Document:

Exhibit 10.29 - Termination of Mgmt. Agreement

 

March 29, 2005

 

Via Fax: 407-438-8949

 

Messrs. Michael J. O’Donnell

and Joseph J. Raymond, Jr.

Members of ALS, LLC

c/o Advantage Services Group, LLC

27 North Summerlin Avenue

Orlando, FL 32801

 

Re:    Termination of Management Agreement

 

Dear Messrs. O’Donnell and Raymond, Jr.:

 

The purpose of this letter is to confirm our understanding that Stratus Services Group, Inc. (“Stratus”) and ALS, LLC (“ALS”) have mutually agreed to terminate the Management Agreement between the parties dated as of February 2, 2005 and that all of the provisions of such agreement are hereby null and void and of no further force or effect.

 

This letter is also intended to confirm our understanding that the Outsourcing Agreement dated August 13, 2004 between Stratus and ALS is hereby reinstated on its original terms except that:

 

(i) The penultimate sentence of Section 3 is hereby revised to read in its entirety as follows:

 

The fee shall be equal to 3% of what the payroll for the California branches of Stratus would have been over that period of time.

 

(ii) The following sentence is hereby added to the end of Section 3.

 

No termination fee will be payable if Stratus terminates the agreement solely with respect to business done outside of the State of California (the “Non-California Business”); provided, however, that if Stratus terminates the agreement with respect to the Non-California Business, it will reimburse ALS for reasonable costs and expenses incurred by it in connection with taking on the Non-California Business and such termination of the Non-California Business. 

 

(iii) Section 8 hereof is hereby amended and restated in its entirety as set forth in Exhibit A hereto.

 

(iv) Exhibit A to the Outsourcing Agreement is hereby amended to add thereto the States of New Jersey, Delaware, Pennsylvania, Maryland, New York, Massachusetts and Texas. The billing rate for such services in such states shall be at the rates set forth on Exhibit E of the Management Agreement. Compensation shall be payable under the Outsourcing Agreement as if it had been in effect during all periods after its effective date of August 13, 2004; provided, however, that such compensation shall be payable in accordance with the rates set forth on Exhibit E to the Management Agreement, and any amount paid by Stratus to ALS under the Management Agreement shall be credited against amounts owed under the Outsourcing Agreement.

 

	  
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ALS and Stratus further agree that the individuals identified on Exhibit B hereto shall remain as employees of ALS (the “Transition Employees”) for a period that will not last beyond the date of the earlier of (a) the termination of the Non-California Business or (b) the termination of the Outsourcing Agreement, and that ALS and Stratus will enter into a Transition Agreement which will provide, among other terms that the parties may agree to, that Stratus will be responsible for paying any commissions owed to such Transition Employees for sales made on behalf of Stratus and will reimburse the Transition Employees for reasonable business expenses incurred with respect to sales activities undertaken with respect to the business of Stratus.

 

This Agreement may be executed in one or more counterparts, each of which shall be an original but all of which shall be deemed to be one and the same instrument.

 

Kindly confirm your agreement to the above by signing below and returning a copy to the undersigned.

 

	 	
Very truly yours,

	 	
Stratus Services Group, Inc.

	 	
By: /s/ Joseph J. Raymond

	 	 
	 	
Joseph J. Raymond

	 	
Chairman and CEO

	
AGREED TO AND ACCEPTED BY:
	 
	
ALS, LLC

By: /s/ Michael J. O’Donnell    

Michael J. O’Donnell
	
WITNESS:

	
Title: CEO    
	
WITNESS:

	
By: /s/ Joseph J. Raymond    

Joseph J. Raymond, Jr.
	 
	
Title:    
	 

 

	  
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EXHIBIT A

 

Section 8. INVOICING of the OUTSOURCING AGREEMENT shall be replaced in its entirety with the following:

 

8.    INVOICING

 

ADVANTAGE’s invoices to STRATUS will be rendered weekly. Except as noted below, all invoices shall be billed directly to STRATUS and not to STRATUS clients. Client will receive invoices from STRATUS.

 

ADVANTAGE’s billings to STRATUS shall be in ADVANTAGE’s standard format, which is set forth on Exhibit D attached hereto, the general form of which STRATUS hereby acknowledges. STRATUS shall, upon receipt of each ADVANTAGE weekly invoice, forward a check or checks representing one hundred percent (100%) of the invoiced amount, which checks ADVANTAGE shall deposit according to the schedule of 25% on the Due Date, Friday, 25% the following Monday, 25% the following Tuesday, and 25% the following Wednesday, or such other times as to which the parties shall mutually agree. In consideration for extending the terms, and in order for ADVANTAGE to evaluate continuing such terms, STRATUS will provide financial information acceptable to ADVANTAGE.

 

In the event that STRATUS defaults on any of its payment obligations hereunder to ADVANTAGE by not paying same as noted above, (“Payment Default”), ADVANTAGE shall simultaneously deliver, to STRATUS and to Capital Temp Funds or any successor lender thereto (the “Lender”), a Notice of Default (Email to Jeffrey Raymond, the Lender, and Michael Maltzman is considered notice). STRATUS shall have eight (8) business hours to cure such Notice of Default. If STRATUS does not cure same, the Lender will direct payment of funds to ADVANTAGE, to cover as much of STRATUS’ Payment Default as can be paid from STRATUS’ Available Amount under its Line of Credit with the Lender. The Lender will make such direct payment of funds available to ADVANTAGE until the Payment Default has been cured, and for a period of thirty (30) days thereafter. Further subject to the consent of the Lender, in the event that Stratus defaults on any of its payment obligations hereunder, Advantage shall have the right to bill Stratus Clients directly for any outstanding receivables or any future receivables due to Advantage. Stratus will use its best efforts to obtain such Lender consent; provided, however, that “best efforts” shall not be construed as requiring the payment of any compensation to the Lender (other than that which is otherwise owed to the Lender by Stratus).

 

 

 

	  
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EXHIBIT B

 

Bryan Smith

Richard Jacoby

Regina Pritchard

Michelle Mills

.

Thomas Henckel

 

 

 

	 
	 	4Exhibit 10.30 - 5th Amend. to Loan/Sec. Agrmt.

FIFTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND

AMENDMENT TO FORBEARANCE AGREMENT

THIS FIFTH AMENDMENT to the Loan and Security Agreement and Amendment to Forbearance Agreement dated as of April ____, 2005 (the “Amendment”), is entered into by and between CAPITAL TEMPFUNDS, INC., a North Carolina corporation (herein called “TEMPFUNDS”) and STRATUS SERVICES GROUP, INC., a Delaware corporation (herein called “BORROWER”).

R E C I T A L S:

	
a)
	
TEMPFUNDS and BORROWER are parties to a Loan and Security Agreement dated December 8, 2000, as amended by that certain First Amendment to Loan and Security Agreement dated June 12, 2001, and as further amended by that certain Second Amendment to Loan and Security Agreement dated as of December 8, 2002, and as further amended by that certain Third Amendment to Loan and Security Agreement dated as of April 10, 2003, and as further amended by that certain Fourth Amendment to Loan and Security Agreement dated as of August 1, 2003 (hereinafter referred to as the “Agreement”).

	 	 
	
b)
	
TEMPFUNDS and BORROWER are also parties to that certain Forbearance Agreement dated as of January 15, 2005 (the “Forbearance Agreement”).

	 	 
	
c)
	
BORROWER and TEMPFUNDS have agreed to certain modifications of the Agreement and the Forbearance Agreement as a result of the ongoing business relationship between the parties.

AGREEMENT

IN CONSIDERATION of the above recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 

1.    The above recitals are true and correct and are incorporated herein by this reference.

2.    The Agreement is hereby amended as follows:

            a.  Item 8 of Schedule 1 is hereby deleted and replaced with the following:

                “8. “Term” as referred to in Section 1.33 means through August 12, 2005.”

            b.  The introductory sentence to Item 27a. of Schedule 1 is deleted in its entirety, and the following is substituted in its place:

                “a. Section 1.11 (d) is deleted in its entirety, and the following is substituted in its place:”

	  
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3.    The Forbearance Agreement is hereby amended as follows:

            a.  Section 4 of the Forbearance Agreement is deleted in its entirety, and the following is substituted in its place:

                “4.  Forbearance Period. So long as the Borrower is in compliance with all of the terms and conditions of this Agreement, Capital agrees that it will refrain from exercising its rights and remedies under the Loan Documents and applicable law until August 12, 2005, said period being sometimes hereinafter referred to as the "Forbearance Period"). During the Forbearance Period, Borrower will be in compliance with all of the terms and conditions of the Loan Documents. In addition, during the Forbearance Period and thereafter, Borrower agree to provide all financial statements required to be delivered to Capital on a timely basis, as required by the Loan Documents.”

4.    Upon the effectiveness of this Amendment, each reference in the Agreement and/or the Forbearance Agreement to the “Agreement”, “hereunder”, “herein”, “hereof”, or words of like import referring to the Agreement and/or the Forbearance Agreement shall mean and be a reference to the Agreement and/or the Forbearance Agreement as amended by this Amendment.

5.    This Amendment shall be deemed to be a contract under and subject to and shall be construed for all purposes and in accordance with the laws of the State of North Carolina.

6.    This Amendment may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

7.    Except as above amended, the Agreement and the Forbearance Agreement shall continue in full force and effect, and are binding upon the Borrower without any setoffs, defenses or counterclaims of any kind whatsoever.

8.    The Fidelity Guarantor, Joseph J. Raymond (“Guarantor”), by signing below, consents to the terms of this Fifth Amendment to the Loan and Security Agreement and Amendment to Forbearance Agreement, reaffirms the terms of his Fidelity Guaranty dated as of December 8, 2000 (the “Guaranty”), and confirms that the Guaranty is in full force and effect and binding upon him without any defenses, setoffs or counterclaims of any kind whatsoever.

9.    To induce Capital to enter into this Amendment, Borrower (a) acknowledges and agrees that no right of offset, defense, counterclaim, claim or objection exists in favor of Borrower against Capital arising out of or with respect to the Loan Agreement, the other Loan Documents, the Obligations, the Forbearance Agreement or any other arrangement or relationship between Capital and Borrower, and (b) releases, acquits, remises and forever discharges Capital and its affiliates and all of their past, present and future officers, directors, employees, agents, attorneys, representatives, successors and assigns from any and all claims, demands, actions and causes of action, whether at law or in equity and whether known or unknown, which Borrower may have by reason of any manner, cause or things to and including the date of this Amendment with respect to matters arising out of or with respect to the Loan Agreement, the other Loan Documents, the Obligations, the Forbearance Agreement or any other arrangement or relationship between Capital and Borrower.

	  
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10.    Borrower reaffirms its obligation to pay a facility fee of $10,000.00 per month to Capital, and agrees to pay to Capital $10,000.00 on April 13, 2005 and $10,000.00 on May 13, 2005, to cover the facility fees for the two (2) months that the Agreement and the Forbearance Agreement are being extended pursuant to the terms of this Amendment.

11.    All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement and/or the Forbearance Agreement, as the case may be.

	
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment, which shall be effective with the date of the Amendment.

	
Witnesses:
	
STRATUS SERVICES GROUP, INC

	 	 
	 	 
	 	 
	
/s/ Suzette Berrios
	
By:  /s/ Michael A. Maltzman

	 	
Michael A. Maltzman, CFO

	
/s/ LConnallon
	 

	
STATE OF NEW JERSEY)
	 
	
ss.:
	 
	
COUNTY OF MONMOUTH)
	 

	
The foregoing instrument acknowledged before me this 8th day of April, 2005, by Michael A. Maltzman, as Chief Financial Officer of Stratus Services Group, Inc., a Delaware corporation, on behalf of the corporation. He is personally known to me and did take an oath.

	 	 /s/ Diane Amatucci
	 	
(Notary Signature)

	
(NOTARY SEAL)
	 
	 	 
	 	 
	 	 
	 	
(Notary Name Printed)

	 	
NOTARY PUBLIC Commission No.

	  
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CAPITAL TEMPFUNDS, INC.

	 	
a North Carolina corporation

	 	
By:

	 	 
	 	
Title

	
STATE OF NORTH CAROLINA

	 
	
COUNTY OF MECKLENBURG

	 
	
The foregoing instrument was acknowledged before me this _____ day of April, 2005, by______________ 

	
, as ___________________________________________________________________________________

	
of CAPITAL TEMPFUNDS, INC., a North Carolina corporation, on behalf of the corporation. She/He is personally known to me or has produced ___________ as identification and did (did not) take an oath.

	 	 
	 	
(Notary Signature)

	
(NOTARY SEAL)
	 
	 	 
	 	 
	 	 
	 	
(Notary Name Printed)

	 	
NOTARY PUBLIC Commission No.

	  
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REAFFIRMATION OF FIDELITY GUARANTY

	
The undersigned hereby reaffirms his Fidelity Guaranty dated as of December 8, 2000, (the “Guaranty”), consent to the terms of the Fifth Amendment to Loan and Security Agreement and Amendment to Forbearance Agreement and confirms that the Guaranty is in full force and effect, and is binding upon the undersigned without any setoffs, defenses or counterclaims of any kind whatsoever.

	 	 /s/ Joseph J. Raymond
	 	
Joseph J. Raymond

	 
	 	 5

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