Document:

MODIFICATION OF FORBEARANCE AGREEMENT

Exhibit

10.8.3

 

MODIFICATION

OF FORBEARANCE AGREEMENT

 

THIS

MODIFICATION OF FORBEARANCE AGREEMENT dated as of June 4,

2002 (the “Agreement”) between Stratus Services Group, Inc. (“Stratus”) and

Source One Personnel (together with its successors and assigns, hereinafter

referred to as “Source One”).

 

WHEREAS,

Stratus and Source One entered into a Forbearance Agreement dated as of January

24, 2002; and

 

WHEREAS,

Stratus has failed to comply with the terms of the

Forbearance Agreement; by failing to make the payments agreed to be made

thereunder; and

 

WHEREAS,

the parties now wish to modify such Forbearance Agreement subject to the terms

and conditions set forth in this Agreement.

 

NOW, THEREFORE,

in consideration of the foregoing, and intending to be legally bound, the

parties mutually agree as follows:

 

1.             Payments.

 

Stratus and Source One agree that the amount currently

due and unpaid for principal and interest as of the date of this Agreement on

Note 1 and Note 2 is $629,547.  Stratus

agrees to pay $629,547 to Source One on or before June 30, 2002, which payment

shall be applied against amounts due under Note 1 and Note 2 for outstanding

principal and interest.

 

2.             Payments

Note 3.

 

Source One is making an additional short-term loan of

$200,000 to Stratus pursuant to a Promissory Note being executed of even date

herewith known as “Note 3”.  Stratus

will pay the entire $200,000 plus interest through June 30 2002 at the rate of

seven 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 to

reinstatement of Notes 1 and 2, Stratus will pay, when due, all other amounts

due and owing under the Notes when due.

 

3.             Extension

of the Forbearance Period.  In consideration

of the foregoing, Source One will extend the Forbearance Period, as defined in

the Forbearance Agreement, until June 30, 2002, subject to Status complying

with all terms and conditions of the Forbearance Agreement as amended hereby.  Stratus acknowledges and agrees that upon

the occurrence of an Event of Termination or failure to comply with any term or

condition of this Modification of Forbearance Agreement, Source One shall have

the right to immediately exercise its rights and remedies under the Documents,

against Stratus, without further notice to Status or any opportunity to

cure.  Stratus further acknowledges that

Source One has already given notice of acceleration on the Notes and has no

obligation to reinstate the Notes, but shall consider such in its reasonable

discretion, upon compliance with the provisions of this Agreement.

 

 

4.             Representations

and Warranties.  Stratus hereby

restates and reaffirms the truth and accuracy of each of the Representations

and Warranties set forth in Section 2 of the Forbearance Agreement as if

restated and set forth at length herein except that subsection 2.6 is amended

to state that the sale of Stratus’ engineering division to SEA Consulting

Services Corporation has been completed and the required payment was not made

by Stratus to Source One.

 

5.             Acknowledgment

of Default.  Stratus hereby confirms

and acknowledges that Defaults and Events of Default have occurred and have

been declared under the Documents and the Forbearance Agreement and remain

uncured and as a result, Source One has a right to immediately exercise all of

its Remedies under the Documents without further notice or opportunity to cure

by Stratus. Status further confirms and acknowledges that this Agreement does

not cure the Defaults or Events of Default under the Documents and the

Forbearance Agreement nor does this Agreement constitute a waiver of such

Defaults or Events of Default by Source One and does not reinstate the

Notes.  Notwithstanding the foregoing

however, Source One has agreed to Forbear from exercising its rights and

remedies under the Notes subject to strict compliance with the terms of this

Modification of Forbearance Agreement. All amounts due to Source One under the

Documents, the Forbearance Agreement and under Note 1, Note 2 and Note 3 are

due and owing from Stratus without defenses to enforcement or rights of set-off

all of which are hereby waived. 

Notwithstanding the foregoing however, Stratus acknowledges that as a

result of the Default under Notes 1 and 2, the Non-Compete/Non Solicitation

Agreement dated July 27th, 2001 between Stratus and Source One is

void and of no further effect.  As a

result of such Default, Stratus’ right to enforce any

covenants not-to-compete and covenants of non-solicitation of customers

against all staff and temporary employees of Stratus, who were Source One

employees prior to July 27, 2001 or who have become current

Stratus employees working in the offices which were sold to Stratus as

part of the Acquired Assets under the Asset Purchase Agreement,

are waived by Stratus and such rights of enforcement are hereby assigned

to Source One.  Further, as a result of the Defaults by

Stratus, the restrictive covenants contained in the July 27, 2001

Employment 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, Jim

Radvany nor any Source One employees will actually begin to compete

with Stratus so long as no Event of Termination has

occurred and Stratus is not in default under any of the terms of

the Forbearance Agreement or this Modification of Forbearance Agreement.

 

6.             The

payments due hereunder under Notes 1, 2 

and Note 3, totaling $829,547, plus interest on Note 3 shall be and are

hereby being personally guaranteed by Joseph J. Raymond, Sr. in the form of a

guaranty attached hereto as Exhibit B.

 

7.             Status

represents and acknowledges that it is not in default under its loan

obligations or facilities with Capital TempFunds, Inc., it has no notice of any

such default and no event has occurred which by notice and or the passage of

time shall constitute an event of default under Stratus’ loan facilities with

Capital TempFunds.  Status acknowledges

and agrees that the occurrence of an event of default or notice of default from

Capital TempFunds shall constitute an Event of Termination under this

Forbearance Agreement.

 

2

 

8.             Release

of Source One.  Stratus acknowledges

and confirms that it has no offsets, defenses or claims against Source One or

any of its officers, agents, directors or employees whether asserted or

unasserted with respect to the Notes. To the extent that it may have such

offsets, defenses or claims, with respect to the Notes only, Stratus and each

of their respective successors, assigns, parents, subsidiaries, affiliates,

predecessors, employees, agents, heirs, executors, as applicable, jointly and

severally, release and forever discharge Source One, its subsidiaries,

affiliates, officers, directors, employees, agents, attorneys, successors and

assigns, both present and former (collectively “Source One”) of and from any

and 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 to

the Notes only, which they ever had, now have or which Stratus or its

successors, assigns, parents, subsidiaries, affiliates, predecessors,

employees, agents, heirs, executors, as applicable, both present and former

ever had or now has, upon or by reason of any manner, cause, causes or thing

whatsoever, including, without limitation, any presently existing claim or

defense whether or not presently suspected, contemplated or anticipated.  Accordingly, Stratus agrees that it shall

not raise any defenses to the enforcement of the Notes by way of Counterclaim

in 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.             The

Forbearance Agreement shall remain in full force and effect without

modification, except as specifically modified in this Amendment.

 

 

[THE REMAINDER OF THIS

PAGE IS INTENTIONALLY LEFT BLANK]

 

3

 

IN WITNESS WHEREOF, Stratus and Source One

agree to the terms of this Agreement and acknowledge receipt of a true copy of

this 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

  	

   

  
						

 

4

 

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 pay

to 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 designate

from 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 in

lawful money of the United States which shall be legal tender in payment of all

debts, public and private, at the time of payment.

 

Maker will be in default under this Note if it fails

to make payment in full by June 30 2002.

 

Upon any default under this Note, the unpaid principal

shall, at the option of the Lender, become immediately due and payable and

interest will immediately accrue, at an annual rate equal to the lesser of

eighteen percent (18%) or the maximum rate of interest permitted by applicable

law.  Failure to exercise this right to

accelerate the amounts due, shall not constitute a waiver of Lender’s right to

exercise the same in the event of any subsequent default. Any property of the

Maker or of any endorser held by the Lender hereof may be applied by the Lender

to any sums due and unpaid pursuant to this Note.

 

As to this Note and any other instruments securing the

indebtedness, the Maker waives all notice of acceleration, presentment, protest

and demand, dishonor and non-payment of this Note, and expressly agree that the

maturity of this Note, or any payment hereunder, may be extended from time to

time without in any way affecting the liability of the Maker and all guarantors

and endorsers.

 

Should it become necessary to collect this Note

through an attorney, the Maker and any surety, endorser or guarantor of this

Note hereby agree to pay all costs and expenses of collection, including

reasonable attorneys’ fees and any attorneys’ fees incurred in appellate,

bankruptcy or post-judgment proceedings.

 

This Note shall be governed by and construed in

accordance with the laws of the State of New Jersey.  The Maker agrees to submit to the jurisdiction of any court which

Lender may select in Mercer County, New Jersey to enforce the terms of this

Note.

 

The Maker acknowledges and agrees that this Note has been signed and

delivered in exchange for valuable consideration.

 

This Note shall be personally guaranteed by Joseph J.

Raymond, Sr.  A form of guarantee is

attached hereto as Exhibit A.

 

5

 

 

This Note is also being executed simultaneously with a

certain Modification of Forbearance Agreement dated as of even date

herewith.  To the extent applicable to

this additional $200,000 loan by Lender, the terms of such Modification

Agreement are incorporated herein by reference.

 

This Note may be prepaid in whole or in part at any

time prior to the Maturity Date without penalty.

 

This Note may not be changed orally, but only by an

agreement in writing, signed by the party against whom enforcement of any

waiver, change, modification or discharge is sought.

 

The term “Maker” as used herein in every instance

shall include the heirs, executors, administrators, successors, legal

representatives and assigns of Maker.

 

This Note is subject to the terms of a certain

Subordination 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

  

 

6

 

PERSONAL GUARANTY

 

The undersigned (“Guarantor”), in consideration for and as an

inducement to Source One Personnel, Inc. (“Source One”) to enter into a certain

Promissory 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 of

Forbearance Agreement of even date herewith between Source One and

Stratus,(attached as Exhibit A”), that Guarantor does hereby

absolutely and unconditionally personally guaranty to Source One, its

successors and assigns, the full payment and performance of Stratus of all the

terms and conditions imposed upon Stratus in Note 3, together with the payment

of $629,547 due by Stratus to Source One by June 30, 2002, pursuant to the

terms of the Modification of Forbearance Agreement, constituting monies due and

past due under Note 1 and Note 2 through June 30, 2002, along with the monies

due 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 of

collection of Note 3 and costs of collection of this Guaranty, including

attorneys fees. (Notes 1, 2 and 3 are referred to herein as the “Notes”).

 

Except as set forth below, Guarantor hereby expressly waives any notice

of nonpayment, nonperformance, nonobservance, or default, notice of protest and

protest of the Note on the part of Stratus. Guarantor further covenants and

agrees that this Guaranty shall remain and continue in full force and effect as

to any further modification of the Forbearance Agreement and during the

extension of the term of the Forbearance Agreement.

 

Guarantor agrees to pay all costs incurred by Source One in enforcing

this Guaranty, including reasonable attorneys’ fees.

 

In the event Guarantor fails to perform the obligations herein and to

promptly comply with a demand by Source One for payment and performance of the

Notes and the Guaranteed Sum, with such default continuing for a period of

ten (10) days after written notice to Guarantor of such default, Source One

shall immediately have all available rights and remedies in law and in equity

against Guarantor.

 

Guarantor acknowledges and agrees that this is not  a Guaranty of Collection. It is a primary

obligation to Source One.  Liability on

this Guaranty shall not be conditional or contingent upon the pursuance by

Source One or anyone else of whatever remedies it may have against Stratus nor

shall Source One be required to exhaust, or in any other way look for the

security that Source One now has or that Source One may obtain or acquire in

the future. Source One shall not be obligated or required to pursue any

remedies it may have against Stratus, prior to pursuing any remedy against

Guarantor.  Not in limitation of the

generality of the foregoing, the liability of Guarantor hereunder shall remain

effective and enforceable even though Stratus’s liability under the Notes or

Loan Documents may be unenforceable or even though recovery against Stratus may

be barred by a statute of limitations, bankruptcy or otherwise.  Guarantor waives any defense arising by

reason of any cause whatsoever, of the liability of Stratus.  This Guaranty shall continue in full force

and effect, notwithstanding any insolvency or bankruptcy of Stratus.

 

7

 

Guarantor acknowledges that the granting of the loan evidenced by Note

3 to Stratus will result in material benefits to Guarantor.

 

Guarantor represents that the personal financial statement submitted to

Source One, dated June 3, 2002 is true and accurate in all material respects.

 

This Guaranty shall be interpreted according to the laws of the State

of New Jersey.  Guarantor agrees to

submit to the jurisdiction of the courts of Mercer County, New Jersey to

enforce the terms of this Guaranty.

 

IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be

executed 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

  	

   

  	

   

  	

   

  
							

 

8EXHIBIT

10.1

 

 

STRAIGHT NOTE

 

 

 

	

  $100,000

  	

   

  	

  South El Monte,

  California

  	

   

  	

  April 3, 2002

  

 

 

                For value

received, Lee Pharmaceuticals promises to pay Mark DiSalvo or order, at South

El Monte, California the sum of ONE HUNDRED THOUSAND DOLLARS, with interest

from April 3, 2002, on unpaid principal at the rate of twenty-four (24) per

cent per annum; principal is payable monthly, commencing on May 25, 2002, with

monthly principal payments of $5,000. 

Interest shall be calculated on the basis of the unpaid principal balance

daily, based on a 365-day year, actual day month and payable monthly.  Principal and interest shall be payable in

lawful money of the United States.  If

action were instituted on this note, I promise to pay such sum as the Court may

fix as attorney’s fees.  This note is

secured by the trademarks on the product brands One Step At A Time®,

lite’n® UP 50, and lite’n® UP 90.

 

 

 

 

 

	

  APRIL 3, 2002

  	

   

  	

  RONALD G. LEE

  	

   

  
	

  Date

  	

   

  	

  Lee Pharmaceuticals - Ronald G. Lee

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  APRIL 3, 2002

  	

   

  	

  MICHAEL L. AGRESTI

  	

   

  
	

  Date

  	

   

  	

  Lee Pharmaceuticals - Michael L. Agresti

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