Exhibit 10.36


    


    


    


    


    


    


    


    
      WRITER'S
        DIRECT DIAL:

      WRITER'S
        E-MAIL:

      mbrundage@hwhlaw.com

    

    


    


    


    August
      12, 2005

    


    


    Michael
      A. Maltzman, CFO

    Stratus
      Services Group, Inc.

    500
      Craig
      Road

    Suite
      201

    Manalapan,
      New Jersey 07726

    


    


    


    
      	 	
              Re:

            	
              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
      Mr.
      Maltzman:

    


    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:

    


    
      	1.  	
              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 the date of
                this
                letter.

            


    

     

    
      	2.  	
              Conditioned
                upon timely receipt of the payment required in paragraph 1 above,
                Advantage will release and fund the current payroll associated with
                the
                Agreement. 

            


    

     

    
      	3.  	
              Provided
                that Stratus complies with all the terms of this forbearance agreement,
                Advantage will continue to perform under the Agreement through August
                25,
                2005.

            


    

     

    
      	4.  	
              Advantage
                shall receive a $50,000 forbearance fee (net of any other default
                penalties or interest) payable on the earlier of termination of the
                agreement or an additional default.


            


    

     

    
      	5.  	
              Advantage
                shall invoice to Stratus as to the payroll paid under paragraph 2
                above
                consistent with the Agreement except that such invoices shall have
                two
                components: (a) invoices totaling the amount of $1,100,000 shall
                be due
                and payable on or before August 18, 2005 (the “Deferred Amount”); and
                (b) the remaining amount due under invoices after deducting $1,100,000
                shall be due and payable immediately (the “Immediately Payable
                Amount”).

            


    

     

    
      	6.  	
              Stratus
                shall repay the Immediately Due Amount by directing CTF, on a daily
                basis
                starting Friday August 12, 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.
                In the
                event that CTF lowers the advance rate under the Secured Loan, CTF
                shall
                immediately notify Advantage thereof and Advantage may elect, prior
                to CTF
                making any additional advances, to cease to forbear under this agreement.
                

            


    

     

    
      	7.  	
              Stratus
                shall be in default hereunder unless the Immediately Due Amount is
                paid in
                full by August 17, 2005. The Deferred Amount shall be due in full
                without
                further notice or demand at 12:00 p.m. Eastern on August 18, 2005.
                

            


    

     

    
      	8.  	
              If
                the Immediately Due Amount and the Deferred Amount are paid in full
                by
                noon on August 18, 2005 and no other defaults exist hereunder, Advantage
                will forbear for one more week but all terms of the Agreement, including,
                but not limited to payment terms shall be govern.
                

            


    

     

    
      	9.  	
              Any
                further default under the Agreement or the Secured Loan shall be
                a default
                hereunder, unless specifically stated other wise 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 or 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.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	10.  	
              CTF
                shall forbear from exercising its rights under the Secured Loan during
                the
                Forbearance Period pursuant to a separate forbearance agreement.
                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 such Advantage
                right
                to cease forbearing hereunder shall constitute Advantages sole remedy
                against CTF. 

            


    

     

    


    HILL,
      WARD & HENDERSON, P.A.

    s/ 

    Michael
      P. Brundage

    


    


    
      	
              ALS,
                LLC

               

               

              By: 
                /s/ Jay Wolin      

               

              Its: 
                CFO      

               

               

            	
              Stratus
                Service Group, Inc.

               

               

              By: 
                /s/ Michael A. Maltzman      

               

              Its: 
                Executive Vice President and CFO      

            
	
               

              Acknowledged
                and consented as to the applicable provisions of paragraph 6, 9 and
                10 by
                Capital TempFunds a division of Capital Factors, LLC

               

               

              By: 
                /s/ James Rothman      

               

              Its: 
                President