Document:

Exhibit 10.55

    EXHIBIT
      10.55

     

    

    

    CAPITAL
      TEMPFUNDS

    a
      division of CAPITAL FACTORS LLC,

    One
      Brixam Green, 15800 John J. Delaney Drive, Suite 300, 

    Charlotte,
      North Carolina 28277

    

    November
      3, 2005

    

    Michael
      A. Maltzman, CFO

    Stratus
      Services Group, Inc.

    500
      Craig
      Road

    Suite
      201

    Manalapan,
      New Jersey 07726

    

    Re:
      AMENDED AND RESTATED FORBEARANCE AGREEMENT (the “Forbearance Agreement”), dated
      as of August 11, 2005, as amended as of August 25, 2005, September 1, 2005,
      September 8, 2005, September 15, 2005, September 29, 2005, October 6, 2005,
      October 12, 2005 and October 19, 2005 by and between CAPITAL TEMPFUNDS, a
      division of CAPITAL FACTORS LLC, (“Capital”), and STRATUS SERVICES GROUP, INC.
      (“Borrower”)

    

    Dear
      Mr.
      Maltzman:

    

    It
      is
      mutually agreed between the parties hereto that the Forbearance Agreement be
      further amended as follows (all capitalized terms not defined herein shall
      have
      the meaning given such term in the Forbearance Agreement):

    

    	(a)  	
            Clause
              (a) of the first sentence Section 3 of the Forbearance Agreement, is
              hereby further amended to replace “November 4, 2005” with “November18,
              2005”;

          

    

    	(b)  	
            Section
              7 of Forbearance Agreement shall be amended by adding new subsections
“g”
              and “h” thereto as follows;

          

    

    “(g)
      No
      later than November 11, 2005, Borrower and ALS, LLC or its affiliated company,
      Advantage Services Group (collectively, “Advantage”) shall have entered into a
      binding agreement, approved in all respects by Capital, for the sale by Borrower
      of all of the assets described in the first “bullet point” contained in that
      certain Term Sheet dated November 1, 2005 between Borrower and Advantage;
      and

    

    (h)
      No
      later than November 18, 2005, there shall be invested in Borrower no less than
      $1,000,000 in the form of a) equity, b)subordinated indebtedness (pursuant
      to
      terms acceptable to Capital); c) a junior participation with Capital in loans
      made and to be made to Borrower; or d) a complete subordination by Advantage
      of
      Borrower’s indebtedness to Advantage in that amount.”

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    (c)
      For
      the period commencing on the date hereof through November 11, 2005, Capital
      shall retain an additional reserve of $100,000.

    

    (d)
      In
      consideration of the additional forbearance referred to herein, Borrower hereby
      authorizes Capital to charge Borrower’s loan account with an additional
      Forbearance Fee of $50,000 upon the execution of this letter
      agreement.

    

    The
      Borrower hereby represents and warrants to Capital that, after giving effect
      to
      this letter agreement, no Default or Event of Default other than the Designated
      Defaults has occurred and is continuing. Borrower hereby acknowledges and agrees
      that a breach of the representation and warranty set forth herein shall
      constitute a Forbearance Default under the Forbearance Agreement and an Event
      of
      Default under the Loan Agreement. This letter agreement shall not be deemed
      to
      be a waiver, amendment or modification of, or consent to or departure from,
      any
      provisions of the Loan Agreement, the Forbearance Agreement or any other Loan
      Document or to be a waiver of any Forbearance Default under the Forbearance
      Agreement or Default or Event of Default under the Loan Agreement or any other
      Loan Document whether arising before or after the date hereof (except for the
      specific amendment referenced above in this letter agreement), and this letter
      agreement shall not preclude the future exercise of any right, remedy, power
      or
      privilege available to Capital whether under the Forbearance Agreement, the
      Loan
      Agreement, the other Loan Documents or otherwise. All capitalized terms not
      otherwise defined herein shall have the meanings given to them in the
      Forbearance Agreement.

    

    This
      letter agreement shall be deemed to be a Loan Document for all purposes. This
      letter agreement may be executed in one or more counterparts, each of which
      shall be deemed an original and all of which taken together shall constitute
      one
      and the same agreement. Any signature delivered by a party by facsimile
      transmission shall be deemed to be an original signature hereto.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    

     

    If
      the
      above provisions are satisfactory to you, please execute this letter agreement
      as set forth below and return it to Capital.

    

                    Capital
      TempFunds, a
      division of Capital Factors, LLC

    

    

                    By:
/s/
      James
      Rothman

    

                    Its:
      President

    

    Acknowledged
      and Agreed:

    Stratus
      Services Group, Inc.

    

    

    By:
      /s/ Michael A. Maltzman

    

    Its:
      Executive V.P. & CFO

    

    

    /s/
      Joseph J. Raymond

    Joseph
      J.
      Raymond, Individually

    

    3Exhibit 10.56

    

      EXHIBIT
        10.56

       

      November
        2, 2005

      

      CONFIDENTIAL

      

      Michael
        A. Maltzman, CFO

      Stratus
        Services Group, Inc.

      500
        Craig
        Road

      Suite
        201

      Manalapan,
        New Jersey 07726

      Stratus
        Services Group

      

      Re:
        Binding letter agreement to purchase certain assets of Stratus Services Group,
        Inc. (“Stratus” or the “Company”)

      

      

      Dear
        Mr.
        Maltzman: 

      

      ALS,
        LLC
        (“ALS” or “Purchaser”) proposes to acquire certain assets (the “Purchased
        Assets”) of the Company pursuant to the terms and conditions set forth below
        (the “Transaction”). 

      

      1. Purchase
        Price and Terms.
        Except
        to the extent set forth within this letter, the terms of Transaction are
        as
        described in the Term Sheet attached hereto as Exhibit “A” (the “Term Sheet”).
        The defined terms set forth in the Term Sheet shall have the same meaning
        herein. 

      

      2.  Definitive
        Agreements.
        Consummation of the Transaction will be subject to the execution of mutually
        acceptable definitive purchase agreements and other applicable documents.
        The
        purchase agreements will include reasonable indemnification provisions;
        representations and warranties by the Company regarding ownership of and
        ability
        to convey free and clear of liens the Purchased Assets, and compliance with
        laws; reasonable non-competition covenants; and other standard and customary
        provisions for transactions of this type. All indemnification provisions
        and
        representations and warranties by the Company will survive the
        closing.

      

      The
        closing of the Transaction will be subject to the following conditions
        precedent:

       

      
        	 	
                (a)

              	
                Approval
                  of the board of directors of the Company;

              

      

       

      
        	 	
                (b)

              	
                A
                  shareholder vote authorizing the Company to consummate the
                  sale

              

      

       

      
        	 	
                (c)
                  

              	
                Receipt
                  of all legally required third party approvals, other governmental
                  or
                  third-party consents and approval of the Company’s lenders.
                  

              

      

       

      
        	 	
                (d)

              	
                Receipt
                  of a commitment from Purchaser’s Lender for the financing required to
                  consummate the Transaction.

              

      

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      

       

      3. Due
        Diligence; Best Efforts and Access.
        Both
        parties acknowledge that all necessary due diligence has been completed so
        that
        the parties are presently able to enter this binding letter agreement. The
        Company and the Purchaser each agree to use best efforts to seek and obtain
        all
        necessary approvals, including shareholder approval by the Company, and to
        satisfy all conditions precedent. Without limited the generality of the
        foregoing, the parties agree to use best efforts to have all conditions
        precedent, other than approval by the Company’s shareholders, satisfied by
        November 30,2005. The Company will continue to provide Purchaser and its
        accountants, lawyers, and other agents access to the Company’s books and
        records, files, and other necessary documents, and make available appropriate
        employees, consultants, accountants, legal counsel and other agents or
        representatives in order to permit Purchaser to obtain all necessary information
        to obtain required financing, to consummate the Transactions and ensure that
        no
        material changes have occurred. 

      

      4. Confidentiality
        and Publicity.
        The
        parties each agree that they will not, except as legally obligated to, without
        the prior written consent of the other, disclose the existence of this letter,
        the terms hereof, the existence or status of negotiations or any information
        concerning the transaction contemplated hereby, except as required by law
        and to
        their respective directors, officers, employees and agents who have a need
        to
        know in order to consummate the transaction contemplated. Notwithstanding
        the
        foregoing or anything contained in any confidentiality agreement previously
        executed by the parties, Company shall allow Purchaser to contact and provide
        financial information to any financing source deemed necessary by Purchaser.
        

      

      5. Non-Solicitation.
        Company
        will not directly or indirectly solicit or encourage any inquiries or proposals
        from (nor enter into any agreements with) any person other than Purchaser
        for
        the purchase of the Purchased Assets, or enter into discussions with, or
        furnish
        any non-public information concerning Company, its assets or business, to
        any
        such other person in connection with such proposal, until shareholder approval
        for the Transaction is obtained or denied or this agreement is terminated
        as a
        result of ALS’ failure to satisfy the conditions set forth in section 2 (d)
        above by January 30th
        2006.;
        Company shall promptly notify Purchaser of any such proposal or inquiry received
        by Company, or any of their representatives. The non-solicitation period
        shall
        be extended pursuant to the definitive purchase agreement.

      

      6. Fees
        and Expenses.
        Company
        and Purchaser shall bear their own costs and expenses related to the transaction
        contemplated by this letter, including, without limitation, fees and expenses
        of
        legal counsel and accountants. 

      

      7. Further
        Assurances.
        The
        parties hereby agree to execute any other documents or agreements reasonably
        necessary to consummate the Transaction and the agreements made
        herein.

      

      8. Binding
        Effect of this Letter Agreement.
        This
        letter agreement constitutes a binding and enforceable agreement between
        the
        parties to consummate the Transaction subject only to the conditions precedent
        set forth herein and in the Term Sheet. The provisions of sections 3, 4,
        5 and 6
        are binding on the parties and enforceable against one another immediately
        upon
        execution and are not subject to any condition.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      

      

      Please
        execute this letter agreement below indicating the Company’s acceptance of and
        agreement to the terms set forth herein. We look forward to working with
        you
        toward the successful consummation of this Transaction.

      

                          Very
        truly
        yours,

      

                          ALS,
        LLC

      

      

                          By:
/s/
        Jay Wolin

       

      Accepted
        and agreed:

      

      STRATUS
        SERVICES GROUP, INC.

      

      

      By:
        /s/
        Joseph J. Raymond 

      

      Date:
        11/3/05

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      Exhibit
        “A” to Letter of Intent

      Term
        Sheet

      November
        2, 2005

      

      
        	
                Proposed
                  Transaction

              	
                The
                  sale, free and clear of all liens and encumbrances, of (i) all
                  accounts
                  receivable (the “Receivables”) and (ii) the contracts and fixed assets
                  related to Stratus’ Southern California region, Phoenix region and Dallas
                  Morning News account (collectively, the “Purchased Accounts” and together
                  with the Receivables, the “Purchased Assets”)

              
	
                Proposed
                  Buyer

              	
                ALS
                  or its designee

              
	
                Sale
                  Structure

              	
                Asset
                  Purchase Agreement approved by (i) the Stratus’ Board of Directors and
                  (ii) the Stratus shareholders in a special meeting 

              
	
                Existing
                  Senior Secured Debt

              	
                To
                  be paid in full or otherwise satisfied at or prior to Closing
                  

              
	
                Interim
                  financing general terms and conditions:

              	
                ALS
                  will fund up to $1 million of cash flow shortfall from day to day
                  operations, from November 1, 2005 through the completion of a shareholder
                  vote on the following conditions:

                 

                · ALS
                  must receive satisfactory collateral

                · All
                  Stratus disbursements are made in the ordinary course

                · No
                  default in the exclusivity provisions of this term sheet

                · Shareholder
                  vote no later than January 30, 2006

              
	
                Purchase
                  Price

              	
                The
                  purchase price shall be approximately $20 million for the Purchased
                  Assets. The purchase price shall be paid as follows:

                 

                · $3.0
                  million in cash at Closing

                · $6.0
                  million earnout, payable monthly in arrears in an amount equal
                  to 15% of
                  collected gross profit from the Purchased Accounts (the
                  “Earnout”)

                · Payment
                  or other satisfaction of the existing funded senior debt, excluding
                  any
                  unpaid fees or other service charges (estimated to be $9.5 million)
                  (the
                  “Funded Senior Debt”)

                · Forgiveness
                  of Stratus’ indebtedness to ALS as of Closing (estimated to be $2.5
                  million) (the “ALS Debt”)

              
	
                Earnout
                  Offset

              	
                The
                  Earnout shall be subject to the following offset:

                 

                · In
                  the event ALS’ collection of the Receivables is less than the sum of (i)
                  the Funded Senior Debt and (ii) the ALS Debt, there will be a dollar
                  for
                  dollar reduction in the Earnout

              

      

      

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      

      
        	
                Exclusivity

              	
                Stratus
                  shall negotiate exclusively with ALS towards the completion of
                  the
                  transaction described in this term sheet from October 31, 2005
                  through the
                  shareholder vote 

              
	
                Shareholder
                  vote

              	
                Stratus
                  shall have a special meeting of shareholders and have shareholders
                  vote on
                  the transaction described in this term sheet no later than January
                  30,
                  2006

              
	
                Pre-Closing
                  Transaction

              	
                · Prior
                  to Closing, ALS may purchase all the Receivables for an amount
                  equal to
                  the Funded Senior Debt

                · In
                  the event ALS chooses to execute this pre-Closing transaction,
                  ALS will
                  direct bill all Stratus’ customers and receive a service fee from Stratus
                  for such services

                · In
                  the event ALS chooses to execute this pre-Closing transaction,
                  the
                  Purchased Assets will exclude the Receivables and the purchase
                  price due
                  at Closing will exclude amounts paid pursuant to this pre-Closing
                  transaction

              
	
                Post-Closing
                  Relationship between Stratus & ALS

              	
                · Stratus
                  will provide up to three (3) months of post-Closing support and
                  transition
                  services (billing, collection, etc) at no cost to ALS. Stratus
                  shall make
                  best efforts to (i) transition the Purchased Assets to ALS and
                  (ii)
                  maintain personnel required to satisfy its obligations to provide
                  such
                  support and transition services.

                · For
                  the remaining term of the Outsourcing Agreement, ALS will continue
                  to
                  process Stratus payroll at rates negotiated prior to ALS’ acquisition of
                  Stratus’ Northern California assets. The agreement will be terminable with
                  30 days notice by either party. It will be terminable by Stratus
                  only if
                  all obligations to ALS are paid in full.

                · Stratus,
                  ALS, each of their officers and Jeff Raymond and his affiliated
                  entities
                  will execute non-compete and non-solicitation agreements with respect
                  to
                  each other’s assets post-Closing

              
	
                Other
                  terms and conditions

              	
                Customary
                  for transactions of this type

              

      

      

      5

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