Document:

Exhibit 10.67

    

      Exhibit
        10.67

      AGREEMENT
        TO EXCHANGE

      SERIES
        I PREFERRED STOCK

      FOR
        SECURED CONVERTIBLE NOTE

      

      

      THIS
        AGREEMENT,
        dated
        as of December 28, 2005, is entered into by and between STRATUS
        SERVICES GROUP, INC.,
        a
        Delaware corporation, with headquarters located at 500 Craig Road, Suite
        201,
        Manalapan, New Jersey 07726 (the “Company”) and Pinnacle Investment Partners,
        L.P., a New York limited partnership, with an office at 30 Montgomery Street,
        Suite 220, Jersey City, New Jersey 07032 (“Pinnacle”).

      WITNESSETH:

      WHEREAS,
        Pinnacle
        holds 21,531 shares of the Company’s Series I Preferred Stock (“Series I
        Preferred Stock”); and

      WHEREAS,
        the
        Company owes Pinnacle certain penalties monies in respect of such Series
        I
        Preferred Stock in the total amount of $100,000.00;

      WHEREAS,
        Pinnacle is willing to exchange the Series I Preferred Stock for a secured
        convertible note, in the form attached hereto, in the principal amount of
        $2,356,850 (the “Secured Note”).

      NOW,
        THEREFORE,
        in
        consideration for the foregoing, the parties hereto agree as
        follows:

      
        	
                1.

              	
                Exchange.
                  Pinnacle’s 21,531 shares of Series I Preferred Stock, including all unpaid
                  dividends and penalties due thereunder, will be exchanged as of
                  December
                  28, 2005 for the Secured Note. Thus, concurrently with the execution
                  of
                  this Agreement, Pinnacle shall deliver to the Company the stock
                  certificates evidencing the Series I shares duly endorsed
                  

              

      

      
        
           

        

        
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      for
        transfer to the Company (or accompanied by a stock power duly executed in
        blank)
        and the Company shall execute and deliver to Pinnacle the Secured
        Note.

      
        	
                2.

              	
                Related
                  Agreements.
                  Concurrently with the execution of this Agreement, the Company
                  shall
                  execute and deliver to Pinnacle a Pledge and Security Agreement,
                  UCC-1
                  financing statements and a confession of judgment, all in the form
                  attached hereto, to secure the Company’s obligations under the Secured
                  Note. Subject to the parties entering into an separate agreement
                  with
                  regard to the Series E Preferred providing for 35% of the exchanged
                  value
                  into the secondary offering, the parties also shall exchange mutual
                  releases, in the form attached hereto, with respect to actions
                  preceding
                  the date of this Agreement.. 

              

      

      
        	
                3.

              	
                Pinnacle’s
                  Representations, Warranties, Etc.; Access To Information; Independent
                  Investigation.
                  Pinnacle represents and warrants to, and covenants and agrees with,
                  the
                  Company as follows:

              

      

      
        	 	
                a.

              	
                Pinnacle
                  is exchanging the Series I Preferred Stock and accrued dividends
                  and
                  penalties thereon for the Secured Note for its own account for
                  investment
                  only and not with a view towards the public sale or distribution
                  thereof
                  and not with a view to or for sale in connection with any distribution
                  thereof.

              

      

      
        	 	
                b.

              	
                Pinnacle
                  is (i) an "accredited investor" as that term is defined in Rule
                  501 of the
                  General Rules and Regulations under the 1933 Act by reason of Rule
                  501(a)(3), and (ii) experienced in making investments of the kind
                  described in this Agreement and the related documents, (iii) able,
                  by
                  reason of the business and financial experience of its officers
                  (if an
                  entity) and professional advisors (who are not affiliated with
                  or
                  compensated in any way by the Company or any of its affiliates
                  or selling
                  agents),

              

      

      
        
           

        

        
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      to
        protect its own interests in connection with the transactions described in
        this
        Agreement, and the related documents, and (iv) able to afford the entire
        loss of
        its investment in the Secured Note.

      
        	 	
                c.

              	
                Pinnacle
                  understands that the Series I Preferred Stock, plus accrued dividends
                  and
                  penalties are being exchanged for the Secured Note in reliance
                  on specific
                  exemptions from the registration requirements of United States
                  federal and
                  state securities laws and that the Company is relying upon the
                  truth and
                  accuracy of, and Pinnacle's compliance with, the representations,
                  warranties, agreements, acknowledgements and understandings of
                  Pinnacle
                  set forth herein in order to determine the availability of such
                  exemptions
                  and the eligibility of Pinnacle to acquire the Secured
                  Note.

              

      

      d. Pinnacle
        and its advisors, if any, have been furnished with all materials relating
        to the
        business, finances and operations of the Company and materials relating to
        the
        exchange of the Series I Preferred Stock and the issuance of the Secured
        Note
        which have been requested by Pinnacle. Pinnacle and its advisors, if any,
        have
        been afforded the opportunity to ask questions of the Company and have received
        complete and satisfactory answers to any 
        such
        inquiries;

      
        	 	
                e.

              	
                Pinnacle
                  understands that no United States federal or state agency or any
                  other
                  government or governmental agency has passed on or made any recommendation
                  or endorsement of the Secured Note.

              

      

      
        	 	
                f.

              	
                This
                  Agreement has been duly and validly authorized, executed and delivered
                  on
                  behalf of Pinnacle and is a valid and binding agreement of Pinnacle
                  enforceable in accordance with its terms, subject as to enforceability
                  to
                  general principles of equity 

              

      

      
        
           

        

        
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      and
        to
        bankruptcy, insolvency, moratorium and other similar laws affecting the
        enforcement of creditors' rights generally.

      4. Company
        Representations, Etc.
        The
        Company represents and warrants to Pinnacle that:

      
        	 	
                a.

              	
                Reporting
                  Company Status.
                  The Company is a corporation duly organized, validly existing and
                  in good
                  standing under the laws of the State of Delaware, and has the requisite
                  corporate power to own its properties and to carry on its business
                  as now
                  being conducted. The Company is duly qualified as a foreign corporation
                  to
                  do business and is in good standing in each jurisdiction where
                  the nature
                  of the business conducted or property owned by it makes such qualification
                  necessary other than those jurisdictions in which the failure to
                  so
                  qualify would not have a material and adverse effect on the business,
                  operations, properties, prospects or condition (financial or otherwise)
                  of
                  the Company. The Company has registered its common stock pursuant
                  to
                  Section 12 of the Securities Exchange Act of 1934, as amended (the
                  "1934
                  Act"), and the Common Stock is listed and traded on the OTC Bulletin
                  Board
                  Market.

              

      

      
        	 	
                b.

              	
                Authorized
                  Shares.
                  The shares of common stock issuable upon conversion of the Secured
                  Note
                  have been duly authorized and, when issued to Pinnacle, will be
                  duly and
                  validly issued, fully paid and non-assessable and will not subject
                  the
                  holder thereof to personal liability by reason of being such
                  holder.

              

      

      
        	 	
                c.

              	
                Conversion
                  Agreement.
                  This Agreement and the transactions contemplated hereby, have been
                  duly
                  and validly authorized by the Company. This Agreement has been
                  duly
                  executed and delivered by the Company and is a valid and binding
                  agreement
                  

              

      

      
        
           

        

        
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      of
        the
        Company enforceable in accordance with its terms, subject as to enforceability
        to general principles of equity and to bankruptcy, insolvency, moratorium,
        and
        other similar laws affecting the enforcement of creditors' rights
        generally.

      
        	 	
                d.

              	
                Non-contravention.
                  The
                  execution and delivery of this Agreement by the Company, the issuance
                  of
                  the Secured Note, and the consummation by the Company of the other
                  transactions contemplated by this Agreement do not and will not
                  conflict
                  with or result in a breach by the Company of any of the terms or
                  provisions of, or constitute a default under (i) the articles of
                  incorporation or by-laws of the Company, (ii) any indenture, mortgage,
                  deed of trust, or other material agreement or instrument to which
                  the
                  Company is a party or by which it or any of its properties or assets
                  are
                  bound, (iii) to its knowledge, any existing applicable law, rule,
                  or
                  regulation or any applicable decree, judgment, or (iv) to its knowledge,
                  order of any court, United States federal or state regulatory body,
                  administrative agency, or other governmental body having jurisdiction
                  over
                  the Company or any of its properties or assets, except such conflict,
                  breach or default which would not have a material adverse effect
                  on the
                  transactions contemplated herein. The Company is not in violation
                  of any
                  material laws, governmental orders, rules, regulations or ordinances
                  to
                  which its property, real, personal, mixed, tangible or intangible,
                  or its
                  businesses related to such properties, are
                  subject.

              

      

      
        	 	
                e.

              	
                Approvals.
                  No
                  authorization, approval or consent of any court, governmental body,
                  regulatory agency, self-regulatory organization, or stock exchange
                  or
                  market is required to be obtained by the Company for the issuance
                  and sale
                  of the Secured Note to Pinnacle as contemplated by this Agreement,
                  except
                  such authorizations, approvals and consents that have been
                  obtained.

              

      

      
        
           

        

        
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                f.

              	
                SEC
                  Documents, Financial Statements.
                  The common stock of the Company is registered pursuant to Section
                  12(g) of
                  the 1934 Act and the Company has filed all reports, schedules,
                  forms,
                  statements and other documents required to be filed by it with
                  the SEC
                  pursuant to the reporting requirements of the Exchange Act, including
                  material filed pursuant to Section 13(a) or 15(d (all of the foregoing
                  including filings incorporated by reference therein being referred
                  to
                  herein as the "SEC Documents"), except that the Company has filed
                  a Form
                  12b-25 with respect to its Annual Report on Form 10-K that was
                  due for
                  filing with the SEC on or about December 31, 2005. The Company,
                  through
                  its agent, has delivered to Pinnacle true and complete copies of
                  the SEC
                  Documents (except for exhibits and incorporated documents). The
                  Company
                  has not provided to Pinnacle any information which, according to
                  applicable law, rule or regulation, should have been disclosed
                  publicly by
                  the Company but which has not been so disclosed, other than with
                  respect
                  to the transactions contemplated by this
                  Agreement.

              

      

      As
        of
        their respective dates, the SEC Documents complied in all material respects
        with
        the requirements of the Act or the Exchange Act as the case may be and the
        rules
        and regulations of the SEC promulgated thereunder and other federal, state
        and
        local laws, rules and regulations applicable to such SEC Documents, and none
        of
        the SEC Documents contained any untrue statement of a material fact or omitted
        to state a material fact required to be stated therein or necessary in order
        to
        make the statements therein, in light of the circumstances under which they
        were
        made, not misleading. The financial statements of the Company included in
        the
        SEC Documents comply as to form in all material respects with applicable
        accounting requirements and the published rules and regulations of the SEC
        or
        other applicable rules and regulations with respect thereto. Such financial
        statements have been prepared in accordance with generally accepted accounting
        principles applied on a consistent basis during the periods involved (except
        (i)
        as may be otherwise indicated in such financial statements or the notes thereto
        or (ii) in the case of unaudited interim 

      
        
           

        

        
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      statements,
        to the extent they may not include footnotes or may be condensed or summary
        statements) and fairly present in all material respects the financial position
        of the Company as of the dates thereof and the results of operations and
        cash
        flows for the periods then ended (subject, in the case of unaudited statements,
        to normal year-end audit adjustments).

      
        	 	
                g.

              	
                Absence
                  of Certain Changes.
                  Since September 30, 2005, there has been no material adverse change
                  and no
                  material adverse development in the business, properties, operations,
                  financial condition, or results of operations of the Company, except
                  as
                  set forth in the Company’s SEC
                  Documents.

              

      

      
        	 	
                h.

              	
                Full
                  Disclosure.
                  There is no fact known to the Company (other than general economic
                  conditions known to the public generally) or as disclosed in the
                  documents
                  referred to in Section 4(g), that has not been disclosed in writing
                  to
                  Pinnacle that (i) would reasonably be expected to have a material
                  adverse
                  effect on the business or financial condition of the Company or
                  (ii) would
                  reasonably be expected to materially and adversely affect the ability
                  of
                  the Company to perform its obligations pursuant to this
                  Agreement.

              

      

      
        
           

        

        
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                5.

              	
                Certain
                  Covenants And Acknowledgments.

              

      

      
        	 	
                a.

              	
                Filings.
                  The Company undertakes and agrees to make all necessary filings
                  in
                  connection with the exchange effected hereby under any United States
                  laws
                  and regulations, or by any domestic securities exchange or trading
                  market,
                  and to provide a copy thereof to Pinnacle promptly after such
                  filing.

              

      

      
        	 	
                b.

              	
                Reporting
                  Status.
                  So long as Pinnacle beneficially owns the Secured Note, the Company
                  shall
                  file all reports required to be filed with the SEC pursuant to
                  Section 13
                  or 15(d) of the 1934 Act, and the Company shall not terminate its
                  status
                  as an issuer required to file reports under the 1934 Act even if
                  the 1934
                  Act or the rules and regulations thereunder would permit such
                  termination.

              

      

      6. Governing
        Law: Miscellaneous.
        This
        Agreement shall be governed by and interpreted in accordance with the laws
        of
        the State of New York. A facsimile transmission of this signed Agreement
        shall
        be legal and binding on all parties hereto. This Agreement may be signed
        in one
        or more counterparts, each of which shall be deemed an original. The headings
        of
        this Agreement are for convenience of reference and shall not form part of,
        or
        affect the interpretation of, this Agreement. If any provision of this Agreement
        shall be invalid or unenforceable in any jurisdiction, such invalidity or
        unenforceability shall not affect the validity or enforceability of the
        remainder of this Agreement or the validity or enforceability of this Agreement
        in any other jurisdiction. This Agreement may be amended only by an instrument
        in writing signed by the party to be charged with enforcement. This Agreement,
        and the related agreements referred to herein, contain the entire agreement
        of
        the parties with respect to the subject matter hereto, superceding all prior
        agreements, understandings or discussions.

      
        
           

        

        
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                7.

              	
                Notices.
                  Any notice required or permitted hereunder shall be given in writing
                  (unless otherwise specified herein) and shall be deemed effectively
                  given,
                  (i) on the date delivered, (a) by personal delivery, or (b) if
                  advance
                  copy is given by fax, (ii) seven business days after deposit in
                  the United
                  States Postal Service by regular or certified mail, or (iii) three
                  business days mailing by international express courier, with postage
                  and
                  fees prepaid, addressed to each of the other parties thereunto
                  entitled at
                  the following addresses, or at such other addresses as a party
                  may
                  designate by ten days advance written notice to each of the other
                  parties
                  hereto.

              

      

      COMPANY: STRATUS
        SERVICES GROUP, INC.

      500
        Craig
        Road, Suite 201

      Manalapan,
        NJ 07726  

      Attn:
        Michael Maltzman

      Telecopier
        No.: (732) 866-6676

      

      PINNACLE:  PINNACLE
        INVESTMENT PARTNERS, L.P.

      30
        Montgomery Street, Suite 220

      Jersey
        City, New Jersey 07032

      Attn:
        Mr.
        Chris Janish

      Telecopier
        No.: (___) ___-_____

       

      8. Successors
        And Assigns.
        This
        Agreement shall be binding upon and inure to the benefit 

      of
        the
        parties hereto and their respective successors and permitted
        assigns.

      
        
           

        

        
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      IN
        WITNESS WHEREOF,
        the
        Company and Pinnacle have caused this Agreement to be executed by their duly
        authorized representatives on the date as first written above.

      

      STRATUS
        SERVICES GROUP, INC. 

      

      

      By:
        /s/
        Michael A. Maltzman

      Name:
        Michael Maltzman

      Title:
        Chief Financial Officer

      

      

      PINNACLE
        INVESTMENT PARTNERS, L.P.

      By:
        PIP
        Management, Inc., General Partner

      

      

      By:
        /s/
        Christopher Janish

      Name:
        Christopher Janish

      Title:
        President

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Exhibit 10.23  

 
 

AMENDMENT NO. 1 TO THE
  SECOND AMENDED AND RESTATED
  EMPLOYMENT AGREEMENT    
    

        This Amendment No. 1 to the Second Amended and Restated Employment Agreement (this "Amendment") is made and entered into effective as of January 30,
2006, and is effective as of October 1, 2005, by and between Seneca Gaming Corporation, a governmental instrumentality of the Seneca Nation of Indians of New York (the "Parent") and John
Pasqualoni ("Executive"). Capitalized terms not defined herein shall have the respective meaning ascribed to such terms in the Second Amended and Restated Employment Agreement made and entered into as
of April 6, 2005, by and between the Parent and Executive (the "Agreement"). 

        WHEREAS, the Board of Directors of the Parent adopted resolutions whereby it expressed its desire to amend Executive's Agreement in order
for Executive to be paid on a flat salary basis and not awarded bonuses as part of Executive's compensation, and to account for the appointment of Executive as President and Chief Executive Officer in
July 2005. 

        WHEREAS, pursuant to such resolutions, the Parent and Executive have agreed to amend the Agreement as set forth herein. 

        NOW, THEREFORE, in consideration of the above premises and other good and valuable
consideration, receipt of which is hereby acknowledged, the Parent and Executive agree as follows: 

        1.     Sections
3(a), 3(c), and 3(g) of the Agreement are hereby amended in their entirety to read as set forth below; and the contents of Sections 3(b), 3(d) and 3(e) are
hereby deleted in their entirety with the words "Intentionally omitted" inserted in lieu thereof: 

        "3.   Compensation. 

	(a)
	Executive
shall be paid "Base Compensation" of a minimum annual salary of Nine Hundred Twenty-Three Thousand Seven Hundred and Fifty Dollars ($923,750) for Employer's fiscal year
ending September 30, 2006, and an annual salary of Nine Hundred Twenty-Three Thousand Seven Hundred and Fifty Dollars ($923,750) for Employer's fiscal year ending September 30, 2007,
with respect to his service for the Employer, with a salary review by the Board each fiscal year thereafter at which time the Board shall determine whether, in its sole discretion, Executive's Base
Compensation shall be increased. Said salary shall be payable periodically in accordance with the Employer's regular payroll practice.

	(c)
	Executive
shall also be eligible to receive any additional performance or incentive compensation, which is approved by the Board in its sole discretion. Said additional performance or
incentive compensation, if any, shall be in addition to and shall not lessen or reduce the Base Compensation. In exercising its discretion, the Board shall specifically consider the extent to which
the goals of the Employer are being met and the extent to which Executive has contributed to same.

	(g)
	Any
compensation, if any due under paragraph 3(c) of this Agreement shall be payable within ninety (90) days after the close of the fiscal year with respect to which it
is earned. 

        2.     Section 5(c)
of the Agreement is hereby amended in its entirety to read as follows: 

	"(c)
	If
Executive's employment should be terminated under paragraph 5(a)(iv) or (v) above, then the Employer shall at that time pay Executive (or his estate) his Base
Compensation earned through the date Executive is terminated; whereupon the Employer shall have no further liability or obligation to Executive under this Agreement or otherwise." 

 

        3.     Section 5(d)
of the Agreement is hereby amended in its entirety to read as follows: 

	"(d)
	If
Executive's employment should be terminated by the Parent for any reason other than those specified in paragraph 5(a) above (it being understood that a purported
termination for Cause which is contested by Executive and finally determined not to have been proper shall be treated as a termination under this paragraph 5(d)), then the Employer shall:
(i) pay Executive his Base Compensation earned, but unpaid, through the date Executive is terminated, (ii) continue to pay Executive his Base Compensation in effect as of the date of
termination for a period following his termination (the "Severance Period") equal to the lesser of (A) eighteen (18) months or (B) the remainder of the period ending on the
Termination Date, and (iii) to the extent elected by Executive, pay for the cost of (A) Executive's premiums for continuation healthcare coverage under Section 4980B of the
Internal Revenue Code of 1986, as amended ("COBRA"), and (B) the premiums for Exec-u-Care® or any similar executive medical reimbursement insurance plan
maintained by the Employer on the date Executive's employment is terminated, for the lesser of (1) the Severance Period, (2) until Executive is no longer eligible for COBRA continuation
coverage, or (3) until Executive obtains comparable healthcare benefits from any other employer during the Severance Period, whereupon the Employer shall have no further liability or obligation
to Executive under this Agreement or otherwise; provided, however, that Executive shall have a duty to
mitigate damages as follows: during the Severance Period, Executive shall endeavor to mitigate damages by seeking employment with duties and salary comparable to those provided for herein, and if he
shall obtain such employment, he shall reimburse the Employer the amount of the compensation he has received from such other entity for such period, but not to exceed the amount of the compensation
the Employer shall have paid him for such period." 

        4.    Effect on the Agreement.    Except as specifically amended or waived by this Amendment, all terms and conditions
of the Agreement shall remain in full force and effect. The term "Agreement" used in the Agreement shall mean the Agreement as amended hereby. 

        5.    Counterparts.    This Amendment may be executed in counterparts each of which shall be deemed to be an original
but all of which shall constitute one and the same agreement. 

        6.    Governing Law.    This Amendment shall be governed by and construed in accordance with the laws of the State of
New York, without regard to its principles of conflicts of law. 

        IN
WITNESS WHEREOF, each of the parties have caused this Amendment to be executed on its behalf by its officers thereunto duly authorized as of the day and year first written above. 

	 	 	SENECA GAMING CORPORATION
	

 	
 	

By:	

/s/  BARRY E. SNYDER, SR.      
 Name: Barry E. Snyder, Sr.

Title: Chairman of the Board
	

 	
 	
EXECUTIVE
	

 	
 	

By:	

/s/  JOHN PASQUALONI      
 Name: John Pasqualoni

2

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AMENDMENT NO. 1 TO THE SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

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