Document:

Exhibit 10.16

    
      
        

      

    

    PARTICIPATION
      AGREEMENT 

    (Acom
      A6 Prospect, Chambers County, Texas)

    

    This
      Participation Agreement ("Agreement") is made and entered into effective as
      of
      the 14th day of June, 2005 ("Effective Date"), by and between Kerr-McGee Oil
      & Gas Onshore LP, d/b/a KMOG Onshore LP (hereinafter "Kerr-McGee") and Ignis
      Petroleum Corporation, (hereinafter "Participant"). Kerr-McGee and Participant
      are sometimes hereinafter referred to, individually, as a "Party" and,
      collectively, as the "Parties".

    

    WHEREAS,
      Kerr-McGee owns or has the right to acquire certain interests in and to the
      oil
      and gas leases identified on Exhibit "A", which is attached hereto and made
      a
      part hereof (the "Leases");

    

    WHEREAS,
      Participant has expressed a desire to participate with Kerr-McGee in the
      drilling of a test well in search of oil or gas on the Leases or portions
      thereof and in the further development of the Leases, if warranted;
      and

    

    WHEREAS,
      subject
      to the terms and conditions hereinafter contained, and, subject to Participant
      fulfilling certain requirements set out in this Agreement, KMG agrees to assign
      unto Participant an undivided 25% of Kerr-McGee's leasehold interest in and
      to
      the Leases, subject to the reservation by Kerr-McGee of the overriding royalty
      interest provided for below.

    

    NOW,
      THEREFORE,
      for and
      in consideration of the mutual covenants and promises herein contained, the
      Parties hereby agree as follows:

    

    
      	
              1.

            	
              TEST
                WELL.

            

    

    

    On
      or
      before August 14, 2005 ("Commencement Date"), KMG will commence or cause to
      be
      commenced operations for the drilling of a test well ("Test Well") in search
      of
      oil and/or gas at a location of Kerr-McGee's choice on the Leases. The Test
      Well
      will be drilled with due diligence and in a good and workmanlike manner to
      a
      depth sufficient to test the Tex Miss formation as seen in the
      Induction/Density-Neutron log for the Janet MacCarthy No. 9 Well between the
      depths of 10,568 and 10,612 (TVD) located in Section 93, A-155, Chambers County,
      Texas, or to a depth of 11,500' (TVD) beneath the surface of the earth,
      whichever is the lesser depth (the "Objective Depth"), unless "Impenetrable
      Conditions", as that term is hereinafter defined, are encountered prior to
      reaching the Objective Depth. The term "Impenetrable Conditions" as used in
      this
      Agreement shall mean formations, conditions (such as heaving shale) or
      mechanical problems that would render further drilling operations by a prudent
      operator uneconomical or impracticable. To the extent not in conflict with
      the
      terms of this Agreement, the Parties agree to be bound by, and all operations
      on
      the Test Well shall be governed by, the terms and provisions of the Operating
      Agreement attached hereto and made a part hereof as Exhibit "B" ("JOA"). Upon
      reaching the Objective Depth, Kerr-McGee shall cause such logs and tests to
      be
      made as it deems prudent under the circumstances.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    During
      the drilling of the Test Well, Participant's representatives shall be allowed
      access to the derrick floor of the Test Well at their sole risk and expense,
      provided they are and remain in compliance with Kerr-McGee's environmental,
      health and safety standards. Prior to running any logging device, coring,
      conducting any formation test(s), or conducting any other similar type test(s),
      Kerr-McGee will first give Participant notice in sufficient time to allow its
      representatives to be present to witness the event. Kerr-McGee will furnish
      Participant all data relative to the drilling well(s) in accordance with
      Participant's well requirement information. Any notice required hereunder to
      be
      given to Participant shall be sent to the address, telephone, email, or fax
      numbers, as the case may be, set forth in Section 7 below.

    

    If
      Impenetrable Conditions are encountered prior to reaching the Objective Depth,
      Kerr-McGee shall have the option of attempting to complete the well as a
      commercial producer of oil and/or gas at a lesser depth if it appears that
      a
      completion attempt is warranted, or, if in Kerr-McGee's opinion a completion
      attempt at a lesser depth is not warranted, then, subject to the provisions
      of
      the immediately following sentence, Kerr-McGee may plug and abandon the Test
      Well, the costs of which shall be borne 65% by Kerr-McGee and 35% by
      Participant. Participant shall have twenty-four (24) hours after notice from
      Kerr-McGee stating that it has determined the Test Well should be plugged and
      abandoned in which to elect to take over the Test Well and become solely
      responsible for any and all costs and expenses associated with any future
      operations on the well, including plugging and abandoning the well. Failure
      of
      Participant to respond within such period of time shall be deemed a response
      by
      Participant to elect to plug and abandon the well.

    

    If
      Impenetrable Conditions are encountered in the Test Well prior to reaching
      the
      Objective Depth and:

    

    
      	 	
              i)

            	
              both
                Parties elect to complete the well at a depth that is less than the
                Objective Depth, then Participant shall have earned a 25.00% leasehold
                interest in and to the well bore of the Test Well, limited in depth
                to one
                hundred feet (100') below the deepest producing perforations in the
                well,
                and subject to the reservation of the overriding royalty interest
                described in Section 5 below; or

            

    

    
      	 	
              ii)

            	
              Kerr-McGee
                elects not to participate in the completion attempt for the well
                and
                Participant does elect to attempt to complete the well, then Participant
                shall have earned a 100% interest in and to the well bore only of
                the Test
                Well, subject to the depth limitation set forth immediately above
                and the
                reservation of the overriding royalty interest described in Section
                5
                below; or

            

    

    
      	 	
              iii)

            	
              Participant
                elects not to participate in the completion attempt for the well
                and
                Kerr-McGee elects to attempt to complete the well, then Participant
                shall
                not have earned an interest in the well bore of the Test Well and,
                if both
                Parties elect to drill a substitute well as provided in Section 3
                below,
                any assignment earned by Participant in the drilling of the substitute
                well shall be less and except the well bore of the Test Well completed
                at
                such lesser depth.

            

    

    

    The
      non-consent provisions of Article VI.B.2 of the JOA shall not apply in the
      case
      of a well that is proposed to be completed at a depth that is less than the
      Objective Depth as a result of encountering Impenetrable
      Conditions.

    

    Any
      interest earned by Participant under the provisions of this Section l. shall
      be
      assigned to it by Kerr-McGee within thirty (30) days after the date on which
      the
      completion rig for the well has been released.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              2.

            	
              CASING
                POINT ELECTION FOR TEST
                WELL.

            

    

    

    When
      the
      Test Well has reached the Objective Depth and all tests have been completed,
      and
      the results thereof furnished to Participant, Kerr-McGee shall give notice
      to
      Participant, and Participant shall have twenty-four (24) hours from receipt
      of
      such notice hick to elect whether or not it desires to participate in the
      setting of casing and the completion attempt of the Test Well. Failure of
      Participant to respond within such twenty-four (24) hour period shall be deemed
      a response to not participate in the completion attempt. If both Parties elect
      to set casing and attempt completion of the Test Well, then all further
      operations on the Test Well shall be conducted under the terms of the
      JOA.

    

    If
      a
      Party elects not to participate in the completion attempt of the Test Well
      at
      the Objective Depth ("Non-Consenting Party"), then the non-consent provisions
      of
      Article VI.B.2. of the JOA shall apply to the Non-Consenting Party's interest
      in
      the Test Well. 

    

    
      	
              3.

            	
              SUBSTITUTE
                TEST WELL.

            

    

    

    In
      the
      event Impenetrable Conditions which render further drilling impracticable are
      met prior to reaching the Objective Depth in the Test Well, then, subject to
      the
      provisions of Section 1 above, for a period of ninety (90) days after making
      the
      election, either Party shall have the right to drill a substitute Test Well
      to
      the Objective Depth on the Leases or on lands pooled therewith. The substitute
      Test Well shall be drilled under the same terms as the Test Well and the
      substitute Test Well shall be deemed to be the Test Well for all purposes under
      this Agreement. If both Parties elect to drill the substitute Test Well, then
      such well shall be drilled by Kerr-McGee. If neither Party elects to drill
      the
      substitute Test Well or if only Kerr-McGee elects to drill the substitute Test
      Well, then this Agreement shall terminate. If Participant is the only Party
      electing to drill the substitute Test Well, then it shall have the right to
      do
      so and if it is drilled to the Objective Depth, Participant shall earn an
      assignment of 100% of Kerr-McGee's right, title and interest in and to the
      Lease(s) and the well shall not be subject to the provisions of the JOA),
      subject to the reservation of the overriding royalty interest described in
      Section 5 below. In such event, the Leases and the well shall no longer be
      subject to the provisions of the JOA.

    

    

    
      	
              4.

            	
              EXPENSES
                FOR DRILLING THE TEST
                WELL.

            

    

    

    Participant
      shall bear and pay, in the percentages set forth below, its share of the costs
      and expenses described below. Such payment shall be due and payable to
      Kerr-McGee on or before fifteen (15) days after receipt of an invoice or
      invoices for such costs or any portion thereof. Kerr-McGee shall have the right
      to "cash call" Participant for Participant's estimated share of such costs
      and
      expenses and the provisions of Article XV. of the JOA shall apply in the event
      of any cash calls and the failure of Participant to timely pay such cash
      calls.

    

    A.
      35% of
      the costs and expenses incurred in drilling the Test Well (and any substitute
      well therefor) to casing point, or to a lesser depth if Impenetrable Conditions
      are encountered in the well, and in plugging and abandoning the well if no
      completion attempt is made. The term "casing point" shall mean that point in
      time when the Test Well has been drilled to the Objective Depth, logged,
      evaluated and Kerr-McGee has notified Participant that a completion attempt
      will
      be made.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    B.
      Participant shall pay none of the costs and expenses, including brokerage fees
      and leasehold bonus, incurred in connection with acquiring the Leases for the
      Test Well.

    

    C.
      25% of
      the costs and expenses incurred in completing the Test Well (and any substitute
      well therefor) and in equipping the same for production.

    

    D.
      35% of
      the costs for drilling title examination, curative work and brokers' fees for
      the test well (and any substitute well therefore) and 25% of subsequent title
      costs.

    

    
      	
              5.

            	
              INTEREST
                EARNED BY DRILLING TO OBJECTIVE
                DEPTH.

            

    

    

    At
      such
      time as the Test Well has reached the Objective Depth and Participant has
      elected whether or not to participate in the completion of the well at the
      Objective Depth or at a lesser depth if Kerr-McGee has recommended to complete
      the well at a depth shallower than the Objective Depth, Participant shall have
      earned an undivided 25% of Kerr-McGee's leasehold interest in and to the Leases,
      subject the provisions of the Leases, subject to any depth limitations described
      below, and subject to the reservation of the overriding royalty interest
      described below in this Section 5.

    

    In
      the
      event Participant elects to participate in the completion of the Test Well
      and
      Kerr-McGee does not participate in the completion of the well, then Participant
      shall earn all depths in the Leases.

    

    

    In
      the
      event Kerr-McGee acquires leasehold interests in the N12 of Section 106 ("Acorn
      Offset Acreage"), Participant shall be required to reimburse Kerr-McGee for
      25%
      of the actual cost to acquire the Acorn Offset Aceage and be entitled to an
      assignment of 25% of Kerr-McGee's right, title and interest in such leasehold,
      free and clear of any burdens placed thereon by Kerr-McGee save and except
      those
      burdens that were required to acquire such leasehold. The Acorn Offset Acreage
      shall be subject to and governed by the attached JOA; provided, however, should
      Participant elect not to participate in the drilling of a well proposed on
      the
      Acorn Offset Acreage or acreage pooled therewith, the provisions of Article
      VIB
      shall not apply and Participant shall be deemed to have forfeited it's interest
      in the Acorn Offset Acreage and required to reassign the leasehold to Kerr-McGee
      free and clear of any burdens placed on such leasehold by
      Participant.

    

    Kerr-McGee
      shall assign to Participant the interest earned in the Leases, effective as
      of
      the date of this Agreement, and such assignment shall be made within thirty
      (30)
      days after the date on which the Objective Depth has been reached. The
      assignment shall be subject to, among other things, the terms and provisions
      of
      this Agreement, the terms and provisions of the JOA, and all royalties,
      overriding royalties, payments out of production, and similar leasehold burdens
      affecting the Leases and existing as of the Effective Date of this Agreement,
      and the overriding royalty interest described below. The drilling of additional
      wells on the Leases and the operation of the Test Well and any additional wells
      on the Leases or lands pooled therewith shall be governed by the terms and
      provisions of the JOA.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    Any
      assignment of the Leases (or any portion thereof) to Participant provided for
      in
      this Agreement shall be subject to the reservation by Kerr-McGee of a 5% of
      818ths overriding royalty interest in the Leases, however, there will be no
      reservation of an overriding royalty interest in the Acorn Offset Acreage.
      The
      overriding royalty interest shall be reduced in proportion to the leasehold
      interest owned by Kerr-McGee at the time of the assignment.

    

    
      	
              6.

            	
              MARKETING
                OF PRODUCTION.

            

    

    

    The
      Parties shall have the right to take their proportionate share of production
      from the Leases in kind or separately market same, exclusive of production
      which
      may be used in development and producing operations and in preparing and
      treating said production for marketing purposes.

    

    
      	
              7.

            	
              NOTICES.

            

    

    

    All
      notices and information to be given hereunder shall be in writing and shall
      be
      sent by United States certified mail, telegram, telex, facsimile, email,
      overnight delivery service or telecopy, postage or charges prepaid and addressed
      to the Party to whom such notice is given as follows:

    

    

    
      	
              If
                to Kerr-McGee:

            	
              Kerr-McGee
                Oil & Gas Onshore LP 

            
	 	
              16666
                Northchase

            
	 	
              Houston,
                Texas 77060 

            
	 	
              Attention:
                Mr. Scott McNamee 

            
	 	
              Telephone:
                2811673-6815

            
	 	
              Facsimile:
                281/673-4815 

            
	 	
              Email:
                smcnamee@kmg.com

            
	 	 
	
              If
                to Participant:

            	
              Ignis
                Petroleum Corporation 

            
	 	
              100
                Cresent Court

            
	 	
              7th, Floor

            
	 	
              Dallas,
                Texas 75201

            
	 	
              Attention:
                Mr. Mike Piazza

            
	 	
              Telephone:
                214-459-8188

            
	 	
              Facsimile:
                214-000-0000

            
	 	
              Email:
                mpp@ignispetro.com

            

    

    

    
      	
              8.

            	
              FORCE
                MAJEURE.

            

    

    

    A.  In
      the
      event either Party is rendered unable, wholly or in part, by Force Majeure
      (as
      hereinafter defined) to carry out its obligations under this Agreement (except
      for the payment of money when due), then the Party relying on such Force Majeure
      (or its or their representative) shall give prompt written notice of the Force
      Majeure with reasonably full particulars concerning it to the other Party.
      The
      obligations of the Party relying on the Force Majeure, insofar as it is affected
      by the Force Majeure, shall be suspended during the continuance of the Force
      Majeure and for a reasonable period thereafter not to exceed thirty (30)
      days.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    B.  The
      term
      "Force Majeure" as herein employed, shall include acts of God or the public
      enemy, wars, blockades, insurrections, riots, epidemics, landslides, fires,
      floods, tornadoes, lightning, explosions, acts or requests, rules or orders
      of
      federal, state or municipal governments or of any federal, state or municipal
      officer or agent purporting to act under duly constituted authority, strikes,
      lockouts, interruptions of transportation, freight embargoes, unavailability
      of
      equipment or drilling rigs and any other cause, whether of the kind specifically
      enumerated above or otherwise, which is not reasonably within the control of
      the
      Party claiming the Force Majeure.

    

    
      	
              9.

            	
              ASSIGNMENT
                AND BINDING EFFECT.

            

    

    

    This
      Agreement shall inure to the benefit of and be binding upon the Parties and
      their successors and permitted assigns. Neither Party may assign its rights
      and
      obligations under this Agreement without the prior written consent of the other,
      which consent will not be unreasonably withheld, delayed or conditioned. In
      the
      event of an assignment, the assignee shall agree to be bound by the terms and
      provisions of this Agreement, including any JOA provided for hereunder. In
      the
      event of such assignment the assigning Party shall be relieved from all
      obligations thereafter accruing, but not theretofore accrued, with respect
      to
      the interest assigned.

    

    
      	
              10.

            	
              ENTIRETY
                OF AGREEMENT.

            

    

    

    This
      Agreement and the Exhibits attached hereto constitute the entire agreement
      between the Parties with respect to the subject matter hereof, and there are
      no
      representations or other agreements between the Parties except as expressly
      set
      forth herein and included within the Exhibits attached hereto.

    

    
      	
              11.

            	
              GOVERNING
                LAW.

            

    

    

    IT
      IS SPECIFICALLY STIPULATED AND AGREED TO BY THE PARTIES THAT THE VALIDITY OF
      THIS AGREEMENT AND ANY OF ITS TERMS AND PROVISIONS, AS WELL AS THE RIGHTS AND
      DUTIES OF THE PARTIES HEREUNDER, SHALL BE GOVERNED AND CONSTRUED BY THE LAWS
      OF
      THE STATE OF TEXAS (EXCLUDING ANY CONFLICT OF LAW RULES WHICH WOULD REFER TO
      THE
      LAWS OF ANOTHER JURISDICTION).

    

    
      	
              12.

            	
              RELATIONSHIP
                OF PARTIES.

            

    

    

    This
      Agreement is not intended to create a relationship of partnership or an
      association for profit between or among the Parties. It is expressly agreed
      that
      the obligations and liabilities of the Parties are several and not joint.
      Nothing contained in this Agreement shall be construed to create or impose
      a
      partnership duty, obligation or liability on any of the Parties or an
      association for profit between or among the Parties. Notwithstanding the
      foregoing provisions, if, for federal income tax purposes, this Agreement and
      the operations hereunder are regarded as a partnership, each of the Parties
      elects, under the authority of Section 761(a) of the Internal Revenue Code
      of
      1986, as amended, and applicable issued regulations, to be excluded from the
      application of all provisions of Subchapter K of Chapter 1 of the Internal
      Revenue Code of 1986, as amended. Should there be any requirement that a Party
      give further evidence of this election, such Party shall execute such documents
      and furnish such other evidence as may be required by the Internal Revenue
      Service or as may be necessary to evidence this election.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              13.

            	
              TERM
                OF AGREEMENT.

            

    

    

    This
      Agreement shall remain in force and effect for a period commencing on the
      Effective Date hereof and, subject to the provisions hereof which provide for
      an
      earlier termination, ending on the date on which the JOA terminates in
      accordance with the provisions of Article XIII. of the JOA.

    

    
      	
              14.

            	
              SEVERABILITY.

            

    

    

    If
      any
      term, provision or condition of this Agreement is held invalid, unenforceable
      or
      contrary to applicable laws, it shall be reformed to the extent necessary to
      conform, consistent with the intention of the Parties, to such laws, and if
      such
      provision cannot be so reformed, it shall be deemed deleted and the validity
      of
      the other terms, provisions and conditions shall not be affected.

    

    
      	
              15.

            	
              MISCELLANEOUS.

            

    

    

    A.    The
      titles and the section headings contained in this Agreement are inserted for
      convenient reference only and shall not be construed as limiting or extending
      the meaning of any provision of this Agreement.

    

    B.    This
      Agreement and any documents to be executed pursuant hereto may be executed
      in
      multiple counterparts, each of which shall constitute an original and all of
      which, when construed together, shall constitute but one and the same
      instrument.

    

    C.    If
      any
      action at law or in equity is necessary to enforce or interpret any of the
      rights or obligations under this Agreement, the prevailing Party shall be
      entitled to reasonable attorney's fees, costs, and necessary disbursements
      from
      the non-prevailing Party in addition to any other relief to which the prevailing
      Party may be entitled.

    

    D.    If
      any
      payment or reimbursement provided for under this Agreement (but not under the
      provisions of the JOA) is to be made on the basis of a Party's costs, the other
      Party shall have the right to audit the books and records relating to such
      costs. Each Party shall maintain such books and records for a period of two
      (2)
      years from the date such costs were incurred and shall make such books and
      records available to the other Party during the Party's normal business hours
      during such two (2) year period; provided that no audit shall be conducted
      more
      than one time during any six (6) month period of time. The foregoing provisions
      of this Section 16.D. are in addition to, and not in substitution for, the
      audit
      provisions under the JOA.

    

    E.    The
      Parties hereby agree to do, execute or procure to be done and executed, any
      and
      all further necessary acts, deeds, documents and things within their power
      to
      give effect to this Agreement and its intent.

    

    F.    No
      waiver
      of any term, provision or condition of or rights under this Agreement shall
      be
      effective unless in writing and signed by an authorized representative of the
      waiving Party. The failure of either Party to insist upon the strict performance
      of any term, provision or condition of this Agreement shall not be construed
      as
      a waiver or relinquishment in the future of the same or any other term,
      provision or condition.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    G.    If,
      following the granting of relief under the Bankruptcy Code to either Party
      as
      debtor thereunder, this Agreement should be held to be an executory contract
      within the meaning of 11 U.S.C. Section 365, then the other Party shall be
      entitled to a determination by the debtor or any trustee for the debtor within
      thirty (30) days from the date an order for relief is entered under the
      Bankruptcy Code as to the rejection or assumption of this Agreement. In the
      event of an assumption, the other Party shall be entitled to adequate assurances
      as to future performance of the debtor's obligations hereunder and the
      protection of the interest of the other Party.

    

    H.    In
      the
      event of a conflict between the terms and provisions of this Agreement and
      the
      terms and provisions of the JOA, then the terms and provisions of this Agreement
      shall control and prevail.

    

    If
      the
      foregoing sets forth your understanding of our agreement, please so indicate
      by
      signing in the space provided below and returning one (1) original of this
      Agreement to the undersigned.

    

    Sincerely
      yours,

    

    KERR-MCGEE
      OIL & GAS ONSHORE LP

    d/b/a
      KMOG Onshore LP

    By:     Kerr-McGee
      Oil & Gas Onshore LLC

    Its
      Managing General Partner

    

    By:
      /s/
      Scott McNamee

    Name:
      Scott McNamee

    Title:
      Attoney-in-Fact

    

    Ignis
      Petroleum Corporation

    

    By:
      /s/
      Michael P. Piazza

    Name:
      Mike Piazza

    Title:
      President & CEOTHIS  WARRANT  AND  THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT  OF  1933,  AS  AMENDED,  AND  MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE  TRANSFERRED  WITHOUT AN EFFECTIVE REGISTRATION THERE0F UNDER SUCH ACT
OR  PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

                            WARRANT TO PURCHASE STOCK

Corporation:                Charys Holding Company, Inc.
Number of Shares:           862,069
Class of Stock:             Common Stock
Initial Exercise Price:     $0.35 per share
Issue Date:                 August 1, 2005
Expiration Date:            July 31, 2012

     THIS  WARRANT  CERTIFIES  THAT,  for the agreed upon value of $1.00 and for
other  good  and  valuable  consideration,  Venture Banking Group, a division of
Greater Bay Bank NA. ("Holder") is entitled to purchase the number of fully paid
and  nonassessable shares of COMMON Stock (the 'Shares") of the corporation (the
"Company")  at the price per Share (the "Warrant Price") all as set forth herein
and as adjusted pursuant to Article 2 of this Warrant, subject to the provisions
and  upon  the  terms  and  conditions  set  forth  of  this  Warrant.

ARTICLE 1.     EXERCISE.
               --------

     1.1     Method  of Exercise. Holder may exercise this Warrant by delivering
             -------------------
a  duly  executed  Notice  of  Exercise  in  substantially  the form attached as
Appendix  I  to the principal office of the Company. Unless Holder is exercising
the  conversion right set forth in Section 1.2, Holder shall also deliver to the
Company  a check for the aggregate Warrant Price for the Shares being purchased.

     1.2     Conversion  Right.  In lieu of exercising this Warrant as specified
             -----------------
in  Section  1.1, Holder may from time to time convert this Warrant, in whole or
in  part,  into a number of Shares determined by dividing (a) the aggregate fair
market  value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market  value  of  one  Share,  The  fair  market  value  of the Shares shall be
determined  pursuant  Section  1.4.

     1.3     No  Rights  of Shareholder. This Warrant does not entitle Holder to
             --------------------------
any  voting rights as a shareholder of the Company prior to the exercise hereof.

     1.4     Fair Market Value. If the Shares are traded in a public market, the
             -----------------
fair market value of the Shares shall be the closing price of the Shares (or the
closing  price  of  the  Company's  stock into which the Shares are convertible)
reported  for  the business day immediately before Holder delivers its Notice of
Exercise  to  the  Company.

     1.5     Delivery  of  Certificate  and  New  Warrant. Promptly after Holder
             --------------------------------------------
exercises  or  converts  this  Warrant,  the  Company  shall  deliver  to Holder
certificates  for  the  Shares  acquired and, if this Warrant has not been fully
exercised  or  converted  and  has  not  expired, a new Warrant representing the
Shares  not  so  acquired.

     1.6     Replacement  of  Warrants.  On  receipt  of  evidence  reasonably
             -------------------------
satisfactory  to  the  Company  of the loss, theft, destruction or mutilation of
this  Warrant  and, in the case of loss, theft or destruction, on delivery of an
indemnity  agreement  reasonably  satisfactory in form and amount to the Company
or,  in  the  case of mutilation, or surrender and cancellation of this Warrant,
the Company at its expense shall execute and deliver, in lieu of this Warrant, a
new  warrant  of  like  tenor.

     1.7     Repurchase on Sale, Merger, or Consolidation of the Company.
             -----------------------------------------------------------

          1.7.1     "Acquisition".  For  the  purpose  of  this  Warrant,
                     ------------
"Acquisition"  means  any  sale,  license,  or  other  disposition  of  all  or
substantially  all  of  the  assets  (including  intellectual  property)  of the
Company,  or  any  reorganization, consolidation, or merger of the Company where
the  holders of the Company's securities before the transaction beneficially own
less than 50% of the outstanding voting securities of the surviving entity after
the  transaction.

          1.7.2     Assumption  of  Warrant. Upon the closing of any Acquisition
                    -----------------------
the  successor  entity  shall  assume  the obligations of this Warrant, and this
Warrant  shall  be  exercisable  for  the same securities, cash, and property as
would  be  payable  for  the  Shares  issuable  upon exercise of the unexercised
portion  of  this  Warrant as if such Shares were outstanding on the record date
for  the Acquisition and subsequent closing. The Warrant Price shall be adjusted
accordingly.

                                      - 1 -
<PAGE>
          1.7.3     Purchase Right. At the election of Holder, the Company shall
                    --------------
purchase  the  unexercised  portion of this Warrant for cash upon the closing of
any  Acquisition  for  an  amount  equal  to  (a)  the  fair market value of any
consideration  that  would  have been received by Holder in consideration of the
Shares  had Holder exercised the unexercised portion of this Warrant immediately
before  the record date for determining the shareholders entitled to participate
in  the proceeds of the Acquisition, less (b) the aggregate Warrant Price of the
Shares,  but  in  no  event  less  than  zero.

ARTICLE 2.     ADJUSTMENTS  TO  THE  SHARES.
               ----------------------------

     2.1     Stock  Dividends,  Splits,  Etc.  If the Company declares or pays a
             -------------------------------
dividend  on  its  common  stock  payable  in common stock, or other securities,
subdivides  the  outstanding common stock into a greater amount of common stock,
then  upon  exercise  of  this  Warrant,  for  each Share acquired, Holder shall
receive,  without  cost  to  Holder,  the total number and kind of securities to
which  Holder  would have been entitled had Holder owned the Shares of record as
of the date the dividend or subdivision occurred.

     2.2     Reclassification,  Exchange  or  Substitution.  Upon  any
             ---------------------------------------------
reclassification,  exchange,  substitution,  or  other  event  that results in a
change  of  the  number and/or class of the securities issuable upon exercise or
conversion  of  this Warrant, Holder shall be entitled to receive, upon exercise
or  conversion  of  this Warrant, the number and kind of securities and property
that  Holder  would  have  received  for  the  Shares  if  this Warrant had been
exercised  immediately  before such reclassification, exchange, substitution, or
other  event.  The Company or its successor shall promptly issue to Holder a new
Warrant for such new securities or other property. The new Warrant shall provide
for adjustments which shall be as nearly equivalent as may be practicable to the
adjustments  provided  for  in  this  Article  2  including, without limitation,
adjustments  to  the  Warrant  Price and to the number of securities or properly
issuable  upon  exercise  of the new Warrant. The provisions of this Section 2.2
shall similarly apply to successive reclassifications, exchanges, substitutions,
or  other  events.

     2.3     Adjustments  for  Combinations,  Etc. If the outstanding Shares are
             ------------------------------------
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares, the Warrant Price shall be proportionately increased.

     2.4     No  Impairment.  The  Company  shall  not,  by  amendment  of  its
             --------------
Certificate  of  Incorporation  or through a reorganization, transfer of assets,
consolidation,  merger,  dissolution,  issue, or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the  terms  to  be  observed or performed under this Warrant by the Company, but
shall at all times in good faith assist in carrying out of all the provisions of
this  Article 2 and in taking all such action as may be necessary or appropriate
to protect Holder's rights under this Article against impairment. If the Company
takes  any  action  affecting  the  Shares  or  its  common  stock other than as
described  above  that adversely affects Holder's rights under this Warrant, the
Warrant  Price shall be adjusted downward and the number of Shares issuable upon
exercise  of  this  Warrant  shall  be adjusted upward in such a manner that the
aggregate Warrant Price of this Warrant is unchanged.

     2.5     Fractional  Shares.  No  fractional  Shares  shall be issuable upon
             ----------
exercise  or  conversion  of  the  Warrant and the number of Shares to be issued
shall be rounded down to the nearest whole Share. If a fractional share interest
arises  upon  any  exercise  or  conversion  of  the  Warrant, the Company shall
eliminate  such  fractional  share  interest by paying Holder amount computed by
multiplying  the  fractional  interest by the fair market value of a full Share.

     2.6     Certificate  as to Adjustments. Upon each adjustment of the Warrant
             ------------------------------
Price,  the  Company  at its expense shall promptly compute such adjustment, and
furnish  Holder  with a certificate of its Chief Financial Officer setting forth
such  adjustment  and the facts upon which such adjustment is based. The Company
shall,  upon  written  request,  furnish  Holder a certificate setting forth the
Warrant  Price  in  effect  upon  the date thereof and the series of adjustments
leading  to  such  Warrant  Price.

ARTICLE 3.     REPRESENTATIONS  AND  COVENANTS  OF  THE  COMPANY.
               -------------------------------------------------

     3.1     Representations  and  Warranties. The Company hereby represents and
             --------------------------------
warrants  to  the  Holder  as  follows:

               (a)     The initial Warrant Price referenced on the first page of
this  Warrant  is  not  greater than (i) the price per share at which the Shares
were last issued in an arms-length transaction in which at least $500,000 of the
Shares  were sold and (ii) the fair market value of the Shares as of the date of
this  Warrant.

               (b)     All  Shares  which may be issued upon the exercise of the
purchase right represented by this Warrant, and all securities, if any, issuable
upon conversion of the Shares, shall, upon issuance, be duly authorized, validly
issued,  fully  paid  and  nonassessable, and free of any liens and encumbrances
except  for  restrictions  on  transfer  provided for herein or under applicable
federal  and  state  securities  laws.

     3.2     Notice  of  Certain Events. If the Company proposes at any time (a)
             --------------------------
to  declare any dividend or distribution upon its common stock, whether in cash,
property, stock, or other securities and whether or not a regular cash dividend;
(b)  to

                                      - 2 -
<PAGE>
offer  for  subscription  pro  rata to the holders of any class or series of its
stock any additional shares of stock of any class or series or other rights; (c)
to effect any reclassification or recapitalization of common stock; (d) to merge
or  consolidate  with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up;  or  (e) offer holders of registration rights the opportunity to participate
in  an  underwritten public offering of the company's securities for cash, then,
in  connection  with each such event, the Company shall give Holder (1) at least
20  days  prior  written  notice of the date on which a record will be taken for
such  dividend, distribution, or subscription rights (and specifying the date on
which  the  holders of common stock will be entitled thereto) or for determining
rights  to  vote,  if  any, in respect of the matters referred to in (c) and (d)
above;  (2) in the case of the matters referred to in (c) and (d) above at least
20  days  prior  written  notice  of the date when the same will take place (and
specifying  the  date  on  which the holders of common stock will be entitled to
exchange  their  common  stock for securities or other property deliverable upon
the  occurrence of such event); and (3) in the case of the matter referred to in
(e)  above,  the  same  notice  as  is given to the holders of such registration
rights.

     3.3     Information Rights. So long as the Holder holds this Warrant and/or
             ------------------
any  of  the  Shares, the Company shall deliver to the Holder (a) promptly after
mailing,  copies  of  all  notices  or  other  written  communications  to  the
shareholders  of  the Company, (b) within ninety (90) days after the end of each
fiscal year of the Company, the annual financial statements of the Company.

     3.4     Registration  Under Securities Act of 1933, as amended. The Company
             ------------------------------------------------------
hereby  grants  to  Holder the same piggyback registration rights granted to the
other  holders  of  the  Shares.

ARTICLE 4.     MISCELLANEOUS.
               -------------

     4.1     Term. This Warrant is exercisable, in whole or in part, at any time
             ----
and  from  time  to  time  on or before the Expiration Date set forth above. The
Company  shall  give  Holder  written  notice of Holder's right to exercise this
Warrant  in  the  form attached as Appendix 2 not more than 90 days and not less
than  30  days  before  the  Expiration Date. If the notice is not so given, the
Expiration Date shall automatically be extended until 30 days after the date the
Company  delivers  the  notice  to  Holder.

     4.2     Legends.  This Warrant and the Shares (and the securities issuable,
             -------
directly  or  indirectly,  upon  conversion  of  the  Shares,  if  any) shall be
imprinted with a legend in substantially the following form:

     THIS  SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED,  AND  MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN
     EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN
     OPINION  OF  COUNSEL  REASONABLY  SATISFACTORY  TO  THE CORPORATION AND ITS
     COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.

     4.3     Compliance  with  Securities Laws on Transfer. This Warrant and the
             ---------------------------------------------
Shares  issuable  upon  exercise  this  Warrant  (and  the  securities issuable,
directly  or  indirectly,  upon  conversion  of  the  Shares, if any) may not be
transferred  or  assigned in whole or in part without compliance with applicable
federal  and  state  securities  laws  by  the  transferor  and  the  transferee
(including,  without  limitation,  the  delivery  of  investment  representation
letters and legal opinions reasonably satisfactory to the Company, as reasonably
requested  by  the  Company). The Company shall not require Holder to provide an
opinion  of  counsel if the transfer is to an affiliate of Holder or if there is
no material question as to the availability of current information as referenced
in  Rule 144(c), Holder represents that it has complied with Rule 144(d) and (e)
in  reasonable  detail,  the selling broker represents that it has complied with
Rule  144(f),  and  the  Company  is  provided with a copy of Holder's notice of
proposed  sale.

     4.4     Transfer  Procedure.  Subject  to  the  provisions  of Section 4.3,
             -------------------
Holder  may  transfer  all  or  part of this Warrant or the Shares issuable upon
exercise  of  this  Warrant (or the securities issuable, directly or indirectly,
upon  conversion  of  the  Shares,  if  any) by giving the Company notice of the
portion  of  the  Warrant  being transferred setting forth the name, address and
taxpayer  identification  number of the transferee and surrendering this Warrant
to  the  Company for reissuance to the transferee(s) (and Holder if applicable).
Unless  the Company is filing financial information with the SEC pursuant to the
Securities  Exchange  Act of 1934, the Company shall have the right to refuse to
transfer  any  portion  of this Warrant to any person who directly competes with
the  Company.

     4.5     Notices.  All  notices and other communications from the Company to
             -------
the  Holder,  or  vice versa, shall be deemed delivered and effective when given
personally  or  mailed  by  first-class  registered  or  certified mail, postage
prepaid,  at  such  address  as  may  have  been furnished to the Company or the
Holder,  as  the case may be, in writing by the Company or such holder from time
to  time.

     4.6     Waiver.  This  Warrant  and any term hereof may be changed, waived,
             ------
discharged  or  terminated  only by an instrument in writing signed by the party
against  which  enforcement  of such change, waiver, discharge or termination is
sought.

                                      - 3 -
<PAGE>
     4.7     Governing  Law.  This Warrant shall be governed by and construed in
             --------------
accordance  with  the laws of the State of Georgia, without giving effect to its
principles  regarding  conflicts  of  law.

                                   Charys Holding Company, Inc.

                                   By:__________________________________________
                                   Billy V. Ray, Jr., Chief Executive Officer

                                      - 4 -
<PAGE>
APPENDIX 1
                               NOTICE OF EXERCISE
                               ------------------

     1.     The undersigned hereby elects to purchase _________________ shares
of the Common Stock/Preferred Series [strike one] of <INSERT CLIENT NAME>
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full.

     2.     The undersigned hereby elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant. This conversion
is  exercised with respect to _____________________________of the Shares covered
by  the  Warrant.

     [Strike paragraph that does not apply.]

     3.     Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name as is specified below:

                                     (Name)

                        ________________________________

                                    (Address)

                        ________________________________

                        ________________________________

     4.     The undersigned represents it is acquiring the shares solely for its
own account and not as a nominee for any other party and not with a view toward
the resale or distribution thereof except in compliance with applicable
securities laws.

                                Venture Banking Group, a division of Greater Bay
                                Bank, N.A.

                                ________________________________________________
                                (Signature)

                                ________________________________________________
                                (Date)

                                      - 5 -
<PAGE>
APPENDIX 2
                     NOTICE THAT WARRANT IS ABOUT TO EXPIRE
                     --------------------------------------

                            _________________, _____

(Name of Holder)

______________________________________

(Address of Holder)

______________________________________

______________________________________

______________________________________
Attn:  Chief Financial Officer

Gentleperson:

     This is to advise you that the Warrant issued to you described below will
expire on __________________, _____.

Issuer:                      <INSERT CLIENT NAME>

Issue Date:                  ______________, _____

Class of Security Issuable:  Series ___ Preferred

Exercise Price Per Share:    $___________________

Number of Shares Issuable:   ____________________

Procedure for Exercise:      Please contact _____________________________ (name)
                             at  __________________  (phone  number)  with  any
                             questions  you  may have concerning exercise of the
                             Warrant.  This  is  your  only  notice  of  pending
                             expiration.

<INSERT CLIENT NAME>

By:________________________________

Its:_______________________________

                                      - 6 -
<PAGE>

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