes, but should be separately treated as a distribution received in respect of its beneficial interest. In addition, holders of previously Allowed Claims may become entitled to an increased share of the assets of the Liquidating Trusts as any Disputed Claims are resolved. The imputed interest provisions of the Tax Code may apply to treat a portion of such increased share
of assets as imputed interest, with the remainder possibly being treated as additional amounts received in respect of their original Claims.





(iv)           Tax Basis in New Equity Interests, New Secured Notes and Liquidating Trust Assets. In general, a holder's tax basis in its undivided interest in the underlying assets of the Liquidating Trusts and the New Equity Interests received should be equal to their fair market value
which, in the case of the Charys Liquidating Trust Assets will reflect any obligations to which those assets are subject. A holder's tax basis in the New Secured Notes received should equal the issue price of such notes. A holder's holding period in such assets, interests and notes generally should begin the day following the receipt of such property.






	
  
	
2.
	
Consequences to Holders of Other Secured Claims Against C&B and General Unsecured Against C&B








Pursuant to the Plan, each holder of an Allowed Other Secured Claim against C&B shall, for federal income tax purposes, be treated as having received on the Effective Date a Class A C&B Beneficial Interest in the C&B Liquidating Trust and all parties (including the Debtors, the C&B Trustee, and the C&B Liquidating Trust
Beneficiaries) are required to report consistently therewith for federal income tax purposes. Pursuant to the Plan, each holder of an Allowed General Unsecured Claim against C&B will receive a Class B C&B Beneficial Interest in the C&B Liquidating Trust in satisfaction of its Claim,





Accordingly, in general, each holder of an Allowed Other Secured Claim against C&B or General Unsecured Claim against C&B should recognize gain or loss (although any loss with respect to a General Unsecured Claim could be deferred until all Disputed Claims are resolved) in an amount equal to the difference, if any, between (i) the
fair market value of its undivided interest in the C&B Liquidating Trust Assets received in satisfaction of its Claim (other than in respect of any Claim for accrued but unpaid interest) and (ii) the holder's adjusted tax basis in its Claim (other than any tax basis attributable to accrued but unpaid interest). See section XII.B.6. below, "Tax Treatment of the Liquidating Trusts and Holders of Beneficial Interests," regarding the treatment of holders of beneficial interests in a Liquidating Trust as a direct
owner of an undivided interest in the underlying assets for federal income tax purposes. For a discussion of the tax consequences of any Claim for accrued but unpaid interest, see section XII.B.3. below, "Distributions in Discharge of Accrued and Unpaid Interest."





In addition, holders of previously Allowed General Unsecured Claims against C&B may become entitled to an increased share of the assets of the C&B Liquidating Trust Assets as any Disputed Claims are resolved. The imputed interest provisions of the Tax Code may apply to treat a portion of such increased share of assets as imputed interest,
Holders of such Claims should also consult their tax advisors regarding the possible deferral of any loss, and a portion of any gain, realized by such holders in respect of their Claims until such Disputed Claims are resolved.








  



92







  








Where gain or loss is recognized by a holder, the character of such gain or loss as long-term or short-term capital gain or loss or as ordinary income or loss will be determined by a number of factors, including, among others, the tax status of the holder, whether the Claim constitutes a capital asset in the hands of the holder and how long
it has been held, whether the Claim was acquired at a market discount, and whether and to what extent the holder previously had claimed a bad debt deduction.





In general, a holder's tax basis in its undivided interest in the C&B Liquidating Trust Assets should be equal to their fair market value which will reflect any obligations to which those assets are subject, and the holding period for such assets should begin the day following the receipt of such assets.





After the Effective Date, any amounts that a holder receives as a distribution from the C&B Liquidating Trust, in respect of its beneficial interest in the C&B Liquidating Trust (other than possibly as a result of the subsequent disallowance of a Disputed Claim, as discussed above) generally should not be included in the holder's
amount realized in respect of its Claim for federal income tax purposes, but should be separately treated as a distribution received in respect of its beneficial interest.






	
  
	
3.
	
Distributions in Discharge of Accrued and Unpaid Interest








In general, to the extent that any consideration received pursuant to the Plan by a holder of an Allowed Claim is received in satisfaction of accrued interest or original issue discount ("OID") during its holding period, such amount will be taxable to the holder as interest income (if not previously included in the holder's gross income).
Conversely, a holder generally recognizes a deductible loss to the extent any accrued interest claimed or amortized OID was previously included in its gross income and is not paid in full. However, the IRS has taken the position that a holder of a security, in an otherwise tax-free exchange, could not claim a current deduction with respect to any unpaid OID. Also, it is also unclear whether a holder of a Claim in the context of a taxable exchange would be required to recognize a capital loss, rather than an ordinary
loss, with respect to previously included OID that is not paid in full.





Pursuant to the Plan, all distributions from Charys Holding and the Affiliated Plan Proponents will be allocated first to the principal amount of such Claims, as determined for federal income tax purposes, and thereafter to the portion of such Claim, if any, representing accrued but unpaid interest or OID. However, there is no assurance that
the IRS would respect such allocation for federal income tax purposes.





Each holder of a Claim is urged to consult its lax advisor regarding the allocation of consideration and the deductibility of accrued but unpaid interest for federal income tax purposes.






	
  
	
4.
	
Ownership and Disposition of New Equity Interests








Any gain or loss recognized by a holder on the sale, exchange, or other disposition of the New Equity Interests generally should be capital gain or loss in an amount equal to the difference, if any, between the amount realized by the holder and the holder's adjusted
tax basis in the New Equity Interests immediately before the sale, exchange, or other disposition. Any such gain or loss generally should be long-term if the holder's holding period for its stock is more than one year at that time. The use of capital losses is subject to limitations,








  



93







  








Under certain circumstances, a creditor that receives stock of a debtor corporation (or its successor) in satisfaction of a debt obligation maybe required to treat all or a portion of any gain recognized upon a subsequent disposition of the stock received (or upon a subsequent disposition of any stock or property received in exchange therefor
in a tax-free exchange) as ordinary income. As discussed above, it does not appear that this provision should apply in respect of the New Equity Interests received by holders of 8.75% Senior Convertible Note Claims in exchange for their Noteholder Shares. See section XII.B. 1 .b.(i) above, "— Consequences to Holders of 8.75% Senior Convertible Note Claims, and Holders of General Unsecured Claims Against Charys Holding - Gain or Loss - With Respect to Contribution of Shares to New Holdco."






	
  
	
5.
	
Ownership and Disposition of New Secured Notes








(a)            Stated interest and Original Issue Discount. A holder of New Secured Notes will be required to include stated interest on the New Secured Notes in income in accordance with the holder's regular method of accounting.





A debt instrument generally has OID if its "stated redemption price at maturity" exceeds its "issue price" by more than a de minimis amount. A debt instrument's stated redemption price at maturity includes all principal and interest payable over the term of the notes, other than qualified stated interest. Stated interest is "qualified stated
interest" if it is payable in cash at least annually at a affixed rate. The "issue price" of the New Secured Notes will depend on whether, at any time during the 60-day period ending 30 days after the Effective Date, such notes are traded on an "established market". If the New Secured Notes are treated for this purpose as traded on an established market, the issue price of the New Secured Notes will equal the fair market value of such notes as of the Effective Date. In such event, the New Secured Notes will be
treated as issued with OID to the extent that its issue price is less than its principal amount. Depending on the fair market value of the New Secured Notes, the total amount of OID could be substantial.





Pursuant to applicable Treasury regulations, an "established market" need not be a formal market, It is sufficient that the New Secured Notes appear on a system of general circulation (including a computer listing disseminated to subscribing brokers, dealers or traders) that provides a reasonable basis to determine fair market value by disseminating
either recent price quotations or actual prices of recent sales transactions, If the New Secured Notes are not traded on an established market, the issue price for such notes should be the stated principal amount of the notes. In general, New Holdco's determination of issue price will be binding on all holders, other than a holder that explicitly discloses its inconsistent treatment in a statement attached to its timely filed tax return for the taxable year in which the Effective Date occurs.





A holder of a New Secured Note that is issued with OID generally will be required to include any OID in income over the term of the note (for so long as the note continues to be owned by the holder) in accordance with a constant yield-to-maturity method, regardless of whether the holder is a cash or accrual method taxpayer, and regardless
of whether and when the holder receives cash payments of interest on the note (other than cash attributable to qualified stated interest). Accordingly, a holder could be treated as receiving interest income in advance of a corresponding receipt of cash. Any OID that a holder includes in income will increase the holder's tax basis in its notes. A holder of New Secured Notes will not be separately taxed on the receipt of any cash payments
with respect to previously taxed OID), but will reduce its tax basis in such notes by the amount of such payments.








  



94







  








In compliance with applicable Treasury regulations, New Holdco will furnish annually to the IRS and the indenture trustee of any New Secured Notes treated as issued with OID information describing the amount of any accrued OID.





(b)            Sale, Exchange or Other Disposition of the New Secured Notes. Unless a non-recognition provision applies, a holder generally will recognize gain or loss upon the sale, exchange or redemption of the New Secured
Notes equal to the difference, if any, between the holder's adjusted tax basis and the amount realized on the sale, exchange or redemption. For this purpose, a holder's adjusted tax basis generally will equal the holder's initial tax basis, increased by the amount of any OID accrued (determined without adjustments) up through the date of the sale, exchange, or redemption, and decreased by the amount of any cash payments (other than qualified stated interest). Any gain or loss generally will be capital gain or
loss, and generally should be long-term if the holder's holding period in its note is more than one year at that time.






	
  
	
6.
	
Tax Treatment of the Liquidating Trusts and Holders of Beneficial Interests








(a)            Classification of the Liquidating Trust. The Liquidating Trusts are intended to qualify as liquidating trusts for federal income tax purposes. In general, a liquidating trust is not a separate taxable entity,
but rather is treated for federal income tax purposes as a "grantor trust" (i.e., a pass-through entity). However, merely establishing a trust as a liquidating trust does not ensure that it will be treated as a grantor trust for federal income tax purposes. The IRS, in Revenue Procedure 94-45, 1994-2 C.B. 684, set forth the general criteria for obtaining an IRS ruling as to the grantor trust status of a liquidating trust under a chapter 11 plan. The Liquidating Trusts have been structured with the intention of
complying with such general criteria. Pursuant to the Plan, and in conformity with Revenue Procedure 94-45, all parties (including, without limitation, the Debtors, the Liquidating Trustees, the Charys Liquidating Trust Beneficiaries and the C&B Liquidating Trust Beneficiaries) are required to treat, for federal income tax purposes, the Liquidating Trusts as grantor trusts of which the holders of beneficial interests in each trust are the owners and grantors, and the following discussion assumes that the
Liquidating Trusts will be so respected for federal income tax purposes. However, no ruling has been requested from the IRS and no opinion of counsel has been requested concerning the tax status of the Liquidating Trusts as grantor trusts, Accordingly, there can be no assurance that the IRS would not take a contrary position. If the IRS were to challenge successfully the classification of the Liquidating Trusts, the federal income tax consequences to the Liquidating Trusts, the holders of beneficial interests
in the Liquidating Trusts and the Debtors could vary from those discussed herein (including the potential for an entity level tax on any income of the Liquidating Trusts).





General Tax Reporting by the Liquidating Trusts and Beneficiaries. For all federal income tax purposes, all parties (including, without limitation, the Debtors, the Liquidating Trustees, the Charys Liquidating Trust Beneficiaries, and the C&B Liquidating Trust Beneficiaries)
must treat the transfer of the liquidating trust assets to the Liquidating Trusts, in accordance with the terms of the Plan, as a transfer of the respective liquidating trust assets, subject to any obligations relating to those assets, directly to the holders of the respective Claims in satisfaction of their Claims, followed by the transfer by the holders to the respective Liquidating Trust of such assets in exchange for beneficial interests
in the Liquidating Trusts. Accordingly, all parties must treat the Liquidating Trusts as grantor trusts of which the holders of beneficial interests are the owners and grantors. Thus, such holders will be treated as the direct owners of an undivided interest in the assets of the respective Liquidating Trust in which they have received beneficial interests for all federal income tax purposes (which assets will generally have a tax basis equal to their fair market value on the Effective Date).








  



95







  








Pursuant to the Plan, as soon as possible after the Effective Date, the trustees of each of the Liquidating Trusts will make a good faith valuation of their respective liquidating trust assets, subject to the valuation of the Board of New Holdco; and all parties (including, without limitation, the Debtors, the Liquidating Trustees, the Charys
Liquidating Trust Beneficiaries and the C&B Liquidating Trust Beneficiaries) must consistently use such valuation for all federal income tax purposes. The valuation will be made available, from time to time, as relevant for tax reporting purposes.





Allocations of taxable income of each of the Liquidating Trusts among the beneficiaries of such trust shall be determined by reference to the manner in which an amount of Cash equal to such taxable income would be distributed (without regard to any restrictions on distributions described in the Plan) if, immediately prior to such deemed distribution,
the respective Liquidating Trust had distributed all its other assets (valued at their tax book value) to the holders of the beneficial interests in such Liquidating Trust (treating all Disputed Claims as if they were Allowed Claims, see Sections 5.2(d)(xiii)(2)(D) and 5.3(a)(xiii)(2)(D) of the Plan), in each case up to the tax book value of the assets treated as contributed by such holders, adjusted for prior taxable income and loss and taking into account all prior and concurrent distributions from the Liquidating
Trust. Similarly, taxable loss of each of the Liquidating Trusts shall be allocated by reference to the manner in which an economic loss would be borne immediately after a liquidating distribution of the remaining respective liquidating trust assets. The tax book value of the liquidating trust assets of each of the Liquidating Trusts for this purpose shall equal their fair market value on the Effective Date, adjusted in accordance with tax accounting principles prescribed by the Tax Code, the applicable tax regulations,
and other applicable administrative and judicial authorities and pronouncements.





The federal income tax obligations of a holder are not dependent on the Liquidating Trusts' distributing any cash or other proceeds. Therefore, a holder may incur a federal income tax liability with respect to its allocable share of the income of a Liquidating Trust regardless of the fact that the Liquidating Trust has not made any concurrent
distribution to the holder. In general, a distribution of cash by a Liquidating Trust to a holder of a beneficial interest in the trust will not be taxable to the holder since the holder will already be regarded for federal income tax purposes as owning the underlying assets.





The trustee of each of the Liquidating Trusts will file with the IRS returns for its respective Liquidating Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a). Except as discussed below with respect to the Liquidating Trust Claims Reserves, the trustee shall also annually send to each holder of a beneficial interest
a separate statement setting forth the holder's share of items of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns or to forward the appropriate information to the beneficial holders with instructions to report such items on their federal income tax returns. The trustee of each of the Liquidating Trusts shall also file (or cause to be filed) any other statements,
returns or disclosures relating to the Liquidating Trust that are required by any governmental unit.








  



96







  




 

(b)            Tax Reporting for Liquidating Trust Assets Allocable to Disputed Claims. Subject to definitive guidance from the IRS, or a court of competent jurisdiction to the contrary (including the receipt by a Liquidating
Trustee of a private letter ruling if one of the trustees so requests one, or the receipt of an adverse determination by the IRS upon audit if not contested by a trustee), the Liquidating Trustee of each of the Liquidating Trusts will (A) elect to treat any liquidating trust assets allocable to, or retained on account of, Disputed Claims (the "Liquidating Trust Claims Reserves") as a "disputed ownership fund" governed by Treasury Regulation section 1.468B-9, and (B) to the extent permitted by applicable law,
report consistent with the foregoing for state and local income tax purposes. Accordingly, the Liquidating Trust Claims Reserves will be subject to tax annually on a separate entity basis on any net income earned with respect to the assets in such reserves, and all distributions from such reserves will be treated as received by holders in respect of their Claims as if distributed by the Debtors. All parties (including, without limitation, the Debtors, the Liquidating Trustees, the Charys Liquidating Trust Beneficiaries
and the C&B Liquidating Trust Beneficiaries) will be required to report for tax purposes consistent with the foregoing.






	
C.
	
INFORMATION REPORTING AND WITHHOLDING








All distributions to holders of Claims under the Plan are subject to any applicable tax withholding, including employment tax withholding. Under federal income tax law, interest, dividends, and other reportable payments may, under certain circumstances, be subject to "backup withholding" at the then applicable withholding rate (currently
28%). Backup withholding generally applies if the holder (a) fails to furnish its social security number or other taxpayer identification number ("TIN"), (b) furnishes an incorrect TIN, (c) fails properly to report interest or dividends, or (d) under certain circumstances, fails to provide a certified statement, signed under penalty of perjury, that the TIN provided is its correct number and that it is a United States person that is not subject to backup withholding. Backup withholding is not an additional tax
but merely an advance payment, which may be refunded to the extent it results in an overpayment of tax and the appropriate information is supplied to the IRS. Certain persons are exempt from backup withholding, including, in certain circumstances, corporations and financial institutions.





In addition, from an information reporting perspective, Treasury Regulations generally require disclosure by a taxpayer on its federal income tax return of certain types of transactions in which the taxpayer participated, including, among other types of transactions, certain transactions that result in the taxpayer's claiming a loss in excess
of specified thresholds. Holders are urged to consult their tax advisors regarding these regulations and whether the transactions contemplated by the Plan would be subject to these regulations and require disclosure on the holders' tax returns.





The foregoing summary has been provided for informational purposes only. All holders of Claims receiving a distribution under the Plan are urged to consult, their tax advisors concerning the federal, state, local and foreign tax consequences applicable under the Plan.








  



97







  








XIII.





CONCLUSION





The Plan Proponents believe that confirmation and implementation of the Plan is in the best interests of all creditors, and urge holders of impaired Claims in Charys Holding Class 5, Class 6, Class 7, and Class 8, and C&B Class 3, Class 4A and Class 4B, to vote to accept the Plan and to evidence such acceptance by returning their ballots
so that they will be received no later than 4:00 p.m. (prevailing Eastern Time) on ______, 2008.





Dated: __________, 2008



















	  	
Respectfully submitted,
	  
	  	  	  	  	  
	  	
Charys Holding Company, Inc.
	  
	  	
Crochet & Borel Services, Inc..
	  
	  	
Complete Tower Sources, Inc.
	  
	  	
LFC, Inc.
	  
	  	
Mitchell Site Acq. Inc.
	  
	  	
Cotton Commercial USA, Inc.
	  
	  	  	  	  	  
	  	
By:
	  	  	  
	  	  	
Name:
	
Michael F. Oyster

	  	  	
Title:
	
Chief Executive Officer of Charys Holding Company, Inc.




























  



98







  








EXHIBIT A








  



 







  








UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE









	
In re
	x	  
	 	:	
Chapter 11. Case No.

	  	:	  
	
CHARYS HOLDING COMPANY, INC., and
	:	  
	
CROCHET & BOREL SERVICES, INC.
	:	
08-10289 (BLS)

	  	:	  
	
Debtors.
	:	
(Jointly Administered)

	  	:	  
	  	x	  


















FIRST AMENDED JOINT PLAN OF REORGANIZATION OF

DEBTORS AND CERTAIN NONDEBTOR AFFILIATES

UNDER CHAPTER 11 OF THE BANKRUPTCY CODE















	
WEIL, GOTSHAL & MANGES LLP
	
RICHARDS, LAYTON & FINGER, P.A.

	
767 Fifth Avenue
	
One Rodney Square

	
New York, New York 10153
	
920 North King Street

	
(212)310-8000
	
Wilmington, Delaware 19801

	  	
(302)651-7700

	  	  
	
Co-Attorneys for Debtors and
	
Co-Attorneys for Debtors and

	
Debtors In Possession
	
Debtors In Possession









Dated: December 8, 2008








  



 







  








TABLE OF CONTENTS













	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	
ARTICLE I
	
DEFINITIONS AND INTERPRETATION
	  
	  	
1.1
	
8,75% Senior Convertible Notes
	  
	  	
1.2
	
8.75% Senior Convertible Note Claims
	  
	  	
1.3
	
Ad Hoc Noteholders Committee
	  
	  	
1.4
	
Administrative Claims Bar Date
	  
	  	
1.5
	
Administrative Expense Claim
	
2

	  	
1.6
	
Affiliate
	
2

	  	
1.7
	
Affiliated Plan Proponent
	
2

	  	
1.8
	
Affiliated Plan Proponent 8.75% Senior Convertible Note Claims
	
2

	  	
1.9
	
Allowed
	
2

	  	
1.10
	
Ballots
	
3

	  	
1.11
	
Bankruptcy Code
	
3

	  	
1.12
	
Bankruptcy Court,.
	
3

	  	
1.13
	
Bankruptcy Rules
	
3

	  	
1.14
	
Benefit Plans
	
3

	  	
1.15
	
Business Day
	
3

	  	
1.16
	
C&B
	
3

	  	
1.17
	
C&B Class 4 Pro Rata Share
	
3

	  	
1.18
	
C&B Equity Interest
	
3

	  	
1.19
	
C&B Liquidating Trust
	
3

	  	
1.20
	
C&B Liquidating Trust Agreement
	
3

	  	
1.21
	
C&B Liquidating Trust Assets
	
4

	  	
1.22
	
C&B Liquidating Trust Beneficiaries
	
4

	  	
1.23
	
C&B Liquidating Trust Claims Reserve
	
4

	  	
1.24
	
C&B Securities Claim
	
4

	  	
1.25
	
C&B 8.75% Senior Convertible Note Claims
	
4

	  	
1.26
	
C&B Trustee
	
4

	  	
1.27
	
Cash
	
4

	  	
1.28
	
Charys 8.75% Senior Convertible Note Claims
	
4














  



i







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
1.29
	
Charys Group
	
4

	  	
1.30
	
Charys Holding
	
4

	  	
1.31
	
Charys Holding Equity Interests
	
4

	  	
1.32
	
Charys Holding Securities Claim
	
5

	  	
1.33
	
Charys Liquidating Trust
	
5

	  	
1.34
	
Charys Liquidating Trust Agreement
	
5

	  	
1.35
	
Charys Liquidating Trust Assets
	
5

	  	
1.36
	
Charys Liquidating Trust Beneficiaries
	
5

	  	
1.37
	
Charys Liquidating Trust Claims Reserve
	
5

	  	
1.38
	
Charys Trustee
	
5

	  	
1.39
	
Claim
	
5

	  	
1.40
	
Class 8 General Unsecured Pro Rata Share
	
6

	  	
1.41
	
Class A C&B Beneficial Interest
	
6

	  	
1.42
	
Class B C&B Beneficial Interest
	
6

	  	
1.43
	
Class A Charys Beneficial Interest
	
6

	  	
1.44
	
Class B Charys Beneficial Interest
	
6

	  	
1.45
	
Class 6/7 Pro Rata Share
	
6

	  	
1.45A
	
Class 7 Pro Rata Share
	
6

	  	
1.46
	
Collateral
	
6

	  	
1.47
	
Commencement Date
	
7

	  	
1.48
	
Confirmation Date
	
7

	  	
1.49
	
Confirmation Hearing
	
7

	  	
1.50
	
Confirmation Order
	
7

	  	
1.51
	
Contingent Claim
	
7

	  	
1.52
	
Cotton
	
7

	  	
1.53
	
Cotton Seller Note Claims
	
7

	  	
1.54
	
Cotton Settlement Agreement
	
7

	  	
1.55
	
Creditors' Committee
	
7

	  	
1.56
	
CTSI
	
7














  



ii







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
1.57
	
CTSI/MSAI Seller Note Claims
	
7

	  	
1.58
	
CTSI / MSAI Settlement Agreement
	
8

	  	
1.59
	
Debtors
	
8

	  	
1.60
	
Debtors in Possession
	
8

	  	
1.61
	
Disallowed Claim
	
8

	  	
1.62
	
Disbursing Agent
	
8

	  	
1.63
	
Disclosure Statement
	
8

	  	
1.64
	
Disclosure Statement Order
	
8

	  	
1.65
	
Disputed Claim
	
8

	  	
1.66
	
Disputed Claim Amount
	
9

	  	
1.67
	
Distribution Record Date
	
9

	  	
1.68
	
Effective Date
	
9

	  	
1.69
	
Equity Interest
	
9

	  	
1.70
	
Estimated Amount
	
9

	  	
1.71
	
Final Order
	
9

	  	
1.72
	
Funding Arrangement
	
10

	  	
1.73
	
Funding Arrangement Agreement
	
10

	  	
1.74
	
General Unsecured Claim
	
10

	  	
1.74
	
Imperium Claims
	
10

	  	
1.75
	
Indenture
	
10

	  	
1.76
	
Indenture Trustee
	
10

	  	
1.77
	
Indenture Trustee Fees
	
10

	  	
1.78
	
Intercompany Claim
	
10

	  	
1.79
	
Lien
	
10

	  	
1.80
	
Liquidating Trusts
	
11

	  	
1.81
	
Liquidating Trustees
	
11

	  	
1.82
	
Liquidating Trust Agreements
	
11

	  	
1.83
	
Local Bankruptcy Rules
	
11

	  	
1.84
	
Mirror Notes
	
11














  



iii







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
1.85
	
Mirror Note Claims
	
11

	  	
1.86
	
Intentionally Omitted
	
11

	  	
1.87
	
MSAI
	
11

	  	
1.88
	
New Equity Interests
	
11

	  	
1.89
	
New Employment Agreements
	
11

	  	
1.90
	
New Holdco
	
11

	  	
1.91
	
New Organizational Documents
	
11

	  	
1.92
	
New Secured Notes
	
11

	  	
1.93
	
New Secured Note Indenture
	
12

	  	
1.94
	
Non-Debtor Subsidiary
	
12

	  	
1.95
	
Non-Released Parties
	
12

	  	
1.96
	
Noteholder Charys Pro Rata Share
	
12

	  	
1.97
	
Other Priority Claim
	
12

	  	
1.98
	
Other Secured Claim
	
12

	  	
1.99
	
Person
	
12

	  	
1.100
	
Plan
	
12

	  	
1.101
	
Plan Proponents
	
12

	  	
1.102
	
Plan Supplement
	
12

	  	
1.103
	
Priority Tax Claim
	
13

	  	
1.104
	
Proponent Inclusive Group
	
13

	  	
1.105
	
Reorganization Cases
	
13

	  	
1.106
	
Restructuring Transactions
	
13

	  	
1.107
	
Schedules
	
13

	  	
1.108
	
Secured Claim
	
13

	  	
1.109
	
Secured Tax Claim
	
13

	  	
1.110
	
Secured Working Capital Facility Claims
	
13

	  	
1.111
	
Settlement Agreements
	
13

	  	
1.112
	
Subordinated Debt Claims
	
13

	  	
1.113
	
Tax Code
	
14














  



iv







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
1.114
	
U.S. Trustee
	
14

	  	
1.115
	
Unimpaired
	
14

	  	
1.116
	
Unliquidated Claim
	
14

	  	
1.117
	
Voting Record Date
	
14

	
ARTICLE II
	
PROVISIONS FOR PAYMENT OF ADMINISTRATIVE EXPENSES AND PRIORITY TAX CLAIMS
	
15

	  	
2.1
	
Administrative Expense Claims
	
15

	  	
2.2
	
Professional Compensation and Reimbursement Claims
	
15

	  	
2.3
	
Indenture Trustee Fees
	
16

	  	
2.4
	
Priority Tax Claims
	
16

	
ARTICLE III
	
CLASSIFICATION OF CLAIMS AND EQUITY INTERESTS, IMPAIRMENT AND VOTING
	
17

	
ARTICLE IV
	
PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS
	
18

	  	
4.1
	
Charys Holding Class 1 (Other Priority Claims Against Charys Holding)
	
18

	  	
4.2
	
Charys Holding Class 2 (Secured Tax Claims Against Charys Holding),
	
19

	  	
4.3
	
Charys Holding Class 3 (Secured Working Capital Facility
	
19

	  	
4.4
	
Charys Holding Class 4 (Other Secured Claims Against Charys Holding)
	
20

	  	
4.5
	
Charys Holding Class 5 (Cotton Seller Note Claims)
	
21

	  	
4.6
	
Charys Holding Class 6 (CTSI / MSAI Seller Note Claims and Mirror Note Claims)
	
21

	  	
4.7
	
Charys Holding Class 7 (8.75% Senior Convertible Note Claims)
	
22

	  	
4.8
	
Charys Holding Class 8 (General Unsecured Claims Against Charys Holding)
	
22

	  	
4.9
	
Charys Holding Class 9 (Subordinated Debt Claims Against Charys Holding)
	
23

	  	
4.10
	
Charys Holding Class 10 (Charys Holding Securities Claims)
	
23

	  	
4.11
	
Charys Holding Class 11 (Charys Holding Equity Interests)
	
23














  



v







  








TABLE OF CONTENTS

(continued)











	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
4.12
	
C&B Class 1 (Other Priority Claims Against C&B)
	
23

	  	
4.13
	
C&B Class 2 (Secured Tax Claims Against C&B)
	
24

	  	
4.14
	
C&B Class 3 (Other Secured Claims Against C&B)
	
24

	  	
4.15
	
C&B Class 4A (General Unsecured Claims Against C&B)
	
25

	  	
4.16
	
C&B Class 4B (C&B 8.75% Senior Convertible Note Claims)
	
25

	  	
4.17
	
C&B Class 5 (C&B Securities Claims)
	
25

	  	
4.18
	
C&B Class 6 (C&B Equity Interests)
	
26

	
ARTICLE V
	
MEANS OF IMPLEMENTATION
	
26

	  	
5.1
	
Means of Implementation Applicable to Both Charys Holding and C&B
	
26

	  	
5.2
	
Means of Implementation Specific to Charys Holding
	
28

	  	
5.3
	
Means of Implementation Specific to C&B
	
35

	
ARTICLE VI
	
PROVISIONS GOVERNING VOTING AND DISTRIBUTIONS
	  
	  	
6.1
	
Voting of Claims
	
41

	  	
6.2
	
Presumed Acceptances by Unimpaired Classes
	
41

	  	
6.3
	
Impaired Classes Deemed to Reject Plan
	
41

	  	
6.4
	
Nonconsensual Confirmation
	
41

	  	
6.5
	
Distributions On Account of General Unsecured Claims
	
42

	  	
6.6
	
Date of Distributions
	
42

	  	
6.7
	
Disbursing Agent
	
42

	  	
6.8
	
Rights and Powers of Disbursing Agent
	
42

	  	
6.9
	
Expenses of the Disbursing Agent
	
43

	  	
6.10
	
Delivery of Distributions
	
43

	  	
6.11
	
Manner of Payment
	
43

	  	
6.12
	
No Fractional Shares
	
44

	  	
6.13
	
No Fractional Notes
	
44

	  	
6.14
	
Setoffs and Recoupment
	
44

	  	
6.15
	
Interest on Claims; Dividends
	
44

	  	
6.16
	
No Distribution In Excess of Allowed Amounts
	
45
















  



vi







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
6.17
	
Allocation of Plan Distributions Between Principal and Interest
	
45

	
ARTICLE VII
	
PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER PLAN OF REORGANIZATION
	
45

	  	
7.1
	
Objections
	
45

	  	
7.2
	
Authority to Prosecute Objections
	
45

	  	
7.3
	
No Distributions Pending Allowance
	
45

	  	
7.4
	
Distributions After Allowance
	
45

	  	
7.5
	
Resolution of Administrative Expense Claims and Claims
	
46

	  	
7.6
	
Estimation of Claims
	
46

	  	
7.7
	
Interest
	
46

	
ARTICLE VIII
	
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
	
46

	  	
8.1
	
Assumption or Rejection of Executory Contracts and Unexpired Leases
	
46

	  	
8.2
	
Approval of Assumption or Rejection of Executory Contracts and Unexpired Leases
	
47

	  	
8.3
	
Inclusiveness
	
47

	  	
8.4
	
Cure of Defaults
	
48

	  	
8.5
	
Bar Date for Filing Proofs of Claim Relating to Executory Contracts and Unexpired Leases Rejected Pursuant to the Plan....
	
48

	  	
8.6
	
Indemnification and Reimbursement Obligations
	
48

	  	
8.7
	
Insurance Policies
	
49

	  	
8.8
	
Compensation and Benefit Plans
	
49

	
ARTICLE IX
	
CORPORATE GOVERNANCE AND MANAGEMENT OF NEW HOLDCO
	
50

	  	
9.1
	
General
	
50

	  	
9.2
	
Operations Between Confirmation Date And Effective Date
	
50

	  	
9.3
	
New Organizational Documents
	
50

	  	
9.4
	
Board of New Holdco
	
50

	  	
9.5
	
Officers of New Holdco
	
50

	  	
9.6
	
New Employment Agreements
	
50














  



vii







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	
ARTICLE X
	
CONDITIONS PRECEDENT TO EFFECTIVE DATE
	
51

	  	
10.1
	
Condition Precedent to Effective Date
	
51

	  	
10.2
	
Waiver of Conditions
	
52

	  	
10.3
	
Satisfaction of Conditions
	
52

	
ARTICLE XI
	
EFFECT OF CONFIRMATION
	
52

	  	
11.1
	
Vesting of Assets
	
52

	  	
11.2
	
Claims Extinguished
	
53

	  	
11.3
	
Binding Effect
	
53

	  	
11.4
	
Discharge of Claims and Termination of Equity Interests
	
53

	  	
11.5
	
Discharge
	
53

	  	
11.6
	
Injunction or Stay
	
54

	  	
11.7
	
Terms of Injunction or Stay
	
54

	  	
11.8
	
Injunction Against Interference With Plan of Reorganization
	
55

	  	
11.9
	
Exculpation
	
55

	  	
11.10
	
Releases
	
55

	  	
11.11
	
Avoidance Actions/Objections
	
56

	  	
11.12
	
Retention of Causes of Action/Reservation of Rights
	
56

	
ARTICLE XII
	
RETENTION OF JURISDICTION
	
57

	
ARTICLE XIII
	
MISCELLANEOUS PROVISIONS
	
58

	  	
13.1
	
Effectuating Documents and Further Transactions
	
58

	  	
13.2
	
Withholding and Reporting Requirements
	
59

	  	
13.3
	
Corporate Action
	
59

	  	
13.4
	
Tax Matters
	
59

	  	
13.5
	
Modification of Plan
	
60

	  	
13.6
	
Revocation or Withdrawal of the Plan
	
61

	  	
13.7
	
Continuing Exclusivity Period
	
61

	  	
13.8
	
Plan Supplement
	
62

	  	
13.9
	
Payment of Statutory Fees
	
62

	  	
13.10
	
Post-Confirmation Date Professional Fees and Expenses
	
62














  



viii







  








TABLE OF CONTENTS

(continued)









	  	  	  	
Page

	  	  	  	  
	  	  	  	  
	  	
13.11
	
Dissolution of the Creditors’ Committee
	
62

	  	
13.12
	
Indenture Trustee as Claim Holder
	
62

	  	
13.13
	
Exemption from Transfer Taxes
	
63

	  	
13.14
	
Expedited Tax Determination
	
63

	  	
13.15
	
Exhibits/Schedules
	
63

	  	
13.16
	
Substantial Consummation
	
63

	  	
13.17
	
Severability of Plan Provisions
	
63

	  	
13.18
	
Governing Law
	
64

	  	
13.19
	
Computation of Time
	
64

	  	
13.20
	
Notices
	
64

	  	
13.21
	
Section Headings
	
65














  



ix







  








UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE







	
In re
	x	  
	 	:	
Chapter 11. Case No.

	  	:	  
	
CHARYS HOLDING COMPANY, INC., and
	:	  
	
CROCHET & BOREL SERVICES, INC.
	:	
08-10289 (BLS)

	  	:	  
	
Debtors.
	:	
(Jointly Administered)

	  	:	  
	  	x	  








FIRST AMENDED JOINT PLAN OF REORGANIZATION OF

DEBTORS AND CERTAIN NONDEBTOR AFFILIATES

UNDER CHAPTER 11 OF THE BANKRUPTCY CODE





Charys Holding Company, Inc., Crochet & Borel Services, Inc., Complete Tower Sources Inc., Mitchell Site Acq. Inc., Cotton Commercial USA, Inc., and LFC, Inc. propose the following chapter 11 plan pursuant to section 1121(a) of the Bankruptcy Code:





ARTICLE I





DEFINITIONS AND INTERPRETATION





The following terms used herein shall have the respective meanings set forth below:





1.1            8.75% Senior Convertible Notes means the 8.75% Senior Convertible Notes due 2012 in the aggregate original principal amount of $201,250,000 issued by Charys Holding pursuant to that certain Indenture,
dated as of February 16,2007, by and between The Bank of New York Mellon Trust Company, N.A, (f/k/a The Bank of New York Trust Company, N.A.), as trustee, and Charys Holding.





1.2            8.75% Senior Convertible Note Claims means the Charys 8.75% Senior Convertible Note Claims, and the Affiliated Plan Proponent 8.75% Senior Convertible Note Claims.





1.3            Ad Hoc Noteholders Committee means the ad hoc committee consisting of certain holders of 8.75% Senior Convertible Notes, which, among other things, negotiated certain terms and conditions of this
Plan and certain other related documents and pleadings with the Debtors prior to the Commencement Date.





1.4            Administrative Claims Bar Date has the meaning ascribed to it in Section 2.1 of the Plan.








  



 







  








1.5            Administrative Expense Claim means any Claim constituting a cost or expense of administration of the Reorganization Cases Allowed under and in accordance with, as applicable, sections 330, 365,
503(b), 507(a)(2) and 507(b) of the Bankruptcy Code, including, without limitation, (a) any actual and necessary costs and expenses, incurred after the Commencement Date, of preserving the Debtors' estates, (b) any actual and necessary costs and expenses, incurred after the Commencement Date, of operating the Debtors' businesses, (c) any indebtedness or obligations incurred or assumed by the Debtors in Possession during the Reorganization Cases and (d) any compensation for professional services rendered and reimbursement
of expenses incurred to the extent Allowed by Final Order. Any fees or charges assessed against the estates of the Debtors under section 1930 of chapter 123 of title 28 of the United States Code is excluded from the definition of Administrative Expense Claim and shall be paid in accordance with Section 13.8 of the Plan.





1.6            Affiliate has the meaning set forth in section 101 (2) of the Bankruptcy Code.





1.7            Affiliated Plan Proponent means CTSI, MSAI, Cotton and LFC, Inc.





1.8            Affiliated Plan Proponent 8.75% Senior Convertible Note Claims means all Claims, rights and interests against the Affiliated Plan Proponents arising out of or related to the 8.75% Senior Convertible
Notes, the Indenture, and any instruments, documents or agreements executed in connection therewith, including, without limitation, all accrued but unpaid interest thereon.





1.9            Allowed means, with reference to any Claim against the Debtors, (a) any Claim against any Debtor which has been listed by such Debtor in its Schedules (as such Schedules may be amended by the Debtors
from time to time in accordance with Bankruptcy Rule 1009) as liquidated in amount and not disputed or contingent and for which no contrary proof of Claim has been filed or no timely objection to allowance or request for estimation has been interposed, (b) any timely filed proof of Claim (i) as to which no objection has been or is interposed in accordance with Section 7.1 of the Plan or such other applicable period of limitation fixed by the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules or
the Bankruptcy Court and as to which any such applicable period of limitation has expired or (ii) as to which any objection has been determined by a Final Order to the extent such objection is determined in favor of the respective holder of such Claim, (c) any Claim expressly allowed by a Final Order or under the Plan, (d) any Claim that is compromised, settled or otherwise resolved pursuant to the authority granted to New Holdco and the Liquidating Trusts (as applicable) pursuant to a Final Order of the Bankruptcy
Court or under Section 7.5 of the Plan; provided, however, that (a) Claims allowed solely for the purpose of voting to accept or reject the Plan pursuant to an order of the Bankruptcy Court shall not be considered "Allowed Claims" and (b) "Allowed Claim" shall not include any Claim subject to disallowance in accordance with section 502(d) of the Bankruptcy Code. Unless otherwise specified in the Plan or by order of the Bankruptcy Court, "Allowed Administrative Expense Claim" or "Allowed
Claim" shall not, for any purpose under the Plan, include interest on such Claim from and after the Commencement Date.








  



2







  








1.10          Ballots means the forms distributed to each holder of an impaired Claim that is entitled to vote to accept or reject the Plan on which is to be indicated acceptance or rejection of the Plan.





1.11          Bankruptcy Code means title 11 of the United States Code, as amended from time to time, as applicable to the Reorganization Cases.





1.12          Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware or any other court of the United States having jurisdiction over the Reorganization Cases.





1.13          Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code, as amended from time to time.





1.14          Benefit Plans means the medical and health insurance, life insurance, dental insurance, and disability benefits and coverage sponsored by Charys Holding; Benefit Plans shall not include any equity, bonus,
stock, option or similar plans in effect on or prior to the Commencement Date.





1.15          Business Day means any day other than a Saturday, Sunday or any other day on which commercial banks in New York, New York and Wilmington, Delaware are required or authorized to close by law or executive
order.





1.16          C&B means Crochet & Borel Services, Inc.





1.17          C&B Class 4 Pro Rata Share means, as of any distribution date under the C&B Liquidating Trust Agreement, the ratio (expressed as a percentage) of the amount of an Allowed General Unsecured Claim
against C&B in Class 4 to the sum of (a) the aggregate amount of all Allowed General Unsecured Claims against C&B in Class 4, and (b) the aggregate of the Disputed Claim Amounts of all Disputed Claims against C&B in Class 4.





1.18          C&B Equity Interest means all shares of common or preferred stock or any other instrument evidencing an ownership interest in C&B, whether or not transferable, and all options, warrants, conversion
rights, rights of first refusal or other rights, contractual or otherwise, to acquire or receive any such interests.





1.19          C&B Liquidating Trust means the liquidating trust established under Section 5.3(a) of the Plan.





1.20          C&B Liquidating Trust Agreement means the agreement between C&B and the Trustee, which shall be in form and substance reasonably satisfactory to the Debtors and Creditors' Committee, governing
the C&B Liquidating Trust, dated as of the Effective Date, substantially in the form set forth in the Plan Supplement.








  



3







  








1.21          C&B Liquidating Trust Assets means all assets of C&B as of the Effective Date.





1.22          C&B Liquidating Trust Beneficiaries means the holders of Other Secured Claims against C&B, and General Unsecured Claims against C&B, in each case, as and when Allowed.





1.23          C&B Liquidating Trust Claims Reserve has the meaning ascribed to it in Section 5.3(a)(xiii)(2)(D) of the Plan.





1.24          C&B Securities Claim means any Claim against C&B, whether or not the subject of an existing lawsuit, arising from the rescission of a purchase or sale of a debt security, for damages arising from
the purchase or sale of any such security, or for reimbursement or contribution allowed under section 502 of the Bankruptcy Code on account of any such Claim.





1.25          C&B 8.75% Senior Convertible Note Claims means all claims, rights and interests against C&B arising out of or related to the 8.75% Senior Convertible Notes, the Indenture, and any instruments
documents or agreements executed in connection therewith, including, without limitation, all accrued but unpaid interest thereon.





1.26          C&B Trustee means a trustee or co-trustees, as the case may be, reasonably satisfactory to the Creditors' Committee, governing the C&B Liquidating Trust,





1.27          Cash means legal tender of the United States of America.





1.28          Charys 8.75% Senior Convertible Note Claims means all Claims, rights and interests against Charys Holding arising out of or related to the 8.75% Senior Convertible Notes, the Indenture, and any instruments,
documents or agreements executed in connection therewith, including, without limitation, all accrued but unpaid interest thereon.





1.29          Charys Group means (i) the affiliated group of corporations, within the meaning of Section 1504 of the Tax Code, of which Charys Holding is the common parent, and (ii) any other group of corporations
filing consolidated, combined or unitary tax returns for state and local tax purposes that includes any of the Debtors or their Affiliates, other than any such group that includes solely the Affiliated Plan Proponents or of which an Affiliated Plan Proponent is the parent.





1.30          Charys Holding means Charys Holding Company, Inc.





1.31          Charys Holding Equity Interests means all shares of common or preferred stock or any other instrument evidencing an ownership interest in Charys Holding,
whether or not transferable, and all options, warrants, conversion rights, rights of first refusal, or other rights, contractual or otherwise, to acquire any such interests. 




  



4







  




 

1.32          Charys Holding Securities Claim means any Claim against Charys Holding, whether or not the subject of an existing lawsuit, arising from the rescission of a purchase or sale of a debt security, for damages
arising from the purchase or sale of any such security, or for reimbursement or contribution allowed under section 502 of the Bankruptcy Code on account of any such Claim.





1.33          Charys Liquidating Trust means the liquidating trust established under Section 5.2 of the Plan.





1.34          Charys Liquidating Trust Agreement means the agreement between Charys Holding and the Charys Trustee, which shall be in form and substance reasonably satisfactory to the Debtors and the Creditors' Committee,
governing the Charys Liquidating Trust, dated as of the Effective Date, substantially in the form set forth in the Plan Supplement.





1.35          Charys Liquidating Trust Assets means (a) all assets of Charys Holding as of the Effective Date, other than the stock in the Affiliated Plan Proponents to be distributed to the Disbursing Agent on behalf
of the holders of Mirror Note Claims pursuant to Section 5.2(a)(i)(2)(B); and (b) 6% of the New Equity Interests.





1.36          Charys Liquidating Trust Beneficiaries means (i) if any Collateral is transferred to the Charys Liquidating Trust, such holders of Allowed Secured Working Capital Claims against Charys Holding or Other
Secured Claims against Charys Holding whose Collateral has been transferred, and (ii) the holders of General Unsecured Claims against Charys Holding and 8.75% Senior Convertible Note Claims, in each case, as and when Allowed.





1.37          Charys Liquidating Trust Claims Reserve has the meaning ascribed to it in Section 5,2(d)(xiii)(l)(D) of the Plan.





1.38          Charys Trustee means a trustee or co-trustees, as the case may be, reasonably satisfactory to the Creditors' Committee, governing the Charys Liquidating Trust.





1.39          Claim means (a) the right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured,
known, unknown, or asserted, or (b) the right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.








  



5







  








1.40          Class 8 General Unsecured Pro Rata Share means, as of any distribution date under the Charys Liquidating Trust, the ratio (expressed as a percentage) of the amount of an Allowed General Unsecured Claim
against Charys Holding in Class 8 to the sum of (a) the aggregate amount of all Allowed General Unsecured Claims against Charys Holding, in Class 8, (b) the aggregate of the Disputed Claim Amounts of all Disputed Claims in Charys Holding Class 8, and (c) the aggregate amount of all Allowed Charys 8.75% Senior Convertible Note Claims.





1.41          Class A C&B Beneficial Interest means, for federal income tax purposes, the entitlement of holders of Allowed Other Secured Claims against C&B in C&B Class 3 to receive distributions from
the C&B Liquidating Trust.





1.42          Class B C&B Beneficial Interest means a beneficial interest in the C&B Liquidating Trust to be issued to holders of Allowed General Unsecured Claims against C&B in C&B Class 4A, which
entitles its holder to receive its C&B Class 4 Pro Rata Share of distributions (other than distributions to which a holder of a Class A C&B Beneficial Interest is entitled to receive) from the C&B Liquidating Trust.





1.43          Class A Charys Beneficial Interest means, for federal income tax purposes, the entitlement of holders of Allowed Secured Working Capital Facility Claims against Charys Holdings in Charys Holding Class
3 and Allowed Other Secured Claims against Charys Holdings in Charys Holding Class 4 to receive distributions from the Charys Liquidating Trust.





1.44          Class B Charys Beneficial Interest means a beneficial interest in the Charys Liquidating Trust to be issued to holders of Allowed Charys 8.75% Senior Convertible Note Claims in Charys Holding Class 7,
and Allowed General Unsecured Claims against Charys Holding in Charys Holding Class 8, which entitles its holder to receive its Class 8 General Unsecured Pro Rata Share or Noteholder Charys Pro Rata Share (as applicable) of distributions (other than distributions to which a holder of a Class A Charys Beneficial Interest is entitled to receive) received from the Charys Liquidating Trust.





1.45          Class 6/7 Pro Rata Share means the ratio (expressed as a percentage) of the amount of an Allowed 8.75% Senior Convertible Note Claim or Allowed Mirror Note Claims, as applicable, to the sum of (a) the
aggregate amount of all Allowed 8.75% Senior Convertible Note Claims and (b) the aggregate amount of all Mirror Note Claims,





1.45 A      Class 7 Pro Rata Share means the ratio (expressed as a percentage) of the amount of an Allowed 8.75% Senior Convertible Note Claim to the sum of the aggregate amount of all Allowed 8.75% Senior Convertible Note Claims.





1.46          Collateral means any property or interest in property of the estates of any of the Debtors that is subject to a Lien, charge or other encumbrance to secure the payment or performance of a Claim, which
Lien, charge or other








  



6







  




 

encumbrance is not subject to avoidance or otherwise invalid under the Bankruptcy Code or applicable state law.





1.47          Commencement Date means February 14, 2008, the date on which the Debtors commenced their Reorganization Cases.





1.48          Confirmation Date means the date on which the clerk of the Bankruptcy Court enters the Confirmation Order on the docket with respect to the Reorganization Cases.





1.49          Confirmation Hearing means the hearing conducted by the Bankruptcy Court to consider confirmation of the Plan, as such hearing may be adjourned or continued from time to time.





1.50          Confirmation Order means the order or orders of the Bankruptcy Court, confirming the Plan pursuant to section 1129 of the Bankruptcy Code.





1.51          Contingent Claim means any Claim, the liability for which attaches or is dependent upon the occurrence or happening of, or is triggered by, an event, which event has not yet occurred, happened or been
triggered as of the date on which such Claim is sought to be estimated or an objection to such Claim is filed, whether or not such event is within the actual or presumed contemplation of the holder of such Claim and whether or not a relationship between the holder of such Claim and the applicable Debtor now or hereafter exists or previously existed.





1.52          Cotton means Cotton Commercial USA, Inc.





1.53          Cotton Seller Note Claims mean all Claims arising under or related to any note, debt, claim, earn-out agreement, employment agreement or other payment obligations (including, without limitation, those
agreements set forth on Schedule A annexed to the Cotton Settlement Agreement) incurred by Charys Holding (or any of its affiliates) in connection with its purchase of that certain business now operated by Cotton Commercial USA, Inc.





1.54          Cotton Settlement Agreement means that certain agreement among Charys Holding, Bryan Michalsky, James Scaife, Randall Thompson, Daryn Ebrecht, Peter Bell, Blake Stansell, Chad Weigman, Johnny Slaughter,
and Russell White, substantially in the form set forth in the Plan Supplement.





1.55          Creditors' Committee means the statutory committee of unsecured creditors appointed in the Reorganization Cases pursuant to section 1102(a) of the Bankruptcy Code.





1.56          CTSI means Complete Tower Sources, Inc.





1.57          CTSI / MSAI Seller Note Claims means all Claims arising under or related to any note, debt, claim, earn-out agreement, employment agreementor other payment obligation (including, without limitation, those
agreements set forth on Schedule A annexed to the CTSI / MSAI Settlement Agreement) incurred by Charys Holding (or any of its affiliates) in connection with its purchase of Complete Tower Sources Inc. and Mitchell Site Acq. Inc.





  



7







  





1.58          CTSI / MSAI Settlement Agreement means that certain agreement among Charys Holding, Lori Mitchell, Matthew Mitchell, and Carrol Castille, substantially in the form set forth in the Plan Supplement.





1.59          Debtors means Charys Holding and C&B.





1.60          Debtors in Possession means the Debtors in their capacity as debtors in possession in the Reorganization Cases under sections 1107(a) and 1108 of the Bankruptcy Code.





1.61          Disallowed Claim means a Claim or a portion of a Claim that is disallowed in its entirety by an order of the Bankruptcy Court or such other court of competent jurisdiction.





1.62          Disbursing Agent means any entity in its capacity as a disbursing agent under Sections 6.7 and 6.8 of the Plan.





1.63          Disclosure Statement means that certain disclosure statement relating to the Plan, including, without limitation, all exhibits and schedules thereto, as the same may be amended, supplemented or otherwise
modified from time to time, as approved by the Bankruptcy Court pursuant to section 1125 of the Bankruptcy Code.





1.64          Disclosure Statement Order means the order of the Bankruptcy Court approving, among other things, the Disclosure Statement and establishing certain procedures with respect to the solicitation and tabulation
of votes to accept or reject the Plan.





1.65          Disputed Claim means, (a) with respect to any Administrative Claim, other than an Administrative Claim that has been Allowed pursuant to the Plan or a Final Order of the Bankruptcy Court or that was incurred
by the Debtors in the ordinary course of business during the Reorganization Cases, a Claim: that is contingent or disputed and subject to liquidation through pending or prospective litigation, including, but not limited to, alleged obligations arising from personal injury, property damage, products liability, consumer complaints, employment law, secondary payor liability, or any other disputed legal or equitable claim based on tort, statute, contract, equity, or common law; or (b) with respect to any Claim that
is not an Administrative Claim, any Claim against any Debtor, proof of which was timely and properly filed, which is (i) disputed under the Plan, (ii) as to which the Debtors have interposed a timely objection and/or request for estimation in accordance with section 502(c) of the Bankruptcy Code and Bankruptcy Rule 3018, which objection and/or request for estimation has not been withdrawn or determined by a Final Order, (iii) any Claim proof of which was required to be tiled by order of the Bankruptcy Court but
as to which a proof of claim was not timely or properly filed, and (iv) for damages based upon the rejection by a Debtor of an executory contract or unexpired lease under section 365 of the Bankruptcy Code and as to which the applicable bar date has not passed. A Claim that is disputed by the Debtors as to its amount only, shall be deemed Allowed in the amount the Debtors admit owing, if any, and disputed as to the excess.





  



8







  





1.66          Disputed Claim Amount means the Estimated Amount of a Disputed Claim, or, if no Estimated Amount exists, the amount set forth in the proof of claim relating to such Disputed Claim as the liquidated amount
of such Disputed Claim.





1.67          Distribution Record Date means the record date for determining entitlement to receive distributions under the Plan on account of Allowed Claims, which date shall be (a) for all holders of Claims other
than holders of 8.75% Senior Convertible Note Claims or Mirror Note Claims, the third (3rd) Business Day after the Confirmation Date at 5:00 p.m. prevailing Eastern time; and (b) for all holders of 8.75% Senior Convertible Note Claims or Mirror Note Claims, 5:00 p.m. prevailing Eastern time the third Business Day prior to the Effective Date.





1.68          Effective Date means a Business Day selected by the Debtors, with the prior consent of the Creditors' Committee, on or after the Confirmation Date, on which (a) no stay of the Confirmation Order is in
effect and (b) the conditions precedent to the effectiveness of the Plan specified in Section 10.1 of the Plan shall have been satisfied or waived as provided in Section 10.2 of the Plan.





1.69          Equity Interest means collectively the Charys Holding Equity Interests and the C&B Equity Interests.





1.70          Estimated Amount means the estimated dollar value of an Unliquidated Claim, Disputed Claim, or Contingent Claim pursuant to section 502(c) of the Bankruptcy Code or as otherwise agreed to between the
holder of such Claim and the applicable Debtor, New Holdco or the Liquidating Trusts (as applicable), with the prior consent of the Creditors' Committee, or as otherwise determined by Bankruptcy Court.





1.71          Final Order means an order or judgment of a court of competent jurisdiction that has been entered on the docket maintained by the clerk of such court and has not been reversed, vacated or stayed and as
to which (a) the time to appeal, petition for certiorari or move for a new trial, reargument or rehearing has expired and as to which no appeal, petition for certiorari or other proceedings for a new trial, reargument or rehearing shall then be pending or (b) if an appeal, writ of certiorari, new trial, reargument or rehearing thereof has been sought, (i) such order or judgment shall have been affirmed by the highest court to which such order was appealed, certiorari shall have been denied or a new trial, reargument
or rehearing shall have been denied or resulted in no modification of such order and (ii) the time to take any further appeal, petition for certiorari, or move for a new trial, reargument or rehearing shall have expired; provided, however, that the possibility that a motion under Rule 60 of the Federal Rules of Civil Procedure, or any analogous rule under the Bankruptcy Rules or the Local Bankruptcy Rules, may be filed relating to such order shall not prevent such order from being a Final Order.





  



9







  





1.72          Funding Arrangement means an arrangement, on the terms set forth in the Funding Arrangement Agreement, by which New Holdco will transfer monies to the Liquidating Trusts on the Effective Date and by which
the Liquidating Trusts will pay New Holdco the net proceeds of all recoveries made, until such time as New Holdco shall have received its initial transfer plus a rate of return specified in the Funding Arrangement Agreement.





1.73          Funding Arrangement Agreement means an agreement between the Liquidating Trustees and New Holdco, substantially in the form contained in the Plan Supplement.





1.74          General Unsecured Claim means any Claim against the Debtors (as applicable) other than an Administrative Expense Claim, Priority Tax Claim, Other Priority Claim, Secured Tax Claim, Secured Working Capital
Facility Claim, Other Secured Claim, Cotton Seller Note Claim, CTSI / MSAI Seller Note Claims, 8.75% Senior Convertible Note Claim, Subordinated Note Claim, Mirror Note Claim, or Intercompany Claim.





1.74A       Imperium Claims means all Claims of Imperium Advisors, LLC, Imperium Master Fund, Ltd., JED Family Trust, and John Michaelson against the Debtors and their affiliates.





1.75          Indenture means that certain Indenture, dated as of February 16, 2007, by and between The Bank of New York Mellon Trust Company, N.A., as trustee, and Charys Holding, under which the 8.75% Senior Convertible
Notes were issued, as such Indenture has been amended, modified or supplemented from time to time.





1.76          Indenture Trustee means the indenture trustee under the Indenture.





1.77          Indenture Trustee Fees means the reasonable and customary fees and expenses of the Indenture Trustee as provided in the Indenture, including, without limitation, reasonable attorneys' fees and disbursements
incurred by the Indenture Trustee, whether prior to or after the Effective Date.





1.78          Intercompany Claim means any Claim against any Debtor held by another Debtor or by a Non-Debtor Subsidiary or Affiliate.





1.79          Lien means a charge against or interest in property of the Debtors to secure payment of a debt or performance of an obligation owed by the Debtors. For purposes of the Plan, the term shall not include
(a) a lien resulting from the provisions of chapter 5 of the Bankruptcy Code or (b) a lien that has been or may be avoided pursuant to chapter 5 of the Bankruptcy Code.





  



10







  





1.80          Liquidating Trusts means the C&B Liquidating Trust and the Charys Liquidating Trust.





1.81          Liquidating Trustees means the C&B Trustee and the Charys Trustee.





1.82          Liquidating Trust Agreements means the C&B Liquidating Trust Agreement and the Charys Liquidating Trust Agreement.





1.83          Local Bankruptcy Rules means the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware as amended from time to time.





1.84          Mirror Notes means, collectively, (i) the 8.75% Senior Convertible Note due 2012 to Lori Mitchell in the approximate original principal amount of $2,569 million, (ii) the 8.75% Senior Convertible Note
due 2012 to Matthew Mitchell in the approximate original principal amount of $2,590 million, and (iii) the 8.75% Senior Convertible Note due 2012 to Carrol Castille in the approximate original principal amount of $2.84 million.





1.85          Mirror Note Claims means all Claims arising under the Mirror Notes.





1.86          Intentionally Omitted.





1.87          MSAI means Mitchell Site Acq. Inc.





1.88          New Equity Interests means the equity interests of New Holdco (i) authorized and issued and to be delivered to holders of certain Allowed Claims under the Plan.





1.89          New Employment Agreements means any employment contracts, to be entered into on Effective Date by New Holdco and the individuals set forth in the Plan Supplement, including Michael F. Oyster, which New
Employment Agreements shall be substantially in the form set forth in the Plan Supplement.





1.90          New Holdco means a new Delaware corporation to be organized on or before the Effective Date.





1.91          New Organizational Documents means each certificate of incorporation, certificate of formation, bylaws, and other organizational document for New Holdco, in form and substance reasonably acceptable to
Charys Holding and the Creditors' Committee, and substantially in the forms set forth in the Plan Supplement.





1.92          New Secured Notes means the senior secured notes to be issued by New Holdco under the Plan to holders of Allowed Claims in Classes 6 and 7 in the aggregate principal amount of $20 million, due on the
fourth anniversary of the Effective Date, bearing interest at the rate of 15% per annum and having the other principal terms as set forth in Exhibit A to the Plan, which Exhibit shall be in the Plan Supplement.





  



11







  





1.93          New Secured Note Indenture means the indenture, dated as of the Effective Date, between New Holdco and an indenture trustee to be selected by Charys Holding with the prior consent of the Creditors' Committee,
governing the New Secured Notes, which shall be substantially in the form set forth in the Plan Supplement.





1.94          Non-Debtor Subsidiary means any direct or indirect Subsidiary of Charys Holding that is not a Debtor.





1.95          Non-Released Parties means Troy Crochet, Billy Ray, Jr., Michael Brown, and McMahan Securities Co. L.P.





1.96          Noteholder Charys Pro Rata Share means as of any distribution date under the Charys liquidating Trust, the ratio (expressed as a percentage) of the amount of an Allowed 8.75% Senior Convertible Note Claim
to the sum of (a) the aggregate amount of all Allowed 8.75% Senior Convertible Note Claims, (b) the aggregate amount of all Allowed General Unsecured Claims against Charys Holding in Charys Holding Class 8, and (c) the aggregate of the Disputed Claim Amounts of all Disputed Claims in Charys Holding Class 8.





1.97          Other Priority Claim means a Claim entitled to priority in payment as specified in section 507(a)(4), (5), (6) or (7) of the Bankruptcy Code.





1.98          Other Secured Claim means a Secured Claim other than a Secured Tax Claim, or Secured Working Capital Facility Claim.





1.99          Person means an individual, partnership, corporation, limited liability company, cooperative, trust, unincorporated organization, association, joint venture, government unit or agency or political subdivision
thereof or any other form of legal entity or enterprise.





1.100        Plan means this First Amended Joint Plan of Reorganization, including, without limitation, the exhibits and schedules hereto or contained in the Plan Supplement, as the same may be amended or modified from time
to time in accordance with the provisions of the Bankruptcy Code and the terms hereof.





1.101        Plan Proponents means, collectively, the Debtors and the Affiliated Plan Proponents.





1.102        Plan Supplement means the supplement to the Plan containing certain documents relevant to the implementation of the Plan, which shall be in form and substance reasonably acceptable to the Debtors and the Creditors'
Committee and shall include, but is not limited to, the lists of the initial members of the New Board of New Holdco, the list of executory contracts and unexpired leases to be assumed pursuant to the Plan, the New Secured Note Indenture, the New Employment Agreements, the Settlement Agreements, the New Organizational Documents, and the New Management Incentive Plan and the Liquidating Trust Agreements.





  



12







  





1.103        Priority Tax Claim means any Claim of a governmental unit of the kind entitled to priority in payment as specified in sections 502(i) and 507(a)(8) of the Bankruptcy Code.





1.104        Proponent Inclusive Group means each Charys Group of which any of the Affiliated Plan Proponents is a member.





1.105        Reorganization Cases means the jointly administered cases commenced by the Debtors under chapter 11 of the Bankruptcy Code.





1.106        Restructuring Transactions has the meaning set forth in Section 5.2(a)(i) of the Plan.





1.107        Schedules means, collectively, the schedules of assets and liabilities, schedules of executory contracts and unexpired leases and statements of financial affairs filed by the Debtors under section 521 of the Bankruptcy
Code, Bankruptcy Rule 1007 and the Official Bankruptcy Forms in the Reorganization Cases, as may have been amended or supplemented from time to time in accordance with Bankruptcy Rule 1009 or orders of the Bankruptcy Court.





1.108        Secured Claim means any Claim that is secured by a Lien on property in which a Debtor's estate has an interest to the extent of the value of such property, as determined in accordance with section 506(a) of the
Bankruptcy Code, or, in the event that such Claim is subject to a permissible setoff under section 553 of the Bankruptcy Code, to the extent of such permissible setoff, or, in either case as otherwise agreed upon in writing by the Debtors (with the consent of the Creditors' Committee), or the Liquidating Trusts (as applicable) and the holder of such Claim.





1.109        Secured Tax. Claim means any Secured Claim that, absent its secured status, would be entitled to priority in right of payment under section 507(a)(8) of the Bankruptcy Code (determined irrespective of any time limitations
therein) and including any related Secured Claim for penalties.





1.110        Secured Working Capital Facility Claims means any and all Secured Claims arising under Charys Holding's guaranty of a working capital facility provided to any of its Affiliates.





1.111        Settlement Agreements means the Cotton Settlement Agreement, and the CTSI / MS AI Settlement Agreement.





1.112        Subordinated Debt Claims means all Claims arising under (i) the Subordinated Unsecured Convertible Note executed on May 18, 2007, but effective as of April 30, 2007, by Charys Holding Company, Inc. payable to Gottbetter
Capital Master, Ltd. in the amount of $8,354,043.00; (ii) the Subordinated Unsecured Convertible Note executed on May 18, 2007, but effective as of April 30, 2007, by Charys Holding Company, Inc. payable to Castlerigg Master Investments, Ltd. in the amount of $5,012,426.00; (iii) the Subordinated Unsecured Convertible Note executed on May 18, 2007, but effective as of April 30, 2007, by Charys Holding-Company, Inc. payable to UBS O'Connor LLC F/B/O/ O'Connor Pipes Corporate Strategies Master Ltd. in the amount
of $1,670,809.00; and (iv) the Subordinated Unsecured Convertible Note issued January 1, 2007, by Charys Holding Company, Inc. payable to Jade Special Strategy, LLC in the amount of $380,000.





  



13







  





1.113        Tax Code means the Internal Revenue Code of 1986, as amended.





1.114        U.S. Trustee means the United States Trustee appointed under section 581 of title 28 of the United States Code to serve in the District of Delaware.





1.115        Unimpaired means, with respect to any Claim, that such Claim is not impaired within the meaning of section 1124 of the Bankruptcy Code.





1.116        Unliquidated Claim means any Claim, the amount of liability for which has not been fixed, whether pursuant to agreement, applicable law or otherwise, as of the date on which such Claim is asserted or sought to be
estimated.





1.117        Voting Record Date means, [____________] for all creditors entitled to vote on the Plan.





Unless otherwise specified, all Section, Article, schedule or exhibit references in the Plan are to the respective Section in, Article of or schedule or exhibit to the Plan or the Plan Supplement, as the same may be amended, waived or modified from time to time. The words "herein," "hereof," "hereto," "hereunder" and other words of similar
import refer to the Plan as a whole and not to any particular section, subsection or clause contained in the Plan. A term used herein that is not defined herein shall have the meaning ascribed to that term in the Bankruptcy Code. The rules of construction contained in section 102 of the Bankruptcy Code shall apply to the construction of the Plan. In the event that a particular term of the Plan of Reorganization (including any exhibits or schedules hereto) conflicts with a particular term of the definitive documentation
required to be implemented pursuant to the terms of the Plan of Reorganization or any settlement or other agreement contemplated hereunder, the definitive documentation shall control and shall be binding on the parties thereto. The headings in the Plan are for convenience of reference only and shall not limit or otherwise affect the provisions hereof.





  



14







  





ARTICLE II





PROVISIONS FOR PAYMENT OF ADMINISTRATIVE

EXPENSES AND PRIORITY TAX CLAIMS






	
  
	
2.1
	
Administrative Expense Claims.








Except to the extent that any entity entitled to payment of any Allowed Administrative Expense Claim agrees to a different treatment, on the latest of (i) the Effective Date, (ii) the date on which its Administrative Expense Claim becomes an Allowed Administrative Expense Claim, or (iii) the date on which its Administrative Expense Claim
becomes payable under any agreement relating thereto, or as soon as practicable thereafter, each holder of an Allowed Administrative Expense Claim shall receive from the applicable Liquidating Trustee, in full satisfaction, settlement, and release of and in exchange for such Allowed Administrative Expense Claim, Cash equal to the unpaid portion of its Allowed Administrative Expense Claim. Notwithstanding the forgoing, (a) any Allowed Administrative Expense Claim based on a liability incurred by the Debtors in
the ordinary course of business during the Reorganization Cases shall be paid by the applicable Liquidating Trustee in the ordinary course of business, in accordance with the terms and conditions of any agreement relating thereto and (b) any Allowed Administrative Expense Claim may be paid on such other terms as may be agreed on between the holder of such Claim and the Debtors, with the prior consent of the Creditors' Committee.





All Administrative Expense Claims not otherwise paid in the ordinary course of the Debtors' business must be filed with the Bankruptcy Court before the Administrative Claims Bar Date. For purposes hereof and for the Reorganization Cases, the "Administrative Claims Bar Date" shall be twenty (20) days before the date scheduled for the Confirmation
Hearing. Unless the applicable Liquidating Trustee objects to an Administrative Claim within thirty-five (35) days after receipt, such Administrative Claim shall be deemed Allowed in the amount requested (to the extent such amount is in a liquidated amount). In the event that an objection is filed to an Administrative Claim, the Bankruptcy Court shall determine the Allowed amount, if any, of such Administrative Claim.






	
  
	
2.2
	
Professional Compensation and Reimbursement Claims.








All entities seeking awards by the Bankruptcy Court of compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under sections 330, 331, 503(b)(2), 503(b)(3), 503(b)(4) or 503(b)(5) of the Bankruptcy Code shall (a) file, on or before the date that is forty-five (45) after the Effective
Date their respective applications for final allowances of compensation for services rendered and reimbursement of expenses incurred and (b) be paid in full by the applicable Liquidating Trustee, in Cash, in such amounts as are Allowed by the Bankruptcy Court in accordance with the order relating to or allowing any such Administrative Expense Claim or upon such other terms as may be mutually agreed upon between the holder of such Administrative Expense Claim and the Debtors, with the prior consent of the Creditors'
Committee, or, if on or after the Effective Date, the applicable Liquidating Trustee. The Debtors, are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Confirmation Date in the ordinary course of business and without the need for Bankruptcy Court approval.





  



15







  






	
  
	
2.3
	
Indenture Trustee Fees.








The Indenture Trustee Fees shall be paid in Cash on the Effective Date by New Holdco, without the need for application to, or approval of, the Bankruptcy Court.





To the extent that the Indenture Trustee provides services related to distributions pursuant to the Plan (including, but not limited to, the services referenced in Section 6.10(a) of the Plan), such Indenture Trustee will receive from the Charys Trustee, without further Bankruptcy Court approval, reasonable compensation for such services
and reimbursement of reasonable expenses, including, but not limited to, reasonable attorneys' fees and expenses, incurred in connection with such services. These payments will be made on terms agreed to by the Indenture Trustee and the Charys Trustee.






	
  
	
2.4
	
Priority Tax Claims.








On the later of (i) the Effective Date or (ii) the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, or as soon as practicable thereafter, each holder of an Allowed Priority Tax Claim shall receive from the applicable Liquidating Trust in full satisfaction, settlement, and release of and in exchange for such Allowed Priority
Tax Claim, in the sole discretion of the Debtors, with the prior consent of the Creditors Committee (a) Cash in an amount equal to such Allowed Priority Tax Claim, (b) equal annual Cash payments aggregating an amount equal to such Allowed Priority Tax Claim, together with interest for a period after the Effective Date at the applicable non-bankruptcy rate over a period not exceeding five (5) years after the Commencement Date, subject to the applicable Liquidating Trustee's sole option to prepay the entire amount
of the Allowed Priority Tax Claim; provided that the payments under this clause (b) shall represent a percentage recovery at least equal to that expected to be received by the most favored Class of nonpriority unsecured Claims against Charys Holding or C&B, as applicable, or (c) such other treatment as to which the Debtors, with the prior consent of the Creditors' Committee, or the Liquidating Trustees, as applicable, and such holder shall have agreed upon in writing; provided, however, that no holder of
an Allowed Priority Tax Claim shall be entitled to any payments on account of any pre-Effective Date interest or penalty accrued on, or after the Commencement Date with respect to or in connection with such Allowed Priority Tax Claim. The applicable Liquidating Trustee's or the applicable Disbursing Agent's failure to make any required payment to the holder of an Allowed Priority Tax Claim in accordance with the terms of this paragraph shall be an event of default, The holder of any Allowed Priority Tax Claim
on which required payments have not been made shall provide written notice to the applicable Liquidating Trustee and counsel for New Holdco of such default, which default may be cured within twenty (20) days from the receipt of such notice.





  



16







  





ARTICLE III





CLASSIFICATION OF CLAIMS AND

EQUITY INTERESTS, IMPAIRMENT AND VOTING





The following table designates the classes of Claims against and equity interests in the Debtors and specifies which of those classes are impaired or Unimpaired by the Plan and entitled to vote to accept or reject the Plan in accordance with section 1126 of the Bankruptcy Code or are deemed to accept or reject the Plan.












	
Class
	
Designation
	
Impairment
	
Entitled to Vote

	
Charys Holding Class 1
	
Other Priority Claims Against Charys Holding
	
Unimpaired
	
No (deemed to accept)

	
Charys Holding Class 2
	
Secured Tax Claims Against Charys Holding
	
Unimpaired
	
No (deemed to accept)

	
Charys Holding Class 3
	
Secured Working Capital Facility Claims Against Charys Holding
	
Unimpaired
	
No (deemed to accept)

	
Charys Holding Class 4
	
Other Secured Claims Against Charys Holding
	
Unimpaired
	
No (deemed to accept)

	
Charys Holding Class 5
	
Cotton Seller Note Claims
	
Impaired
	
Yes

	
Charys Holding Class 6
	
CTSI / MSAI Seller Note Claims and Mirror Note Claims
	
Impaired
	
Yes

	
Charys Holding Class 7
	
8.75% Senior Convertible Note Claims
	
Impaired
	
Yes

	
Charys Holding Class 8
	
General Unsecured Claims Against Charys Holding
	
Impaired
	
Yes

	
Charys Holding Class 9
	
Subordinated Debt Claims
	
Impaired
	
No (deemed to reject)

	
Charys Holding Class 10
	
Charys Holding Securities Claims
	
Impaired
	
No (deemed to reject)














  



17







  



 








	
Class
	
Designation
	
Impairment
	
Entitled to Vote

	
Charys Holding Class 11
	
Charys Holding Equity Interests
	
Impaired
	
No (deemed to reject)

	
C&B Class 1
	
Other Priority Claims Against C&B
	
Unimpaired
	
No (deemed to accept)

	
C&B Class 2
	
Secured Tax Claims Against C&B
	
Unimpaired
	
No (deemed to accept)

	
C&B Class 3
	
Other Secured Claims Against C&B
	
Impaired
	
Yes

	
C&B Class 4A
	
General Unsecured Claims Against C&B
	
Impaired
	
Yes

	
C&B Class 4B
	
C&B 8.75% Senior Convertible Note Claims
	
Impaired
	
No (deemed to reject)

	
C&B Class 5
	
C&B Securities Claims
	
Impaired
	
No (deemed to reject)

	
C&B Class 6
	
C&B Equity Interests
	
Impaired
	
No (deemed to reject)










 

 


ARTICLE IV





PROVISIONS FOR TREATMENT OF CLAIMS AND EQUITY INTERESTS






	
  
	
4.1
	
Charys Holding Class 1 (Other Priority Claims Against Charys Holding).








(a)           Impairment and Voting. Charys Holding Class 1 is Unimpaired by the Plan. Each holder of an Allowed Other Priority Claim against Charys Holding is conclusively presumed to have accepted the Plan and is not entitled
to vote to accept or reject the Plan.





(b)           Distributions. Except to the extent that a holder of an Allowed Other Priority Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee,
each holder of an Allowed Other Priority Claim against Charys Holding shall receive from the Charys Liquidating Trust, in full satisfaction of such Claim, Cash in an amount equal to the Allowed amount of such Claim on, or as soon as reasonably practicable after, the later of (i) the Effective Date, (ii) and the date such Claim becomes Allowed, and (iii) the date for payment provided by any agreement or understanding between Charys Holding and the holder of such Claim.

 




  



18







  






	
  
	
4.2
	
Charys Holding Class 2 (Secured Tax Claims Against Charys Holding).








(a)           Impairment and Voting. Charys Holding Class 2 is Unimpaired by the Plan. Each holder of an Allowed Secured Tax Claim against Charys Holding is conclusively presumed to have accepted the Plan and is not entitled
to vote to accept or reject the Plan.





(b)           Distributions. Except to the extent that a holder of an Allowed Secured Tax Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee,
each holder of an Allowed Secured Tax Claim against Charys Holding shall receive from the Charys Liquidating Trust, at the option of Charys Holding, with the consent of the Creditors' Committee on the later of the Effective Date or the date such Secured Tax Claim becomes an Allowed Secured Tax Claim, or as soon as practicable thereafter, (i) Cash in an amount equal to such Allowed Secured Tax Claim, including any interest on such Allowed Secured Tax Claim required to be paid pursuant to section 506(b) of the
Bankruptcy Code, or (ii) equal annual Cash payments commencing on the above date in an aggregate amount equal to such Allowed Secured Tax Claim, together with interest for the period after the Effective Date at the applicable non-bankruptcy rate, over a period through the fifth (5th) anniversary of the Commencement Date, subject to the Charys Trustee's sole option to prepay the entire amount of the Allowed Secured Tax Claim, provided that the first payment shall represent a percentage recovery at least equal
to that expected to be received by the most favored Class of nonpriority unsecured Claims against Charys Holding, or (iii) deferred Cash Payments upon such other terms determined by the Bankruptcy Court to provide the holder of such Allowed Secured Tax Claim a value, as of the Effective Date, equal to such Allowed Secured Tax Claim. In the event Charys Holding treats a Claim under clause (i) of this Section, any Liens securing such Secured Tax Claim shall be deemed released as of the Effective Date.






	
  
	
4.3
	
Charys Holding Class 3 (Secured Working Capital Facility Claims Against Charys Holding).








(a)           Impairment and Voting. Charys Holding Class 3 is Unimpaired by the Plan. Each holder of an Allowed Secured Working Capital Facility Claim against Charys Holding is conclusively presumed to have accepted the
Plan and is not entitled to vote to accept or reject the Plan.





(b)           Distributions. Except to the extent that a holder of an Allowed Secured Working Capital Facility Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the
Creditors' Committee, each holder of an Allowed Secured Working Capital Facility Claim against Charys Holding shall receive from the Charys Liquidating Trust on or as soon as practicable after the later of the (a) Effective Date or (b) date on which such Claim becomes Allowed, in full satisfaction of such Claim, at the option of Charys Holding, with the consent of the Creditors' Committee (i) Cash in an amount equal to the Allowed amount of such Allowed Secured Working Capital Facility Claim; (ii) the proceeds
of the sale or disposition of the Collateral securing such Allowed Secured Working Capital Facility Claim to the extent of the value of the holder's secured interest in such Collateral, (iii) the Collateral securing such Allowed Secured Working Capital Facility Claim, or (iv) such other distribution as necessary to satisfy the requirements of section 1124 of the Bankruptcy Code. In the event such a Claim is treated under clauses (i) or (ii) of this Section, the Liens securing such Secured Working Capital Facility
Claim shall be deemed released as of the Effective Date.





  



19







  





(c)           Tax Treatment of Post-Effective Date Receipt of Collateral Proceeds. In the event that such a Claim is to be satisfied under Section 4.3(b)(ii) by the Charys Liquidating Trust, each holder of an Allowed Secured
Working Capital Facility Claim against Charys Holding shall, for federal income tax purposes, be treated as having received on the Effective Date a Class A Charys Beneficial Interest in the Charys Liquidating Trust and all parties (including the Debtors, the Charys Trustee, and the Charys Liquidating Trust Beneficiaries) shall report consistently therewith for federal income tax purposes.






	
  
	
4.4
	
Charys Holding Class 4 (Other Secured Claims Against Charys Holding).








(a)           Impairment and Voting. Charys Holding Class 4 is Unimpaired by the Plan. Each holder of an Allowed Other Secured Claim against Charys Holding is conclusively presumed to have accepted the Plan and is not entitled to vote to
accept or reject the Plan.





(b)           Distributions. Except to the extent that a holder of an Allowed Other Secured Claim against Charys Holding agrees to a different treatment with Charys Holding, with the prior consent of the Creditors' Committee, each holder
of an Allowed Other Secured Claim against Charys Holding shall receive from the Charys Liquidating Trust on or as soon as practicable after the later of the (a) Effective Date or (b) date on which such Claim becomes Allowed, in full satisfaction of such Claim, at the option of Charys Holding, with the consent of the Creditors' Committee (i) Cash in an amount equal to one hundred percent (100%) of the Allowed amount of such Allowed Other Secured Claim; (ii) the proceeds of the sale or disposition of the Collateral
securing such Allowed Other Secured Claim to the extent of the value of the holder's secured interest in such Collateral, (iii) the Collateral securing such Allowed Other Secured Claim, or (iv) such other distribution as necessary to satisfy the requirements of section 1124 of the Bankruptcy Code. In the event such a Claim is treated under clauses (i) or (ii) of this Section, the Liens securing such Secured Other Secured Claim shall be deemed released as of the Effective Date.





(c)           Tax Treatment Post-Effective Date Right to Collateral Proceeds. In the event that such a Claim is to be satisfied under Section 4.4(b)(ii) by the Charys Liquidating Trust, each holder of an Allowed Other Secured Claim against
Charys Holding shall, for federal income tax purposes, be treated as having received on the Effective Date a Class A Charys Beneficial Interest in the Charys Liquidating Trust and all parties (including the Debtors, the Charys Trustee, and the Charys Liquidating Trust Beneficiaries) shall report consistently therewith for federal income tax purposes.





  



20







  






	
  
	
4.5
	
Charys Holding Class 5 (Cotton Seller Note Claims).








(a)           Impairment and Voting. Charys Holding Class 5 is impaired by the Plan, Each holder of an Allowed Cotton Seller Note Claim against Charys Holding is entitled to vote to accept or reject the Plan.





(b)           Distributions. Each holder of an Allowed Cotton Seller Note Claim shall receive, in full satisfaction of such Allowed Claim, the treatment provided for in the Cotton Settlement Agreement. Each holder of a Cotton
Seller Note Claim, effective as of the Effective Date, waives and releases, and shall be deemed to have waived and released any and all Claims against C&B and each non-Debtor Subsidiary (including, all Affiliated Plan Proponents) with respect to or in any way related to the Cotton Seller Note Claims (including, without limitation, any guaranty obligations with respect thereto).





(c)           Releases. On and effective as of the Effective Date, the Debtors and their respective estates, New Holdco and each of their respective subsidiaries and the Liquidating Trusts shall release and shall be deemed
to have released each of the holders of the Cotton Seller Note Claims from (i) all claims arising under chapter 5 of the Bankruptcy Code, including, without limitation, all such claims arising from or in connection with Charys Holding's acquisition of Cotton or any transfers made to any of the holders of the Cotton Seller Note Claims on account thereof prior to the Commencement Date; and (ii) all other claims of any nature, known or unknown, other than, in each case, claims for fraud, willful misconduct or gross
negligence. On the Effective Date, each of the holders of the Cotton Seller Note Claims shall release and shall be deemed to release each of the Debtors and their affiliates from all claims arising from or in connection with Charys Holding's acquisition of Cotton.






	
  
	
4.6
	
Charys Holding Class 6 (CTSI/MSAI Seller Note Claims and Mirror Note Claims).








(a)           The (i) Mirror Note Claims shall be deemed Allowed in the aggregate amount of $8 million and the CTSI/MSAI Seller Note Claims shall be deemed Allowed in the aggregate amount of $19.6 million, for all purposes of the Plan and these Reorganization Cases.





(b)           Impairment and Voting. Charys Holding Class 6 is impaired by the Plan. Each holder of an Allowed CTSI / MSAI Seller Note Claim and Allowed Mirror Note Claim against Charys Holding is entitled to vote to accept
or reject the Plan.





(c)           Distributions. Each holder of an Allowed CTSI / MSAI Seller Note Claim and Allowed Mirror Note Claim shall receive from Charys Holding, in full satisfaction of such Allowed Claim, the treatment provided for
in the CTSI / MSAI Settlement Agreement, which shall include, inter aha, receipt, in accordance with the Restructuring Transactions, of its Class 6/7 Pro Rata Share of the New Secured Notes. Each holder of a CTSI / MSAI Seller Note Claim and a Mirror Note Claim, effective as of the Effective Date, waives and releases, and shall be deemed to have waived and released any and all Claims against C&B and each non-Debtor Subsidiary (including, all Affiliated Plan Proponents) with respect to or in any way related
to the CTSI / MSAI Seller Note Claims and the Mirror Notes (including, without limitation, any guaranty obligations with respect thereto).





  



21







  





(d)           Releases. On and effective as of the Effective Date, the Debtors and their respective estates, New Holdco and each of their respective subsidiaries and the Liquidating Trusts shall release and shall be deemed
to have released each of the holders of the CTSI/MSAI Seller Note Claims from (i) all claims arising under chapter 5 of the Bankruptcy Code, including, without limitation, all such claims arising from or in connection with Charys Holding's acquisition of CTSI or MSAI or any transfers made to any of the holders of the CTSI/MSAI Seller Note Claims on account thereof prior to the Commencement Date; and (ii) all other claims of any nature, known or unknown, other than, in each case, claims for fraud, willful misconduct
or gross negligence. On the Effective Date, each of the holders of the CTSI/MSAI Seller Note Claims shall release and shall be deemed to release each of the Debtors and their affiliates from all claims arising from or in connection with Charys Holding's acquisition of CTSI or MSAI.






	
  
	
4.7
	
Charys Holding Class 7 (8.75% Senior Convertible Note Claims).








(a)           The 8.75% Senior Convertible Note Claims shall be deemed Allowed in the amount of $210 million for all purposes of the Plan and these Reorganization Cases.





(b)           Impairment and Voting. Charys Holding Class 7 is impaired by the Plan. Each holder of an Allowed 8.75% Senior Convertible Note Claim as of the Voting Record Date is entitled to vote to accept or reject the Plan.





(c)           Distributions. Each holder of an Allowed 8.75% Senior Convertible Note Claim shall receive on the Effective Date, in accordance with the Restructuring Transactions, in full satisfaction of such Claim (i) its Class 6/7 Pro Rata
Share of the New Secured Notes, (ii) its Class 7 Pro Rata Share of 94% of the New Equity Interests, and (iii) its Class B Charys Beneficial Interests in the Charys Liquidating Trust. Each holder of a 8.75% Senior Convertible Note Claim, effective as of the Effective Date, waives and releases, and shall be deemed to have waived and released any and all Claims against C&B and each non-Debtor Subsidiary with respect to or in any way related to the 8.75% Senior Convertible Notes, including, without limitation,
any guaranty obligations with respect thereto.

 



  



22







  








	
  
	
4.8
	
Charys Holding Class 8 (General Unsecured Claims Against Charys Holding).






(a)           Impairment and Voting. Charys Holding Class 8 is impaired by the Plan. Each holder of an Allowed General Unsecured Claim against Charys Holding as of the Voting Record Date is entitled to vote to accept or
reject the Plan.





(b)           Distributions. On the later of the Effective Date or the date on which a General Unsecured Claim against Charys Holding becomes an Allowed Claim, or, in each case, as soon thereafter as is reasonably practicable,
each holder of an Allowed General Unsecured Claim against Charys Holding shall receive, in full satisfaction of such Claim, a Class B Charys Beneficial Interest in the Charys Liquidating Trust.






	
  
	
4.9
	
Charys Holding Class 9 (Subordinated Debt Claims Against Charys Holding).








(a)           Impairment and Voting. Charys Holding Class 9 is impaired by the Plan. Each holder of an Allowed Subordinated Debt Claim against Charys Holding is deemed to reject the Plan and is not entitled to vote to accept
or reject the Plan.





(b)           Distributions. Each holder of an Allowed Subordinated Debt Claim against Charys Holding shall not receive or retain any interest or property under the Plan on account of such Allowed Subordinated Debt Claim.






	
  
	
4.10
	
Charys Holding Class 10 (Charys Holding Securities Claims).








(a)           Impairment and Voting. Charys Holding Class 10 is impaired by the Plan. Each holder of a Charys Holding Securities Claim is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.





(b)           Distributions. Each holder of an Allowed Charys Holder Securities Claim shall not receive or retain any interest or property under the Plan on account of such Allowed Charys Holding Securities Litigation Claim;
provided, however, that except as explicitly set forth in Article XI below, nothing in this Plan shall affect any rights or claims such holder may have against any other party.






	
  
	
4.11
	
Charys Holding Class 11 (Charys Holding Equity Interests).








(a)           Impairment and Voting. Charys Holding Class 11 is impaired by the Plan. Each holder of a Charys Holding Equity Interest is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.





(b)           Distributions. Each holder of a Charys Holding Equity Interest shall not receive or retain any interest or property under the Plan and all Charys Holding Equity Interests shall be cancelled and extinguished;
provided, however, that except as explicitly set forth in Article XI below, nothing in this Plan shall affect any rights or claims such holder may have against any other party.

 



  



23







  








	
  
	
4.12
	
C&B Class 1 (Other Priority Claims Against C&B).






(a)           Impairment and Voting. C&B Class 1 is Unimpaired by the Plan. Each holder of an Allowed Other Priority Claim against C&B is conclusively presumed to have accepted the Plan and is not entitled to vote
to accept or reject the Plan.





(b)           Distributions. Except to the extent that a holder of an Allowed Other Priority Claim against C&B agrees to a different treatment with C&B, with the prior consent of the Creditors' Committee, each holder
of an Allowed Other Priority Claim against C&B shall receive from the C&B Liquidating Trust, in full satisfaction of such Claim, Cash in an amount equal to the Allowed amount of such Claim on, or as soon as reasonably practicable after the later of (i) the Effective Date, (ii) the date such Claim becomes Allowed, and (iii) the date for payment provided by any agreement or understanding between C&B and the holder of such Claim.






	
  
	
4.13
	
C&B Class 2 (Secured Tax Claims Against C&B).








(a)           Impairment and Voting. C&B Class 2 is Unimpaired by the Plan. Each holder of an Allowed Secured Tax Claim against C&B is conclusively presumed to have accepted the Plan and is not entitled to vote to
accept or reject the Plan.





(b)           Distributions. Except to the extent that a holder of an Allowed Secured Tax Claim against C&B agrees to a different treatment with C&B, with the prior consent of the Creditors' Committee, each holder
of an Allowed Secured Tax Claim against C&B shall receive from the C&B Liquidating Trust, at the option of C&B, with the consent of the Creditors' Committee, on the later of the (a) Effective Date or (b) date such Secured Tax Claim becomes an Allowed Secured Tax Claim, or as soon as practicable thereafter, (i) Cash in an amount equal to such Allowed Secured Tax Claim, including any interest on such Allowed Secured Tax Claim required to be paid pursuant to section 506(b) of the Bankruptcy Code, or
(ii) equal annual Cash payments commencing on the above date in an aggregate amount equal to such Allowed Secured Tax Claim, together with interest for the period after the Effective Date at the applicable non-bankruptcy rate, over a period through the fifth (5th) anniversary of the Commencement Date, subject to the C&B Liquidating Trust's sole option to prepay the entire amount of the Allowed Secured Tax Claim, provided that the first payment shall represent a percentage recovery at least equal to that expected
to be received by the most favored Class of nonpriority unsecured Claims against C&B, or (iii) deferred Cash payments upon such other terms determined by the Bankruptcy Court to provide the holder of such Allowed Secured Tax Claim a value, as of the Effective Date, equal to such Allowed Secured Tax Claim. In the event C&B treats a Claim under clause (i) of this Section, any Liens securing such Secured Tax Claim shall be deemed released as of the Effective Date.






	
  
	
4.14
	
C&B Class 3 (Other Secured Claims Against C&B).








(a)           Impairment and Voting. C&B Class 3 is impaired by the Plan. Each holder of an Allowed Other Secured Claim against C&B as of the Voting Record Date is entitled to vote to accept or reject the Plan.





  



24







  





(b)           Distributions. Except to the extent that a holder of an Allowed Other Secured Claim against C&B agrees to a different treatment with C&B, with the prior consent of the Creditor' Committee, each holder of an Allowed
Other Secured Claim against C&B shall receive from the C&B Liquidating Trust, in the order of priority of such holder's security interest in the Collateral securing such Allowed Other Secured Claim, the net proceeds of the sale or disposition of such Collateral to the extent of the value of the holder's secured interest in the value of such Collateral, pursuant to the terms and provisions of the C&B Liquidating Trust Agreement. Upon the disposition of such Collateral pursuant to the terms of the Liquidating
Trust Agreement, the Liens securing such Secured Claim shall be released. Each holder of an Allowed Other Secured Claim shall, for federal income tax purposes, be treated as having received on the Effective Date a Class A C&B Beneficial Interest in the C&B Liquidating Trust and all parties (including the Debtors, the C&B Trustee, and the C&B Liquidating Trust Beneficiaries) shall report consistently therewith for federal income tax purposes.






	
  
	
4.15
	
C&B Class 4A (General Unsecured Claims Against C&B).








(a)           Impairment and Voting. C&B Class 4A is impaired by the Plan. Each holder of an Allowed General Unsecured Claim against C&B as of the Voting Record Date is entitled to vote to accept or reject the Plan.





(b)           Distributions. On the later of (i) the Effective Date, and (ii) the date on which a General Unsecured Claim against C&B becomes an Allowed Claim, or, in each case, as soon thereafter as is reasonably practicable, each holder
of an Allowed General Unsecured Claim against C&B shall receive in full settlement and satisfaction thereof, a Class B C&B Beneficial Interest in the C&B Liquidating Trust.






	
  
	
4.16
	
C&B Class 4B (C&B 8.75% Senior Convertible Note Claims).








(a)           Impairment and Voting. C&B Class 4B is impaired by the Plan. Each holder of a C&B 8.75% Senior Convertible Note Claim is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.





(b)           Distributions. Each holder of an Allowed C&B 8.75% Senior Convertible Note Claim shall not receive or retain any interest or property under the Plan on account of such Allowed C&B 8.75% Senior Convertible Note Claim.






	
  
	
4.17
	
C&B Class 5 (C&B Securities Claims).








(a)           Impairment and Voting. C&B Class 5 is impaired by the Plan. Each holder of a C&B Securities Claim is deemed to reject the Plan and is not entitled to vote to accept or reject the Plan.





(b)           Distributions. Each holder of an Allowed C&B Securities Litigation Claim shall not receive or retain any interest or property under the Plan on account of such Allowed C&B Securities Claim.





  



25







  






	
  
	
4.18
	
C&B Class 6 (C&B Equity Interests).








(a)           Impairment and Voting. C&B Class 5 is impaired by the Plan. Charys Holding, as the sole holder of any C&B Equity Interests is deemed to reject the Plan.





(b)           Distributions. The holder of the C&B Equity Interest shall not receive or retain any interest or property under the Plan and all C&B Equity Interests shall be cancelled and extinguished.





ARTICLE V





MEANS OF IMPLEMENTATION






	
  
	
5.1
	
Means of Implementation Applicable to Both Charys Holding and C&B.









	
  
	
(a)
	
Liquidating Trusts Funding Arrangements.








On the Effective Date, New Holdco shall enter into the Funding Arrangement Agreement with the Liquidating Trustees and shall transfer the funds required under the Funding Arrangement Agreement to the Liquidating Trustees.






	
  
	
(b)
	
Settlement of Claims.








Pursuant to Bankruptcy Rule 9019, in consideration for the classification, distribution and other benefits provided under the Plan, upon the Effective Date, the provisions of the Plan shall constitute a good-faith compromise and settlement of all Claims or controversies resolved pursuant to the Plan. All Plan distributions made to creditors
holding Allowed Claims in any class are intended to be and shall be final, and no Plan distribution to the holder of a Claim in one class shall be subject to being shared with or reallocated to the holders of any Claim in another class by virtue of any prepetition collateral trust agreement, shared collateral agreement, subordination agreement, other similar inter-creditor arrangement or deficiency Claim.






	
  
	
(c)
	
Intercompany Claims.








Notwithstanding anything to the contrary herein, Intercompany Claims will be adjusted, continued or discharged to the extent determined appropriate by the Debtors, with the prior consent of the Creditors Committee. Any such transaction may be effected on or subsequent to the Effective Date without any further action by the stockholders of
any of the Debtors or the Debtors in Possession.





  



26







  






	
  
	
(d)
	
Cancellation of Existing Securities and Agreements.








(i)             Except (i) as otherwise expressly provided in the Plan, (ii) with respect to executory contracts or unexpired leases that have been assumed by the Debtors, (iii) for purposes of evidencing a right to distributions under the Plan, or (iv) with respect to any Claim
that is reinstated and rendered Unimpaired under the Plan, on the Effective Date, the 8.75% Senior Convertible Notes (and all documents and instalments related thereto), the Mirror Notes, all instruments and documents representing or evidencing the Cotton Seller Note Claims, CTSI / MSAI Seller Note Claims, Mirror Note Claims, all instruments and documents representing or evidencing the subordinated debt, the Indentures and other instruments or documents evidencing any Claims or Equity Interests shall be deemed
automatically cancelled and deemed surrendered without further act or action under any applicable agreement, law, regulation, order or rale and the obligations of the Debtors under the agreements, instruments and other documents, indentures, and certificates of designations governing such Claims and Equity Interests, as the case maybe, shall be discharged; provided, however, that the 8.75% Senior Convertible Notes, the Mirror Notes, and the Indenture shall continue in effect solely for the purposes of (i) allowing
the holders of the 8.75% Senior Convertible Notes and the Mirror Notes to receive their distributions under the Plan, and (ii) allowing the Disbursing Agent or the Indenture Trustee, as the case may be, to make such distributions, if any, to be made on account of the 8.75% Senior Convertible Notes Claims and Mirror Note Claims.





(ii)            Subsequent to the performance by the Indenture Trustee or its agents of any duties that are expressly required under the Plan, and the Confirmation Order and/or under the terms of the Indenture, the Indenture Trustee and its agents shall be relieved of, and released from,
all responsibilities and obligations associated with the 8.75% Senior Convertible Notes arising under the Indenture or under other applicable agreements or law and the Indenture shall be deemed to be discharged.






	
  
	
(e)
	
Merger/Dissolution/Consolidation.








On or as of the Effective Date or as soon as practicable thereafter (or, in case of clause (b), at any time following the Confirmation Date), and without the need for any further action, the Debtors may, with the prior consent of the Creditors' Committee (a) cause any of the Debtors to be merged with and into the other Debtor, dissolved or
otherwise consolidated, (b) cause C&B to be merged with, or converted into, a limited liability company, or (c) engage in any other transaction in furtherance of the Plan.






	
  
	
(f)
	
Imperium Claims.








The Imperium Claims shall be treated pursuant to the terms and provisions of that certain Settlement and Cash Collateral Agreement, dated as of June 25, 2008 (as amended), by and among Charys Holding, C&B, Ayin Tower Management Services, Inc., the Guarantors signatory thereto, the Noteholders signatory thereto and Imperium Advisors, LLC,
which agreement was approved by order of the Bankruptcy Court dated August, 2008.





  



27







  






	
  
	
5.2
	
Means of Implementation Specific to Charys Holding.









	
  
	
(a)
	
Issuance of New Equity Interests and New Securities.








(i)             On the Effective Date, the following transactions (the "Restructuring Transactions") shall be effectuated in the order set forth below:





(1) Simultaneously, (A) CTSI shall issue 954,845.3 new shares, MSAI shall issue 999,900 new shares, Cotton shall issue 885,245.4 new shares, and LFC, Inc. shall issue 858,471.7 new shares, in each case, to the Indenture Trustee on behalf of the holders of 8.75% Senior Convertible Note Claims in full satisfaction of their Affiliated Plan
Proponent 8.75 % Senior Convertible Note Claims, and (B) CTSI shall issue 45,054.7 new shares, Cotton shall issue 114,654.6 new shares and LFC, Inc. shall issue 141,428.3 new shares, in each case, to Charys Holding in satisfaction of certain intercompany claims owed by them to Charys Holding and on account of the settlement contained within this Plan.





(2) Simultaneously, (A) Charys Holding shall transfer 8,394.9 CTSI shares, 105,004.8 Cotton shares and 108,560 LFC, Inc. shares and the other Charys Liquidating Trust Assets to the Charys Trustee for the benefit of the Charys Liquidating Trust Beneficiaries in full satisfaction of their Claims against Charys Holding, and (B) Charys Holding
shall transfer 9,649.8 CTSI shares, 36,659.8 Cotton shares and 32,868.3 LFC, Inc. shares to the Disbursing Agent on behalf of holders of Mirror Note Claims in accordance with their pro rata share of the Mirror Note Claims in full satisfaction of their Claims.





(3) Simultaneously, (A) the Indenture Trustee shall, on behalf of the holders of Affiliated Plan Proponent 8.75% Senior Convertible Note Claims, contribute all of the shares issued pursuant to clause (1)(A) above to New Holdco in exchange for 94% of the New Equity Interests and $19,227,000 of the New Secured Notes, (B) the Charys Trustee
shall contribute all of the shares transferred pursuant to clause (2)(A) to New Holdco in exchange for 6% of the New Equity Interests, and (C) the Disbursing Agent shall, on behalf of the holders of Mirror Note Claims, transfer all of the shares issued pursuant to clause (2)(B) above to New Floldco in exchange for $773,000 of the New Secured Notes.





(4) The Indenture Trustee shall distribute the New Equity Interests and the New Secured Notes received pursuant to clause (3)(A) to the holders of Affiliated Plan Proponent 8.75% Senior Convertible Note Claims.





  



28







  





(5) The Disbursing Agent shall distribute New Secured Notes received pursuant to clause (3)(C) to the holders of Mirror Note Claims.






	
  
	
(ii)
	
Consistent Tax Reporting.








(1) All parties (including the Debtors, the Charys Trustee, the holders of 8.75% Senior Convertible Note Claims, the Mirror Note Claims and General Unsecured Claims against Charys Holding and New Holdco) shall report for all federal income tax purposes consistent with the form of the Restructuring Transactions, subject to definitive guidance
from the Internal Revenue Service or a court of competent jurisdiction to the contrary (including, without limitation, the receipt by the Charys Trustee or New Holdco of a private letter ruling if the Charys Trustee or New Holdco so requests one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not contested),





(2) As soon as possible after the Effective Date, but in no event later than thirty (30) days thereafter, the Board of New Holdco shall determine the value of the stock of CTSI, MSAI, Cotton, and LFC, Inc. and the New Equity Interests as of the Effective Date. The Board of New Holdco shall apprise, in writing or on a website established
by New Holdco, all parties of such valuation. The valuation shall be used consistently by all parties (including the Debtors, the Charys Trustee, the holders of 8.75% Senior Convertible Note Claims, the Mirror Note Claims, and General Unsecured Claims against Charys Holding and New Holdco) for all federal income tax purposes.






	
  
	
(b)
	
Section 1145 Exemption.








To the maximum extent provided in section 1145 of the Bankruptcy Code and applicable nonbankruptcy law, the issuance under the Plan of the New Equity Interests, New Secured Notes and beneficial interests in Liquidating Trusts will be exempt from registration under the Securities Act of 1933, as amended, and all rales and regulations promulgated
thereunder,






	
  
	
(c)
	
Hart-Scott-Rodino Compliance.








Any shares of New Equity Interests to be distributed under the Plan to any entity required to file a Premerger Notification and Report Form under the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended, shall not be distributed until the notification and waiting periods applicable under such Act to such entity shall have expired
or been terminated.

 



  



29







  








	
  
	
(d)
	
Charys Liquidating Trust.






(i)             Execution of Charys Liquidating Trust Agreement. On or before the Effective Date, the Charys Liquidating Trust Agreement shall be executed by Charys Holding and the Charys Trustee, and all other necessary
steps shall be taken to establish the Liquidating Trust and the beneficial interests therein which shall be for the benefit of the Charys Liquidating Trust Beneficiaries as provided in Section 4.3, Section 4.4, Section 4.7 and Section 4.8 of the Plan, whether their Claims are Allowed on or after the Effective Date. In the event of any conflict between the terms of this Section 5.2(d) and the terms of the Charys Liquidating Trust Agreement, the terms of the Charys Liquidating Trust Agreement shall govern, The
Charys Liquidating Trust Agreement may provide powers, duties and authorities in addition to those explicitly stated herein, but only to the extent that such powers, duties and authorities do not affect the status of the Charys Liquidating Trust as a liquidating trust for United States federal income tax purposes.





(ii)            Purpose of the Charys Liquidating Trust. The Charys Liquidating Trust shall be established for the sole purpose of liquidating and distributing its assets, in accordance with Treasury Regulation section
301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business.





(iii)           Charys Liquidating Trust Assets. The Charys Liquidating Trust shall consist of the Charys Liquidating Trust Assets. On the Effective Date, Charys Holding shall transfer all of the Charys Liquidating Trust
Assets to the Charys Liquidating Trust, subject to the Administrative Expense Claims, Other Priority Claims, Priority Tax Claims, Secured Tax Claims, and the obligations under the Funding Arrangement Agreement to be paid by the Charys Liquidating Trust. Such transfer shall be exempt from any stamp, real estate transfer, mortgage reporting, sales, use or other similar tax. Upon delivery of the Charys Liquidating Trust Assets to the Charys Liquidating Trust, Charys Holding and its successors and assigns shall be
released of all liability with respect to the delivery of such distributions.





(iv)           Governance of the Charys Liquidating Trust. The Charys Liquidating Trust shall be governed by the Charys Trustee.





(v)            The Charys Trustee. The Charys Trustee shall be designated by Charys Holding with the consent of the Creditors' Committee. In the event the Charys Trustee dies, is terminated or resigns for any reason, the
Trust Advisory Board (as defined in the Charys Liquidating Trust Agreement) shall designate a successor.





(vi)           Role of the Charys Trustee. In furtherance of and consistent with the purpose of the Charys Liquidating Trust and the Plan, the Charys Trustee shall (i) have the power and authority to hold, manage, convert
to Cash, and distribute the Charys Liquidating Trust Assets, including prosecuting and resolving the Claims belonging to the Charys Liquidating Trust, (ii) hold the Charys Liquidating Trust Assets for the benefit of the Charys Liquidating Trust Beneficiaries who are entitled to distributions therefrom under the Plan, whether their Claims are Allowed on or after the Effective Date, and (iii) have the power and authority to hold, manage, and distribute Cash or non-Cash Charys Liquidating Trust Assets obtained through
the exercise of its power and authority. In all circumstances, the Charys Trustee shall act in the best interests of all beneficiaries of the Charys Liquidating Trust and in furtherance of the purpose of the Charys Liquidating Trust. The Charys Trustee shall not serve as a member of the Board of New Holdco.





  



30







  





(vii)          Nontransferability of Charys Liquidating Trust Interests. The beneficial interests in the Charys Liquidating Trust shall not be certificated and shall not be transferable.





(viii)         Cash. The Charys Trustee may invest Cash (including any earnings thereon or proceeds therefrom) as permitted by section 345 of the Bankruptcy Code, provided, however, that such investments are investments permitted to be
made by a liquidating trust within the meaning of Treasury Regulation section 301.7701-4(d), as reflected therein, or under applicable Internal Revenue Service guidelines, rulings, or other controlling authorities.





(xi)            Distribution of Charys Liquidating Trust Assets. At least quarterly, the Charys Trustee shall make distributions to the beneficial holders of the Charys Liquidating Trust of all Cash on hand in accordance
with the Charys Liquidating Trust Agreement (including any Cash received from the Debtors on the Effective Date, and treating as Cash for purposes of this section any permitted investments under Section 5.2(d)(viii) of the Plan) except such amounts (i) as would be distributable to a holder of a Disputed Claim if such Disputed Claim had been Allowed prior to the time of such distribution (but only until such Claim is resolved), (ii) as are reasonably necessary to meet contingent liabilities and to maintain the
value of the Charys Liquidating Trust Assets during liquidation, (iii) to pay reasonable expenses (including, but not limited to, any taxes imposed on the Charys Liquidating Trust or in respect of the Charys Liquidating Trust Assets), (iv) to pay amounts required under the Funding Arrangement Agreement between the Charys Trustee and New Holdco, and (v) to satisfy other liabilities incurred by the Charys Liquidating Trust in accordance with the Plan or the Charys Liquidating Trust Agreement.





(x)             Costs and Expenses of the Charys Liquidating Trust. The costs and expenses of the Charys Liquidating Trust, including the fees and expenses of the Charys Trustee and its retained professionals, shall
be paid out of the Charys Liquidating Trust Assets. Fees and expenses incurred in connection with the prosecution and settlement of any Claims shall be considered costs and expenses of the Charys Liquidating Trust.





  



31







  





(xi)            Compensation of the Charys Trustee. The individual(s) comprising the Charys Trustee shall be entitled to reasonable compensation approved by the Trust Advisory Board in an amount consistent with that of
similar functionaries in similar roles.





(xii)           Retention of Professionals by the Charys Trustee. The Charys Trustee may retain and compensate attorneys and other professionals to assist in its duties as Charys Trustee on such terms as the Charys Trustee deems
appropriate without Bankruptcy Court approval. Without limiting the foregoing, the Charys Trustee may retain any professional who represented parties in interest in the Reorganization Cases.





(xiii)          Federal Income Tax Treatment of the Charys Liquidating Trust.





(1) Charys Liquidating Trust Assets Treated as Owned by Creditors. For all federal income tax purposes, all parties (including, without limitation, the Debtors, the Charys Trustee and the Charys Liquidating Trust Beneficiaries) shall treat the transfer of the Charys Liquidating
Trust Assets to the Charys Liquidating Trust for the benefit of the Charys Liquidating Trust Beneficiaries, whether their Claims are Allowed on or after the Effective Date, as





(A) a transfer of the Charys Liquidating Trust Assets directly to those holders of Allowed Claims receiving Charys Liquidating Trust beneficial interests (other than to the extent allocable to Disputed Claims), followed by





(B) the transfer by such Persons to the Charys Liquidating Trust of the Charys Liquidating Trust Assets in exchange for beneficial interests in the Charys Liquidating Trust (and in respect of the Charys Liquidating Trust Assets allocable to the Charys Liquidating Trust Claims Reserve, as a transfer to the Charys Liquidating Trust Claims
Reserve).





Accordingly, those holders of Allowed Claims receiving Charys Liquidating Trust beneficial interests, shall be treated for federal income tax purposes as the grantors and owners of their respective share of the Charys Liquidating Trust Assets. The foregoing treatment shall also apply, to the extent permitted by applicable law, for state and
local income tax purposes.





(2) Tax Reporting.





(A) The Charys Trustee shall file returns for the Charys Liquidating Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a) and in accordance with this Section 5.2(d)(xiii)(2). The Charys Trustee shall also annually send to each holder of a beneficial interest a separate statement setting forth the holder's share of
items of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns or to forward the appropriate information to the beneficial holders with instructions to report such items on their federal income tax returns. The Charys Trustee shall also file (or cause to be filed) any other statements, returns or disclosures relating to the Charys Liquidating Trust that are required by any governmental unit.





  



32







  





(B) As soon as possible after the Effective Date, the Charys Trustee shall make a good-faith valuation of the Charys Liquidating Trust Assets, subject to the valuation of the Board of New Holdco referred to in section 5.2(a)(ii)(2), and such valuation shall be made available from time to time, to the extent relevant, and shall be used consistently
by all parties (including, without limitation, the Debtors, the Charys Trustee and the Charys Liquidating Trust Beneficiaries), for all federal income tax purposes.





(C) Allocations of Charys Liquidating Trust taxable income among the Charys Liquidating Trust Beneficiaries shall be determined by reference to the manner in which an amount of Cash equal to such taxable income would be distributed (without regard to any restrictions on distributions described herein) if, immediately prior to such deemed
distribution, the Charys Liquidating Trust had distributed all its other assets (valued at their tax book value) to the holders of the Charys Liquidating Trust interests (treating all Disputed Claims as if they were Allowed Claims (see Section 5.2(d)(xiii)(2)(D) hereof)), in each case up to the tax book value of the assets treated as contributed by such holders, adjusted for prior taxable income and loss and taking into account all prior and concurrent distributions from the Charys Liquidating Trust. Similarly,
taxable loss of the Charys Liquidating Trust shall be allocated by reference to the manner in which an economic loss would be borne immediately after a liquidating distribution of the remaining Charys Liquidating Trust Assets. The tax book value of the Charys Liquidating Trust Assets for this purpose shall equal their fair market value on the Effective Date, adjusted in accordance with tax accounting principles prescribed by the Tax Code, the applicable tax regulations, and other applicable administrative and
judicial authorities and pronouncements.





(D) Subject to definitive guidance from the Internal Revenue Service, or a court of competent jurisdiction to the contrary (including the receipt by the Charys Trustee of a private letter ruling if the Charys Trustee so requests one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not contested by
the Charys Trustee), the Charys Trustee shall (A) timely elect to treat any Charys Liquidating Trust Assets allocable to, or retained on account of, Disputed Claims (the "Charys Liquidating Trust Claims Reserve") as a "disputed ownership fund" governed by Treasury Regulation section 1.468B-9, and (B) to the extent permitted by applicable law, report consistent with the foregoing for state and local income tax purposes. All parties (including the Debtors, the Charys Trustee, and the Charys Liquidating Trust Beneficiaries)
shall report for tax purposes consistent with the foregoing.





  



33







  





(E) The Charys Trustee shall be responsible for payments, out of the Charys Liquidating Trust Assets, of any taxes imposed on the trust or its assets including the Charys Liquidating Trust Claims Reserve. In the event, and to the extent, any Cash retained on account of Disputed Claims in the Charys Liquidating Trust Claims Reserve is insufficient
to pay the portion of any such taxes attributable to the taxable income arising from the assets allocable to, or retained on account of, Disputed Claims, such taxes shall be (i) reimbursed from any subsequent Cash amounts retained on account of Disputed Claims, or (ii) to the extent such Disputed Claims have subsequently been resolved, deducted from any amounts distributable by the Charys Trustee as a result of the resolutions of such Disputed Claims.





(F) The Charys Trustee may request an expedited determination of taxes of the Charys Liquidating Trust, including the Charys Liquidating Trust Claims Reserve, under section 505(b) of the Bankruptcy Code for all returns filed for, or on behalf of, the Charys Liquidating Trust for all taxable periods through the dissolution of the Charys
Liquidating Trust.





(xiv)         Dissolution. The Charys Trustee and the Charys Liquidating Trust shall be discharged or dissolved, as the case may be, at such time as (i) all Disputed Claims have been resolved, (ii) the Charys Trustee determines,
in its sole discretion, that the administration of the Charys Liquidating Trust Assets is not likely to yield sufficient additional Charys Liquidating Trust proceeds to justify further pursuit and (iii) all distributions required to be made by the Charys Trustee under the Plan and the Charys Liquidating Trust Agreement have been made, but in no event shall the Charys Liquidating Trust be dissolved later than three (3) years from the Effective Date unless the Bankruptcy Court, upon motion within the six month
period prior to the third anniversary (or at least six (6) months prior to the end of an extension period), determines that a fixed period extension (not to exceed three years, together with any prior extensions, without a favorable letter ruling from the Internal Revenue Service that any further extension would not adversely affect the status of the trust as a liquidating trust for federal income tax purposes) is necessary to facilitate or complete the recovery and liquidation of the Charys Liquidating Trust
Assets. If at any time the Charys Trustee determines, in reliance upon such professionals as the Charys Trustee may retain, that the expense of administering the Charys Liquidating Trust so as to make a final distribution to its beneficiaries is likely to exceed the value of the assets remaining in the Charys Liquidating Trust, the Charys Trustee may apply to the Bankruptcy Court for authority to (i) reserve any amounts necessary to dissolve the Charys Liquidating Trust, (ii) donate any balance to a charitable
organization exempt from federal income tax under section 501(c)(3) of the Tax Code that is unrelated to the Debtors, the Charys Liquidating Trust, and any insider of the Charys Trustee, and (iii) dissolve the Charys Liquidating Trust.





  



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(xv)          Indemnification of Charys Trustee. The Charys Trustee or the individuals comprising the Trustee, as the case may be, and the Charys Trustee's agents and professionals, shall not be liable for actions taken or omitted
in its capacity as, or on behalf of, the Charys Trustee, except those acts arising out of its or their own willful misconduct or gross negligence, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of its actions or inactions in its capacity as, or on behalf of, the Charys Trustee, except for any actions or inactions involving willful misconduct or gross negligence. Any indemnification claim of the Charys Trustee (and the other parties entitled to indemnification
under this subsection) shall be satisfied solely from the Charys Liquidating Charys Trust Assets. The Charys Trustee shall be entitled to rely, in good-faith, on the advice of its retained professionals.






	
  
	
5.3
	
Means of Implementation Specific to C&B.










	 	
(a)
	
The C&B Liquidating Trust.









(i)             Execution of C&B Liquidating Trust Agreement. On or before the Effective Date, the C&B Liquidating Trust Agreement shall be executed by C&B and the C&B Trustee, and all other necessary
steps shall be taken to establish the Liquidating Trust and the beneficial interests therein which shall be for the benefit of the C&B Liquidating Trust Beneficiaries, as provided in Section 4.14 and Section 4.15 of the Plan, whether their Claims are Allowed on or after the Effective Date. In the event of any conflict between the terms of this Section 5.3(a) and the terms of the C&B Liquidating Trust Agreement, the terms of the C&B Liquidating Trust Agreement shall govern. The C&B Liquidating
Trust Agreement may provide powers, duties and authorities in addition to those explicitly stated herein, but only to the extent that such powers, duties and authorities do not affect the status of the C&B Liquidating Trust as a liquidating trust for United States federal income tax purposes.





  



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(ii)            Purpose of the C&B Liquidating Trust. The C&B Liquidating Trust shall be established for the sole purpose of liquidating and distributing its assets, in accordance with Treasury Regulation section
301.7701-4(d), with no objective to continue or engage in the conduct of a trade or business.





(iii)           C&B Liquidating Trust Assets. The C&B Liquidating Trust shall consist of the C&B Liquidating Trust Assets. On the Effective Date, C&B shall transfer all of the C&B Liquidating Trust Assets
to the C&B Liquidating Trust subject to the Administrative Expense Claims, Other Priority Claims, Priority Tax Claims, Secured Tax Claims, and the obligations under the Funding Arrangement Agreement to be paid by the C&B Liquidating Trust, Such transfer shall be exempt from any stamp, real estate transfer, mortgage reporting, sales, use or other similar tax. Upon delivery of the C&B Liquidating Trust Assets to the C&B Liquidating Trust, C&B and its successors and assigns shall be released
of all liability with respect to the delivery of such distributions.





(iv)           Governance of the C&B Liquidating Trust. The C&B Liquidating Trust shall be governed by the C&B Trustee.





(v)            The C&B Trustee. The C&B Trustee shall be designated by C&B with the consent of the Creditors' Committee. In the event the C&B Trustee dies, is terminated or resigns for any reason, the Trust
Advisory Board (as defined in the C&B Liquidating Trust Agreement) shall designate a successor,.





(vi)           Role of the C&B Trustee. in furtherance of and consistent with the purpose of the C&B Liquidating Trust and the Plan, the C&B Trustee shall (i) have the power and authority to hold, manage, convert
to Cash, and distribute the C&B Liquidating Trust Assets, including prosecuting and resolving the Claims belonging to the C&B Liquidating Trust, (ii) hold the C&B Liquidating Trust Assets for the benefit of the C&B Liquidating Trust Beneficiaries who are entitled to distributions therefrom under the Plan, whether their Claims are Allowed on or after the Effective Date, and (iii) have the power and authority to hold, manage, and distribute Cash or non-Cash C&B Liquidating Trust Assets obtained
through the exercise of its power and authority. In all circumstances, the C&B Trustee shall act in the best interests of all beneficiaries of the C&B Liquidating Trust and in furtherance of the purpose of the C&B Liquidating Trust.





(vii)          Nontransferability of C&B Liquidating Trust Interests. The beneficial interests in the C&B Liquidating Trust shall not be certificated and shall not be transferable.





  



36







  





(viii)         Cash. The C&B Trustee may invest Cash (including any earnings thereon or proceeds therefrom) as permitted by section 345 of the Bankruptcy Code, provided, however, that such investments are investments permitted
to be made by a liquidating trust within the meaning of Treasury Regulation section 301.7701-4(d), as reflected therein, or under applicable Internal Revenue Service guidelines, rulings, or other controlling authorities.





(ix)            Distribution of C&B Liquidating Trust Assets. At least quarterly, the C&B Trustee shall make distributions to the beneficial holders of the C&B Liquidating Trust of all Cash on hand in accordance
with the C&B Liquidating Trust Agreement (including any Cash received from the Debtors on the Effective Date, and treating as Cash for purposes of this section any permitted investments under Section 5.3(a)(viii) of the Plan) except such amounts (i) as would be distributable to a holder of a Disputed Claim if such Disputed Claim had been Allowed prior to the time of such distribution (but only until such Claim is resolved), (ii) as are reasonably necessary to meet contingent liabilities and to maintain the
value of the C&B Liquidating Trust Assets during liquidation, (iii) to pay reasonable expenses (including, but not limited to, any taxes imposed on the C&B Liquidating Trust or in respect of the C&B Liquidating Trust Assets), (iv) to pay amounts required under the Funding Arrangement Agreement between the C&B Trustee and New Holdco, and (v) to satisfy other liabilities incurred by the C&B Liquidating Trust in accordance with this Plan or the C&B Liquidating Trust Agreement.





(x)             Costs and Expenses of the C&B Liquidating Trust. The costs and expenses of the C&B Liquidating Trust, including the fees and expenses of the C&B Trustee and its retained professionals, shall
be paid out of the C&B Liquidating Trust Assets. Fees and expenses incurred in connection with the prosecution and settlement of any Claims shall be considered costs and expenses of the C&B Liquidating Trust.





(xi)            Compensation of the C&B Trustee. The individual(s) comprising the C&B Trustee shall be entitled to reasonable compensation approved by the Trust Advisory Board in an amount consistent with that of
similar functionaries in similar roles.





(xii)           Retention of Professionals by the C&B Trustee. The C&B Trustee may retain and compensate attorneys and other professionals to assist in its duties as C&B Trustee on such terms as the C&B Trustee
deems appropriate without Bankruptcy Court approval. Without limiting the foregoing, the C&B Trustee may retain any professional who represented parties in interest in the Reorganization Cases.





(xiii)          Federal Income Tax Treatment of the C&B Liquidating Trust.





(1) C&B.Liquidating Trust Assets Treated as Owned by Creditors. For all federal income tax purposes, all parties (including, without limitation, the Debtors, the C&B Trustee and the C&B Liquidating Trust Beneficiaries shall treat the transfer of the C&B Liquidating
Trust Assets to the C&B Liquidating Trust for the benefit of the C&B Liquidating Trust Beneficiaries, whether the Claims are Allowed on or after the Effective Date, as





  



37







  





(A) a transfer of the C&B Liquidating Trust Assets directly to those holders of Allowed Claims receiving C&B Liquidating Trust beneficial interests (other than to the extent allocable to Disputed Claims) followed by





(B) the transfer by such beneficiaries to the C&B Liquidating Trust of the C&B Liquidating Trust Assets in exchange for beneficial interests in the C&B Liquidating Trust (and in respect of the C&B Liquidating Trust Assets allocable to the C&B Liquidating Trust Claims Reserve, as a transfer to the C&B Liquidating
Trust Claims Reserve).





Accordingly, those holders of Allowed Claims receiving C&B Liquidating Trust beneficial interests shall be treated for federal income tax purposes as the grantors and owners of their respective share of the C&B Liquidating Trust Assets. The foregoing treatment shall also apply, to the extent permitted by applicable law, for state
and local income tax purposes.





(2) Tax Reporting.





(A) The C&B Trustee shall file returns for the C&B Liquidating Trust as a grantor trust pursuant to Treasury Regulation section 1.671-4(a) and in accordance with this Section 5.3(a)(xiii)(2). The Trustee shall also annually send to each holder of a beneficial interest a separate statement setting forth the holder's share of items
of income, gain, loss, deduction or credit and will instruct all such holders to report such items on their federal income tax returns or to forward the appropriate information to the beneficial holders with instructions to report such items on their federal income tax returns. The C&B Trustee shall also file (or cause to be filed) any other statements, returns or disclosures relating to the C&B Liquidating Trust that are required by any governmental unit.





(B) As soon as possible after the Effective Date, the C&B Trustee shall make a good-faith valuation of the C&B Liquidating Trust Assets, and such valuation shall be made available from time to time, to the extent relevant, shall be used consistently by all parties (including, without limitation, the Debtors, the C&B Trustee
and the C&B Liquidating Trust Beneficiaries) for all federal income tax purposes.





  



38







  





(C) Allocations of C&B Liquidating Trust taxable income among the C&B Liquidating Trust Beneficiaries shall be determined by reference to the manner in which an amount of Cash equal to such taxable income would be distributed (without regard to any restrictions on distributions described herein) if, immediately prior to such deemed
distribution, the C&B Liquidating Trust had distributed all its other assets (valued at their tax book value) to the holders of the C&B Liquidating Trust interests (treating all Disputed Claims as if they were Allowed Claims (see Section 5.3(a)(xiii)(2)(D) hereof)), in each case up to the tax book value of the assets treated as contributed by such holders, adjusted for prior taxable income and loss and taking into account all prior and concurrent distributions from the C&B Liquidating Trust. Similarly,
taxable loss of the C&B Liquidating Trust shall be allocated by reference to the manner in which an economic loss would be borne immediately after a liquidating distribution of the remaining C&B Liquidating Trust Assets. The tax book value of the C&B Liquidating Trust Assets for this purpose shall equal their fair market value on the Effective Date, adjusted in accordance with tax accounting principles prescribed by the Tax Code, the applicable tax regulations, and other applicable administrative
and judicial authorities and pronouncements.





(D) Subject to definitive guidance from the Internal Revenue Service, or a court of competent jurisdiction to the contrary (including the receipt by the C&B Trustee of a private letter ruling if the C&B Trustee so requests one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not contested
by the C&B Trustee), the C&B Trustee shall (A) timely elect to treat any C&B Liquidating Trust Assets allocable to, or retained on account of, Disputed Claims (the "C&B Liquidating Trust Claims Reserve") as a "disputed ownership fund" governed by Treasury Regulation section 1.468B-9, and (B) to the extent permitted by applicable law, report consistent with the foregoing for state and local income tax purposes. All parties (including New Holdco, the Trustees, and C&B Liquidating Trust Beneficiaries
shall report for tax purposes consistent with the foregoing.





(E) The C&B Trustee shall be responsible for payments, out of the C&B Liquidating Trust Assets, of any taxes imposed on the trust or its assets including the C&B Liquidating Trust Claims Reserve. In the event, and to the extent, any Cash retained on account of Disputed Claims in the C&B Liquidating Trust Claims Reserve is
insufficient to pay the portion of any such taxes attributable to the taxable income arising from the assets allocable to, or retained on account of, Disputed Claims, such taxes shall be (i) reimbursed from any subsequent Cash amounts retained on account of Disputed Claims, or (ii) to the extent such Disputed Claims have subsequently been resolved, deducted from any amounts distributable by the C&B Trustee as a result of the resolutions of such Disputed Claims.





  



39







  





(F) The C&B Trustee may request an expedited determination of taxes of the C&B Liquidating Trust, including the C&B Liquidating Trust Claims Reserve, under section 505(b) of the Bankruptcy Code for all returns filed for, or on behalf of, the C&B Liquidating Trust for all taxable periods through the dissolution of the C&B
Liquidating Trust.





(xiv)         Dissolution. The C&B Trustee and the C&B Liquidating Trust shall be discharged or dissolved, as the case may be, at such time as (i) all Disputed Claims have been resolved, (ii) the C&B Trustee determines,
in its sole discretion, that the administration of the C&B Liquidating Trust Assets is not likely to yield sufficient additional C&B Liquidating Trust proceeds to justify further pursuit and (iii) all distributions required to be made by the C&B Trustee under the Plan and the C&B Liquidating Trust Agreement have been made, but in no event shall the C&B Liquidating Trust be dissolved later than three (3) years from the Effective Date unless the Bankruptcy Court, upon motion within the six month
period prior to the third anniversary (or at least six (6) months prior to the end of an extension period), determines that a fixed period extension (not to exceed three years, together with any prior extensions, without a favorable letter ruling from the Internal Revenue Service that any further extension would not adversely affect the states of the trust as a liquidating trust for federal income tax purposes) is necessary to facilitate or complete the recovery and liquidation of the C&B Liquidating Trust
Assets. If at any time the C&B Trustee determines, in reliance upon such professionals as the C&B Trustee may retain, that the expense of administering the C&B Liquidating Trust so as to make a final distribution to its beneficiaries is likely to exceed the value of the assets remaining in the C&B Liquidating Trust, the C&B Trustee may apply to the Bankruptcy Court for authority to (i) reserve any amounts necessary to dissolve the C&B Liquidating Trust, (ii) donate any balance to a charitable
organization exempt from federal income tax under section 501(c)(3) of the Tax Code that is unrelated to the Debtors, the C&B Liquidating Trust, and any insider of the C&B Trustee, and (iii) dissolve the C&B Liquidating Trust.





  



40







  





(xv)          Indemnification of C&B Trustee. The C&B Trustee or the individuals comprising the C&B Trustee, as the case may be, and the C&B Trustee's agents and professionals, shall not be liable for actions
taken or omitted in its capacity as, or on behalf of, the C&B Trustee, except those acts arising out of its or their own willful misconduct or gross negligence, and each shall be entitled to indemnification and reimbursement for fees and expenses in defending any and all of its actions or inactions in its capacity as, or on behalf of, the C&B Trustee, except for any actions or inactions involving willful misconduct or gross negligence. Any indemnification claim of the C&B Trustee (and the other parties
entitled to indemnification under this subsection) shall be satisfied solely from the C&B Liquidating Trust Assets. The C&B Trustee shall be entitled to rely, in good-faith, on the advice of its retained professionals.





ARTICLE VI





PROVISIONS GOVERNING VOTING AND DISTRIBUTIONS






	
  
	
6.1
	
Voting of Claims.








Each holder of an Allowed Claim in an impaired class of Claims as of the Voting Record Date that is entitled to vote on the Plan pursuant to Article III and Article IV of the Plan shall be entitled to vote separately to accept or reject the Plan, as provided in the Disclosure Statement Order.






	
  
	
6.2
	
Presumed Acceptances by Unimpaired Classes.








Charys Holding Class 1, Charys Holding Class 2, Charys Holding Class 3 Charys Holding Class 4, C&B Class 1 and C&B Class 2 are Unimpaired under the Plan, Under Section 1126(f) of the Bankruptcy Code, holders of such Unimpaired Claims are conclusively presumed to have accepted the Plan, and the votes of such Unimpaired Claim holders
shall not be solicited.






	
  
	
6.3
	
Impaired Classes Deemed To Reject Plan.








Holders of Claims and Equity Interests in Charys Holding Class 9, Charys Holding Class 10, Charys Holding Class 11, C&B Class 4B, C&B Class 5, and C&B Class 6 are not entitled to receive or retain any property under the Plan. Under Section 1126(g) of the Bankruptcy Code, such holders are deemed to have rejected the Plan, and the
votes of such holders shall not be solicited.






	
  
	
6.4
	
Nonconsensual Confirmation.








If any impaired class of Claims entitled to vote shall not accept the Plan by the requisite statutory majority provided in section 1126(c) of the Bankruptcy Code, the Debtors reserve the right, after consulting with the Creditors' Committee, to amend the Plan in accordance with Section 13.5 of the Plan or undertake to have the Bankruptcy
Court confirm the Plan under section 1129(b) of the Bankruptcy Code or both. With respect to Charys Holding Class 9, Charys Holding Class 10, Charys Holding Class 11, C&B Class 4B, C&B Class 5, and C&B Class 6, all of which are deemed to reject the Plan, the Debtors shall request that the Bankruptcy Court confirm the Plan pursuant to section 1129(b) of the Bankruptcy Code.





  



41







  






	
  
	
6.5
	
Distributions On Account of General Unsecured Claims








All Allowed General Unsecured Claims or Allowed 8.75% Senior Convertible Note Claims held by a creditor shall be aggregated and treated as a single Claim. At the written request of the Disbursing Agent, any creditor holding multiple Allowed General Unsecured Claims or multiple Allowed 8.75% Senior Convertible Note Claims shall provide to
the Disbursing Agent, as applicable, a single address to which any distributions shall be sent.






	
  
	
6.6
	
Date of Distributions.








In the event that any payment or act under the Plan is required to be made or performed on a date that is not a Business Day, then the making of such payment or the performance of such act may be completed on the next succeeding Business Day, but shall be deemed to have been completed as of the required date.






	
  
	
6.7
	
Disbursing Agent.








All distributions under the Plan on account of Allowed Claims against Charys Holding shall be made by the Charys Trustee, as a Disbursing Agent in accordance with the Plan and the Charys Liquidating Trust Agreement. All distributions under the Plan on account of Allowed Claims against C&B shall be made by the C&B Trustee as a Disbursing
Agent in accordance with the Plan and the C&B Liquidating Trust Agreement. The applicable Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties unless otherwise ordered by the Bankruptcy Court and, in the event that a Disbursing Agent is so otherwise ordered, all reasonable costs and expenses of procuring any such bond or surety shall be borne by the applicable Debtor or Liquidating Trusts, The Indenture Trustee shall receive the distributions
under the Plan for the holders of the Allowed 8.75% Senior Convertible Note Claims and shall make appropriate distribution thereof to such holders in accordance with the terms of the Plan, Upon delivery of the forgoing distributions to the Indenture Trustee, the applicable Disbursing Agent shall be released of all liability with respect to the delivery of such distributions. The Indenture Trustee shall retain all rights provided for under the Indenture and related documents to recover its fees and expenses and
those of its counsel and advisors from distributions made pursuant to the Plan to holders of Allowed 8.75% Senior Convertible Note Claims.






	
  
	
6.8
	
Rights and Powers of Disbursing Agent.








The Disbursing Agent shall be empowered to (a) effect all actions and execute all agreements, instruments and other documents necessary to perform its duties under the Plan, (b) make all distributions contemplated hereby, (c) employ professionals to represent it with respect to its responsibilities and (d) exercise such other powers as may
be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant to the Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions hereof.





  



42







  






	
  
	
6.9
	
Expenses of the Disbursing Agent.








Except as otherwise ordered by the Bankruptcy Court, any reasonable fees and expenses incurred by the Disbursing Agent (including, without limitation, taxes and reasonable attorneys' fees and expenses) on or after the Effective Date shall be paid in Cash in the ordinary course of business, by the applicable Liquidating Trusts.






	
  
	
6.10
	
Delivery of Distributions.








(a)            Last Known Address. Subject to Bankruptcy Rule 9010, all distributions to any holder of an Allowed Claim or Allowed Administrative Expense Claim shall be made at the address of such holder as set forth on
the Schedules filed with the Bankruptcy Court or on the books and records of the Debtors or their agents, as applicable, unless the Debtors, and/or the Liquidating Trustees, as the case may be, have been notified in writing of a change of address, including, without limitation, by the filing of a proof of Claim by such holder that contains an address for such holder different than the address of such holder as set forth on the Schedules. In the event that any distribution to any holder is returned as undeliverable,
the applicable Disbursing Agent shall use commercially reasonable efforts to determine the current address of such holder, but no distribution to such holder shall be made unless and until the applicable Disbursing Agent has determined the then-current address of such holder, at which time such distribution shall be made to such holder without interest; provided that such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one (1) year from the Effective
Date. After such date, all unclaimed property or interests in property shall be returned by the applicable Disbursing Agent to, and shall revert to the applicable Liquidating Trust and the Claim of any holder to such property or interest in property shall be discharged and forever barred; provided, however, that unclaimed distributions made by the Liquidating Trustees shall be redistributed in accordance with the priorities set forth in the applicable Liquidating Trust Agreement, and (ii) with respect to Allowed
Claims in Charys Holding Class 7 shall be redistributed ratably as provided in Section 4.7 hereof.





(b)            Distribution Record Date. With respect to holders of all Claims against the Debtors, on the Distribution Record Date, the claims register shall be closed. Neither the Debtors nor any other Person shall have
any obligation to recognize any transfer of any Claims occurring after the close of business on such date.






	
  
	
6.11
	
Manner of Payment.








At the option of the Disbursing Agent, any Cash payment to be made hereunder may be made by a check or wire transfer.





  



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6.12
	
No Fractional Shares.








No fractional shares of New Equity Interests shall be distributed and no Cash shall be distributed in lieu of such fractional shares. When any distribution pursuant to the Plan on account of an Allowed Claim would otherwise result in the issuance of a number of shares of New Equity Interests that is not a whole number, the actual distribution
of shares of New Equity Interests shall be rounded as follows: (a) fractions of one-half (1/2) or greater shall be rounded to the next higher whole number and (b) fractions of less than one-half (1/2) shall be rounded to the next lower whole number with no further payment therefor. The total number of authorized shares of New Equity Interests to be distributed to holders of Allowed Claims shall be adjusted as necessary to account for the foregoing rounding.






	
  
	
6.13
	
No Fractional Notes.








The New Secured Notes shall not be distributed in denominations of less than one thousand dollars ($ 1,000). When any distribution pursuant to the Plan of Reorganization on account of an Allowed Claim would otherwise result in the issuance of an amount of the New Secured Notes that is not a multiple of one thousand (1,000), the actual distribution
of the New Secured Notes shall be rounded as follows: (i) denominations of five hundred dollars ($500) or greater shall be rounded up to one thousand dollars ($1,000); and (ii) denominations less than five hundred dollars ($500) shall be rounded down to zero with no further payment therefor.






	
  
	
6.14
	
Setoffs and Recoupment.








The Debtors may, but shall not be required to, setoff against or recoup from any Claim any Claims of any nature whatsoever that the Debtors may have against the claimant, provided, however, that neither the failure to do so nor the allowance of any claim hereunder shall constitute a waiver or release by the Debtors or their respective successors
of any such claim it may have against such claimant.






	
  
	
6.15
	
Interest on Claims; Dividends.








Unless otherwise specifically provided for in the Plan or the Confirmation Order, postpetition interest shall not accrue or be paid on any Claims, and no holder of a Claim shall be entitled to interest accruing on or after the Commencement Date on any Claim. Unless otherwise specifically provided for in the Plan or the Confirmation Order,
interest shall not accrue or be paid upon any Claim in respect of the period from the Commencement Date to the date a final distribution is made thereon if and after such Claim becomes an Allowed Claim.





No holder of a Claim who is entitled to shares of New Equity Interests shall be entitled to dividends on such shares unless such holder's Claim is an Allowed Claim as of the applicable record date for such dividends.





  



44







  






	
  
	
6.16
	
No Distribution In Excess of Allowed Amounts.








Notwithstanding anything to the contrary herein, no holder of an Allowed Claim shall receive in respect of such Claim any distribution of a value as of the Effective Date in excess of the Allowed amount of such Claim.






	
  
	
6.17
	
Allocation of Plan Distributions Between Principal and Interest.








To the extent that any Allowed Claim entitled to a distribution under the Plan consists of indebtedness and other amounts (such as accrued but unpaid interest thereon), such distribution shall be allocated first to the principal amount of the Claim (as determined for federal income tax purposes) and then, to the extent the consideration exceeds
the principal amount of the Claim, to such other amounts.





ARTICLE VII





PROCEDURES FOR TREATING DISPUTED

CLAIMS UNDER PLAN OF REORGANIZATION






	
  
	
7.1
	
Objections.








The Liquidating Trustees (each as to Claims to be addressed by their respective Liquidating Trusts) shall be entitled to object to all Claims. Any objections shall be served on the respective claimant and filed with the Bankruptcy Court on or before the later of (a) ninety (90) days after the Effective Date, or (b) such later date as may
be fixed by the Bankruptcy Court.






	
  
	
7.2
	
Authority to Prosecute Objections.








After the Effective Date, only the applicable Liquidating Trustees, as applicable, shall have the authority to file objections to Claims and to settle, compromise, withdraw, or litigate to judgment objections to Claims.






	
  
	
7.3
	
No Distributions Pending Allowance.








Notwithstanding any other provision of the Plan, if any portion of an Administrative Expense Claim or Claim is Disputed, no payment or distribution provided hereunder shall be made on account of such Administrative Expense Claim or Claim unless and until such Disputed Administrative Expense Claim or Disputed Claim becomes Allowed.






	
  
	
7.4
	
Distributions After Allowance.








To the extent that a Disputed Claim or Disputed Administrative Expense Claim becomes Allowed, distributions (if any) shall be made to the holder of such Claim in accordance with the provisions of the Plan. As soon as practicable after the date that the order or judgment of the Bankruptcy Court Allowing any Disputed Claim or Disputed Administrative
Expense Claim becomes a Final Order, the Disbursing Agent shall provide to the holder of such Administrative Expense Claim or Claim the distribution (if any) to which such holder is entitled under the Plan.





  



45







  






	
  
	
7.5
	
Resolution of Administrative Expense Claims and Claims.








On and after the Effective Date, the applicable Liquidating Trustees, shall have the authority to compromise, settle, otherwise resolve or withdraw any objections to Administrative Expense Claims and Claims against the Debtors and to compromise, settle or otherwise resolve any Disputed Administrative Expense Claims and Disputed Claims against
the Debtors without approval of the Bankruptcy Court, other than with respect to Administrative Expense Claims relating to compensation of professionals for fees and expenses incurred prior to the Confirmation Date.






	
  
	
7.6
	
Estimation of Claims.








The Debtors and, after the Effective Date with respect to Claims to receive distributions from the Liquidating Trusts, the applicable Liquidating Trustee, may at any time request that the Bankruptcy Court estimate any Contingent Claim, Unliquidated Claim or Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether
any of the Debtors or any other Person previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court will retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including, without limitation, during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any Contingent Claim, Unliquidated Claim or Disputed Claim, the amount so estimated shall
constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors or the Liquidating Trustees, as the case may be, may pursue supplementary proceedings to object to the allowance of such Claim. All of the aforementioned objection, estimation and resolution procedures are intended to be cumulative and not exclusive of one another. Claims may be estimated
and subsequently compromised, settled, withdrawn or resolved by any mechanism approved by the Bankruptcy Court.






	
  
	
7.7
	
Interest.








To the extent that a Disputed Claim becomes an Allowed Claim after the Effective Date, the holder of such Claim shall not be entitled to any interest thereon.





ARTICLE VIII





EXECUTORY CONTRACTS AND UNEXPIRED LEASES






	
  
	
8.1
	
Assumption or Rejection of Executory Contracts and Unexpired Leases.








  



46







  





Pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, all executory contracts and unexpired leases that exist between the Debtors and any person or entity prior to the Commencement Date shall be deemed rejected by the Debtors as of the Effective Date, except for any executory contract or unexpired lease (a) that has been assumed
pursuant to an order of the Bankruptcy Court entered prior to the Effective Date, (b) as to which a motion for approval of the assumption of such executory contract or unexpired lease has been filed and served prior to the Confirmation Date or (c) that is specifically designated as a contract or lease to be assumed on Schedule 8.1, which Schedule shall be contained in the Plan Supplement; provided, however, that the Debtors reserve the right, on or prior to the Confirmation Date, to amend, in consultation with
the Creditors' Committee, such Schedule to delete any executory contract or unexpired lease therefrom or add any executory contract or unexpired lease thereto, in which event such executory contract(s) or unexpired lease(s) shall be deemed to be, respectively, either rejected or assumed as of the Effective Date. The Debtors shall provide notice of any such amendments to the parties to the executory contracts and unexpired leases affected thereby. The listing of a document on Schedule 8.1 shall not constitute
an admission by the Debtors that such document is an executory contract or an unexpired lease or that the Debtors have any liability thereunder.






	
  
	
8.2
	
Approval of Assumption or Rejection of Executory Contracts and Unexpired Leases.








Entry of the Confirmation Order shall, subject to and upon the occurrence of the Effective Date, constitute (a) the approval, pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of the assumption of the executory contracts and unexpired leases assumed pursuant to Section 8.1 of the Plan, (b) the extension of time, pursuant
to section 365(d)(4) of the Bankruptcy Code, within which the Debtors may assume, assume and assign or reject the executory contracts and unexpired leases specified in Section 8.1 of the Plan through the date of entry of an order approving the assumption, assumption and assignment or rejection of such executory contracts and unexpired leases and (c) the approval, pursuant to sections 365(a) and 1123(b)(2) of the Bankruptcy Code, of the rejection of the executory contracts and unexpired leases rejected pursuant
to Section 8.1 of the Plan.






	
  
	
8.3
	
Inclusiveness.








Unless otherwise specified in Schedule 8.1, each executory contract and unexpired lease listed or to be listed therein shall include any and all modifications, amendments, supplements, restatements or other agreements made directly or indirectly by any agreement, instrument or other document that in any manner affects such executory contract
or unexpired lease, without regard to whether such agreement, instrument or other document is listed on such schedule.





  



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8.4
	
Cure of Defaults.








Except to the extent that different treatment has been agreed to by the non-debtor party or parties to any executory contract or unexpired lease to be assumed pursuant to Section 8.1 of the Plan, the Debtors shall, pursuant to the provisions of sections 1123(a)(5)(G) and 1123(b)(2) of the Bankruptcy Code and consistent with the requirements
of section 365 of the Bankruptcy Code, within at least twenty (20) days prior to the later of (a) the hearing on the Debtors' motion for assumption or assumption and assignment and (b) the Confirmation Hearing, file with the Bankruptcy Court and serve by first class mail on each non-debtor party to such executory contracts or unexpired leases to be assumed pursuant to Section 8.1 of the Plan, a notice, which shall list the cure amount as to each executory contract or unexpired lease to be assumed. The parties
to such executory contracts or unexpired leases to be assumed or assumed and assigned by the Debtors shall have twenty (20) days from the date of service of such notice to file and serve any objection to the cure amounts listed by the Debtors. If there are any objections filed, the Bankruptcy Court shall hold a hearing on a date to be set by the Bankruptcy Court. Notwithstanding Section 8.1 of the Plan, the Debtors shall retain their rights to reject any of their executory contracts or unexpired leases that are
subject to a dispute concerning amounts necessary to cure any defaults through the Effective Date.






	
  
	
8.5
	
Bar Date for Filing Proofs of Claim Relating to Executory Contracts and Unexpired Leases Rejected Pursuant to the Plan.








Proofs of Claim for damages arising out of the rejection of an executory contract or unexpired lease must be filed with the Bankruptcy Court and served upon the attorneys for the Debtors on or before the date that is thirty (30) days after the later of (a) the date of service of notice of the Confirmation Date, (b) notice of modification
to Schedule 8.1 of the Plan (solely with respect to the party directly affected by such modification) or (c) the date of service of notice of such later rejection date that occurs as a result of a dispute concerning amounts necessary to cure any defaults (solely with respect to the party directly affected by such rejection). In the event that the rejection of an executory contract or unexpired lease by the Debtors pursuant to the Plan results in damages to the other party or parties to such contract or lease,
a Claim for such damages, if not evidenced by a timely filed proof of Claim, shall be forever barred and shall not be enforceable against the Debtors or their successors, or their properties or interests in property as agents, successors or assigns.






	
  
	
8.6
	
Indemnification and Reimbursement Obligations.








The obligations of Charys Holding and/or C&B to indemnify and reimburse those officers, directors and employees set forth on an Exhibit contained in the Plan Supplement against and for any obligations pursuant to articles of incorporation, codes of regulations, bylaws, applicable state law, or specific agreement, or any combination of
the foregoing, shall survive confirmation of the Plan, irrespective of whether indemnification or reimbursement is owed in connection 
with an event occurring before, on, or after the Commencement Date and all such obligations shall be, and shall be deemed to be assumed by New Holdco as of the Effective Date; provided, however, that in no circumstance shall New Holdco assume any obligation to indemnify or reimburse
any individual in connection with the fraud, willful misconduct, or gross negligence of such individual. In furtherance of the foregoing, New Holdco will obtain a directors' and officers' insurance policy with tail coverage for a period of six years from an insurer whose rating with A.M. Best is no lower than that of the insurers of the policies in existence on the Effective Date for the current and former officers and directors of the Debtors, provided, however, that such policy shall have an aggregate cost
of no more than an amount as agreed on by the Debtors and the Creditors' Committee.

 



 



48







 


 



	
  
	
8.7
	
Insurance Policies.




 

Notwithstanding anything contained in the Plan to the contrary, unless specifically rejected by order of the Bankruptcy Court, all of the Debtors' insurance policies and any agreements, documents or instruments relating thereto, are treated as executory contracts under the Plan and will be assumed pursuant to the Plan effective as of the
Effective Date. Nothing contained in this Section shall constitute or be deemed a waiver of any cause of action that the Debtors may hold against any entity, including, without limitation, the insurer, under any of the Debtors' policies of insurance.

 


	
  
	
8.8
	
Compensation and Benefit Plans.




 

All Benefit Plans of Charys Holding, including Benefit Plans and programs subject to sections 1114 and 1129(a)(13) of the Bankruptcy Code, entered into before or after the Commencement Date and not since terminated, shall be deemed to be, and shall be treated as if they were, executory contracts that are assumed hereunder. Charys Holding's
obligations under such plans and programs shall survive confirmation of the Plan and shall be and shall be deemed to be assumed by New Holdco, except for (a) executory contracts or Benefit Plans expressly rejected pursuant to the Plan (to the extent such rejection does not violate sections 1114 and 1129(a)(13) of the Bankruptcy Code), (b) executory contracts or employee Benefit Plans that have previously been rejected, are the subject of a motion to reject pending as of the Confirmation Date or have been specifically
waived by the beneficiaries of any employee Benefit Plan or contract and (c) such executory contracts or employee Benefit Plans to the extent they relate to former employees whose employment by the Debtors terminated prior to the Commencement Date. Notwithstanding anything to the contrary in the Plan or the Confirmation Order, no equity, stock, option or other similar plans in effect on or prior to the Commencement Date shall be assumed and such plans shall be cancelled.





  



49







  



 

ARTICLE IX

 

CORPORATE GOVERNANCE AND MANAGEMENT OF NEW HOLDCO

 


	
  
	
9.1
	
General.




 

On the Effective Date, the management, control and operation of New Holdco shall become the general responsibility of the Board of Directors of New Holdco.

 


	
  
	
9.2
	
Operations Between Confirmation Date And Effective Date.




 

The Debtors shall continue to operate as debtors-in-possession during the period from the Confirmation Date through the Effective Date.

 


	
  
	
9.3
	
New Organizational Documents.




 

The New Organizational Documents, to the extent applicable, shall prohibit the issuance of nonvoting equity securities to the extent required by section 1123(a)(6) of the Bankruptcy Code.



 


	
  
	
9.4
	
Board of New Holdco.




 

The initial Board of Directors of New Holdco shall consist of seven members, to be determined by the Creditors' Committee. The initial members of such Board, together with biographical information, shall be set forth in the Plan Supplement.

 


	
  
	
9.5
	
Officers of New Holdco.




 

The initial officers of New Holdco shall be set forth in the Plan Supplement. Such officers shall serve in accordance with applicable non-bankruptcy law, any employment agreement entered into with New Holdco and the New Organizational Documents.

 


	
  
	
9.6
	
New Employment Agreements.




 

(a)           On the Effective Date, New Holdco shall enter into the New Employment Agreements.

 

(b)           Pursuant to the CTSI/MSAI Settlement Agreement, new employment and related agreements will be entered into with certain existing officers of CTSI and MSAI effective as of the date(s) stated therein, but subject to the occurrence of the Effective Date. Under such employment
contracts, the officers will receive the compensation and stock options in New Holdco provided therein.





  



50







  



 

(c)            Pursuant to the Cotton Settlement Agreement, certain existing employees of Cotton will enter into new employment agreements with Cotton effective as of the Effective Date and will receive the compensation provided for therein.

 

ARTICLE X

 

CONDITIONS PRECEDENT TO EFFECTIVE DATE

 


	
  
	
10.1
	
Conditions Precedent to Effective Date.




 

The Effective Date shall not occur and the Plan shall not become effective unless and until the following conditions are satisfied in full or waived in accordance with Section 10.2 of the Plan:

 

(a)           The Confirmation Order, in form and substance reasonably acceptable to the Debtors and the Creditors' Committee, shall have been entered and shall be in full force and effect and there shall not be a stay or injunction in effect with respect thereto;

 

(b)           All actions and all agreements, instruments or other documents necessary to implement tire terms and provisions of the Plan are effected or executed and delivered, as applicable, in form and substance reasonably satisfactory to the Debtors and the Creditors' Committee;

 

(c)           All authorizations, consents and regulatory approvals, if any, required by the Debtors in connection with the consummation of the Plan have been obtained and have not been revoked, including, if applicable, the expiration or termination of the notification and waiting periods
applicable under the Hart-Scott Rodino Antitrust Improvement Act of 1976, as amended, with respect to distributions of any shares of New Equity Interests pursuant to the Plan to any entity required to file a premerger notification and report form thereunder;

 

(d)           New Holdco shall have been organized and the New Organizational Documents of New Holdco required to be filed with the Secretary of State of Delaware shall have been filed;

 

(e)           The New Employment Agreements shall have become effective;

 

(f)            The Confirmation Order shall contain a finding that the aggregate amount of Cash necessary to satisfy Allowed Administrative Expense Claims shall not exceed $[   ]; and

 

(g)           Holders of 90% in principal amount of the 8.75% Senior Convertible Notes shall have voted to accept the Plan.





  



51







  



 


	
  
	
10.2
	
Waiver of Conditions.




 

Each of the conditions precedent in Section 10.1 hereof may be waived, in whole or in part, by the Debtors with the prior consent of the Creditors' Committee in each of their sole discretion. Any such waiver may be effected at any time, without notice, without leave or order of the Bankruptcy Court and must be in writing.

 


	
  
	
10.3
	
Satisfaction of Conditions.




 

Any actions required to be taken on the Effective Date shall take place and shall be deemed to have occurred simultaneously, and no such action shall be deemed to have occurred prior to the taking of any other such action. In the event that one or more of the conditions specified in Section 10.1 of the Plan have not occurred or otherwise
been waived pursuant to Section 10.2 of the Plan, within 60 days after the Confirmation Date or such later date as may be agreed upon by the Debtors and the Creditors' Committee, then (a) the Confirmation Order shall be vacated, (b) no distributions under the Plan shall be made, (c) the Debtors and all holders of Claims and interests including any Old Equity Interests shall be restored to the status quo ante as of the day immediately preceding the Confirmation
Date as though the Confirmation Date never occurred and (d) the Debtors' obligations with respect to Claims and equity interests shall remain unchanged and nothing contained herein shall constitute or be deemed a waiver or release of any Claims or equity interests by or against the Debtors or any other Person or to prejudice in any manner the rights of the Debtors or any Person in any further proceedings involving the Debtors.

 

ARTICLE XI

 

EFFECT OF CONFIRMATION

 


	
  
	
11.1
	
Vesting of Assets.




 

(a)           Vesting of Assets With Respect to Charys Holding. On and after the Effective Date, the Charys Trustee may dispose of the assets of the Charys
Liquidating Trust free of any restrictions of the Bankruptcy Code, but in accordance with the provisions of the Plan and the Charys Liquidating Trust Agreement.

 

(b)           Vesting of Assets With Respect to C&B. On and after the Effective Date, the C&B Trustee may dispose of the assets of the C&B Liquidating Trust free of any restrictions of the Bankruptcy Code, but
in accordance with the provisions of the Plan and the C&B Liquidating Trust Agreement.

 

(c)           New Holdco and Liquidating Trust Property. As of the Effective Date, all property of New Holdco, and the Liquidating Trusts shall be free and clear of all Claims, liens, encumbrances, charges and other interests,
except as provided in the Plan.





  



52







  



 


	
  
	
11.2
	
Claims Extinguished.




 

As of the Effective Date, any and all alter-ego or derivative claims accruing to the Debtors or Debtors in Possession against present or former officers and directors of the Debtors who were officers or directors of Charys Holding and C&B at any time during the Reorganization Cases (other than any Non-Released Parties) shall be extinguished
whether or not then pending, provided however that no claims against the Non-Released Parties shall be released.

 


	
  
	
11.3
	
Binding Effect.




 

Subject to the occurrence of the Effective Date, on and after the Confirmation Date, the provisions of the Plan shall bind any holder of a Claim against, or Equity Interest in, the Debtors and such holder's respective successors and assigns, whether or not such Claim or Equity Interest is impaired under the Plan, whether or not such holder
has accepted the Plan and whether or not such holder is entitled to a distribution under the Plan. Additionally, subject to the occurrence of the Effective Date, on and after the Confirmation Date, the provisions of the Plan shall bind any holder of a 8.75% Senior Convertible Note Claim, Mirror Note Claim, and the Indenture Trustee and such holder's respective successors and assigns, whether or not such Claim or Equity Interest is impaired under the Plan, whether or not such holder has accepted the Plan and whether
or not such holder is entitled to a distribution under the Plan.

 


	
  
	
11.4
	
Discharge of Claims and Termination of Equity Interests.




 

The rights afforded in and the payments and distributions to be made under the Plan shall terminate all Equity Interests and discharge all existing debts and Claims of any kind, nature or description whatsoever against or in the Debtors or any of their assets or properties to the fullest extent permitted by section 1141 of the Bankruptcy
Code. Except as provided in the Plan, upon the Effective Date, all existing Claims against the Debtors and Equity Interests shall be, and shall be deemed to be, discharged and terminated, and all holders of such Claims and Equity Interests shall be precluded and enjoined from asserting against New Holdco, its successors or assigns or any of its assets or properties, or against the Liquidating Trusts or any of their assets or properties, any other or further Claim or Equity Interest based upon any act or omission,
transaction or other activity of any kind or nature that occurred prior to the Effective Date, whether or not such holder has filed a proof of Claim or proof of equity interest and whether or not the facts or legal bases therefor were known or existed prior to the Effective Date.

 


	
  
	
11.5
	
Discharge.




 

(a)           Upon the Effective Date, in consideration of the distributions to be made under the Plan and except as otherwise expressly provided in the Plan, each holder (as well as any trustees and agents on behalf of each holder) of a Claim or Equity Interest and any Affiliate of such
holder shall be deemed to have forever waived, released and discharged the Debtors, to the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Equity Interests, rights and liabilities that arose prior to the Effective Date. Upon the Effective Date, all such persons shall be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting
any such discharged Claim against or terminated Equity Interest in the Debtors.





  



53







  



 

(b)            In addition to the terms of (a) above, each holder of an 8.75% Senior Convertible Note Claim, each holder of a Mirror Note Claim, and the Indenture Trustee (as well as any trustees and agents on behalf of each holder) and any Affiliate of such holder shall be deemed
to have waived, released and discharged the Affiliated Plan Proponents from any Liens, Claims, causes of action, rights or liabilities arising from notes issued under, and the guarantees issued pursuant to, the Indenture. In addition, the Confirmation Order shall provide that the Indenture Trustee is authorized and directed to take all such actions necessary to effectuate the foregoing. Upon the Effective Date, all such persons shall be forever precluded and enjoined from prosecuting or asserting any such discharged
Claim against the Affiliated Plan Proponents.



 


	
  
	
11.6
	
Injunction or Stay.




 

Except as otherwise expressly provided herein or in the Confirmation Order, all Persons or entities who have held, hold or may hold Claims against or Equity Interests in either of the Debtors, and all other parties in interest, along with their respective present and former employees, agents, officers, directors, principals and affiliates,
are permanently enjoined, from and after the Effective Date, from (a) commencing or continuing in any manner any action or other proceeding of any kind on any such Claim or Equity Interest against any of the Debtors or the Liquidating Trusts, (b) the enforcement, attachment, collection or recovery by any manner or means of any judgment, award, decree or order against the Debtors or the Liquidating Trusts, (c) creating, perfecting or enforcing any encumbrance of any kind against the Debtors or the Liquidating
Trusts or against the property or interests in property of the Debtors or the Liquidating Trusts, (d) asserting any right of setoff, subrogation or recoupment of any kind against any obligation due to the Debtors or against the property or interests in property of the Debtors, or the Liquidating Trusts with respect to such Claim or Equity Interest or (e) pursuing any claim released pursuant to this Article XI of the Plan. Such injunction shall extend to any successors of the Debtors and the Liquidating Trusts,
including, without limitation, New Holdco, and their respective properties and interests in properties.

 


	
  
	
11.7
	
Terms of Injunction or Stay.




 

Unless otherwise provided in the Confirmation Order, all injunctions or stays arising under or entered during the Reorganization Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, that are in existence on the Confirmation Date shall remain in full force and effect until the Effective Date.





  



54







  



 


	
  
	
11.8
	
Injunction Against Interference With Plan of Reorganization.




 

Upon the entry of the Confirmation Order, all holders of Claims and Equity Interests and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals and affiliates shall be enjoined from taking any actions to interfere with the implementation or consummation of the Plan.

 


	
  
	
11.9
	
Exculpation.




 

Notwithstanding anything herein to the contrary, as of the Effective Date, none of the Debtors, New Holdco, the Affiliated Plan Proponents, the Liquidating Trusts, the Creditors' Committee, the Ad Hoc Noteholders Committee, and the Indenture Trustee, and their respective officers, directors, members, employees, accountants,
financial advisors, investment bankers, agents, restructuring advisors and attorneys and representatives (but, in each case, solely in their capacities as such) shall have or incur any liability for any Claim, cause of action or other assertion of liability for any act taken or omitted to be taken in connection with, or arising out of, the Reorganization Cases, the formulation, dissemination, confirmation, consummation or administration of the Plan, property to be distributed under the Plan or any other act or
omission in connection with the Reorganization Cases, the Plan, the Disclosure Statement or any contract, instrument, document or other agreement related thereto; provided, however, that the foregoing shall not affect the liability of any person that otherwise would result from any such act or omission to the extent such act or omission is determined by a Final Order to have constituted willful misconduct or gross negligence. Any of the forgoing Persons
in all respects shall be entitled to rely upon the advice of counsel with respect to any of the foregoing. The foregoing exculpation shall not apply to the Non-Released Parties.

 


	
  
	
11.10
	
Releases.




 

Effective as of the Confirmation Date but subject to the occurrence of the Effective Date, and in consideration of the services of (a) the present and former directors, officers, members, employees, affiliates, agents, financial advisors, restructuring advisors, attorneys and representatives of or to the Debtors who acted
in such capacities after the Commencement Date; (b) the Indenture Trustee; and (c) the members of the Creditors' Committee, and their respective professionals in connection with the Reorganization Cases; (x) the Debtors, the Affiliated Plan Proponents, and New Holdco; (y) each holder of a Claim that votes to accept the Plan (or is deemed to accept the Plan) and (z) to the fullest extent permissible under applicable law, as such law may be extended or integrated after the Effective Date, each holder of a Claim
or Equity Interest that does not vote to accept the Plan, shall release unconditionally and forever each present or former director, officer, member, employee, affiliate, agent, financial advisor, restructuring advisor, attorney and representative (and theirrespective affiliates) of the Debtors who acted in such capacity after the Commencement Date, the Affiliated Plan Proponents, the Indenture Trustee, the Creditors' Committee, and each of their respective members, officers, directors, agents, financial advisors,
attorneys, employees, equity holders, parent corporations, subsidiaries, partners, affiliates and representatives (but, in each case, solely in their capacities as such) from any and all Claims or causes of action whatsoever in connection with, related to, or arising out of the Reorganization Cases, the pursuit of confirmation of the Plan, the consummation thereof, the administration thereof or the property to be distributed thereunder; provided, however, that
the foregoing shall not operate as a waiver of or release from any causes of action arising out of the willful misconduct or gross negligence of any such person or entity; and provided further, however, that the foregoing release shall not apply to the Non-Released Parties.





  



55







  



 


	
  
	
11.11
	
Avoidance Actions/Objections.




 

Other than any releases granted herein, by the Confirmation Order and by Final Order of the Bankruptcy Court, as applicable, from and after the Effective Date, the Liquidating Trusts, as applicable, shall have the right to prosecute any avoidance or equitable subordination or recovery actions under sections 105, 502(d), 510, 542 through 551,
and 553 of the Bankruptcy Code that belong to the Debtors or Debtors in Possession, provided however, that the Debtors shall be deemed to have waived all causes of action including avoidance, equitable subordination, and recovery actions against the Indenture Trustee and holders of 8.75% Senior Convertible Note Claims and Mirror Note Claims.

 


	
  
	
11.12
	
Retention of Causes of Action/Reservation of Rights.




 

(a)           Except as provided in the Plan, nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or the relinquishment of any rights or causes of action that the Debtors or the Liquidating Trusts may have or which the Liquidating Trusts may choose to
assert on behalf of the respective Debtor's estate under any provision of the Bankruptcy Code or any applicable nonbankruptcy law, including, without limitation, (i) any and all Claims against any person or entity, to the extent such person or entity asserts a crossclaim, counterclaim, and/or Claim for setoff which seeks affirmative relief against the Debtors, the Liquidating Trusts, their officers, directors, or representatives and (ii) the turnover of any property of the Debtors' estates.

 

(b)           Nothing contained in the Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any claim, cause of action, right of setoff, or other legal or equitable defense which the Debtors had immediately prior to the Commencement Date, against or with
respect to any Claim left Unimpaired by the Plan. The Liquidating Trusts shall have, retain, reserve, and be entitled to assert all such claims, causes of action, rights of setoff, and other legal or equitable defenses which the Debtors had immediately prior to the Commencement Date fully as if the Reorganization Cases had not been commenced, and all of the Debtors' legal and equitable rights respecting any Claim left Unimpaired
by the Plan may be asserted after the Confirmation Date by the Liquidating Trusts to the same extent as if the Reorganization Cases had not been commenced.





  



56







  



 

ARTICLE XII

 

RETENTION OF JURISDICTION

 

The Bankruptcy Court shall have exclusive jurisdiction of all matters arising out of, or related to, the Reorganization Cases and the Plan pursuant to, and for the purposes of, sections 105(a) and 1142 of the Bankruptcy Code, including, without limitation:

 

(a)           To hear and determine pending motions or applications for the assumption or rejection of executory contracts or unexpired leases, the allowance of Claims and Administrative Expense Claims resulting therefrom and any disputes with respect to executory contracts or unexpired
leases relating to facts and circumstances arising out of or relating to the Reorganization Cases;

 

(b)           To determine any and all adversary proceedings, motions, applications and contested matters pending on or commenced after the Confirmation Date;

 

(c)           To hear and determine all applications for compensation and reimbursement of expenses under sections 330, 331 and 503(b) of the Bankruptcy Code;

 

(d)           To hear and determine any objections to, or requests for estimation of Disputed Administrative Expense Claims and Disputed Claims, in whole or in part and otherwise resolve disputes as to Administrative Expense Claims and Claims;

 

(e)           To resolve disputes as to the ownership of any Administrative Expense Claim, Claim or Old Equity Interest;

 

(f)            To enter and implement such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, revoked, modified or vacated;

 

(g)           To issue such orders in aid of execution of the Plan, to the extent authorized by section 1142 of the Bankruptcy Code;

 

(h)           To consider any amendments to or modifications of the Plan or to cureany defect or omission, or reconcile any inconsistency, in any order of the BankruptcyCourt, including, without limitation, the Confirmation Order;

 

(i)            To hear and determine disputes or issues arising in connection with theinterpretation, implementation or enforcement of the Plan, the Confirmation Order,any transactions or payments contemplated hereby, any agreement, instrument, orother document governing or relating to
any of the foregoing or any settlementapproved by the Bankruptcy Court;





  



57







  



 

(j)            To hear and determine matters concerning state, local and federal taxes in accordance with sections 346, 505 and 1146 of the Bankruptcy Code (including, without limitation, any request by the Debtors prior to the Effective Date or by the Liquidating Trustees or any Disbursing
Agent after the Effective Date for an expedited determination of tax under section 505(b) of the Bankruptcy Code);

 

(k)           To hear and determine all disputes involving the existence, scope, nature or otherwise of the discharges, releases, injunctions and exculpations granted under the Plan, the Confirmation Order or the Bankruptcy Code;

 

(1)           To issue injunctions and effect any other actions that may be necessary or appropriate to restrain interference by any person or entity with the consummation, implementation or enforcement of the Plan, the Confirmation Order or any other order of the Bankruptcy Court;

 

(m)          To determine such other matters and for such other purposes as may be provided in the Confirmation Order;

 

(n)           To hear and determine any rights, Claims or causes of action held by or accruing to the Debtors pursuant to the Bankruptcy Code or pursuant to any federal or state statute or legal theory;

 

(o)           To recover all assets of the Debtors and property of the Debtors' estates, wherever located;

 

(p)           To hear all disputes concerning the Liquidating Trusts;

 

(q)           To enter a final decree closing the Reorganization Cases; and

 

(r)            To hear any other matter not inconsistent with the Bankruptcy Code.

 

ARTICLE XIII

 

MISCELLANEOUS PROVISIONS

 


	
  
	
13.1
	
Effectuating Documents and Further Transactions.




 

On or before the Effective Date, and without the need for any further order or authority, the Debtors shall file with the Bankruptcy Court or execute, as appropriate, such agreements and other documents that are in form and substance satisfactory to them and the Creditors' Committee as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan. As of the Effective Date, New Holdco and the Liquidating Trusts are authorized to execute, deliver, file, or record such contracts, instruments, releases, indentures and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Plan and any securities issued pursuant to the Plan.





  



58







  



 


	
  
	
13.2
	
Withholding and Reporting Requirements.




 

In connection with the Plan and all instruments issued in connection therewith and distributed thereon, any party issuing any instrument or making any distribution under the Plan shall comply with all applicable withholding and reporting requirements imposed by any federal, state or local taxing authority, and all distributions under the
Plan shall be subject to any such withholding or reporting requirements. Notwithstanding the above, each holder of an Allowed Claim that is to receive a distribution under the Plan shall have the sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed on such holder by any governmental unit, including income, withholding and other tax obligations, on account of such distribution. Any party issuing any instrument or making any distribution under the Plan has the right,
but not the obligation, to not make a distribution until such holder has made arrangements satisfactory to such issuing or disbursing party for payment of any such tax obligations.

 


	
  
	
13.3
	
Corporate Action.




 

On the Effective Date, all matters provided for under the Plan that would otherwise require approval of the stockholders or directors of one or more of the Debtors, shall be deemed to have occurred and shall be in effect from and after the Effective Date pursuant to the applicable general corporation law of the states in which the Debtors
are incorporated, without any requirement of further action by the stockholders or directors of the Debtors.

 


	
  
	
13.4
	
Tax Matters




 

(a)           For all taxable periods ending on or prior to, or including, the Effective Date, the Charys Trustee shall prepare and file (or cause to be prepared and filed) on behalf of the Charys Group or Chary Holding all tax returns, reports, certificates, forms or similar statements
or documents, including amended returns (collectively, "Tax Returns"), whether related to income taxes or non-income taxes, required to be filed or that the Charys Trustee otherwise deems appropriate, and the Charys Trustee shall have full authority with respect to such Tax Returns and related taxes as if it were the debtor in possession. The C&B Trustee shall prepare and file (or cause to be prepared and filed) all Tax Returns required to be filed or that the C&B Trustee otherwise deems appropriate,
in each case, where such Tax Returns solely relate to C&B and its subsidiaries and are not Tax Returns of the Charys Group, and the C&B Trustee shall have full authority with respect to such Tax Returns and related taxes as if it were the debtor in possession. The Charys Trustee shall provide New Holdco with a copy of each prepared Tax Return relating to a Proponent Inclusive Group at least twenty days prior to the due date or filing thereof, along with supporting workpapers, for New Holdco's review and
approval. The Charys Trustee and New Holdco shall attempt in good faith to resolve any disagreements regarding such Tax Returns prior to the due date for filing. In the event that the Charys Trustee and New Holdco are unable to resolve any dispute with respect to such a Tax Return at least ten days prior to the due date for filing (or otherwise within a reasonable period of time), such dispute shall be resolved pursuant to Section
13.4(d).





  



59







  



 

(b)           If following the Effective Date notice of any claim, audit or other proceeding with respect to taxes of a Proponent Inclusive Group shall be received by the Charys Trustee, on the one hand, or any of the Affiliated Plan Proponents or New Holdco on the other hand, the notified
party shall notify the other party of claim, audit or other proceeding. The Charys Trustee shall control all such administrative and judicial proceedings. The Charys Trustee shall keep New Holdco reasonably informed regarding the progress of such proceedings and any application for a ruling from the Internal Revenue Service and New Holdco shall be entitled to participate in such proceedings or ruling request at its own expense. The Charys Trustee shall not settle or compromise any such
claim, audit or other proceeding, or submit a ruling request without the prior written consent of New Holdco, which consent shall not be unreasonably withheld.

 

(c)           The Charys Trustee and New Holdco shall (and New Holdco shall cause the Affiliated Plan Proponents to) furnish to each other, upon request, as promptly as practicable, such information and assistance (including access to books and records and personnel as well as the timely
provision of powers of attorney or similar authorizations) as is reasonably necessary for the filing of all Tax Returns and the preparation for, and contest of, any audit or administrative or judicial proceeding relating to taxes of a Proponent Inclusive Group.

 

(d)           If the Charys Trustee and New Holdco are unable to resolve any disagreement relating to any provision of this Section 13.14, the disagreement shall be referred to an independent accounting firm mutually acceptable to the Charys Trustee and New Holdco (the "Independent Expert").
The Independent Expert shall resolve the disagreement as soon as practicable and the decision of the Independent Expert shall be conclusive and binding on the Charys Trustee and New Holdco. The fees of the Independent Expert shall be divided equally between the Charys Trustee and New Holdco.

 

(e)           Prior to the Effective Date, Charys Holding shall designate (or cause to be designated) LFC, Inc., or such other entity as New Holdco shall select, as permitted by law, as the "substitute agent" (within the meaning of Treasury Regulation Section 1.1502-77) for the Charys
Group in accordance with Treasury Regulation Section 1.1502-77 and Rev. Proc. 2002-43, 2002-2 C.B. 99 (June 28, 2002), in either case, as amended or supplemented, and any comparable provision under state and local law, with respect to all taxable periods ending on or before, or including, the Effective Date.

 


	
  
	
13.5
	
Modification of Plan.




 

Subject to the prior consent of the Creditors' Committee, alterations, amendments or modifications of or to the Plan may be proposed in writing by the Debtors at any time prior to the Confirmation Date, provided that the Plan, as altered, amended or modified satisfies the conditions of sections 1122 and 1123 of the Bankruptcy Code and the
Debtors shall have complied with section 1125 of the Bankruptcy Code. Subject to the prior consent of the Creditors' Committee, the Plan may be altered, amended or modified at any time after the Confirmation Date and before substantial consummation, provided that the Plan, as altered, amended or modified, satisfies the requirements of sections 1122 and 1123 of the Bankruptcy Code and the Bankruptcy Court, after notice and a hearing, confirms the Plan, as altered, amended or modified, under section 1129 of the
Bankruptcy Code and the circumstances warrant such alterations, amendments or modifications. A holder of a Claim that has accepted the Plan shall be deemed to have accepted the Plan, as altered, amended or modified, if the proposed alteration, amendment or modification does not materially and adversely change the treatment of the Claim of such holder.





  



60







  



 

Prior to the Effective Date, the Debtors may, with the prior consent of the Creditors' Committee, make appropriate technical adjustments and modifications to the Plan without further order or approval of the Bankruptcy Court, provided that such technical adjustments and modifications do not adversely affect in a material way the treatment
of holders of Claims or Equity Interests.

 

For the avoidance of doubt, the foregoing shall not effect a waiver of any rights that any party may have with respect to modification of the Plan under section 1127 of the Bankruptcy Code.

 


	
  
	
13.6
	
Revocation or Withdrawal of the Plan.




 

The Debtors reserve the right to revoke or withdraw the Plan, in whole or in part, prior to the Confirmation Date. If the Debtors revoke or withdraw the Plan in whole prior to the Confirmation Date, then the Plan shall be deemed null and void. In such event, nothing contained herein shall constitute or be deemed a waiver or release of any
Claims or Equity Interests by or against the Debtors or any other person or to prejudice in any manner the rights of the Debtors or any person in any further proceedings involving the Debtors. The Debtors reserve the right to withdraw the Plan with respect to either Debtor and proceed with confirmation of the Plan with respect to the other Debtor. In such event, nothing contained herein shall constitute or be deemed a waiver or release of any Claims against or equity interests in the Debtor withdrawn from the
Plan or any other person or to prejudice in any manner the rights of such Debtor or any person in any further proceedings involving such withdrawn Debtor.

 


	
  
	
13.7
	
Continuing Exclusivity Period.




 

Subject to further order of the Bankruptcy Court, until the Effective Date, the Debtors shall, pursuant to section 1121 of the Bankruptcy Code, retain the exclusive right to amend the Plan and to solicit acceptances thereof.





  



61







  



 


	
  
	
13.8
	
Plan Supplement




 

The Plan Supplement and the documents contained therein shall be in form and substance reasonably satisfactory to the Debtors and the Creditors' Committee, and shall be filed with the Bankruptcy Court no later than five (5) Business Days before the deadline for voting to accept or reject the Plan, provided
that the documents included therein may thereafter be amended and supplemented prior to execution with the consent of the Creditors' Committee. The Plan Supplement and the documents contained therein are incorporated into and made a part of the Plan as if set forth in full herein.

 


	
  
	
13.9
	
Payment of Statutory Fees.




 

All fees payable under section 1930 of chapter 123 of title 28 of the United States Code, as determined by the Bankruptcy Court at the Confirmation Hearing, shall be paid on the Effective Date.

 


	
  
	
13.10
	
Post-Confirmation Date Professional Fees and Expenses.




 

From and after the Confirmation Date, Charys Holding or C&B, as the case may be, shall, in the ordinary course of business and without the necessity for any approval by the Bankruptcy Court, pay the reasonable fees and expenses of professional persons thereafter incurred by them,

 


	
  
	
13.11
	
Dissolution of the Creditors' Committee.




 

On the Effective Date, the Creditors' Committee shall be dissolved and the members thereof shall be released and discharged of and from all further authority, duties, responsibilities and obligations related to and arising from and in connection with the Reorganization Cases, and the retention or employment of the Creditors' Committee's attorneys,
accountants and other agents, if any, shall terminate other than for purposes of (i) filing and prosecuting applications for final allowances of compensation for professional services rendered and reimbursement of expenses incurred in connection therewith, and (ii) reviewing and objecting to the applications of other parties for the allowance of compensation for professional services rendered and reimbursement of expenses incurred in connection therewith.

 


	
  
	
13.12
	
Indenture Trustee as Claim Holder.




 

Consistent with Bankruptcy Rule 3003(c), the Debtors shall recognize a proof of Claim timely filed by the Indenture Trustee in respect of any Claims under the Indenture. Accordingly, any Claim for principal and interest under the 8.75% Senior Convertible Notes, proof of which is filed by the registered or beneficial holder of any 8.75% Senior
Convertible Notes, is disallowed as duplicative of the Claim of the Indenture Trustee, without any further action of the Bankruptcy Court.





  



62







  



 


	
  
	
13.13
	
Exemption from Transfer Taxes.




 

Pursuant to section 1146(a) of the Bankruptcy Code, the issuance, transfer or exchange of notes or equity securities under or in connection with the Plan, the creation of any mortgage, deed of trust or other security interest, the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer
under, in furtherance of, or in connection with the Plan, including, without limitation, the New Secured Notes and New Common Stock, any merger agreements or agreements of consolidation, deeds, bills of sale or assignments executed in connection with any of the transactions contemplated under the Plan, shall not be subject to any stamp, real estate transfer, mortgage recording or other similar tax.

 


	
  
	
13.14
	
Expedited Tax Determination.




 

The Debtors and the Liquidating Trusts are authorized to request an expedited determination of taxes under section 505(b) of the Bankruptcy Code for any or all returns filed for, or on behalf of, the Debtors for any and all taxable periods (or portions thereof) ending after the Commencement Date through and including
the Effective Date.

 


	
  
	
13.15
	
Exhibits/Schedules.




 

All exhibits and schedules to the Plan, including the Plan Supplement, are incorporated into and are a part of the Plan as if set forth in full herein.

 


	
  
	
13.16
	
Substantial Consummation.




 

On the Effective Date, the Plan shall be deemed to be substantially consummated under sections 1101 and 1127(b) of the Bankruptcy Code.

 


	
  
	
13.17
	
Severability of Plan Provisions.




 

If, prior to the entry of the Confirmation Order, any term or provision of the Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Debtors, subject to the consent of the Creditors' Committee, shall have the power to alter and interpret such term or provision to make it valid
or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted. Notwithstanding any such holding, alteration, or interpretation, unless agreed otherwise between the Debtors and the Creditors' Committee, the remainder of the terms and provisions of the Plan will remain in full force and effect and will in no way be affected, impaired, or invalidated
by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Plan, as it may have been altered or interpreted in accordance with the foregoing, is valid and enforceable pursuant to its terms.





  



63







  



 


	
  
	
13.18
	
Governing Law.




 

Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an exhibit to the Plan or document in the Plan Supplement provides otherwise (in which case the governing law specified therein shall be applicable to such exhibit), the rights, duties, and obligations arising under the Plan shall be governed
by, and construed and enforced in accordance with, the laws of the State of New York without giving effect to its principles of conflict of laws.

 


	
  
	
13.19
	
Computation of Time.




 

In computing any period of time prescribed or allowed by the Plan, the provisions of Rule 9006(a) of the Bankruptcy Rules shall apply.

 


	
  
	
13.20
	
Notices.




 

All notices, requests and demands to or upon the Debtors to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed,
addressed as follows:









	
Charys Holding Company Inc.

	
1117 Perimeter Center

	
West Suite N415

	
Atlanta, Georgia 30338

	
Attn:     Michael F. Oyster

	
Telephone:       (678) 443-2300

	
Facsimile:          (678) 443-2320

	  
	
- and -

	  
	
Weil, Gotshal & Manges LLP

	
767 Fifth Avenue

	
New York, New York 10153

	
Attn:    Stephen Karotkin, Esq.

	
  Damon P. Meyer, Esq.

	
Telephone:       (212)310-8000

	
Facsimile:          (212)310-8007

	  
	
- and -











  



64







  









	
Milbank, Tweed, Hadley & McCloy LLP

	
One Chase Manhattan Plaza

	
New York, New York 10005

	
Attn:    Matthew S. Barr, Esq.

	
 Brian Kinney, Esq.

	
Telephone:       (212)530-5000

	
Facsimile:          (212)530-5219







 


	
  
	
13.21
	
Section Headings




 

The section headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan.





  



65







  



 

Dated: December 8, 2008

 

 




	  	
Respectfully submitted,

	  	  
	  	
Charys Holding Company, Inc.

	  	
Crochet & Borel Services, Inc.

	  	
Complete Tower Sources, Inc.

	  	
LFC, Inc.

	  	
Mitchell Site Acq. Inc.

	  	
Cotton Commercial USA, Inc.

	  	  	  	  
	  	
By:
	
/s/ Michael F. Oyster
	  
	  	  	
Name:   Michael F. Oyster
	 
	  	  	
Title:     President and

  Chief Executive Officer
	
 










  



66







  



 

EXHIBIT B

 

(to be provided)





  



  







  



 

EXHIBIT C

 

(to be provided)





  



  







  



 

EXHIBIT D





  



  







  





Charys Holding Company, Inc. and Subsidiaries

Condensed Consolidated Projected Statements of Operations





 









	
IN THOUSANDS
	 	
3 Months
	 	 	
12 Months
	 	 	
12 Months
	 	 	
12 Months
	 
	
For the periods ended April 30,
	 	
Feb 2009 -April 2009
	 	 	
FY 2010
	 	 	
FY 2011
	 	 	
FY 2012
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 
	
Net sales
	 	$	26,782	 	 	$	140,204	 	 	$	123,754	 	 	$	129,144	 
	
Cost of goods sold
	 	 	17,350	 	 	 	90,691	 	 	 	76,471	 	 	 	79,643	 
	
Gross profit
	 	 	9,432	 	 	 	49,513	 	 	 	47,283	 	 	 	49,601	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Selling
	 	 	1,185	 	 	 	5,339	 	 	 	4,965	 	 	 	5,131	 
	
General and administrative
	 	 	4,847	 	 	 	20,714	 	 	 	20,830	 	 	 	21,480	 
	
Other expense
	 	 	5,229	 	 	 	3,613	 	 	 	1,598	 	 	 	1,696	 
	
Depreciation and amortization
	 	 	968	 	 	 	820	 	 	 	769	 	 	 	723	 
	
Operating income
	 	 	(2,797	)	 	 	19,027	 	 	 	19,121	 	 	 	20,472	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Interest Expense
	 	 	970	 	 	 	3,831	 	 	 	3,747	 	 	 	3,747	 
	
Income from operations before income tax
	 	 	(3,767	)	 	 	15,196	 	 	 	15,374	 	 	 	16,725	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Income Tax (@39%)*
	 	 	(1,469	)	 	 	5,926	 	 	 	5,996	 	 	 	6,523	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Income
	 	$	(2,298	)	 	$	9,270	 	 	$	9,378	 	 	$	10,202	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Adjusted EBITDA Reconciliation
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Earnings before interest and taxes
	 	$	(2,797	)	 	$	19,027	 	 	$	19,121	 	 	$	20,472	 
	
Other expenses (Including MIP)
	 	 	5,229	 	 	 	3,613	 	 	 	1,698	 	 	 	1,696	 
	
Depreciation and amortization
	 	 	254	 	 	 	820	 	 	 	769	 	 	 	723	 
	
Adjusted EBITDA
	 	$	2,686	 	 	$	23,460	 	 	$	21,488	 	 	$	22,890	 










* Estimated combined effective Federal, Texas. Louisiana and Georgia state tax rates





  



  







  



 

EXHIBIT E





  



  







  





12/8/2008

 

 

Charys Holding Company, Inc.





 

DISCLOSURE STATEMENT

 

EXHIBIT





 

LIQUIDATION ANALYSIS

 

 

The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

Introduction

 

A Chapter 11 plan cannot be confirmed unless the Bankruptcy Court determines that the plan is in the "best interests" of all holders of claims and interests that are impaired by the plan and that have not accepted the plan. The "best interests" test requires a Bankruptcy Court to find either that (i) all members of an
impaired class of claims or interests have accepted the plan or (ii) the plan will provide a member who has not accepted the plan with a recovery of property of a value, as of the effective date of the plan, that is not less than the amount that such holder would recover if the debtor were liquidated under Chapter 7 of the Bankruptcy Code.

 

The Analysis provides for a liquidation of the operating units and is based on the Debtors' balance sheet as of May 31, 2008 (except as indicated). The value available for distribution to creditors as of the date of an actual liquidation may differ from the value used in this Analysis, potentially by a material amount.

 

Conversion of these cases to Chapter 7 likely would result in additional costs to the Estates. Costs of liquidation under Chapter 7 of the Bankruptcy Code would include the compensation of a trustee, as well as of counsel and other professionals retained by the trustee, asset disposition expenses, all unpaid expenses incurred
by the Debtors in the Chapter 11 Cases (such as compensation of attorneys, financial advisors, and restructuring consultants) that arc allowed in the Chapter 7 case, litigation costs, and Claims arising from the operations of the Debtors during the pendency of the Bankruptcy cases. This analysis assumes that the operating subsidiaries not currently in Chapter 11 continue operating as going concerns, therefore limiting the exposure to Chapter 7 expenses. If these subsidiaries were forced to file for bankruptcy
protection, the value of the recovery to the estate would be diminished.

 

In the event of liquidation, the aggregate amount of General Unsecured Claims will no likely increase significantly (as reflected in the higher range estimate), and such Claims will be subordinated to priority claims that will be created. For example, employees likely will file Claims for wages, pensions and other benefits,
some of which will be entitled to priority. Landlords may file large Claims for both unsecured and priority amounts. The resulting increase in both general unsecured and priority Claims will decrease percentage recoveries to Holders of General Unsecured Claims.

 

For purposes of this Analysis, management assumes a liquidation would take place as part of an orderly liquidation sale. Unless explicitly stated elsewhere, recoveries are net of necessary liquidation expenses. If actual results were lower than those shown, or if the assumptions used in formulating the Analysis were not
realized, distribution to each member of each class of Claims could be affected adversely.

 

The Analysis is based on management's good faith assumptions believed to be reasonable in light of the circumstances under which they are based. The Analysis has not been examined or reviewed by independent accountants in accordance with standards promulgated by the American Institute of Certified Public Accountants. The
estimates and assumptions, although considered reasonable by management, are inherently subject to significant uncertainties and contingencies beyond management's control. Accordingly, there can be no assurance that the results shown would be realized if the Debtor's were liquidated, and actual results in such case could vary materially from those presented.

 

 

The accompanying notes are an integral part of the Best Interests Analysis






  



  







  





 

12/8/2008





Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





I.  CALCULATION OF NET ESTIMATED PROCEEDS AVAILABLE FOR ALLOCATION









	 	 	  	 	
Value @

5/31/2008 (a)
	 	 	
Estimated

Recovery Rate

Range
	 	 	
Estimated Recovery

on Collateral
	 	 	
See

Note
	 
	 	 	  	 	 	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	 	 
	A.	
STATEMENT OF ASSETS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
Cash and Equivalents
	 	$	38	 	 	 	100	%	 	 	100	%	 	$	38	 	 	$	38	 	 	 	 
	 	
Holding Company Intercompany Claims (b)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Cotton Commercial USA
	 	 	11,633	 	 	 	16	%	 	 	19	%	 	 	1,832	 	 	 	2,242	 	 	
1
	 
	 	 	
Complete Tower Sources
	 	 	888	 	 	 	2	%	 	 	10	%	 	 	22	 	 	 	86	 	 	
2
	 
	 	 	
LFC
	 	 	12,063	 	 	 	1	%	 	 	1	%	 	 	66	 	 	 	175	 	 	
3
	 
	 	 	
Viasys
	 	 	46,287	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
4
	
 

	 	 	
Aeon Technologies Group
	 	 	21,947	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
4
	 
	 	 	
Cotton Telecom Holdings
	 	 	29	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
4
	 
	 	 	
Digital Communication Services
	 	 	3,041	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
4
	 
	 	 	
Personnel Resources Group
	 	 	1,115	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
4
	 
	 	 	
Method 1Q
	 	 	15,712	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
5
	 
	 	 	
C&B
	 	 	5,731	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
6
	 
	 	
Investment In Subsidiaries (c)
	 	 	18,705	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 	 	
 
	 
	 	
PP&E
	 	 	75	 	 	 	3	%	 	 	8	%	 	 	2	 	 	 	6	 	 	
7
	
 

	 	
Other Assets
	 	 	17,230	 	 	 	0	%	 	 	0	%	 	 	4	 	 	 	80	 	 	
8
	 
	 	 	
Total Assets
	 	$	154,494	 	 	 	1	%	 	 	2	%	 	$	1,964	 	 	$	2,628	 	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
B.
	
RECOVERIES FROM EXERCISE OF AVOIDING POWERS
	 	 	 	 	 	 	 	 	 	 	 	-	 	 	 	4,534	 	 	
9
	 
	 	
C.
	
GROSS PROCEEDS
	 	 	 	 	 	 	 	 	 	 	 	1,964	 	 	 	7,162	 	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
D.
	
CREDITOR RECOVERY EXPENSES (POST-PETITION)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Chapter 7 Trustee Fees (3% of Gross Proceeds)
	 	 	 	 	 	 	 	 	 	 	 	(59	)	 	 	(215	)	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(59	)	 	 	(215	)	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	
Net Estimated Proceeds Available for Allocation
	 	 	$	1,906	 	 	$	6,948	 	 	 	 






 






 



	
(a)
	
Values as of 5/31/08 unless otherwise noted.





	
(b)
	
Values stated represent the net of intercompany receivable and payable balances due to Charys Holding Company as of 3/31/08.





	
(c)
	
Value as of 7/31/07. Management has determined that the amount of secured and unsecured claims at each of the Company's subsidiaries is in excess of the going concern value of each subsidiary. Accordingly, the equity value of each subsidiary is deemed to be zero.












The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008





Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





III.  ALLOCATION OF NET ESTIMATED PROCEEDS TO SECURED, ADMINISTRATIVE AND PRIORITY CLAIMS



































	  	 	
Estimated

Allowable

Claims
	 	 	
Estimated Recovery

on Administrative and

Priority Claims
	 	 	
Estimated

Recovery

Range
	 
	  	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	
Net Estimated Proceeds
	 	 	 	 	 	 	 	$	1,906	 	 	$	6,94S	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Secured Claims (a)
	 	 	1,660	 	 	 	1,660	 	 	 	1,660	 	 	 	1,660	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured Claims
	 	 	 	 	 	 	 	 	 	 	246	 	 	 	5,288	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Chapter 7 Administrative Claims:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Administrative Claims (b)
	 	 	6,300	 	 	 	7,700	 	 	 	246	 	 	 	5,288	 	 	 	4	%	 	 	69	%
	
Total Administrative Claims Distributions
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured and Administrative Claims
	 	 	 	 	 	 	 	 	 	 	-	 	 	 	-	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Less Priority Claims:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Employee Priority Claims (c)
	 	 	-	 	 	 	120	 	 	 	-	 	 	 	-	 	 	 	0	%	 	 	0	%
	
Priority & Property Tax Claims (c)
	 	 	100	 	 	 	200	 	 	 	-	 	 	 	-	 	 	 	0	%	 	 	0	%
	
Total Priority Claims Distributions
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured and Administrative and Priority Claims
	 	 	$	-	 	 	$	-	 	 	 	 	 	 	 	 	 





































	
(a)
	
Imperium amount listed above is the consolidated total due to Imperium, the JED Family Trust and John Michaelson. The amounts above are at settlement value after completion of the Ayin Tower asset sale and the distribution of funds from the escrow account. All amounts assume interest paid on a current basis through 1/31/09.





	
(b)
	
Amount represents estimated Chapter 11 professional fees through September plus open post petition trade A/P.





	
(c)
	
Management's estimate of pre-petition priority claims.












The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)

 

IV.  ALLOCATION OF NET ESTIMATED PROCEEDS TO UNSECURED CLAIMS

 

















































	  	 	
Estimated

Allowable

Claims
	 	 	
Estimated Recovery on Unsecured Claims
	 	  	 	
Estimated

Recovery

Range
	 
	  	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	  	 	
Low
	 	 	
High
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured, Administrative and Priority Claims
	 	 	 	 	 	 	 	$	-	 	 	$	
-
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 
	
Senior Notes
	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 
	
Senior Notes & 3/4% issued 2/16/07 (less Proceeds From Asset Sales) (b)
	 	 	209,960	 	 	 	209,960	 	 	 	-	 	 	
-
	 	
(e)
	 	 	0	%	 	 	0	%
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured, Administrative, Priority Claims, and Senior Noteholder Claims
	 	 	 	 	 	 	 	 	 	$	-	 	 	$	
-
	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Seller Notes (a)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Troy Crochet (b)
	 	 	-	 	 	 	49,002	 	 	 	-	 	 	 	-	 	
(e)
	 	 	0	%	 	 	0	%
	
Cotton
	 	 	-	 	 	 	5,483	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Complete Tower Sources
	 	 	-	 	 	 	14,200	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Mitchell Site Acquisition
	 	 	-	 	 	 	5,400	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Matt Mitchell Senior Note 8 3/4% issued 2/16/07 (b)
	 	 	-	 	 	 	2,759	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Lori Mitchell Senior Note 8 3/4% issued 2/16/07 (b)
	 	 	-	 	 	 	2,737	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Carrol Castille Senior Note 8 3/4% issued 2/16/07 (b)
	 	 	-	 	 	 	3,025	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Digital Communications
	 	 	-	 	 	 	440	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Viasys
	 	 	-	 	 	 	346	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Total Sellers Note Claims Distributions
	 	 	-	 	 	 	83,392	 	 	 	-	 	 	 	-	 	  	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
General Unsecured Claims: (c)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
HarPos (b)
	 	 	947	 	 	 	947	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Sean Posner (b)
	 	 	359	 	 	 	359	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Steven Posner (b)
	 	 	359	 	 	 	359	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Mel Harris (b)
	 	 	359	 	 	 	359	 	 	 	-	 	 	 	
-
	 	  	 	 	0	%	 	 	0	%
	
Mitchell Site Acquisition Intercompany
	 	 	2,062	 	 	 	2,062	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Ayin Tower Management Intercompany
	 	 	4,948	 	 	 	4,948	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Trade Payables
	 	 	4,203	 	 	 	4,203	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Secured Lender Deficiency Claim
	 	 	-	 	 	 	-	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Preference Recoveries
	 	 	-	 	 	 	4,534	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Unsecured Employee Claims (d)
	 	 	1,537	 	 	 	2,662	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Total General Unsecured Claims Distributions
	 	 	14,774	 	 	 	20,433	 	 	 	-	 	 	 	-	 	  	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Total Senior Notes, Seller Notes, and General Unsecured Distributions
	 	$	224,734	 	 	$	313,785	 	 	$	-	 	 	$	-	 	
(e)
	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured, Administrative, Priority Claims, Senior Noteholder Claims, Seller Noteholder Claims And General Unsecured Claims
	 	 	 	 	 	 	 	 	 	 	-	 	 	 	-	 	  	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Subordinated Debt
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Castlerigg (b)
	 	 	4,242	 	 	 	4,242	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
UBS (b)
	 	 	1,415	 	 	 	1,415	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Gottbetter (b)
	 	 	7,781	 	 	 	7,781	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Vision - Sands Bros (b)
	 	 	523	 	 	 	523	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	
Jade Special Strategy (b)
	 	 	389	 	 	 	389	 	 	 	-	 	 	 	-	 	  	 	 	0	%	 	 	0	%
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 
	
Total Subordinated Debt Distributions
	 	$	14,350	 	 	$	14,350	 	 	$	-	 	 	$	-	 	 	 	 	 	 	 	 	 	 


















































 


	 	
(a)
	
Lower end range of seller notes reflects that there may be avoidance actions against the note holders which may reduce or eliminate these claims.





	 	
(b)
	
Includes estimated amounts for accrued interest.





	 	
(c)
	
Other General Unsecured Claims represent various accruals but excludes warranty and other customer obligations.





	 	
(d)
	
Low employee claims calculated based on accrued bonus amounts as of 2/14/08. High employee claim amounts assumes one year of severance for each employee under contract.





	 	
(e)
	
If Subordination Agreement and Troy Crochet claim arc valid, proceeds of Senior Note claim would go to Troy Crochet.








 

The accompanying notes arc an integral part of the Best Interests Analysis







  



  







  







12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





Note I - Intercompany Receivable from Cotton





The following schedule estimates (the value of certain secured and unsecured claims against Cotton Commercial USA, Inc. The tow range of this analysis is based on a forced liquidation of the subsidiary's assets as stated
below. The high range is based on going concern value of the subsidiary. This analysis is based on the operation of the subsidiary as a going concern. Going concern value was derived from EBITDA, CapEx and Working Capital estimates provided by the management of this subsidiary.

 















	  	 	
Principal

and Accrued

Interest
	 	 	 	
Estimated Recovery

on Secured and Unsecured Claims
	 	 	
Estimated

Recovery

Range
	 
	  	 	 	 	 	 	 	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	
Value Available For Distribution (a)
	 	 	 	 	 	 	 	 	$	47,400	 	 	$	49,500	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Secured Claims:
	 	
Low
	 	 	
High
	 	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
New Stream (b)
	 	 	8,777	 	 	 	5,722	 	 	 	 	8,777	 	 	 	5,722	 	 	 	100	%	 	 	100	%
	
Equipment Lenders
	 	 	1,069	 	 	 	1,069	 	 	 	 	1,069	 	 	 	1,069	 	 	 	100	%	 	 	100	%
	
Total Secured Claims
	 	 	9,846	 	 	 	6,791	 	 	 	 	9,846	 	 	 	6,791	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Value After Secured Claims
	 	 	 	 	 	 	 	 	 	 	 	37,554	 	 	 	42,709	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Valuation of Unsecured Claims
	 	
Low
	 	 	
High
	 	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Senior Notes 8 3/4% Issued 2/16/07
	 	 	209,960	 	 	 	209,960	 	 	 	 	33,067	 	 	 	40,466	 	 	 	16	%	 	 	19	%
	
Accounts Payable And Accrued Liabilities
	 	 	16,849	 	 	 	-	 	(d)	 	 	2,654	 	 	 	-	 	 	 	16	%	 	 	0	%
	
Charys Holding Company Intercompany Payable (b)
	 	 	11,633	 	 	 	11,633	 	 	 	 	1,832	 	 	 	2,242	 	 	 	16	%	 	 	19	%
	
Ayin Tower Management Intercompany Payable
	 	 	5	 	 	 	5	 	 	 	 	1	 	 	 	1	 	 	 	16	%	 	 	19	%
	
LFC Intercompany Payable
	 	 	1	 	 	 	1	 	 	 	 	0	 	 	 	0	 	 	 	16	%	 	 	19	%
	
Total Unsecured Claims
	 	 	238,448	 	 	 	221.599	 	 	 	$	37,554	 	 	$	42,709	 	 	 	 	 	 	 	 	 
















 







 


	
(a)
	
Low value based on a forced liquidation value equal to net receivables valued at 85%. net property, plant and equipment valued at 50% plus cash. High value based on estimated going concern value.





	
(b)
	
Based on average revolver balances for the period between 10/17/08 and 11/14/08. Also includes New Stream success fee of $300,000 payable upon termination of the secured lending facility,





	
(c)
	
Net of Intercompany payables and receivables due to Charys Molding Company as of 3/31/08.





	
(d)
	
In the high value accounts payable and accrued liabilties would be assumed by company as part of the going concern valuation.












The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





Note 2 - Intercompany Receivable from CTSI





The following schedule estimates the value of certain secured and unsecured claims against Cotton Commercial USA, Inc. The low range of this analysis is based on a forced liquidation of the subsidiary's assets as stated below. The high range is based on going concern value of the subsidiary. This analysis is based on the
operation of the subsidiary as a going concern. Going concern value was derived from EBITDA, CapEx and Working Capital estimates provided by the management of this subsidiary.

 













	  	 	
Principal

and Accrued

Interest
	 	 	 	
Estimated Recovery

on Secured and Unsecured Claims
	 	 	
Estimated

Recovery

Range
	 
	  	 	 	 	 	 	 	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	
Value Available For Distribution (a)
	 	 	 	 	 	 	 	 	$	9,900	 	 	$	23,100	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Secured Claims:
	 	
Low
	 	 	
High
	 	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
New Stream (b)
	 	 	4,384	 	 	 	2,297	 	 	 	 	4,384	 	 	 	2,297	 	 	 	100	%	 	 	100	%
	
Equipment Lenders
	 	 	273	 	 	 	273	 	 	 	 	273	 	 	 	273	 	 	 	100	%	 	 	100	%
	
Total Secured Claims
	 	 	4,657	 	 	 	2,570	 	 	 	 	4,657	 	 	 	2,570	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Value After Secured Claims
	 	 	 	 	 	 	 	 	 	 	 	5,243	 	 	 	20,530	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Value of Unsecured Claims
	 	
Low
	 	 	
High
	 	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Senior Notes 8 3/4% Issued 2/16/07
	 	 	209,960	 	 	 	209,960	 	 	 	 	5,140	 	 	 	20,378	 	 	 	2	%	 	 	10	%
	
Accounts Payable And Accrued Liabilities
	 	 	2,630	 	 	 	-	 	(d)	 	 	64	 	 	 	-	 	 	 	2	%	 	 	0	%
	
Charys Holding Company Intercompany Payable (c)
	 	 	888	 	 	 	888	 	 	 	 	22	 	 	 	86	 	 	 	2	%	 	 	10	%
	
Mitchell Site Acquisition Intercompany Payable
	 	 	681	 	 	 	681	 	 	 	 	17	 	 	 	66	 	 	 	2	%	 	 	10	%
	
Total Unsecured Claims
	 	 	214,159	 	 	 	211,529	 	 	 	$	5,243	 	 	$	20,530	 	 	 	 	 	 	 	 	 














 







 


	
(a)
	
Low value based on a forced liquidation value equal to net
receivables valued at 85%, net property, plant and equipment valued at 50% plus cash. High value based on estimated going concern value.





	
(b)
	
Based on average revolver balances for the period between 10/17/08 and 11/14/08.





	
(c)
	
Net of Intercompany payables and receivables due to Charys Holding Company as of 3/31/08.





	
(d)
	
In the high value accounts payable and accrued liabilities would be assumed by company as part of the going concern valuation.




 





The accompanying notes are an integral part of the Best Interests Analysis





  



  







  






12/8/2008








Charys Holding Company, Inc.



Liquidation Analysis



($ in 000s)









Note 3 - Intercompany Receivable from LFC, Inc.









The following schedule estimates the value of certain secured and unsecured claims against Cotton Commercial USA, Inc. The low range of this analysis is based on a forced liquidation of the subsidiary's assets as stated below. The high range is based on going concern value of the subsidiary. This analysis is based on the operation of the subsidiary
as a going concern. Going concern value was derived from EBITDA, CapEx and Working Capital estimates provided by the management of this subsidiary.



 




	  	 	

Principal



and Accrued



Interest

	 	 	 	

Estimated Recovery



on Secured and Unsecured Claims

	 	 	

Estimated



Recovery



Range

	 
	 	 	 	 	 	 	 	 	 	

Low

	 	 	

High

	 	 	

Low

	 	 	

High

	 
	
Value Available For Distribution (a)
	 	 	 	 	 	 	 	 	$	1,700	 	 	$	3,700	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Secured Claims:

	 	

Low

	 	 	

High

	 	 	 	

Low

	 	 	

High

	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Equipment Lenders

	 	 	477	 	 	 	477	 	 	 	 	477	 	 	 	477	 	 	 	100	%	 	 	100	%
	

Total Secured Claims

	 	 	477	 	 	 	477	 	 	 	 	477	 	 	 	477	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Net Estimated Value After Secured Claims

	 	 	 	 	 	 	 	 	 	 	 	1,223	 	 	 	3,223	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Value of Unsecured Claims

	 	

Low

	 	 	

High

	 	 	 	

Low

	 	 	

High

	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Senior Notes 8 3/4% Issued 2/16/07

	 	 	209,960	 	 	 	209,960	 	 	 	 	1,153	 	 	 	3,048	 	 	 	1	%	 	 	1	%
	

Accounts Payable And Accrued Liabilities

	 	 	690	 	 	 	-	 	(c)	 	 	4	 	 	 	-	 	 	 	1	%	 	 	0	%
	

Charys Holding Company Intercompany Payable (b)

	 	 	12,063	 	 	 	12,063	 	 	 	 	66	 	 	 	175	 	 	 	1	%	 	 	1	%
	

Viasys Intercompany Payable

	 	 	1	 	 	 	1	 	 	 	 	0	 	 	 	0	 	 	 	1	%	 	 	1	%
	

Total Unsecured Claims

	 	$	222,714	 	 	$	222,024	 	 	 	$	1,223	 	 	$	3,223	 	 	 	 	 	 	 	 	 




 








 


	
(a)
	
Low value based on a forced liquidation value equal to net receivables valued at 85%, net property, plant and equipment valued at 50% plus cash. High value based on estimated going concern value.







	
(b)
	
Net of Intercompany payables and receivables due to Charys Holding Company as of 3/31/08.







	
(c)
	
In the high value accounts payable and accrued liabilities would be assumed by company as part of the going concent valuation.













The accompanying notes arc an integral part of the Best Interests Analysis





  



  







  






12/8/2008









Charys Holding Company, Inc.



Liquidation Analysis



($ in 000s)









Note 4 - Other Intercompany Claims









The following intercompany claims relate to subsidiaries which are either non-operational or which Management has determined have diminimus value.



 




	  	 	

Intercompany

	 	 	

Recovery Rate



Range

	 	 	

Estimated Proceeds



Range

	 
	  	 	

Claim (f)

	 	 	 	 	 	 	 
	

Company

	 	

3/31/2008

	 	 	

Low

	 	 	

High

	 	 	

Low

	 	 	

High

	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	

Viasys, Inc. (a)

	 	$	46,287	 	 	 	0	%	 	 	0	%	 	$	-	 	 	$	-	 
	

Aeon Technologies Group, Inc. (b)

	 	 	21,947	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	

Cotton Telecom Holdings, Inc. (c)

	 	 	29	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	

Digital Communication Services, Inc. (d)

	 	 	3,041	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	

Personnel Resources Group Of Georgia (e)

	 	 	1,115	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	

Total Other Intercompany Claims

	 	$	72,419	 	 	 	0	%	 	 	0	%	 	$	-	 	 	$	-	 





 




	 	
(a)
	
Management has determined the going concern value of Viasys, Inc. to be diminimus based on its operating profile, the loss of certain key customers, and the fact that it has experienced negative cash flow from its operations over the course of the last two years.







	 	
(b)
	
Aeon Technologies Group, Inc. sold it primary operating asset, Aeon Technologies, inc. in November 2007. The operations of its other subsidiary, Berkshire Wireless, were discontinued March 2008.







	 	
(c)
	
Cotton Telecom Holdings, Inc.'s only assets are the equity in Complete Tower Sources, Inc., Mitchell Site Acq., Inc. and LFC, Inc, The secured and unsecured claims against these three subsidiaries exceed the going concern value of these subsidiaries,







	 	
(d)
	
DCS is immaterial in size and has secured debt of $1.0MM.







	 	
(e)
	
The operations of Personnel Resources Group Of Georgia, (Inc. were discontinued in Fiscal Year 2007. (f) Net of Intercompany payables and receivables due to Charys Holding Company as of 3/31/08.







	 	
(f)
	
Net of Intercompany payables and receivables due to Charys Holding Company as of 3/31/2008.

















The accompanying notes arc an integral part of the Best Interests Analysis





  



  







  






12/8/2008



 

Charys Holding Company, Inc.



Liquidation Analysis



($ in 000s)









Note 5 - Method IQ Asset Sale









Method IQ completed a transaction with Phoenix Transformational Technologies ("PTT") in January 2008. Method IQ received $250K in proceeds with the potential for an additional payments upon the achievement of certain targets. Additionally, certain liabilities were not assumed as part of this transaction, as designated below. For purposes of
this analysis, the potential recovery to creditors is being excluded from total recoveries.  Such recovery has the same value under the Debtors' plan of reorganization as under a liquidation scenario, and thus it can be excluded from both when evaluating whether the Debtors' plan is in the best interest of all creditors.



 

























	  	 	 	 	 	
Recovery Rate

Range
	 	 	
Estimated Proceeds

Range
	 
	
Method IQ Assets
	 	

Est. Value



10/31/2008

	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Cash on Hand
	 	$	2	 	 	 	100	%	 	 	100	%	 	$	2	 	 	$	2	 
	
Potential Renewal Proceeds (a)
	 	 	250	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	2	 
	
Potential Assignment Payments (b)
	 	 	53	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	13	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Total Value Available For Distribution
	 	$	305	 	 	 	1	%	 	 	5	%	 	 	2	 	 	$	15	 























































	  	 	 	 	 	
Liability

Range
	 	 	
Estimated Disbursement

Range
	 
	
Method IQ Liabilities and Obligations
	 	
Est. Value

10/31/2008
	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	
Accounts Payable (c)
	 	$	135	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Current Past Due Lease Obligations (d)
	 	 	27	 	 	 	0	%	 	 	0	%	 	 	0	 	 	 	0	 
	
Future Lease Obligations (d)
	 	 	499	 	 	 	0	%	 	 	0	%	 	 	0	 	 	 	0	 
	
Sales Tax Obligations (e)
	 	 	57	 	 	 	0	%	 	 	0	%	 	 	0	 	 	 	0	 
	
Employee Obligations (f)
	 	 	58	 	 	 	0	%	 	 	0	%	 	 	0	 	 	 	0	 
	
Charys Holding Company Intercompany Payable (g)
	 	 	15,712	 	 	 	0	%	 	 	0	%	 	 	2	 	 	 	14	 
	
Net Proceeds Available for Unsecured Claims
	 	$	16,488	 	 	 	0	%	 	 	0	%	 	$	2	 	 	$	15	 





































	
(a)
	
These proceeds will only be paid in the event PTT completes a renewal contract with AT&T for a period of 1 year.





	
(b)
	
These payments are based on a percentage of gross revenues generated by PTT on the assigned AT&T contract.





	
(c)
	
Accounts payable includes amounts for Dell ($30) and Lucent ($30) which are currently being disputed.





	
(d)
	
Estimated future lease obligations based on contract through 2012. Company attempting to sublease space.





	
(e)
	
Sales tax for sales in Georgia and South Carolina. Amounts currently in dispute.





	
(f)
	
Severance obligations for 4 employees, Company currently disputing the obligation.





	
(g)
	
Net of Intercompany payables and receivables due to Charys Holding Company as of 3/31/08.








 


The accompanying notes are an integral part of the Best Interests Analysis







  



  







  




12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysts

($ in 000s)





Note 6 - C&B Asset Disposal





The liquidation of C&B assets would include the collection of all remaining outstanding receivables and the sale of its equipment. The amounts collected would be offset by secured debt and payables to LVI, which currently has liens on certain properties in which C&B did work. C&B creditors would be paid from
the proeeeds generated by C&B the collection of sale of C&B'S assets. For purposes of this analysis, the potential recovery to creditors is being excluded from total recoveries. Such recovery has the same value under the Debtors' plan of reorganization as under a liquidation scenario, and thus it can be excluded from both when evaluating whether the Debtors' plan is in the best interest of all creditors.

 



	  	 	
 

Estimated Value 11/14/08
	 	 	
Estimated Recovery

on Secured and Unsecured Claims
	 	 	
Estimated

Recovery

Range
	 
	  	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	
Cash On Hand
	 	$	703	 	 	$	703	 	 	$	703	 	 	$	703	 	 	 	100	%	 	 	100	%
	
Machinery & Equipment
	 	 	1,255	 	 	 	1,255	 	 	 	126	 	 	 	188	 	 	 	10	%	 	 	15	%
	
Receivable Collections
	 	 	21,555	 	 	 	21,555	 	 	 	2,156	 	 	 	10,778	 	 	 	10	%	 	 	50	%
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Gross Estimated Proceeds Available For Distribution
	 	 	25,843	 	 	 	 	 	 	 	2,984	 	 	 	11,669	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Secured Claims:
	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Equipment Lenders (a)
	 	 	335	 	 	 	335	 	 	 	335	 	 	 	335	 	 	 	100	%	 	 	100	%
	
Total Secured Claims
	 	 	335	 	 	 	335	 	 	 	335	 	 	 	335	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured Claims
	 	 	 	 	 	 	 	 	 	 	2,649	 	 	 	11,334	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Admin Claims:
	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Chapter 7 Trustee Fees (3% of Gross Proceeds)
	 	 	90	 	 	 	350	 	 	 	90	 	 	 	350	 	 	 	100	%	 	 	100	%
	
Other Professional Fees (12 Month Period) (b)
	 	 	500	 	 	 	350	 	 	 	500	 	 	 	350	 	 	 	100	%	 	 	100	%
	
Total Secured Claims
	 	 	590	 	 	 	700	 	 	 	590	 	 	 	700	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured and Admin Claims
	 	 	 	 	 	 	 	 	 	 	2,059	 	 	 	10,634	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Distribution to LVI
	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
LVI Payables (c)
	 	 	7,728	 	 	 	7,728	 	 	 	2,059	 	 	 	7,728	 	 	 	27	%	 	 	100	%
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Estimated Proceeds After Secured, Admin and LVI Claims
	 	 	 	 	 	 	 	 	 	 	-	 	 	 	2,906	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Distribution To Unsecured Creditors
	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Charys Holding Company Intercompany Payable (d)
	 	 	5,731	 	 	 	5,731	 	 	 	-	 	 	 	883	 	 	 	0	%	 	 	15	%
	
Cotton Commercial USA Intercompany Payable (e)
	 	 	269	 	 	 	269	 	 	 	-	 	 	 	41	 	 	 	0	%	 	 	15	%
	
Mike Thomas
	 	 	1,224	 	 	 	1,224	 	 	 	-	 	 	 	189	 	 	 	0	%	 	 	15	%
	
Other Payables
	 	 	11,638	 	 	 	11,638	 	 	 	-	 	 	 	1,793	 	 	 	0	%	 	 	15	%
	
Total Unsecured Claims
	 	 	18,862	 	 	 	18,862	 	 	$	-	 	 	$	2,906	 	 	 	 	 	 	 	 	 




 






 



	
(a)
	
This debt in currently secured by certain equipment owned by C&B.





	
(b)
	
Amount based on Management's estimate- of the professional fees necessary to collect receivables outstanding and to manage an orderly liquidation of the equipment and other assets of the estate.





	
(c)
	
LVI currently maintains liens on certain properties in which it has performed services. The Debtor filed a stipulation with the Court indicating that LVI claims will be satisfied upon collection of receivables,





	
(d)
	
Net of Intercompany payables and receivables due to Charys 1 Holding Company as of 3/31/08.





	
(e)
	
Net of Intercompany payables and receivables due to Cotton Commercial USA, Inc. as of 3/31/08,












The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





Note 7 - Net PP&E - Owned and Leased





Net PP&E is comprised of buildings and improvements and Computer Equipment.





PP&E such as Leasehold Improvements would be expected to have negligible or no liquidation value. Computer Hardware would be expected to yield marginal amounts on the dollar.





Assumed recoveries from the sale of these items were based upon management's best estimate from prior dispositions.
























	  	 	 	 	 	
Recovery Rate

Range
	 	 	
Estimated Proceeds

Range
	 
	
 

PP&E
	 	
Balance @ 10/31/2008
	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Computer
	 	$	47	 	 	 	5	%	 	 	10	%	 	$	2	 	 	$	5	 
	
Furniture and Fixtures
	 	 	28	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	1	 
	
Total PP&E
	 	$	75	 	 	 	 	 	 	 	 	 	 	$	2	 	 	$	6	 





























The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





Note 8 - Other Current Assets





Other assets primarily relate to miscellaneous receivables, prepaid financing costs and other prepaid assets. These assets have a low chance of recoverability.
























	  	 	 	 	 	
Recovery Rate

Range
	 	 	
Estimated Proceeds

Range
	 
	
Other Current Assets
	 	
Balance @

10/31/2008
	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Other Receivables
	 	$	106	 	 	 	0	%	 	 	50	%	 	$	 	 	 	$	53	 
	
Prepaid insurance and other expenses
	 	 	89	 	 	 	5	%	 	 	30	%	 	 	4	 	 	 	27	 
	
Retainers
	 	 	738	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	
Deposits
	 	 	18	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	
Acquisition Cost
	 	 	844	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	
Deferred Financing Costs
	 	 	15,435	 	 	 	0	%	 	 	0	%	 	 	-	 	 	 	-	 
	
Total Other Current Assets
	 	$	17,230	 	 	 	0	%	 	 	0	%	 	$	4	 	 	$	80	 





























The accompanying notes are an integral part of the Best Interests Analysis





  



  







  





12/8/2008

 

Charys Holding Company, Inc.

Liquidation Analysis

($ in 000s)





Note 9- Recoveries From Avoidance Actions





It is likely in a Chapter 7 liquidation that the trustee would seek to recover on certain causes of action, including preferences fro payments made in the 90 days prior to filing (365 days for insiders) and fraudulent conveyances related to the acquisition of certain subsidiaries. For purposes of this Analysis, management
has estimated the recoveries net of all potential setoffs, recoupment and other defenses and claims that are likely to be asserted by the preference defendants as being between 0% and 50% of the estimated payments made in the applicable pre-filing period. This depiction is without prejudice to the Debtors' right to challenge those defenses and claims. The Debtors' recognize that an unsecured claim will be allowed for each amount recovered.

 

















	  	  	 	 	 	 	
Estimated

Recovery Range
	 	 	
Estimated

Recovery Range
	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Component
	  	 	
Estimated Claim
	 	 	
Low
	 	 	
High
	 	 	
Low
	 	 	
High
	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Payments to insiders
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Released Parties
	
(a)
	 	$	1,456	 	 	 	0	%	 	 	10	%	 	$	-	 	 	$	146	 
	
Unreleased Parties
	
(b)
	 	 	2,886	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Payments to Third Parties
	
(a)
	 	 	4,118	 	 	 	0	%	 	 	10	%	 	 	-	 	 	 	412	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Seller Preference Actions
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Lori Mitchell
	
(a)
	 	 	37,200	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	1,860	 
	
Matt Mitchell
	
(a)
	 	 	18,600	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	930	 
	
Carrol Castille
	
(a)
	 	 	7,800	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	390	 
	
Pete Bell
	
(a)
	 	 	7,256	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	363	 
	
Daryn Ebrecht
	
(a)
	 	 	7,256	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	363	 
	
Bryan Michalsky
	
(a)
	 	 	1,426	 	 	 	0	%	 	 	5	%	 	 	-	 	 	 	71	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Seller Fraudulent Transfer Claims
	
(c)
	 	 	-	 	 	 	0	%	 	 	10	%	 	 	-	 	 	 	-	 
	
Crochet & Borel Fraudulent Transfer Claim
	
(d)
	 	 	30,800	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Net Preferences and Seller Recoveries
	  	 	$	 118,798	 	 	 	0	%	 	 	4	%	 	 	-	 	 	$	4,534	 


















 


	
(a)
	
High end recovery based on analysis of the payments made to these parties and an assesment of potential defenses against these avoidance actions.




 


	
(b)
	
For purposes of this analysis, no estimate is made for the potential recovery of causes of action related to the payments to insiders which will not be released as part of the Debtor's plan. Such cause of action has the same value under the Debtors' plan of reorganization as under a liquidation scenario, and thus it can be excluded from both when evaluating whether the Debtors' plan is in the best
interest of all creditors.




 


	
(c)
	
For purposes of this analysis, it is assumed that the cash amounts paid in connection with the various acquisitions is less then the previous market value of the respective businesses at the time of the acquisition and therefore no amount is available for recovery.




 


	
(d)
	
For purposes of this analysis, no estimate is made for the potential recovery of causes of action related to the C&B acquisition. Such cause of action has the same value under the Debtors' plan of reorganization as under a liquidation scenario, and thus it can be excluded from both when evaluating whether the Debtors' plan is in the best interest of all creditors.












The accompanying notes are an integral part of the Best Interests Analysis