EXHIBIT 10.40

CAPITAL TEMPFUNDS
a division of CAPITAL FACTORS LLC,
One Brixam Green, 15800 John J. Delaney Drive, Suite 300,
Charlotte, North Carolina 28277

September 1, 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, by and between
CAPITAL TEMPFUNDS, a division of CAPITAL FACTORS LLC, (“Capital”), and STRATUS
SERVICES GROUP, INC. (“Borrower”)

Dear Mr. Maltzman:

In accordance with Section 3 of the Forbearance Agreement, the undersigned
hereby agree that clause (a) of the first sentence of Section 3 of the
Forbearance Agreement is hereby further amended to replace “September 2, 2005”
with “September 9, 2005”.

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
 

 
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signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
 
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 Service Group, Inc.

By: s/ Joseph J. Raymond   

Its: CEO