WRITER'S DIRECT
DIAL:
WRITER'S E-MAIL:
mbrundage@hwhlaw.com
August 12, 2005
Stratus
Services Group, Inc.
Manalapan, New
Jersey 07726
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Forbearance
regarding default under outsourcing agreement dated August 13,
2004, by and between ALS, LLC and Stratus Services Group, Inc., as
amended (the “Agreement”)
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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”). As you know, 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.
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:
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1.
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On
Stratus’ direction which is given hereby, CTF shall wire
transfer to Advantage the sum of $1,112,000 by 5:00 p.m. Eastern on
August 11, 2005 to be applied to the amounts owed by Stratus to
Advantage pursuant to the terms of the Agreement bringing them
current through th
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