October 20, 2005
EXHIBIT
10.51
October
20, 2005
Xxxxxxx
X. Xxxxxxxx, CFO
Stratus
Services Group, Inc.
000
Xxxxx
Xxxx, Xxxxx 000
Xxxxxxxxx,
Xxx Xxxxxx 00000
Re: Continued
forbearance regarding default under outsourcing agreement dated
August 13, 2004, by and between ALS, LLC and Stratus Services
Group,
Inc., as amended (the “Agreement”)
Dear
Xx.
Xxxxxxxx:
As
you
know, this law firm represents ALS, LLC (“Advantage”) in connection with the
Agreement and Advantage’s business relationships with Stratus Services Group,
Inc. (“Stratus”). Capital TempFunds (“CTF”) is Stratus’ secured lender under the
terms and conditions of a loan and security agreement dated as of December
8,
2000 as amended and modified (the “Secured Loan”). By letters dated July 29,
2005 and August 5, 2005, Advantage has provided Stratus with written notices
of
its defaults and material breaches of payment obligations due under the
Agreement. Stratus has failed to cure the material breaches of payment
obligations within two business days of notice and therefore, pursuant to
paragraph 3 of the Agreement, Advantage currently has the right to terminate
the
Agreement. Additionally, as a result of the defaults, Stratus owes to Advantage
$1,000.00 per day of payment obligation breach or 24% annual interest on the
outstanding amount, compounded daily, or a maximum allowed by law, whichever
is
higher. We understand that CTF has declared defaults under the Secured Loan,
but
has entered into a forbearance agreement with Stratus through at least November
4, 2005.
This
letter sets forth the terms by which the parties agree to a forbearance of
enforcement of existing defaults that have been declared by Advantage as to
the
Agreement and CTF as to the Secured Loan. Due to the time urgency in getting
this letter agreement prepared and executed, the parties agree to enter a more
formal agreement if reasonably necessary.
Advantage
will forbear from enforcing current defaults under the Agreement, unless a
default occurs hereunder, on the following terms and conditions:
| 1. |
On
Stratus’ direction which is given hereby, CTF shall wire transfer to
Advantage by 10 am Eastern on October 21, 2005 the sum of $1,622,207.46
of
the $1,922,207.46 presently
owed by Stratus to Advantage pursuant to the terms of the Agreement
(which
excludes the $600,000 subordinated receivable, which will remain due
and
owing). The remaining $300,000 shall be paid by wire transfer no later
than November 3, 2005).
|
| 2. |
Conditioned
upon timely receipt of the payments required in paragraph 1 above,
and as
long as payments continue to be timely made in accordance with paragraph
4
below and Stratus is not in payment default hereunder, Advantage will
release and fund the payrolls associated with the Agreement on October
21,
2005 and October 28, 2005.
|
| 3. |
Provided
that Stratus complies with all the terms of this forbearance agreement,
Advantage will continue to perform under the Agreement through November
3,
2005.
|
| 4. |
Advantage
shall invoice to Stratus as to each payroll paid under paragraph 2
above
consistent with the Agreement except that such invoices shall have
two
components: (a) invoices for each week totaling the amount of $1,100,000
shall be due and payable on or before October 27, 2005 and November
3,
2005 respectively (the “Deferred Amounts”); and (b) the remaining amount
due under invoices after deducting $1,100,000 shall be due and payable
immediately (the “Immediately Due
Amounts”).
|
| 5. |
Stratus
shall repay the Immediately Due Amounts for each week by directing
CTF, on
a daily basis starting Friday, October 21, 2005, to advance and wire
transfer to Advantage from available funds under the Secured Loan.
Stratus
shall provide Advantage with an exact copy of the loan status provided
by
CTF.
|
| 6. |
Stratus
shall be in default hereunder unless: (i) the Immediately Due Amounts
for
each week are paid in full by October 26, 2005 and November 2, 2005
respectively; and (ii) the Deferred Amounts for each week are paid
in full
by October 27, 2005 and November 3, 2005,
respectively.
|
| 7. |
Stratus
confirms that Advantage is entitled to a $50,000 Forbearance Fee through
August 25, 2005, as previously memorialized in the August 12, 2005
letter
agreement between Stratus and Advantage. Thereafter, as set forth in
the
preamble to this letter above, Stratus confirms that Advantage is entitled
to $1,000 per day of payment obligation breach or 24% annual interest
on
the outstanding amount, compounded daily, or a maximum obligation allowed
by law, whichever is higher. Amounts for fees and/or interest due from
Stratus to Advantage are in addition to the balance due listed
above.
|
| 8. |
Any
further default under the Agreement or the Secured Loan shall be a
default
hereunder, unless specifically stated otherwise herein. A default
hereunder or under the Agreement shall entitle Advantage to immediately
terminate the Agreement and immediately seek all available remedies.
For
the term hereof, CTF agrees to give Advantage and Stratus immediate
and
simultaneous notice of any default by Stratus hereunder of under the
Secured Loan. For the term hereof, Advantage agrees to give CTF and
|
Stratus
immediate and simultaneous notice of any default by Stratus hereunder or under
the Agreement.
| 9. |
CTF
shall forbear from exercising its rights under the Secured Loan during
the
Forbearance Period pursuant to the separate forbearance agreement,
an
executed copy of which will be immediately provided to Advantage. Stratus
shall provide Advantage with copies of the executed forbearance agreement
with CTF. Advantage’s obligation to forbear hereunder shall cease if CTF
ceases to forbear under its forbearance agreement and Advantage’s right to
cease forbearing hereunder shall constitute Advantage’s sole remedy
against CTF.
|
XXXX,
XXXX &
XXXXXXXXX, P.A.
s/
Xxxxxxx
X.
Xxxxxxxx
|
ALS,
LLC
|
STATUS
SERVICE GROUP
|
|
By: /s/
Xxx Xxxxx
|
By: /s/
Xxxxxxx X. Xxxxxxxx
|
|
Its: CFO
|
Its: Exec
VP & CFO
|
|
Acknowledged
and consented to by
|
|
|
CAPITAL
TEMPFUNDS, INC.
|
|
|
By: /s/
Xxxxxxx Xxxxxxx
|
|
|
Its: Vice
President
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