Document:

Exhibit
10.17

 

March 2, 2004

 

 

Via Fax: 
011 1 480 436 231

 

Board of Directors

Artisan (UK) plc

Dean House, Sovereign Court

Ermine Business Park, Huntingdon

Cambridgeshire PE29 6 XU

England

 

Re:          Stratus
Services Group, Inc.; Series A Transaction

 

Gentlemen:

 

Please let
this serve as memorialization of an amendment (the “Amendment”) to the prior
agreement dated July 31, 2003 (the “Agreement”) between Stratus Services Group,
Inc. (“Stratus”) and Artisan (UK) plc (“Artisan”), the sole beneficial
shareholder of Stratus’ issued and outstanding Series A Preferred Stock (the
“Series A Stock”).

 

As Artisan is
aware, Stratus is currently working towards the filing of an S-1 Registration
Statement for a continuous offering of units to consist of Stratus common stock
and warrants, the precise terms of which have not yet been finalized (the
“Continuous Offering”).  As discussed
with Artisan, Stratus is willing to agree to redeem the Series A stock, subject
to the terms and conditions set forth below, in the event that Stratus through
its underwriters completes a Continuous Offering raise in an aggregate amount
of at least $1.0 million (for purposes of this letter agreement only the
receipt of such $1.0 million in the aggregate by the underwriters shall mean
the  “Initial Closing”).

 

Assuming that this Initial Closing is indeed
completed by no later than April 30, 2004, the parties hereto hereby agree
that, upon the Initial Closing, the Series A Stock shall be redeemed in full by
Stratus and thereafter cancelled, pursuant to the following terms:

 

1.             Within seven (7) days
after the completion of the Initial Closing, Stratus will pay to Artisan the
lump sum of Five Hundred Thousand Dollars ($500,000.00).

 

 

2.             By January 31, 2005,
Stratus shall either, at its option (i) pay Artisan the sum of Two Hundred
Fifty Thousand Dollars ($250,000.00), or (ii) within three (3) business days
from January 31, 2005, deliver to Artisan shares of common stock registered for
resale and freely tradeable with an aggregate value of $250,000.00, based on
the average of the closing bid prices for Stratus’ common stock for the thirty
(30) consecutive trading days prior to January 31, 2005.

 

No interest
will accrue on this obligation through January 31, 2005; however, in the event
that Stratus shall default on its obligations to pay such $250,000.00 in cash
or in stock, then Artisan shall be entitled to receive a lump sum payment of
$300,000 cash only, plus default interest, at a rate of eighteen percent (18%)
calculated on a daily basis, from the date of the default until the default is
cured.

 

3.             Artisan or its
designee will receive within seven (7) days of the completion of the Initial
Closing, one million, seven hundred fifty thousand (1,750,000) shares of common
stock (the “Common Stock”).  This amount
of shares assumes that the Company has already completed its contemplated 1 for
4 reverse stock split (i.e., this amount of shares is post split).  In the event that the reverse split deviates
in any manner from the contemplated 1 for 4, then the amount of shares to be
issued shall be shall be adjusted proportionately as well (i.e., assuming a
reverse split of 1 for 3, the amount of shares to be issued be would be
2,333,333, if there is no reverse split, the amount of shares to be issued
would be 7,000,000).

 

In conjunction
with this issuance of Common Stock, Artisan agrees to the following lock-up
agreement with Stratus (the “Lock-Up Agreement”) with the following terms:

 

(a)           Any Common Stock issued in connection with
section 3 of this Amendment shall be subject to a lock-up for a period of
fourteen (14) months following the earlier of the Initial Closing and issuance
of the Common Stock, however, Artisan will retain the voting rights to
same.  Thereafter, assuming the
completion of a 1-for-4 reverse split by Stratus in connection with the
Continuous Offering, Artisan shall be entitled to sell up to 200,000 shares of
Common Stock per month.  This dribble
out shall in all respects be released on December 31, 2005.

 

(b)           Any other common stock held by Artisan as of
the date of the signing of this Agreement, shall be subject to lock-up for a
period of one hundred thirty-five (135) days from the completion of the
Initial. Thereafter, assuming the completion of a 1-for-4 reverse split by
Stratus in connection with the Continuous Offering, Artisan shall be entitled
to sell up to 25,000 shares of common stock per month.  While the shares released from the lock-up
do not aggregate monthly, (i.e. if 25,000 shares are not sold in month one
50,000

 

2

 

shares may not be sold in month two), this 25,000 per month share
limitation shall in all respects be released on July 1, 2004.  Further, in the event that the reverse split
deviates in any manner from the contemplated 1 for 4, then the amount of shares
to be released monthly from the lock-up shall be adjusted proportionately as
well (i.e., assuming a reverse split of 1 for 3, the amount of shares to be
released monthly from lock-up would be 33,333).

 

4.             All of the foregoing
is contingent upon the following:

 

(a)           Approval by the Board of Directors of
Stratus within two (2) business days of the date hereof;

 

(b)           Approval by the Board of Directors of
Artisan within two (2) business days of the date hereof;

 

(c)           Completion of the Initial Closing.  However, if Stratus raises less than $1.0
million through its underwriters in the Continuous Offering by April 30, 2004,
it may, at its option, still elect to deliver the $500,000 and 1,750,000 shares
of its common stock.

 

5.             If Stratus does not
deliver the $500,000 and the 1,750,000 shares of its outstanding common stock
within seven (7) days of the Initial Closing, or if Stratus does not, per 4(c)
elect, at its option, to deliver the $500,000 and 1,750,000 shares of its
outstanding common stock on or prior to April 30, 2004, then Artisan will have
the right to immediately terminate this Amendment, with no further obligations
hereunder and without prejudicing any of its available rights and remedies
under applicable law or equity.

 

6.             Upon execution of
this Amendment, Stratus will deliver into the escrow account of such New York
counsel as Artisan or its designee, Ken Levine, shall name (the “Escrow Agent”)
all voting rights to the Series A Stock and the common stock held by Artisan as
of the date of the signing of this Amendment. 
Upon the completion of the Initial Closing and the delivery of the lump
sum payment and common shares by Stratus pursuant to the terms of Items 1
through 4 above, the Escrow Agent shall deliver from escrow to Artisan any
voting rights that Stratus and/or Joseph J. Raymond, Sr., Stratus’ Chairman,
President and CEO, may have with respect to the Artisan Series A stock and
common shares.

 

7.             Artisan shall have
the right to assign its rights under this Addendum to Ken Levine, or an entity
affiliated with Ken Levine, or any other wholly-owned subsidiary that Artisan
may so designate.

 

3

 

If you are in agreement with the following,
please sign below where indicated and return a copy to the undersigned.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Very truly yours,

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Stratus Services
  Group, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph J. Raymond

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  CEO

  	
   

  
									

 

 

AGREED TO AND
ACCEPTED:

 

Artisan (UK) plc

 

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Name:  Chris Musselle

  	
   

  
	
  Title:   Financial Director

  	
   

  

 

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EXHIBIT 4.1.13    
    

	SERIES I PREFERRED STOCK

NUMBER	 	SERIES I PREFERRED STOCK

SHARES

[STRATUS
SERVICES GROUP, INC. LOGO] 

INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

SEE REVERSE FOR CERTAIN RESTRICTIONS 

This
Certifies that 

is
the owner of 

FULLY PAID AND NON-ASSESSABLE SHARES OF THE

SERIES I PREFERRED STOCK,  

$0.01
PAR VALUE, OF 

STRATUS SERVICES GROUP, INC.  

transferable
on the books of the Corporation by the holder hereof in person or by duly authorized Attorney upon surrender of this certificate properly endorsed. This certificate is not valid until
countersigned and registered by the Transfer Agent and Registrar. 

        WITNESS
the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. 

Dated                                       
 

[STRATUS
SERVICES GROUP, INC. Corporate Seal] 

	/s/ J. TODD RAYMOND, ESQ.

SECRETARY	 	/s/ JOSEPH J. RAYMOND

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

STRATUS SERVICES GROUP, INC. 

        The
Corporation will furnish without charge to each stockholder who so requests a copy of the powers, designations, preferences and relative, participating, optional or other special
rights to each class of stock or series thereof, and the qualifications, limitations, or restrictions of such preferences and/or rights. 

        The
following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or
regulations: 

	TEN COM—as tenants in common UNIF GIFT MIN ACT—	 	CUSTODIAN
	Custodian	 	
	 	

	 	 	(CUST)	 	(MINOR)
	 	 	Under Uniform Trans to Minors

(State)

TEN ENT—as tenants by the

entireties 

JT
TEN—as joint tenants with

right of survivorship and not as

tenants in common 

        Additional
abbreviations may also be used though not in the above list. 

FOR
VALUE RECEIVED,
                                        
hereby sell, assign and transfer unto 

PLEASE
INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE 

	
	 	 
	 	 	 
	

	
 	

 
	 	 	 
	

	(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
	 	 	 
	 	 	 
	

	 	 	 
	
	 	 
	 	 	Shares

	represented by the within Certificate, and do hereby irrevocably constitute and appoint
	 	 	 
	 	 	 
	

	Attorney	 	 
	

to transfer the said shares on the books to the within named Corporation with full power of substitution in the premises.

Dated:                                       
 

	 	 	 	 	 	 

	

 	
 	

X	

	
 	

 
	 	 	 	 	 	 
	

 	
 	

X	

	
 	

 
	 	 	 	NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.	 	 

THE
SIGNATURES(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15. 

	SIGNATURE(S) GUARANTEED BY:	 	 
	 	 	 
	

	
 	

 

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EXHIBIT 4.1.13

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