**Exhibit10.8.3**

 

**MODIFICATIONOF FORBEARANCE AGREEMENT**

 

**THISMODIFICATION OF FORBEARANCE AGREEMENT** dated as of June 4,2002 (the “Agreement”) between Stratus Services Group, Inc. (“Stratus”) andSource One Personnel (together with its successors and assigns, hereinafterreferred to as “Source One”).

 

**WHEREAS**,Stratus and Source One entered into a Forbearance Agreement dated as of January24, 2002; and

 

**WHEREAS,**Stratus has failed to comply with the terms of theForbearance Agreement; by failing to make the payments agreed to be madethereunder; and

 

**WHEREAS,**the parties now wish to modify such Forbearance Agreement subject to the termsand conditions set forth in this Agreement.

 

**NOW,**THEREFORE**,**in consideration of the foregoing, and intending to be legally bound, theparties mutually agree as follows:

 

1.             Payments.

 

Stratus and Source One agree that the amount currentlydue and unpaid for principal and interest as of the date of this Agreement onNote 1 and Note 2 is $629,547.  Stratusagrees to pay $629,547 to Source One on or before June 30, 2002, which paymentshall be applied against amounts due under Note 1 and Note 2 for outstandingprincipal and interest.

 

2.             PaymentsNote 3.

 

Source One is making an additional short-term loan of$200,000 to Stratus pursuant to a Promissory Note being executed of even dateherewith known as “Note 3”.  Stratuswill pay the entire $200,000 plus interest through June 30 2002 at the rate ofseven percent (7%) per annum on or before June 30, 2002.  A copy of Note 3 is attached hereto as **Exhibit A**.Except as provided above, and subject to Source One’s agreement toreinstatement of Notes 1 and 2, Stratus will pay, when due, all other amountsdue and owing under the Notes when due.

 

3.             Extensionof the Forbearance Period.  In considerationof the foregoing, Source One will extend the Forbearance Period, as defined inthe Forbearance Agreement, until June 30, 2002, subject to Status complyingwith all terms and conditions of the Forbearance Agreement as amended hereby.  Stratus acknowledges and agrees that uponthe occurrence of an Event of Termination or failure to comply with any term orcondition of this Modification of Forbearance Agreement, Source One shall havethe right to immediately exercise its rights and remedies under the Documents,against Stratus, without further notice to Status or any opportunity tocure.  Stratus further acknowledges thatSource One has already given notice of acceleration on the Notes and has noobligation to reinstate the Notes, but shall consider such in its reasonablediscretion, upon compliance with the provisions of this Agreement.

 

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4.             Representationsand Warranties.  Stratus herebyrestates and reaffirms the truth and accuracy of each of the Representationsand Warranties set forth in Section 2 of the Forbearance Agreement as ifrestated and set forth at length herein except that subsection 2.6 is amendedto state that the sale of Stratus’ engineering division to SEA ConsultingServices Corporation has been completed and the required payment was not madeby Stratus to Source One.

 

5.             Acknowledgmentof Default.  Stratus hereby confirmsand acknowledges that Defaults and Events of Default have occurred and havebeen declared under the Documents and the Forbearance Agreement and remainuncured and as a result, Source One has a right to immediately exercise all ofits Remedies under the Documents without further notice or opportunity to cureby Stratus. Status further confirms and acknowledges that this Agreement doesnot cure the Defaults or Events of Default under the Documents and theForbearance Agreement nor does this Agreement constitute a waiver of suchDefaults or Events of Default by Source One and does not reinstate theNotes.  Notwithstanding the foregoinghowever, Source One has agreed to Forbear from exercising its rights andremedies under the Notes subject to strict compliance with the terms of thisModification of Forbearance Agreement. All amounts due to Source One under theDocuments, the Forbearance Agreement and under Note 1, Note 2 and Note 3 aredue and owing from Stratus without defenses to enforcement or rights of set-offall of which are hereby waived. Notwithstanding the foregoing however, Stratus acknowledges that as aresult of the Default under Notes 1 and 2, the Non-Compete/Non SolicitationAgreement dated July 27th, 2001 between Stratus and Source One isvoid and of no further effect.  As aresult of such Default, Stratus’ right to enforce anycovenants not-to-compete and covenants of non-solicitation of customersagainst all staff and temporary employees of Stratus, who were Source Oneemployees prior to July 27, 2001 or who have become currentStratus employees working in the offices which were sold to Stratus aspart of the Acquired Assets under the Asset Purchase Agreement,are waived by Stratus and such rights of enforcement are hereby assignedto Source One.  Further, as a result of the Defaults byStratus, the restrictive covenants contained in the July 27, 2001Employment Agreement between Stratus and James Radvany, specifically,paragraphs, 7, 8, 9 and 10 are void and without further effect.Notwithstanding the foregoing, Source One agrees that neither Source One, JimRadvany nor any Source One employees will actually begin to competewith Stratus so long as no Event of Termination hasoccurred and Stratus is not in default under any of the terms ofthe Forbearance Agreement or this Modification of Forbearance Agreement.

 

6.             Thepayments due hereunder under Notes 1, 2 and Note 3, totaling $829,547, plus interest on Note 3 shall be and arehereby being personally guaranteed by Joseph J. Raymond, Sr. in the form of aguaranty attached hereto as **Exhibit B**.

 

7.             Statusrepresents and acknowledges that it is not in default under its loanobligations or facilities with Capital TempFunds, Inc., it has no notice of anysuch default and no event has occurred which by notice and or the passage oftime shall constitute an event of default under Stratus’ loan facilities withCapital TempFunds.  Status acknowledgesand agrees that the occurrence of an event of default or notice of default fromCapital TempFunds shall constitute an Event of Termination under thisForbearance Agreement.

 

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8.             Releaseof Source One.  Stratus acknowledgesand confirms that it has no offsets, defenses or claims against Source One orany of its officers, agents, directors or employees whether asserted orunasserted with respect to the Notes. To the extent that it may have suchoffsets, defenses or claims, with respect to the Notes only, Stratus and eachof their respective successors, assigns, parents, subsidiaries, affiliates,predecessors, employees, agents, heirs, executors, as applicable, jointly andseverally, release and forever discharge Source One, its subsidiaries,affiliates, officers, directors, employees, agents, attorneys, successors andassigns, both present and former (collectively “Source One”) of and from anyand all manner of action and actions, cause and causes of action, suits, debts,controversies, damages, judgments, executions, claims and demands whatsoever,asserted or unasserted, in law or in equity against Source One, with respect tothe Notes only, which they ever had, now have or which Stratus or itssuccessors, assigns, parents, subsidiaries, affiliates, predecessors,employees, agents, heirs, executors, as applicable, both present and formerever had or now has, upon or by reason of any manner, cause, causes or thingwhatsoever, including, without limitation, any presently existing claim ordefense whether or not presently suspected, contemplated or anticipated.  Accordingly, Stratus agrees that it shallnot raise any defenses to the enforcement of the Notes by way of Counterclaimin any action by Source One to enforce the Notes, and all of such defenses,whether known or unknown at this time are hereby waived.

 

9.             TheForbearance Agreement shall remain in full force and effect withoutmodification, except as specifically modified in this Amendment.

 

 

[THE REMAINDER OF THISPAGE IS INTENTIONALLY LEFT BLANK]

 

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**IN WITNESS WHEREOF**, Stratus and Source Oneagree to the terms of this Agreement and acknowledge receipt of a true copy ofthis Agreement.

 
| ATTEST:                   |   | STRATUS SERVICES GROUP, INC. |                  |
|---------------------------|--------|------------------------------|-----------------------|
|                      |   |                         |                  |   |
|                      |   |                         |                  |   |
| /s/ Lorraine C. Gallagher |   | By:                          | /s/ Joseph J. Raymond |   |
|                      |   | Name:                        | Joseph J. Raymond     |   |
|                      |   | Title:                       | President and CEO     |   |
|                      |   |                         |                  |   |
|                      |   | SOURCE ONE PERSONNEL, INC.   |                  |
|                      |   |                         |                  |   |
|                      |   |                         |                  |   |
|                      |   | By:                          | /s/ James Radvany     |   |
|                      |   | Name:                        |   James  Radvany |   |
|                      |   | Title:                       |   President      |   |
|                           |        |                              |                       |  |  |

 

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**PROMISSORY NOTE**

** **
| U.S. $200,000 |   | June 4, 2002  |
|---------------|--------|---------------|
|          |   | Manalapan, NJ |
|               |        |               |  |

 

FOR VALUE RECEIVED, **STRATUS SERVICES GROUP, INC**.,a Delaware corporation (hereinafter referred to as the “Maker”) promises to payto the order of **SOURCE ONE PERSONNEL, INC**., a New Jersey corporation(hereinafter referred to as the “Lender”) at 4 Princess Road, Suite 201,Lawrenceville, New Jersey 08648, or at such address as Lender may designatefrom time to time, the principal sum of Two Hundred Thousand and 00/100 Dollars($200,000), together with interest thereon at the rate of seven percent (7%)annually, both principal and interest being due and payable in full on June 30,2002.

 

Payments of the amounts due hereunder shall be made inlawful money of the United States which shall be legal tender in payment of alldebts, public and private, at the time of payment.

 

Maker will be in default under this Note if it failsto make payment in full by June 30 2002.

 

Upon any default under this Note, the unpaid principalshall, at the option of the Lender, become immediately due and payable andinterest will immediately accrue, at an annual rate equal to the lesser ofeighteen percent (18%) or the maximum rate of interest permitted by applicablelaw.  Failure to exercise this right toaccelerate the amounts due, shall not constitute a waiver of Lender’s right toexercise the same in the event of any subsequent default. Any property of theMaker or of any endorser held by the Lender hereof may be applied by the Lenderto any sums due and unpaid pursuant to this Note.

 

As to this Note and any other instruments securing theindebtedness, the Maker waives all notice of acceleration, presentment, protestand demand, dishonor and non-payment of this Note, and expressly agree that thematurity of this Note, or any payment hereunder, may be extended from time totime without in any way affecting the liability of the Maker and all guarantorsand endorsers.

 

Should it become necessary to collect this Notethrough an attorney, the Maker and any surety, endorser or guarantor of thisNote hereby agree to pay all costs and expenses of collection, includingreasonable attorneys’ fees and any attorneys’ fees incurred in appellate,bankruptcy or post-judgment proceedings.

 

This Note shall be governed by and construed inaccordance with the laws of the State of New Jersey.  The Maker agrees to submit to the jurisdiction of any court whichLender may select in Mercer County, New Jersey to enforce the terms of thisNote.

 

The Maker acknowledges and agrees that this Note has been signed anddelivered in exchange for valuable consideration.

 

This Note shall be personally guaranteed by Joseph J.Raymond, Sr.  A form of guarantee isattached hereto as Exhibit A.

 

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This Note is also being executed simultaneously with acertain Modification of Forbearance Agreement dated as of even dateherewith.  To the extent applicable tothis additional $200,000 loan by Lender, the terms of such ModificationAgreement are incorporated herein by reference.

 

This Note may be prepaid in whole or in part at anytime prior to the Maturity Date without penalty.

 

This Note may not be changed orally, but only by anagreement in writing, signed by the party against whom enforcement of anywaiver, change, modification or discharge is sought.

 

The term “Maker” as used herein in every instanceshall include the heirs, executors, administrators, successors, legalrepresentatives and assigns of Maker.

 

This Note is subject to the terms of a certainSubordination Agreement with Capital TempFunds, Inc. dated as of July 27, 2001

 
|                      |   | **STRATUS  SERVICES GROUP, INC**. |
|---------------------------|--------|-----------------------------------|
| Attest:                   |   |                              |   |
|                      |   |                              |   |
| /s/ Lorraine C. Gallagher |   | By:                               | /s/ Joseph J. Raymond |
|                      |   |                              | Joseph J. Raymond, President and CEO |

 

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**PERSONAL GUARANTY**

 

The undersigned (“Guarantor”), in consideration for and as aninducement to Source One Personnel, Inc. (“Source One”) to enter into a certainPromissory Note for the principal amount of $200,000 of even date herewith(“Note 3”) whereby Source One is Lender and Stratus Services Group, Inc.(“Stratus”) is Borrower and pursuant to the terms of a certain Modification ofForbearance Agreement of even date herewith between Source One andStratus,(attached as **Exhibit A**”), that Guarantor does herebyabsolutely and unconditionally personally guaranty to Source One, itssuccessors and assigns, the full payment and performance of Stratus of all theterms and conditions imposed upon Stratus in Note 3, together with the paymentof $629,547 due by Stratus to Source One by June 30, 2002, pursuant to theterms of the Modification of Forbearance Agreement, constituting monies due andpast due under Note 1 and Note 2 through June 30, 2002, along with the moniesdue under Note 3, totaling $829,547. Guarantor is not guarantying payment of any amount in excess of such$829,547 (the “Guaranteed Sum”), except for interest due under Note 3, costs ofcollection of Note 3 and costs of collection of this Guaranty, includingattorneys fees. (Notes 1, 2 and 3 are referred to herein as the “Notes”).

 

Except as set forth below, Guarantor hereby expressly waives any noticeof nonpayment, nonperformance, nonobservance, or default, notice of protest andprotest of the Note on the part of Stratus. Guarantor further covenants andagrees that this Guaranty shall remain and continue in full force and effect asto any further modification of the Forbearance Agreement and during theextension of the term of the Forbearance Agreement.

 

Guarantor agrees to pay all costs incurred by Source One in enforcingthis Guaranty, including reasonable attorneys’ fees.

 

In the event Guarantor fails to perform the obligations herein and topromptly comply with a demand by Source One for payment and performance of theNotes and the Guaranteed Sum, with such default continuing for a period often (10) days after written notice to Guarantor of such default, Source Oneshall immediately have all available rights and remedies in law and in equityagainst Guarantor.

 

Guarantor acknowledges and agrees that this is not  a Guaranty of Collection. It is a primaryobligation to Source One.  Liability onthis Guaranty shall not be conditional or contingent upon the pursuance bySource One or anyone else of whatever remedies it may have against Stratus norshall Source One be required to exhaust, or in any other way look for thesecurity that Source One now has or that Source One may obtain or acquire inthe future. Source One shall not be obligated or required to pursue anyremedies it may have against Stratus, prior to pursuing any remedy againstGuarantor.  Not in limitation of thegenerality of the foregoing, the liability of Guarantor hereunder shall remaineffective and enforceable even though Stratus’s liability under the Notes orLoan Documents may be unenforceable or even though recovery against Stratus maybe barred by a statute of limitations, bankruptcy or otherwise.  Guarantor waives any defense arising byreason of any cause whatsoever, of the liability of Stratus.  This Guaranty shall continue in full forceand effect, notwithstanding any insolvency or bankruptcy of Stratus.

 

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Guarantor acknowledges that the granting of the loan evidenced by Note3 to Stratus will result in material benefits to Guarantor.

 

Guarantor represents that the personal financial statement submitted toSource One, dated June 3, 2002 is true and accurate in all material respects.

 

This Guaranty shall be interpreted according to the laws of the Stateof New Jersey.  Guarantor agrees tosubmit to the jurisdiction of the courts of Mercer County, New Jersey toenforce the terms of this Guaranty.

 

IN WITNESS WHEREOF, the undersigned have caused this Guaranty to beexecuted as of the day, month and year first above written.

 
| WITNESS:                  |         | GUARANTOR:             |
|---------------------------|--------------|------------------------|
|                      |         |                   |
| /s/ Lorraine C. Gallagher |         |                   | /s/ Joseph J. Raymond |   |
|                      |         | Joseph J. Raymond, Sr. |
| Dated:               | June 4, 2002 |                   |   |   |
|                           |              |                        |  |  |  |  |

 

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