Exhibit 4.2.12


 


 


WARRANT AGREEMENT


 


between


 


Stratus Services Group, Inc.


 


and


 


American Stock Transfer & Trust Company


 


Dated as of
             ,
2004


 

















 


WARRANT AGREEMENT


 


This Agreement, dated as of
                    ,
2004, is between Stratus Services Group, Inc., a Delaware corporation (the
“Company”) and American Stock Transfer & Trust Company, a New York
corporation(the “Warrant Agent”).


 


The Company,
at or about the time that it is entering into this Agreement, proposes to (i)
issue and sell to public investors up to ten million Units (together with the
additional units issuable as provided herein, the “Units”), with each Unit
consisting of one share of common stock, $0.04 par value, of the Company and
one warrant (collectively, the “Warrants”) and (ii) issue Warrants to holders
of its Series E Preferred Stock in connection with an exchange offer it is
making to the holders of its Series E Preferred Stock.  Each Warrant is exercisable to purchase one
share of Common Stock upon the terms and conditions and subject to adjustment
in certain circumstances, all as set forth in this Agreement.


 


The Company
wishes to retain the Warrant Agent to act on behalf of the Company, and the
Warrant Agent is willing so to act, in connection with the issuance, transfer,
exchange and replacement of the certificates evidencing the Warrants to be
issued under this Agreement (the “Warrant Certificates”) and the exercise of
the Warrants.


 


The Company
and the Warrant Agent wish to enter into this Agreement to set forth the terms
and conditions of the Warrants and the rights of the holders thereof
(“Warrantholders”) and to set forth the respective rights and obligations of
the Company and the Warrant Agent.  Each
Warrantholder is an intended beneficiary of this Agreement with respect to the
rights of Warrantholders herein.


 


NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set forth, the parties hereto agree as follows:


 


1.             Appointment of Warrant Agent.  The Company appoints the Warrant Agent to
act as agent for the Company in accordance with the instructions in this
Agreement and the Warrant Agent accepts such appointment.


 


2.             Date, Denomination and Execution of
Warrant Certificates.


 


(a)           The Warrant Certificates (and the Form of
Election to Purchase and the Form of Assignment to be printed on the reverse
thereof) shall be in registered form only and shall be substantially of the
tenor and purport recited in Exhibit A hereto, and may have such letters,
numbers or other marks of identification or designation and such legends,
summaries or endorsements printed, lithographed or engraved thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law, or with any rule
or regulation made pursuant thereto, or with any rule or regulation of any
stock exchange on which the Common Stock or the Warrants may be listed or any
automated quotation system, or to conform to usage.  Each Warrant Certificate shall entitle the registered holder
thereof, subject to the provisions of this Agreement and of the Warrant
Certificate, to purchase, on or


 


2

















 


after
                  ,
2004 and on or before the close of business on                   ,
2006 (the “Expiration Date”), one fully paid and non-assessable share of Common
Stock for each Warrant evidenced by such Warrant Certificate for $0.95.  The exercise price of the Warrants (the
“Exercise Price”) is subject to adjustments as provided in Section 6
hereof.  Each Warrant Certificate shall
be dated the date on which the Warrant Agent receives valid issuance
instructions from the Company or a transferring holder of a Warrant Certificate
or, if such instructions specify another date, such other date.


 


(b)           For purposes of this Agreement, the term
“close of business” on any given date shall mean 5:00 p.m., Eastern time, on
such date; provided, however, that if such date is not a business day, it shall
mean 5:00 p.m., Eastern time, on the next succeeding business day.  For purposes of this Agreement, the term
“business day” shall mean any day other than a Saturday, Sunday, or a day on
which banking institutions in New York, New York or in the State in which the
Warrant Agent maintains the principal office in which it conducts business
related to the Warrants are authorized or obligated by law to be closed.


 


(c)           Each Warrant Certificate shall be executed
on behalf of the Company by the Chairman of the Board or its President or a
Vice President, either manually or by facsimile signature printed thereon,
which shall be attested by the Secretary or an Assistant Secretary of the
Company, either manually or by facsimile signature.  Each Warrant Certificate shall be countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned.  In case any officer of the Company who shall
have signed any Warrant Certificate shall cease to be such officer of the
Company before countersignature by the Warrant Agent and issue and delivery
thereof by the Company, such Warrant Certificate, nevertheless, may be
countersigned by the Warrant Agent, issued and delivered with the same force
and effect as though the person who signed such Warrant Certificate had not
ceased to be such officer of the Company.


 


3.             Subsequent Issue of Warrant
Certificates.  Subsequent to their
original issuance, no Warrant Certificates shall be reissued except (i) Warrant
Certificates issued upon transfer thereof in accordance with Section 4 hereof,
(ii) Warrant Certificates issued upon any combination, split-up or exchange of
Warrant Certificates pursuant to Section 4 hereof, (iii) Warrant Certificates
issued in replacement of mutilated, destroyed, lost or stolen Warrant
Certificates pursuant to Section 5 hereof, (iv) Warrant Certificates issued
upon the partial exercise of Warrant Certificates pursuant to Section 7 hereof,
and (v) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder pursuant
to Section 22 hereof.  The Warrant Agent
is hereby irrevocably authorized to countersign and deliver, in accordance with
the provisions of said Sections 4, 5, 7 and 22, the new Warrant Certificates
required for purposes thereof, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly
executed on behalf of the Company for such purposes.


 


3

















 


4.             Transfers and Exchanges of Warrant Certificates.


 


(a)           The Warrant Agent will keep or cause to be
kept books for registration of ownership and transfer of the Warrant
Certificates issued hereunder.  Such
registers shall show the names and addresses of the respective holders of the
Warrant Certificates and the kind and number of Warrants evidenced by each such
Warrant Certificate.


 


(b)           The Warrant Agent shall, from time to time,
register the transfer of any outstanding Warrants upon the books to be
maintained by the Warrant Agent for that purpose, upon surrender of the Warrant
Certificate evidencing such Warrants, with the Form of Assignment duly filled
in and executed with such signature guaranteed by an eligible institution and
such supporting documentation as the Warrant Agent or the Company may
reasonably require, to the Warrant Agent at its stock transfer office in New
York, New York at any time on or before the Expiration Date of such Warrant,
and upon payment to the Warrant Agent for the account of the Company of an
amount equal to any applicable transfer tax. 
Payment of the amount of such tax may be made in cash, or by certified
or official bank check, payable in lawful money of the United States of America
to the order of the Company.


 


(c)           Upon receipt of a Warrant Certificate, with
the Form of Assignment duly filled in and executed, accompanied by payment of
an amount equal to any applicable transfer tax, the Warrant Agent shall
promptly cancel the surrendered Warrant Certificate and countersign and deliver
to the transferee a new Warrant Certificate for the number of full Warrants
transferred to such transferee; provided, however, that in case the registered
holder of any Warrant Certificate shall elect to transfer fewer than all of the
Warrants evidenced by such Warrant Certificate, the Warrant Agent in addition
shall promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so transferred.


 


(d)           Any Warrant Certificate or Certificates may
be exchanged at the option of the holder thereof for another Warrant
Certificate or Certificates of different denominations, of like tenor and
representing in the aggregate the same kind and number of Warrants, upon
surrender of such Warrant Certificate or Certificates, with the Form of
Assignment duly filled in and executed, to the Warrant Agent, at any time or
from time to time after the close of business on the date hereof and prior to
the close of business on the Expiration Date relating to such Warrant.  The Warrant Agent shall promptly cancel the
surrendered Warrant Certificate and deliver the new Warrant Certificate
pursuant to the provisions of this Section.


 


5.             Mutilated, Destroyed, Lost or Stolen
Warrant Certificates.  Upon receipt
by the Company and the Warrant Agent of evidence reasonably satisfactory to
them of the loss, theft, destruction or mutilation of any Warrant Certificate,
and in the case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to them, and reimbursement to them of all reasonable
expenses incidental thereto, and, in the case of mutilation, upon surrender and
cancellation of the Warrant Certificate, the Warrant Agent shall


 


4

















 


countersign and deliver a new Warrant Certificate of like tenor for the
same kind and number of Warrants.


 


6.             Adjustments of Number and Kind of
Shares Purchasable and Exercise Price. 
The number and kind of securities or other property purchasable upon
exercise of a Warrant shall be subject to adjustment from time to time upon the
occurrence, after the date hereof, of any of the following events:


 


(a)           In case the Company shall (1) pay a dividend
in, or make a distribution of, shares of capital stock on its outstanding
Common Stock, (2) subdivide its outstanding shares of Common Stock into a
greater number of such shares or (3) combine its outstanding shares of Common
Stock into a smaller number of such shares, the total number of shares of
Common Stock purchasable upon the exercise of each Warrant outstanding
immediately prior thereto shall be adjusted so that the holder of any Warrant
Certificate thereafter surrendered for exercise shall be entitled to receive at
the same aggregate Exercise Price the number of shares of capital stock (of one
or more classes) which such holder would have owned or have been entitled to
receive immediately following the happening of any of the events described
above had such Warrant been exercised in full immediately prior to the record
date with respect to such event.  Any adjustment
made pursuant to this Subsection shall, in the case of a stock dividend or
distribution, become effective as of the record date therefore and, in the case
of a subdivision or combination, be made as of the effective date thereof.  If, as a result of an adjustment made
pursuant to this Subsection, the holder of any Warrant Certificate thereafter
surrendered for exercise shall become entitled to receive shares of two or more
classes of capital stock of the Company, the Board of Directors of the Company
(whose determination shall be conclusive and shall be evidenced by a Board
resolution filed with the Warrant Agent) shall determine the allocation of the
adjusted Exercise Price between or among shares of such classes of capital
stock.


 


(b)           In the event of a capital reorganization or
a reclassification of the Common Stock (except as provided in Subsection (a)
above or Subsection (d) below), any Warrantholder, upon exercise of Warrants,
shall be entitled to receive, in substitution for the Common Stock to which he
would have become entitled upon exercise immediately prior to such
reorganization or reclassification, the shares (of any class or classes) or
other securities or property of the Company (or cash) that he would have been
entitled to receive at the same aggregate Exercise Price upon such
reorganization or reclassification if such Warrants had been exercised
immediately prior to the record date with respect to such event; and in any
such case, appropriate provision (as determined by the Board of Directors of
the Company, whose determination shall be conclusive and shall be evidenced by
a certified Board resolution filed with the Warrant Agent) shall be made for
the application of this Section 6 with respect to the rights and interests
thereafter of the Warrantholders (including but not limited to the allocation
of the Exercise Price between or among shares of classes of capital stock), to
the end that this Section 6 (including the adjustments of the number of shares
of Common Stock or other securities purchasable and the Exercise Price thereof)
shall thereafter be


 


5

















 


reflected, as nearly as reasonably practicable, in all subsequent
exercises of the Warrants for any shares or securities or other property (or
cash) thereafter deliverable upon the exercise of the Warrants.


 


(c)           Whenever the number of shares of Common
Stock or other securities purchasable upon exercise of a Warrant is adjusted as
provided in this Section 6, the Company will promptly file with the Warrant
Agent a certificate signed by a Chairman or co-Chairman of the Board or the
President or a Vice President of the Company and by the Treasurer or Chief
Financial Officer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company setting forth the number and kind of securities or
other property purchasable upon exercise of a Warrant, as so adjusted, stating
that such adjustments in the number or kind of shares or other securities or
property conform to the requirements of this Section 6, and setting forth a
brief statement of the facts accounting for such adjustments.  Promptly after receipt of such certificate,
the Company, or the Warrant Agent at the Company’s request, will deliver, by
first-class, postage prepaid mail, a brief summary thereof (to be supplied by
the Company) to the registered holders of the outstanding Warrant Certificates;
provided, however, that failure to file or to give any notice required under
this Subsection, or any defect therein, shall not affect the legality or
validity of any such adjustments under this Section 6; and provided, further,
that, where appropriate, such notice may be given in advance and included as
part of the notice required to be given pursuant to Section 12 hereof.


 


(d)           In case of any consolidation of the Company
with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the corporation formed by such consolidation or
merger or the corporation which shall have acquired such assets, as the case
may be, shall execute and deliver to the Warrant Agent a supplemental warrant
agreement providing that the holder of each Warrant then outstanding shall have
the right thereafter (until the expiration of such Warrant) to receive, upon
exercise of such Warrant, solely the kind and amount of shares of stock and
other securities and property (or cash) receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock of
the Company for which such Warrant might have been exercised immediately prior
to such consolidation, merger, sale or transfer.  Such supplemental warrant agreement shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section.  The above
provision of this Subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.


 


The Warrant Agent shall not be under any responsibility to determine
the correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or
securities or property (or cash) purchasable by holders of Warrant Certificates
upon the exercise of their Warrants after any such consolidation, merger, sale
or transfer or


 


6

















 


of any adjustment to be made with respect thereto, but subject to the
provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.


 


(e)           Irrespective of any adjustments in the
number or kind of shares issuable upon exercise of Warrants, Warrant Certificates
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrant Certificates
initially issuable pursuant to this Warrant Agreement.


 


(f)            The Company may retain a firm of
independent public accountants of recognized standing, which may be the firm
regularly retained by the Company, selected by the Board of Directors of the
Company or the Executive Committee of said Board, to make any computation
required under this Section, and a certificate signed by such firm shall, in
the absence of fraud or gross negligence, be conclusive evidence of the
correctness of any computation made under this Section.


 


(g)           For the purpose of this Section, the term
“Common Stock” shall mean (i) the Common Stock or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value,
or from no par value to par value.  In
the event that any time as a result of an adjustment made pursuant to this
Section, the holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive any shares of capital stock of the Company other
than shares of Common stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in this Section, and
all other provisions of this Agreement, with respect to the Common Stock, shall
apply on like terms to any such other shares.


 


(h)           The Company may, from time to time and to
the extent permitted by law, reduce the Exercise Price of the Warrants by any
amount for a period of not less than 20 days. 
If the Company so reduces the Exercise Price of such Warrants, it will
give not less than 15 days’ notice of such decrease, which notice may be in the
form of a press release, and shall take such other steps as may be required
under applicable law in connection with any offers or sales of securities at
the reduced price.


 


7.             Exercise and Redemption of Warrants.  Unless the Warrants have been redeemed as
provided in this Section 7, the registered holder of any Warrant Certificate
may exercise the Warrants evidenced thereby, in whole at any time or in part
from time to time at or prior to the close of business on the Expiration Date
relating to such Warrant, subject to the provisions of Section 8, at which time
the Warrant Certificates shall be and become


 


7

















 


wholly void and of no value. 
Warrants may be exercised by their holders or redeemed by the Company as
follows:


 


(a)           Exercise of Warrants shall be accomplished
upon surrender of the Warrant Certificate evidencing such Warrants, with the
Form of Election to Purchase on the reverse side thereof duly filled in and
executed, to the Warrant Agent at its stock transfer office in New York, New
York, together with payment to the Warrant Agent on behalf of the Company of
the Exercise Price (as of the date of such surrender) of the Warrants then
being exercised and an amount equal to any applicable transfer tax and, if
requested by the Company, any other taxes or governmental charges which the
Company may be required by law to collect in respect of such exercise.  Payment of the Exercise Price and other
amounts may be made by wire transfer of good funds, or by certified or bank cashier’s
check, payable in lawful money of the United States of America to the order of
the Company.  No adjustment shall be
made for any cash dividends, whether paid or declared, on any securities
issuable upon exercise of a Warrant.


 


(b)           Upon receipt of a Warrant Certificate, with
the Form of Election to Purchase duly filled in and executed, accompanied by
payment of the Exercise Price of the Warrants being exercised (and of an amount
equal to any applicable taxes or government charges as aforesaid), the Warrant
Agent shall promptly request from the Transfer Agent with respect to the
securities to be issued and deliver to or upon the order of the registered
holder of such Warrant Certificate, in such name or names as such registered
holder may designate, a certificate or certificates for the number of full
shares of the securities to be purchased, together with cash made available by
the Company pursuant to Section 8 hereof in respect of any fraction of a share
of such securities otherwise issuable upon such exercise.  If the Warrant is then exercisable to
purchase property other than securities, the Company shall take appropriate
steps to cause such property to be delivered to or upon the order of the
registered holder of such Warrant Certificate. 
In addition, if it is required by law and upon instruction by the
Company, the Warrant Agent will deliver to each Warrantholder a prospectus
which complies with the provisions of Section 9 of the Securities Act of 1933
and the Company agrees to supply Warrant Agent with sufficient number of
prospectuses to effectuate that purpose.


 


(c)           In case the registered holder of any Warrant
Certificate shall exercise fewer than all of the Warrants evidenced by such
Warrant Certificate, the Warrant Agent shall promptly countersign and deliver
to the registered holder of such Warrant Certificate, or to his duly authorized
assigns, a new Warrant Certificate or Certificates evidencing the number of
Warrants that were not so exercised.


 


(d)           Each person in whose name any certificate
for securities is issued upon the exercise of Warrants shall for all purposes
be deemed to have become the holder of record of the securities represented
thereby as of, and such certificate shall be dated, the date upon which the
Warrant Certificate was duly surrendered in proper form and payment of the
Exercise Price (and of any applicable taxes or other


 


8

















 


governmental charges) was made; provided, however, that if the date of
such surrender and payment is a date on which the stock transfer books of the
Company are closed, such person shall be deemed to have become the record
holder of such shares as of, and the certificate for such shares shall be
dated, the next succeeding business day on which the stock transfer books of
the Company are open (whether before, on or after the Expiration Date relating
to such Warrant) and the Warrant Agent shall be under no duty to deliver the
certificates for such shares until such date. 
The Company covenants and agrees that it shall not cause its stock
transfer books to be closed for a period of more than 20 consecutive business
days except upon consolidation, merger, sale of all or substantially all of its
assets, dissolution or liquidation or as otherwise provided by law.


 


(e)           The Warrants outstanding at the time of a
redemption may be redeemed at the option of the Company, in whole or in part on
a pro-rata basis, by giving not less than 30 days prior notice as provided in
Section 7(f) below, which notice may not be given before, but may be given at
any time after, the last reported sale price of the Common Stock on the
principal exchange or quotation system on which it is then traded or quoted has
equaled or exceeded $1.66 per share (subject to appropriate adjustments as
provided herein) on each of twenty (20) consecutive trading days that occur
subsequent to the date of this Warrant Agreement; provided, however, that the
Company may not exercise its right to redeem the Warrants if it is not then in
compliance with Section 9 of this Agreement. 
The price at which Warrants may be redeemed (the “Redemption Price”) is
$.10 per Warrant (subject to appropriate adjustments as provided herein).  On and after the redemption date the holders
of record of redeemed Warrants shall be entitled to payment of the Redemption
Price upon surrender of such redeemed Warrants to the Company at the office of
the Warrant Agent designated for that purpose.


 


(f)            Notice of redemption of Warrants shall be
given at least 30 days prior to the redemption date by mailing a copy of such
notice to the Warrant Agent and to all of the holders of record of Warrants at
their respective addresses appearing on the books or transfer records of the
Company or such other address designated in writing by the holder of record to
the Warrant Agent not less than 40 days prior to the redemption date.


 


(g)           From and after the redemption date, all
rights of the Warrantholders (except the right to receive the Redemption Price)
shall terminate, but only if (i) no later than one day prior to the redemption
date the Company shall have irrevocably deposited with the Warrant Agent as
paying agent a sufficient amount to pay on the redemption date the Redemption
Price for all Warrants called for redemption and (ii) the notice of redemption
shall have stated the name and address of the Warrant Agent and the intention
of the Company to deposit such amount with the Warrant Agent no later than one
day prior to the redemption date.


 


(h)           On the Redemption Date, the Warrant Agent
shall pay to the holders of record of redeemed Warrants all monies received by
the Warrant Agent for the redemption


 


9

















 


of Warrants to which the holders of record of such redeemed Warrants
who shall have surrendered their Warrants are entitled.  The Warrant Agent shall have no obligation
to pay for the redemption of the Warrants except to the extent that funds for
such payment have been provided to it by the Company.


 


(i)            Any amounts deposited with the Warrant
Agent that are not required for redemption of Warrants may be withdrawn by the
Company.  Any amounts deposited with the
Warrant Agent that shall be unclaimed after six months after the redemption
date shall be redelivered back to the Company, and thereafter the holders of
the Warrants called for redemption or which such funds were deposited shall
look solely to the Company for payment. 
The Company shall be entitled to the interest, if any, on funds
deposited with the Warrant Agent and the holders of redeemed Warrants shall
have no right to any such interest.  At
the instruction of the Company, the Warrant Agent shall deposit or invest any
and all funds deposited with it by the Company in connection with any
redemption in federally insured, interest bearing accounts with the financial
institution or institutions typically used by the Warrant Agent for such
purpose, and the Warrant Agent shall have no liability with respect to the
performance of any such investments other than, in the case of funds deposited
in accounts maintained by the Warrant Agent, the liability of the Warrant Agent
to its depositors in such accounts, generally.


 


(j)            If the Company fails to make a sufficient
deposit with the Warrant Agent as provided above, the holder of any Warrants
called for redemption may at the option of the holder (i) by notice to the
Company declare the notice of redemption a nullity as to such holder, or (ii)
maintain an action against the Company for the Redemption Price.  If the holder brings such an action, the
Company will pay reasonable attorneys’ fees of the holder.  If the holder fails to bring an action
against the Company for the Redemption Price within 60 days after the
redemption date, the holder shall be deemed to have elected to declare the
notice of redemption to be a nullity as to such holder and such notice shall be
without any force or effect as to such holder. 
Except as otherwise specifically provided in this Section 7(j), a notice
of redemption, once mailed by the Company as provided in Section 7(f) shall be
irrevocable.


 


8.             Fractional Interests.  The Company shall not be required to issue
any Warrant Certificate evidencing a fraction of a Warrant or to issue
fractions of shares of securities on the exercise of the Warrants.  If any fraction (calculated to the nearest
one-hundredth) of a Warrant or a share of securities would, except for the
provisions of this Section, be issuable on the exercise of any Warrant, the
Company shall, at its option, either purchase such fraction for an amount in
cash equal to the current value of such fraction computed on the basis of the
closing market price (as quoted on the OTC Bulletin Board or other principal
quotation system or exchange on which the Common Stock is quoted or traded) on
the trading day immediately preceding the day upon which such Warrant
Certificate was surrendered for exercise in accordance with Section 7 hereof or
issue the required fractional Warrant or share.  By accepting a Warrant Certificate, the holder thereof expressly
waives any right to receive a Warrant Certificate evidencing any fraction of a


 


10

















 


Warrant or to receive any fractional share of securities upon exercise
of a Warrant, except as expressly provided in this Section 8.


 


9.             Reservation and Registration of Equity
Securities.  The Company covenants
that it will at all times reserve and keep available, free from any preemptive
rights, out of its authorized and unissued equity securities, solely for the
purpose of issue upon exercise of the Warrants, such number of shares of equity
securities of the Company as shall then be issuable upon the exercise of all
outstanding Warrants (“Equity Securities”). 
The Company covenants that all Equity Securities which shall be so
issuable shall, upon such issue, be duly authorized, validly issued, fully paid
and non-assessable.


 


The Company covenants that if any equity securities, required to be
reserved for the purpose of issue upon exercise of the Warrants hereunder,
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon exercise of
Warrants, the Company will use all commercially reasonable efforts to cause
such securities to be duly registered, or approved, as the case may be, and, to
the extent practicable, take all such action in anticipation of and prior to
the exercise of the Warrants, including, without limitation, filing or
maintaining an appropriate registration statement, necessary to permit a public
offering of the securities underlying the Warrants at any and all times during
the term of this Agreement, provided, however, that in no event shall such
securities be issued, and the Company is authorized to refuse to honor the
exercise of any Warrant, if such exercise would result in the opinion of the
Company’s Board of Directors, upon advice of counsel, in the violation of any
law.


 


10.           Reduction of Conversion Price Below Par
Value.  Before taking any action
that would cause an adjustment pursuant to Section 6 hereof reducing the
portion of the Exercise Price required to purchase one share of capital stock
below the then par value (if any) of a share of such capital stock, the Company
will use its best efforts to take any corporate action which, in the opinion of
its counsel, may be necessary in order that the Company may validly and legally
issue fully paid and non-assessable shares of such capital stock.


 


11.           Payment of Taxes.  The Company covenants and agrees that it
will pay when due and payable any and all federal and state documentary stamp
and other original issue taxes which may be payable in respect of the original
issuance of the Warrant Certificates, or any shares of Common Stock or other
securities upon the exercise of Warrants. 
The Company shall not, however, be required (a) to pay any tax which may
be payable in respect of any transfer involved in the transfer and delivery of
Warrant Certificates or the issuance or delivery of certificates for Common
Stock or other securities in a name other than that of the registered holder of
the Warrant Certificate surrendered for purchase or (b) to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
any Warrant Certificate until any such tax shall have been paid, all such tax
being payable by the holder of such Warrant Certificate at the time of
surrender.


 


12.           Notice of Certain Corporate Action.  In case the Company after the date hereof
shall propose (a) to offer to the holders of Common Stock, generally, rights to
subscribe to or purchase any additional shares of any class of its capital
stock, any evidences of its


 


11

















 


indebtedness or assets, or any other rights or options or (b) to effect
any reclassification of Common Stock (other than a reclassification involving
merely the subdivision or combination of outstanding shares of Common Stock) or
any capital reorganization, or any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or any sale, transfer or other disposition of its property and assets
substantially as an entirety, or the liquidation, voluntary or involuntary
dissolution or winding-up of the Company, then, in each such case, the Company
shall file with the Warrant Agent and the Company, or the Warrant Agent on its
behalf, shall mail (by first-class, postage prepaid mail) to all registered
holders of the Warrant Certificates notice of such proposed action, which
notice shall specify the date on which the books of the Company shall close or
a record be taken for such offer of rights or options, or the date on which
such reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, voluntary or involuntary dissolution or
winding-up shall take place or commence, as the case may be, and which shall
also specify any record date for determination of holders of Common Stock
entitled to vote thereon or participate therein and shall set forth such facts
with respect thereto as shall be reasonably necessary to indicate any
adjustments in the Exercise Price and the number or kind of shares or other
securities purchasable upon exercise of Warrants which will be required as a
result of such action.  Such notice
shall be filed and mailed in the case of any action covered by clause (a)
above, at least ten days prior to the record date for determining holders of
the Common Stock for purposes of such action or, if a record is not to be
taken, the date as of which the holders of shares of Common Stock of record are
to be entitled to such offering; and, in the case of any action covered by
clause (b) above, at least 20 days prior to the earlier of the date on which
such reclassification, reorganization, consolidation, merger, sale, transfer,
other disposition, liquidation, voluntary or involuntary dissolution or
winding-up is expected to become effective and the date on which it is expected
that holders of shares of Common Stock of record on such date shall be entitled
to exchange their shares for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, voluntary or involuntary dissolution or winding-up.


 


Failure to give any such notice or any defect therein shall not affect
the legality or validity of any transaction listed in this Section 12.


 


13.           Disposition of Proceeds on Exercise of
Warrant Certificate, etc.  The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all moneys received by the
Warrant Agent for the purchase of securities or other property through the
exercise of such Warrants.


 


The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer
office.  Copies of this Agreement may be
obtained upon written request addressed to the Warrant Agent at its stock
transfer office in New York, New York.


 


14.           Warrantholder Not Deemed a Stockholder.  No Warrantholder, as such, shall be entitled
to vote, receive dividends or be deemed the holder of Common Stock or any other


 


12

















 


securities of the Company which may at any time be issuable on the
exercise of the Warrants represented thereby for any purpose whatever, nor
shall anything contained herein or in any Warrant Certificate be construed to
confer upon any Warrantholder, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereto, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance or otherwise), or to receive
notice of meetings or other actions affecting stockholders (except as provided
in Section 12 hereof), or to receive dividend or subscription rights, or
otherwise, until such Warrant Certificate shall have been exercised in
accordance with the provisions hereof and the receipt of the Exercise Price and
any other amounts payable upon such exercise by the Warrant Agent.


 


15.           Right of Action.  All rights of action in respect to this Agreement
are vested in the respective registered holders of the Warrant Certificates;
and any registered holder of any Warrant Certificate, without the consent of
the Warrant Agent or of any other holder of a Warrant Certificate, may, in his
own behalf for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or
otherwise in respect of, his right to exercise the Warrants evidenced by such
Warrant Certificate, for the purchase of shares of the Common Stock in the
manner provided in the Warrant Certificate and in this Agreement.


 


16.           Agreement with Holders of Warrant
Certificates.  Every holder of a
Warrant Certificate by accepting the same consents and agrees with the Company,
the Warrant Agent and with every other holder of a Warrant Certificate that:


 


(a)           the Warrant Certificates are transferable on
the registry books of the Warrant Agent only upon the terms and conditions set
forth in this Agreement; and


 


(b)           the Company and the Warrant Agent may deem
and treat the person in whose name the Warrant Certificate is registered as the
absolute owner of the Warrant (notwithstanding any notation of ownership or
other writing thereon made by anyone other than the Company or the Warrant
Agent) for all purposes whatever and neither the Company nor the Warrant Agent
shall be affected by any notice to the contrary.


 


17.           Cancellation of Warrant Certificates.  In the event that the Company shall purchase
or otherwise acquire any Warrant Certificate or Certificates after the issuance
thereof, such Warrant Certificate or Certificates shall thereupon be delivered
to the Warrant Agent and be canceled by it and retired.  The Warrant Agent shall also cancel any
Warrant Certificate delivered to it for exercise, in whole or in part, or
delivered to it for transfer, split-up, combination or exchange.  Warrant Certificates so canceled shall be
maintained in accordance with the regulations of the Securities and Exchange Commission.


 


18.           Concerning the Warrant Agent.  The Company agrees to pay to the Warrant
Agent from time to time, on demand of the Warrant Agent, reasonable
compensation for all services


 


13

















 


rendered by it hereunder and also its reasonable expenses, including
counsel fees, and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder.  The Company also agrees to
indemnify the Warrant Agent for, and to hold it harmless against, any loss,
liability or expense (including the reasonable fees and expenses of a single
counsel to the Warrant Agent), incurred without gross negligence, bad faith or
willful misconduct on the part of the Warrant Agent, arising out of or in
connection with the acceptance and administration of this Agreement.


 


19.           Merger or Consolidation or Change of Name
of Warrant Agent.  Any corporation
into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. 
In case at the time such successor to the Warrant Agent shall succeed to
the agency created by this Agreement, any of the Warrant Certificates shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent and deliver
such Warrant Certificates so countersigned; and in case at that time any of the
Warrant Certificates shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrant Certificates either in the name of
the predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all such cases such Warrant Certificates shall have the full force
provided in the Warrant Certificates and in this Agreement.


 


In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrant Certificates so countersigned; and in case at that
time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior
name or in its changed name; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.


 


20.           Duties of Warrant Agent.  The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrant Certificates, by their
acceptance thereof, shall be bound:


 


(a)           The Warrant Agent may consult with counsel
satisfactory to it (who may be counsel for the Company), and the opinion of
such counsel shall be full and complete authorization and protection to the
Warrant Agent as to any action taken, suffered or omitted by it in good faith
and in accordance with such opinion; provided, however, that the Warrant Agent
shall have exercised reasonable case


 


14

















 


in the selection of such counsel. 
Fees and expenses of such counsel, to the extent reasonable, shall be
paid by the Company.


 


(b)           Whenever in the performance of its duties
under this Agreement, the Warrant Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company prior to taking
or suffering any action hereunder, such fact or matter (unless other evidence
in respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by the Company prior to taking or suffering
any action hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by a Chairman or co-Chairman of
the Board or the President or a Vice President or the Secretary of the Company
and delivered to the Warrant Agent; and such certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.


 


(c)           The Warrant Agent shall be liable hereunder
only for its own gross negligence, bad faith or willful misconduct.


 


(d)           The Warrant Agent shall not be liable for or
by reason of any of the statements of fact or recitals contained in this
Agreement or in the Warrant Certificates (except its countersignature on the
Warrant Certificates and such statements or recitals as describe the Warrant
Agent or action taken or to be taken by it) or be required to verify the same,
but all such statements and recitals are and shall be deemed to have been made
by the Company only.


 


(e)           The Warrant Agent shall not be under any
responsibility in respect of the validity of this Agreement or the execution
and delivery hereof (except the due execution hereof by the Warrant Agent) or
in respect of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall it be responsible for the making of any change
in the number of shares of Common Stock for which a Warrant is exercisable
required under the provisions of Section 6 or responsible for the manner,
method or amount of any such change or the ascertaining of the existence of
facts that would require any such adjustment or change (except with respect to
the exercise of Warrant Certificates after actual notice of any adjustment of
the Exercise Price); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any shares
of Common Stock to be issued pursuant to this Agreement or any Warrant
Certificate or as to whether any shares of Common Stock will, when issued, be
validly issued, fully paid and non-assessable.


 


(f)            The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or take any other
action likely to involve expense unless the Company or one or more registered
holders of Warrant Certificates shall furnish


 


15

















 


the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred.  All
rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding relative thereto, and
any such action, suit or proceeding instituted by the Warrant Agent shall be
brought in its name as Warrant Agent, and any recovery of judgment shall be for
the ratable benefit of the registered holders of the Warrant Certificates, as
their respective rights or interests may appear.


 


(g)           The Warrant Agent and any stockholder,
director, officer or employee of the Warrant Agent may buy, sell or deal in any
of the Warrants or other securities of the Company or become pecuniarily
interested in any transaction in which the Company may be interested, or
contract with or lend money to or otherwise act as fully and freely as though
it were not Warrant Agent under this Agreement.  Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.


 


(h)           The Warrant Agent is hereby authorized and
directed to accept instructions with respect to the performance of its duties
hereunder from a Chairman or co-Chairman of the Board or President or a Vice
President or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent’s duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.


 


(i)            The Warrant Agent will not be responsible
for any failure of the Company to comply with any of the covenants contained in
this Agreement or in the Warrant Certificates to be complied with by the
Company.


 


(j)            The Warrant Agent may execute and exercise
any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys, agents or employees and the
Warrant Agent shall not be answerable or accountable for any act, default,
neglect or misconduct of any such attorneys, agents or employees or for any
loss to the Company resulting from such neglect or misconduct; provided,
however, that reasonable care shall have been exercised in the selection and
continued employment of such attorneys, agents and employees.


 


(k)           The Warrant Agent will not incur any
liability or responsibility to the Company or to any holder of any Warrant
Certificate for any action taken, or any failure to take action, in reliance on
any notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument reasonably believed by the Warrant Agent to be genuine
and to have been signed, sent or presented by the proper party or parties.


 


(l)            The Warrant Agent will act hereunder solely
as agent of the Company in a ministerial capacity, and its duties will be
determined solely by the provisions


 


16

















 


hereof.  The Warrant Agent will
not be liable for anything which it may do or refrain from doing in connection
with this Agreement except for its own gross negligence, bad faith or willful
misconduct.


 


21.           Change of Warrant Agent.  The Warrant Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ prior notice in
writing mailed, by registered or certified mail, to the Company.  The Company may remove the Warrant Agent or
any successor warrant agent upon 30 days’ prior notice in writing, mailed to
the Warrant Agent or successor warrant agent, as the case may be, by registered
or certified mail.  If the Warrant Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Warrant Agent and shall, within 15
days following such appointment, give notice thereof in writing to each
registered holder of the Warrant Certificates. 
If the Company shall fail to make such appointment within a period of 15
days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Warrant Agent, then the Company agrees to perform the duties of the Warrant
Agent hereunder until a successor Warrant Agent is appointed.  After appointment and execution of a copy of
this Agreement in effect at that time, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Warrant Agent without further act or deed; but the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent,
within a reasonable time, any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose.  Failure to give any
notice provided for in this Section, however, or any defect therein shall not
affect the legality or validity of the resignation or removal of the Warrant
Agent or the appointment of the successor warrant agent, as the case may be.


 


22.           Issuance of New Warrant Certificates.  Notwithstanding any of the provisions of
this Agreement or the several Warrant Certificates to the contrary, the Company
may, at its option, issue new Warrant Certificates in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable under the several
Warrant Certificates made in accordance with the provisions of this Agreement.


 


23.           Notices.  Notice or demand pursuant to this Agreement to be given or made
on the Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:


 


Stratus Services Group, Inc.


500 Craig Road, 2nd Floor


Manalapan, New Jersey  07726


Attention:  Chief Financial
Officer


 


Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the company or by the holder of any Warrant
Certificate to or on the Warrant


 


17

















 


Agent shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Warrant Agent with the Company) as follows:


 


American Stock Transfer & Trust Company


59 Maiden Lane


Plaza Level


New York, New York  10038


 


Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to
the last address of such holder as it shall appear on the registers maintained
by the Warrant Agent.


 


24.           Modification of Agreement.  The Warrant Agent may, without the consent
or concurrence of the Warrantholders, by supplemental agreement or otherwise,
concur with the Company in making any changes or corrections in this Agreement
that the Warrant Agent shall have been advised by counsel (who may be counsel
for the Company) are necessary or desirable to cure any ambiguity or to correct
any defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, or to make any other provisions in regard to
matters or questions arising hereunder and which shall not be inconsistent with
the provisions of the Warrant Certificates and which shall not adversely affect
the interests of the Warrantholders.  As
of the date hereof, this Agreement contains the entire and only agreement,
understanding, representation, condition, warranty or covenant between the
parties hereto with respect to the matters herein, supersedes any and all other
agreements between the parties hereto relating to such matters, and may be
modified or amended only by a written agreement signed by both parties hereto
pursuant to the authority granted by the first sentence of this Section.


 


25.           Successors.  All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the benefit
of their respective successors and assigns hereunder.


 


26.           Delaware Contract.  This Agreement and each Warrant Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be construed in accordance with
the laws of said State.


 


27.           Termination.  This Agreement shall terminate as of the
close of business on the Expiration Date, or such earlier date upon which all
Warrants shall have been exercised or redeemed, except that the Warrant Agent
shall account to the Company as to all Warrants outstanding and all cash held
by it as of the close of business on the Expiration Date.  The provisions of Sections 18 and 20 of this
Agreement shall survive the termination of this Agreement.


 


28.           Benefits of this Agreement.  Nothing in this Agreement or in the Warrant
Certificates shall be construed to give to any person or corporation other than
the Company, the Warrant Agent, and their respective successors and assigns
hereunder and the registered


 


18

















 


holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Warrant Agent, their respective
successors and assigns hereunder and the registered holders of the Warrant
Certificates.


 


29.           Descriptive Headings.  The descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.


 


30.           Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but such counterparts
shall together constitute one and the same instrument.


 


Remainder of page intentionally left blank;
signature page follows)


 


19

















 


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed as of the day and year first above written.


 


	
   

  	
   

  	
  STRATUS
  SERVICES GROUP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AMERICAN
  STOCK TRANSFER & TRUST COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


20

















 


Exhibit A


 


VOID AFTER 5
P.M. EASTERN TIME ON                ,
2006


 


WARRANTS TO
PURCHASE COMMON STOCK


 


               
Warrants


 


	
  W

  	
  Stratus Services
  Group, Inc.

  



 


CUSIP
              


 


THIS CERTIFIES THAT


 


or registers assigns, is the registered
holder of the number of Warrants (“Warrants”) set forth above.  Each Warrant, unless and until redeemed by
the Company as provided in the Warrant Agreement, hereinafter more fully
described (the “ Warrant Agreement”) entitles the holder thereof to purchase
from Stratus Services Group, Inc., a corporation incorporated under the laws of
the State of Delaware (“Company”), subject to the terms and conditions set
forth hereinafter and in the Warrant Agreement, at any time on or after
               ,
2004 and before the close of business on
               ,
2006 (“Expiration Date”), one fully paid and non-assessable share of Common
Stock, $0.04 par value, of the Company (“Common Stock”) upon presentation and
surrender of this Warrant Certificate, with the instructions for the
registration and delivery of Common Stock filled in, at the stock transfer
office in New York, New York, of American Stock Transfer & Trust Company,
Warrant Agent of the Company (“Warrant Agent”) or of its successor warrant
agent or, if there be no successor warrant agent, at the corporate offices of
the Company, and upon payment of the Exercise Price (as defined in the Warrant
Agreement) and any applicable taxes paid either in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company.  Each Warrant
initially entitles the holder to purchase one share of Common Stock for $0.95
(subject to appropriate adjustments as provided in the Warrant Agreement).  The number and kind of securities or other
property for which the Warrants are exercisable are subject to adjustment in
certain events, such as mergers, splits, stock dividends, splits and the like,
to prevent dilution.  The Company may
redeem any or all outstanding and unexercised warrants by giving not less than
30 days prior notice at any time after the last reported sale price of the
Common Stock on the principal exchange on which it is traded has equaled or
exceeded $1.66 per share (subject to appropriate adjustments as provided in the
Warrant Agreement) on each of twenty (20) consecutive trading days subsequent
to
               ,
2004.  The Redemption Price is $0.10
(subject to appropriate adjustments as provided in the Warrant Agreement) per
Warrant.  All Warrants not theretofore
exercised will expire on the Expiration Date.


 


This Warrant
Certificate is subject to all of the terms, provisions and conditions of the
Warrant Agreement, dated as of
               ,
2004, between the Company and the Warrant Agent, to all of which terms,
provisions and conditions the registered holder of this Warrant Certificate
consents by acceptance hereof.  The
Warrant Agreement is incorporated herein by reference and made a part hereof
and reference is made to the Warrant Agreement for a full description of the
rights, limitations of rights, obligations, duties and immunities of the
Warrant Agent, the Company and the holders of the Warrant Certificates.  Copies of the Warrant


 

















 


Agreement are available for inspection at the
stock transfer office of the Warrant Agent or may be obtained upon written
request addressed to the Company at Stratus Services Group, Inc., 500 Craig
Road, 2nd Floor, Manalapan, New Jersey 07726, Attention:  Chief Financial Officer.


 


The Company
shall not be required upon the exercise of the Warrants evidenced by this
Warrant Certificate to issue fractions of Warrants, Common Stock or other
securities, but shall make adjustment therefore in cash on the basis of the
current market value of any fractional interest as provided in the Warrant
Agreement.


 


In certain
cases, the sale of securities by the Company upon exercise of Warrants would
violate the securities laws of the United States, certain states thereof or
other jurisdictions.  The Company has
agreed to use all commercially reasonable efforts to cause a registration
statement to continue to be effective during the term of the Warrants with
respect to such sales under the Securities Act of 1933, and to take such action
under the laws of various states as may be required to cause the sale of
securities upon exercise to be lawful. 
However, the Company will not be required to honor the exercise of
Warrants if, in the opinion of the Board of Directors, upon advice of counsel,
the sale of securities upon such exercise would be unlawful.  In certain cases, the Company may, but is
not required to, purchase Warrants submitted for exercise for a cash price
equal to the difference between the market price of the securities obtainable
upon such exercise and the exercise price of such Warrants.


 


This Warrant
Certificate, with or without other Certificates, upon surrender to the Warrant
Agent, any successor warrant agent or, in the absence of any successor warrant
agent, at the corporate offices of the Company, may be exchanged for another
Warrant Certificate or Certificates evidencing in the aggregate the same number
of Warrants as the Warrant Certificate or Certificates so surrendered.  If the Warrants evidenced by this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Certificates
evidencing the number of Warrants not so exercised.


 


No holder of
this Warrant Certificate, as such, shall be entitled to vote, receive dividends
or be deemed the holder of Common Stock or any other securities of the Company which
may at any time be issuable on the exercise hereof for any purpose whatever,
nor shall anything contained in the Warrant Agreement or herein be construed to
confer upon the holder of this Warrant Certificate, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof
or give or withhold consent to any corporate action (whether upon any matter
submitted to stockholders at any meeting thereof, or give or withhold consent
to any merger, recapitalization, issuance of stock, reclassification of stock,
change of par value or change of stock to no par value, consolidation,
conveyance or otherwise) or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Warrant Agreement) or to
receive dividends or subscription rights or otherwise until the Warrants
evidenced by this Warrant Certificate shall have been exercised and the Common
Stock purchasable upon the exercise thereof shall have become deliverable as
provided in the Warrant Agreement.


 


If this
Warrant Certificate shall be surrendered for exercise within any period during
which the transfer books for the Company’s Common Stock or other class of stock
purchasable upon the exercise of the Warrants evidenced by this Warrant
Certificate are closed for any


 


2

















 


purpose, the Company shall not be required to
make delivery of certificates for shares purchasable upon such transfer until
the date of the reopening of said transfer books.


 


Every holder
of this Warrant Certificate by accepting the same consents and agrees with the
Company, the Warrant Agent, and with every other holder of a Warrant
Certificate that:


 


(a)           this Warrant Certificate is transferable on
the registry books of the Warrant Agent only upon the terms and conditions set
forth in the Warrant Agreement, and


 


(b)           the Company and the Warrant Agent may deem
and treat the person in whose name this Warrant Certificate is registered as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone other than the Company or the Warrant Agent) for
all purposes whatever and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary. 
The Company shall not be required to issue or deliver any certificate
for shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the holder of this Warrant Certificate pursuant to the
Warrant Agreement shall have been paid, such tax being payable the holder of
this Warrant Certificate at the time of surrender.


 


This Warrant Certificate shall not be valid
or obligatory for any purpose until it shall have been countersigned by the
Warrant Agent.


 


(Remainder of page intentionally left blank;
signature page follows)


 


3

















 


WITNESS the facsimile signatures of the
proper officers of the Company and its corporate seal.


 


	
  Dated: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
  Stratus
  Services Group, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Name:

  	
  Name:

  	
   

  	
   

  
	
  Title:  Secretary

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Authorized Officer)

  	
   

  	
   

  	
   

  	
   

  
									



 


4

















 


[TO BE PRINTED ON BACK OF CERTIFICATE]


 


FORM OF ELECTION TO PURCHASE


 


The undersigned holder hereby exercises the
right to purchase
                     
of the shares of common stock (the “Warrant Shares”) of STRATUS SERVICES GROUP,
INC., a Delaware corporation (the “Company”), evidenced by the attached Warrant
(the “Warrant”).  Capitalized terms used
herein and not otherwise defined have the respective meanings set forth in the
Warrant.


 


1.             Payment of Warrant Exercise Price.  The holder has paid in connection with this
exercise the sum of
$                  
to the Company in accordance with the terms of the Warrant.


 


2.             Delivery of Warrant Shares.  The Company shall deliver to the holder
                     
Warrant Shares in accordance with the terms of the Warrant.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name of Registered Holder)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
							



 


FORM OF ASSIGNMENT


 


FOR VALUE RECEIVED, the undersigned does
hereby assign and transfer to
                     ,
Federal Identification No.
                     ,
a warrant to purchase
                     
shares of the common stock of STRATUS SERVICES GROUP, INC., a Delaware
corporation, represented by warrant certificate no.
               ,
standing in the name of the undersigned on the books of said corporation.  The undersigned does hereby irrevocably
constitute and appoint
              ,
attorney to transfer the warrants of said corporation, with full power of
substitution in the premises.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Name of Registered Holder)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: