Exhibit 3.1.8

                  CERTIFICATE OF DESIGNATIONS, PREFERENCES AND
                      RIGHTS OF SERIES I PREFERRED STOCK OF
                          STRATUS SERVICES GROUP, INC.

      The  undersigned  Vice President and Treasurer of Stratus  Services Group,
Inc. (the "Corporation"), a corporation organized and existing under the General
Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:

      That, pursuant to the authority conferred on the Board of Directors by the
Amended and Restated Certificate of Incorporation of the Corporation and Section
151 of the  General  Corporation  Law of the  State of  Delaware,  the  Board of
Directors of the Corporation,  by unanimous written consent dated as of June 18,
2004, did unanimously approve the adoption of the following resolution providing
for the  designations,  preferences  and other rights,  and the  qualifications,
limitations  or  restrictions  thereof,  of the Series I Preferred  Stock of the
Corporation;

      RESOLVED,  that pursuant to the authority vested in the Board of Directors
in accordance  with the  provisions of the Amended and Restated  Certificate  of
Incorporation  of the  Corporation,  there is  hereby  established  a series  of
Preferred Stock to which the following provisions shall be applicable:

      The shares of this  series  shall be  designated  the  "Series I Preferred
Stock" (the "Series I Preferred Stock") and shall consist of 54,000 shares, with
a par  value of $.01 per  share  and a stated  value of  $100.00  per  share.  A
statement   of   the   relative   powers,   dividends,    preferences,   rights,
qualifications,  limitations  and  restrictions  of the Series I Preferred Stock
("Statement") is as follows:

      1.  Dividends.  The  holders  of the  Series I  Preferred  Stock  shall be
entitled to receive, out of any assets legally available  therefore,  cumulative
dividends  at the rate of twelve  percent  (12%) per  annum,  accrued  daily and
payable on the Series I Redemption  Date (as defined  below),  in preference and
priority to any payment of any dividend on the common  stock of the  Corporation
("Common Stock"), subject to adjustment, as provided in Section 4(b) below. Such
dividends  shall accrue on any given share from the day of original  issuance of
such share and shall  accrue from day to day whether or not earned or  declared.
If at any time dividends on the outstanding Series I Preferred Stock at the rate
set forth above shall not have been paid or declared  and set apart for payment,
the amount of the  deficiency  shall be fully paid or declared and set apart for
payment,  but  without  interest,  before  any  distribution,  whether by way of
dividend  or  otherwise,  shall be  declared  or paid  upon or set apart for the
shares of Common Stock.

      2.  Voting.  Holders of Series I Preferred  Stock shall not be entitled to
any voting  rights except as otherwise  provided by law and Section 7 below.  To
the  extent  that  such vote may be  required  by law or  Section  7 below,  and
notwithstanding  anything to the contrary contained in the Corporation's Amended
and Restated Certificate of Incorporation, notice of a meeting of the holders of
Series I  Preferred  Stock may be  dispensed  with and the  holders  of Series I
Preferred  Stock may act  without a meeting  upon the  written  consent of those
holders of Series I  Preferred  Stock who would have been  entitled  to cast the
minimum  number of votes that would be necessary  to authorize  such action at a
meeting at which all shares entitled to be voted thereat were present and voted.

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      3. Liquidation Preference.

         (a) Series I Preferred  Stock.  Upon the  occurrence  of a  Liquidating
Event (as defined below),  whether voluntary or involuntary,  the holders of the
Series I Preferred Stock shall be entitled to receive,  out of the assets of the
Corporation  available for distribution to its stockholders or from the proceeds
from such  Liquidating  Event,  and prior to and in preference to any payment or
distribution made in respect of the Common Stock, $100.00 in cash, securities or
other property  (based upon the Market Price (as defined below) thereof for such
securities  and the fair market value thereof for such other  property,  in each
case  calculated  as of the date of such  Liquidating  Event)  for each share of
Series I Preferred Stock, together with all accrued and unpaid dividends thereon
(the amount thus payable, the "Series I Liquidation Preference").  If, upon such
Liquidating  Event,  the  assets  distributable  to the  holders of the Series I
Preferred  Stock  shall be  insufficient  to permit  the  payment in full of the
Series  I  Liquidation  Preference,  the  assets  of the  Corporation  shall  be
distributed  to the holders of the Series I Preferred  Stock  ratably  until the
holders  shall have  received  the full amount to which they would  otherwise be
entitled.

         (b)  Valuation  of  Securities.  For purposes of this Section 3, if any
asset  distributed to stockholders  upon the occurrence of any Liquidating Event
consists  of  property  other  than  cash  or  securities,  the  value  of  such
distribution  shall be deemed to be the fair market value thereof at the time of
such distribution,  as determined in good faith by the Board of Directors of the
Corporation.  Any securities to be delivered pursuant to this Section 3 shall be
valued as follows:

            (i)  Securities  not subject to  investment  letter or other similar
restrictions on free  marketability  covered by Section 3(b)(ii) hereof shall be
valued at the Market Price; and

            (ii) Securities  subject to investment letter or other  restrictions
on free  marketability  (other than  restrictions  arising solely by virtue of a
stockholder's  status as an affiliate or former affiliate) shall be valued at an
appropriate  discount  from the Market Price,  as  reasonably  determined by the
Board of  Directors  in good faith,  to reflect the  adjusted  fair market value
thereof.

      For purposes of this  Statement,  the "Market Price" of any security means
the  average of the closing  prices of such  security's  sales on the  principal
securities  exchanges on which such  security may at the time be listed,  or, if
there have been no sales on any such  exchange  on any day,  the  average of the
highest bid and lowest  asked  prices on all such  exchanges  at the end of such
day,  or, if on any day such  security  is not so  listed,  the  average  of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M.,
New York  time,  or, if on any day such  security  is not  quoted in the  NASDAQ
System,  the average of the highest bid and lowest  asked  prices on such day in
the domestic over-the-counter market as reported by the NASD OTC Bulletin Board,
or any similar successor organization,  in each such case averaged over a period
of five days  consisting of the day prior to the day as of which Market Price is
being determined and the four consecutive business days prior to such day. If at

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any time such security is not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, the Market Price shall be the fair
value thereof determined in good faith by the Corporation's Board of Directors.

         (c)  Liquidating  Event.  Any of the  following  shall be  considered a
"Liquidating  Event",  and shall  entitle  the holders of the Series I Preferred
Stock and the Common Stock to receive at the  closing,  in cash,  securities  or
other  property,  amounts as specified  in Sections  3(a) (valued as provided in
Section 3(b) above):

            (i) any  liquidation,  dissolution or winding up of the Corporation;
or

            (ii) a sale, lease or other  disposition of all or substantially all
the Corporation's assets;  provided,  however, that if the holders of a majority
of the shares of Series I Preferred  Stock so elect by giving  written notice to
the Corporation before the effective date of any such sale, lease or disposition
that would otherwise be a Liquidating Event as defined herein,  such sale, lease
or  disposition  shall not be deemed a Liquidating  Event and the  provisions of
Section 6(d) below shall apply.

         (d) Notice of Liquidation  Event.  The  Corporation  shall give to each
holder at least thirty (30) days' prior written notice of any Liquidating  Event
by  delivery  of such  notice via first  class  mail,  postage  prepaid,  at the
holder's  address  as set forth in the  records  of the  Corporation;  provided,
however,  that  to the  extent  that  the  Series  I  Preferred  Stock  is  then
convertible at the option of the holder,  any holder of Series I Preferred Stock
may convert its shares of Series I Preferred  Stock to Common  Stock at any time
prior to the payment date stated in such notice.

      4. Redemption of Series I Preferred Stock.

         (a)  Mandatory   Redemption.   Subject  to  Section  4(h)  below,   the
Corporation  shall redeem each share of Series I Preferred Stock on the one year
anniversary  of the  date  (the  "Initial  Redemption  Date")  of  its  original
issuance,  at a  redemption  price  payable  in cash of  $100.00  per  share (as
adjusted for any stock  dividends,  combinations  or splits with respect to such
shares),  plus any  accrued  but  unpaid  dividends  (the  "Series I  Redemption
Price"); provided, however, that the Corporation may elect to extend the date by
which it is  required  to redeem  the Series I  Preferred  Stock to the two year
anniversary  date of its original  issuance by providing  written notice of such
election  to each  holder  of the  Series I  Preferred  Stock  which it would be
otherwise  required  to redeem  not later  than  thirty  (30) days  prior to the
Initial  Redemption Date. In the event that the Corporation elects to extend the
redemption date as described above, the dividend rights of the holders of Series
I Preferred Stock shall be adjusted in accordance with Section 4(b) below.

         (b) Effect of Extension.  If the Corporation  elects to extend the date
upon which it is  required to redeem the Series I  Preferred  Stock  pursuant to
Section 4(a) above, then in such event:

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            (i) it shall pay in cash no later than the Initial  Redemption  Date
all  dividends  accrued on the Series I  Preferred  Stock  through  the  Initial
Redemption Date and unpaid;

            (ii)  dividends  accruing  after the Initial  Redemption  Date shall
become payable in cash on the last day of each calendar  quarter (March 31, June
30, September 30 and December 31);

            (iii)  the  Corporation  shall  issue  to each  holder  of  Series I
Preferred  Stock,  no later than thirty  (30) days after the Initial  Redemption
Date, a number of shares of Common Stock having an aggregate  Market Price value
equal to ten percent (10%) of the aggregate  stated value,  determined as of the
Initial  Redemption Date, of the shares of Series I Preferred Stock held by such
holder;

            (iv)  the  Corporation  shall  pay an  advisory  fee  to an  advisor
designated by the plurality,  acting by vote or written  consent,  of the voting
power of the Series I Preferred  Stock,  in an amount equal to ten percent (10%)
of the aggregate  stated value of the  outstanding  shares of Series I Preferred
Stock,  which  advisory fee shall be payable,  within thirty (30) days after the
designation  of such  advisor by the  holders of the Series I  Preferred  Stock,
eight  percent  (8%) in cash and two  percent  (2%) in shares  of Common  Stock,
valued at the Market Price of the Common Stock on the Initial Redemption Date.

         (c) Redemption  Default. If the Corporation does not extend the Initial
Redemption  Date in  accordance  with Section 4(a) above and fails to redeem the
Series I Preferred Stock on or prior to the Initial  Redemption  Date, or if the
Corporation extends the Initial Redemption Date and fails to redeem the Series I
Preferred Stock on or before the second  anniversary of the date of the original
issuance  of the  Series  I  Preferred  Stock  (in  either  case  a  "Redemption
Default"),  then, from and after the date of such Redemption Default,  dividends
shall accrue at a rate of twenty-four percent (24%) per annum.

         (d) Optional  Redemption.  If not earlier redeemed,  part or all of the
Series I Preferred  Stock shall be subject to redemption by the  Corporation  at
any time prior to  conversion at a redemption  price of $100.00 per share,  plus
any accrued but unpaid dividends.

         (e) Number of Shares  Subject to  Redemption.  Any  redemption of fewer
than all  outstanding  shares of Series I Preferred  Stock effected  pursuant to
this Section 4 shall be made on a pro-rata basis among the holders of the Series
I Preferred  Stock in proportion to the shares of Series I Preferred  Stock then
held by them.

         (f)  Redemption  Date;  Notice  of  Redemption.  Any  date  on  which a
redemption  is  effectuated  shall be known  herein as the "Series I  Redemption
Date".  At least 15 but no more than 30 days prior to each  Series I  Redemption
Date written notice shall be mailed, first class postage prepaid, to each holder
of record (at the close of business on the business day next  preceding  the day
on which notice is given) of the Series I Preferred Stock to be redeemed, at the
address last shown on the records of the Corporation for such holder,  notifying
such holder of the redemption to be effected, specifying the number of shares to
be redeemed  from such holder,  the Series I  Redemption  Date,  the  Redemption
Price,  the place at which  payment may be obtained and calling upon such holder
to surrender to the Corporation,  in the manner and at the place designated, his
certificate or certificates  representing the shares to be redeemed (the "Series
I Redemption Notice").

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      (g) Redemption Procedure.

            (i) Except as provided in Section 4(h) below, on or after the Series
I Redemption  Date, each holder of Series I Preferred Stock to be redeemed shall
surrender to the Corporation the certificate or certificates  representing  such
shares,  in the manner and at the place  designated  in the Series I  Redemption
Notice,  and  thereupon  the Series I  Redemption  Price of such shares shall be
payable to the order of the person  whose name  appears on such  certificate  or
certificates  as the owner  thereof and each  surrendered  certificate  shall be
cancelled.  In the  event  less  than  all the  shares  represented  by any such
certificate are redeemed,  a new certificate  shall be issued  representing  the
unredeemed shares.

            (ii) From and after the Series I Redemption Date, unless there shall
have been a default in payment of the Series I Redemption  Price,  all rights of
the holders of shares of Series I Preferred  Stock  designated for redemption in
the Series I Redemption  Notice as holders of Series I Preferred  Stock  (except
the right to  receive  the  Series I  Redemption  Price  without  interest  upon
surrender of their certificate or certificates) shall cease with respect to such
shares,  and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever.

         (h) Certain Redemption Restrictions. Subject to the rights of series of
preferred stock of the Corporation  ("Preferred Stock"),  which may from time to
time come into  existence,  if funds of the  Corporation  legally  available for
redemption of shares of Series I Preferred Stock on any Series I Redemption Date
are  insufficient  to redeem  the total  number of shares of Series I  Preferred
Stock to be redeemed on such date, those funds which are legally  available will
be used to redeem the maximum  possible  number of such shares ratably among the
holders of such  shares to be  redeemed  based upon their  holdings  of Series I
Preferred  Stock.  The shares of Series I  Preferred  Stock not  redeemed  shall
remain  outstanding  and  entitled  to all the rights and  preferences  provided
herein.  Subject to the rights of series of Preferred  Stock which may from time
to time come into existence, at any time thereafter when additional funds of the
Corporation  are  legally  available  for the  redemption  of shares of Series I
Preferred  Stock,  such funds will  immediately be used to redeem the balance of
the shares which the  Corporation  has become  obliged to redeem on any Series I
Redemption Date but which it has not redeemed.

      5. Forced Conversion of Series I Preferred Stock.

         (a) The Corporation at its option may cause each  outstanding  share of
the Series I Preferred Stock to be converted into Common Stock at any time prior
to the Initial Redemption Date (the "Mandatory  Conversion Date"),  into, at the
election of the holder,  either (i) one hundred twenty-five (125) fully paid and
non-assessable  shares of Common Stock and two hundred  fifty (250) Common Stock
purchase  warrants  ("Warrants")  for  each  $100  of  the  aggregate  Series  I
Liquidation  Preference of such Series I Preferred  Stock,  prorated for amounts
less than $100, or (ii) such number of fully paid and  non-assessable  shares of
Common  Stock  as  shall  be  determined  by  dividing  the  aggregate  Series I
Liquidation Preference of the Series I Preferred Stock being converted as of the

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Mandatory Conversion Date by the Conversion Price (as determined by Section 6(b)
below) in effect on the Mandatory Conversion Date.

         (b) To  effect  the  conversion  provided  for  in  Section  5(a),  the
Corporation  shall at least twenty (20) days prior to the  Mandatory  Conversion
Date send a notice (the "Mandatory  Conversion Notice") to each holder of record
of the Series I Preferred Stock, at the address last shown on the records of the
Corporation for such holder, notifying such holder of the conversion which is to
be effected, specifying the Mandatory Conversion Date and the conversion options
and calling upon each such holder to surrender to the Corporation, in the manner
and at the place  designated,  a certificate or  certificates  representing  the
number of shares of Series I Preferred Stock held by such holder.

         (c) At least five (5) days before the Mandatory  Conversion  Date, each
holder of Series I Preferred Stock shall notify the Corporation in writing as to
whether its  election is pursuant to clause (i) or clause (ii) of Section  5(a).
Any holder of Series I  Preferred  Stock who does not  provide  such notice on a
timely basis shall be deemed to have elected the method which will result in the
greatest number of shares of Common Stock being issued to such holder.

         (d) On or after the Mandatory  Conversion Date, each holder of Series I
Preferred   Stock  shall   surrender  to  the  Corporation  the  certificate  or
certificates  representing  the shares of Series I Preferred Stock owned by such
holder as of the  Mandatory  Conversion  Date,  in the  manner  and at the place
designated in the Mandatory Conversion Notice, and thereupon the shares issuable
upon such conversion shall be delivered as provided in Section 6(e)(iii) hereof.

      6. Optional Conversion of Series I Preferred Stock

         (a)  Option to  Convert.  If (x) the  Corporation  does not  extend the
Initial Redemption Date and fails to redeem all outstanding shares of the Series
I  Preferred  Stock  on or  prior  to  the  Initial  Redemption  Date  or if the
Corporation extends the Initial Redemption Date and fails to redeem the Series I
Preferred  Stock on or before  the two (2) year  anniversary  of the date of its
original issuance as required under Section 4(a) above (a "Redemption  Default")
or (y) a Bankruptcy Event (as defined below) shall occur, each share of Series I
Preferred  Stock that is not redeemed  will  thereafter be  convertible,  at the
option of the  holder,  into  either  (i) 125  shares  of  Common  Stock and 250
Warrants for each $100.00 of the Series I Liquidation  Preference represented by
such share of Series I Preferred Stock,  prorated for amounts less than $100, or
(ii) such  number of fully  paid and  non-assessable  shares of Common  Stock as
shall be determined by dividing the aggregate Series I Liquidation Preference of
the Series I Preferred  Stock being converted on the Conversion Date (as defined
in  Section  6(e)  below) by the  Conversion  Price  determined  as  hereinafter
provided in effect on the applicable Conversion Date (as defined in Section 6(e)
below).  The  Warrants  shall have the terms set forth in the Warrant  Agreement
dated as of July 14, 2004 between the  Corporation and American Stock Transfer &
Trust  Company.  The term  "Bankruptcy  Event"  shall mean (A) the filing by the
Corporation  of a petition in bankruptcy  or  insolvency  or for  reorganization
under the  bankruptcy  laws of the United States or under any  insolvency act of
any  state  or (B)  the  institution  of  involuntary  proceedings  against  the
Corporation  under any such bankruptcy law or insolvency act, or the appointment
of a  receiver  or  trustee  for all or  substantially  all of the assets of the
Corporation   and  such   involuntary   proceeding  is  not  dismissed  or  such

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receivership   or  trusteeship   vacated  within  sixty  (60)  days  after  such
institution or appointment.

         (b) Determination of Conversion Price.

            (i) The  "Conversion  Price"  shall be equal to the  average  of the
closing bid prices of the Common Stock during the five (5)  consecutive  trading
days preceding the conversion date multiplied by 80%.

            (ii) The  "closing  bid price" of the Common  Stock on a trading day
shall be the closing bid price of the Common Stock on OTC Bulletin  Board or any
other principal  securities  price quotation system or market on which prices of
the  Common  Stock are  reported.  The term  "trading  day" means a day on which
trading is reported on the principal  quotation system or market on which prices
of the Common Stock are reported.

            (iii) If, during the period of consecutive trading days provided for
above,  the  Corporation  shall  declare or pay any dividend on the Common Stock
payable in Common Stock or in rights to acquire Common Stock,  or shall effect a
stock  split  or  reverse  stock  split,  or  a  combination,  consolidation  or
reclassification   of  the  Common  Stock,   the   Conversion   Price  shall  be
proportionately  decreased or increased, as appropriate,  to give effect to such
event.

         (c)  Subdivision or Combination of Common Stock.  In the event that the
Corporation  at any time or from time to time shall effect a subdivision  of the
outstanding  shares of Common  Stock  into a greater  number of shares of Common
Stock (by  stock  split,  reclassification  or  otherwise),  or in the event the
outstanding  shares  of Common  Stock  shall be  combined  or  consolidated,  by
reclassification  or otherwise,  into a lesser number of shares of Common Stock,
then the  number  of  shares of Common  Stock  and the  Warrants  issuable  upon
conversion  immediately  prior  to  such  event  shall,  concurrently  with  the
effectiveness  of such event,  be  proportionately  decreased or  increased,  as
appropriate.

         (d) Extraordinary Event. Prior to the consummation of any Extraordinary
Event (as defined below), the Corporation shall make appropriate  provisions (in
form and substance  reasonably  satisfactory to the holders of a majority of the
Series I Preferred Stock then outstanding) to ensure that each of the holders of
Series I Preferred Stock shall thereafter have the right to acquire and receive,
in lieu of or in addition to (as the case may be) the shares of Common Stock and
Warrants immediately  theretofore  acquirable and receivable upon the conversion
of such holder's Series I Preferred Stock,  such shares of stock,  securities or
assets as such holder would have received in connection with such  Extraordinary
Event if such holder had  converted  its Series I Preferred  Stock and exercised
its Warrants  immediately prior to such Extraordinary  Event. In each such case,
the Corporation  shall also make  appropriate  provisions (in form and substance
reasonably  satisfactory  to the holders of a majority of the Series I Preferred
Stock then  outstanding)  to ensure that the  provisions of this Section 6 shall
thereafter be applicable to the Series I Preferred Stock. The Corporation  shall
not  effect  any  such  consolidation,  merger  or  sale,  unless  prior  to the
consummation  thereof,  the  successor  entity (if other  than the  Corporation)
resulting from such consolidation or merger or the entity purchasing such assets
assumes by written instrument (in form and substance reasonably  satisfactory to
the holders of a majority of the Series I Preferred Stock then outstanding), the
obligation  to deliver to each such holder such shares of stock,  securities  or

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assets as, in  accordance  with the  foregoing  provisions,  such  holder may be
entitled to acquire. For purposes of this Section 6, "Extraordinary Event" means
the  occurrence  or   consummation   of  a  transaction  or  series  of  related
transactions  (other than any such  transaction that is treated as a Liquidating
Event)  resulting in: (i) a merger,  consolidation,  sale or  reorganization  in
which  the  Corporation  or  any  of  its  subsidiaries  is  not  the  surviving
corporation;  or (ii) a sale, lease or exchange,  directly or indirectly, of all
or substantially  all of the property and assets of the Corporation,  whether or
not in the ordinary course of business.

      (e) Conversion Procedure.

            (i) To convert  shares of Series I  Preferred  Stock into  shares of
Common Stock as  permitted  hereby,  each holder shall give written  notice (the
"Conversion  Notice") to the Corporation  that such holder elects to convert the
same and shall state therein the number of shares to be  converted,  the name or
names in which such holder wishes the certificate or certificates  for shares of
Common Stock and, if applicable,  Warrants to be issued,  and whether the holder
is  electing  to receive  Common  Stock and  Warrants  pursuant to clause (i) of
section  6(a) above or Common  stock and  Warrants  pursuant  to clause  (ii) of
section  6(a)  above.  With the  delivery of the  Conversion  Notice or promptly
thereafter,   the  holder  shall   surrender  the  certificate  or  certificates
representing  the shares to be converted,  duly  endorsed,  at the office of the
Corporation,  or at such other place  designated by the  Corporation.  Except as
otherwise provided herein,  each conversion of Series I Preferred Stock shall be
deemed to have been  effected  as of the close of  business on the date on which
the certificate or certificates  representing the Series I Preferred Stock to be
converted have been  surrendered  for conversion at the principal  office of the
Corporation  (a  "Conversion  Date").  At the time any such  conversion has been
effected, the rights of the holder of the shares converted as a holder of Series
I Preferred  Stock shall  cease,  and (i) the person or persons in whose name or
names any  certificate  or  certificates  for  shares of Common  Stock are to be
issued upon such conversion shall be deemed to have become the holder or holders
of record of the shares of Common Stock represented thereby, and (ii) the person
or persons in whose name or names any Warrant certificate or certificates are to
be issued  upon such  conversion  shall be deemed to have  become  the holder or
holders of record of the Warrants represented thereby.

            (ii)  Notwithstanding any other provision hereof, if a conversion of
Series I Preferred Stock is to be made in connection with an Extraordinary Event
or any other  transaction  affecting the  Corporation  or any holder of Series I
Preferred  Stock,  the conversion of any shares of Series I Preferred Stock may,
at the election of the holder thereof,  be conditioned  upon the consummation of
such transaction,  in which case such conversion shall be deemed to be effective
immediately prior to the consummation of such transaction.

            (iii)  Promptly  (and in any event within five (5) business  days in
the case of Section  6(e)(iii)(A)  below) after a conversion  has been effected,
the Corporation shall deliver to the converting holder:

               (A) a  certificate  or  certificates  representing  the number of
shares of Common  Stock  issuable by reason of such  conversion  in such name or
names and such  denomination  or  denominations  as the  converting  holder  has
specified;

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               (B) a Warrant certificate or certificates representing the number
of Warrants issuable by reason of such conversion in such name or names and such
denomination or denominations as the converting holder has specified; and

               (C) a certificate  representing  any shares of Series I Preferred
Stock which were represented by the certificate or certificates delivered to the
Corporation in connection with such conversion but which were not converted.

            (iv) The  issuance of  certificates  for shares of Common  Stock and
Warrants  upon  conversion  of Series I Preferred  Stock  shall be made  without
charge to the holders of such Series I Preferred  Stock for any  issuance tax in
respect  thereof  (so long as such  certificates  are  issued in the name of the
record  holder of such Series I Preferred  Stock) or other cost  incurred by the
Corporation  in  connection  with such  conversion  and the related  issuance of
shares of Common Stock and Warrants.  Upon  conversion of each share of Series I
Preferred Stock, the Corporation shall take all such actions as are necessary in
order to ensure that the Common Stock issuable with respect to such  conversion,
and the shares of Common  Stock  issuable  with  respect to the  exercise of the
Warrants, shall be validly issued, fully paid and nonassessable,  free and clear
of all taxes (other than any taxes  relating to any dividends  paid with respect
thereto), liens, charges and encumbrances with respect to the issuance thereof.

            (v) The  Corporation  shall not close its books against the transfer
of (i) Series I Preferred  Stock,  (ii)  Common  Stock  issued or issuable  upon
conversion of Series I Preferred  Stock,  (iii)  Warrants,  or (iv) Common Stock
issued or issuable  upon  exercise of Warrants,  in any manner which  interferes
with the timely  conversion of Series I Preferred Stock.  The Corporation  shall
assist  and  cooperate  with any  holder  of such  shares  required  to make any
governmental  filings  or  obtain  any  governmental  approval  prior  to  or in
connection  with any  conversion of such shares  hereunder  (including,  without
limitation, making any filings required to be made by the Corporation).

      (f) Certain Conversion Restrictions.

            (i) A holder may not convert  shares of Series I Preferred  Stock to
the  extent  such  conversion  would  result in the  holder,  together  with any
affiliate thereof, beneficially owning (as determined in accordance with Section
13(d) of the Exchange  Act and the rules  promulgated  thereunder)  in excess of
4.999% of the then  issued and  outstanding  shares of Common  Stock,  including
shares  issuable upon  conversion of the shares of Series I Preferred Stock held
by such holder after  application of this Section.  Since the holder will not be
obligated  to report to the Company the number of shares of Common  Stock it may
hold at the time of a conversion hereunder, unless the conversion at issue would
result in the  issuance  of  shares  of Common  Stock in excess of 4.999% of the
then-outstanding shares of Common Stock without regard to any other shares which
may be  beneficially  owned by the holder or an  affiliate  thereof,  the holder
shall have the authority and  obligation  to determine  whether the  restriction
contained in this Section will limit any particular  conversion hereunder and to
the extent that the holder  determines  that the  limitation  contained  in this
Section applies,  the  determination of which shares of Series I Preferred Stock
are convertible shall be the responsibility and obligation of the holder. If the
holder has delivered a Conversion  Notice for shares of Series I Preferred Stock
that,  without  regard to any other shares that the holder or its affiliates may
beneficially own, would result in the issuance in excess of the permitted amount

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<PAGE>

hereunder,  the Company shall notify the holder of this fact and shall honor the
conversion  for the maximum  number of shares  permitted to be converted on such
Conversion  Date in accordance with the periods  described in Section  6(e)(iii)
and,  at the  option of the  holder,  either  retain  any  shares  tendered  for
conversion in excess of the permitted amount hereunder for future conversions or
return  such  excess  shares  of Series I  Preferred  Stock to the  holder.  The
provisions  of this Section may be waived by a holder (but only as to itself and
not to any other holder) upon not less than 61 days prior notice to the Company.
Other holders shall be unaffected by any such waiver.

            (ii) In no event is a holder entitled to convert any share of Series
I Preferred Stock prior to the occurrence of a Redemption Default.

         (g) No Fractional  Shares or Warrants.  No  fractional  share of Common
Stock or fractional  Warrant shall be issued upon the conversion of any share or
shares of Series I Preferred  Stock. All shares of Common Stock and all Warrants
(including fractions thereof) issuable upon conversion of more than one share of
Series I Preferred Stock by a holder thereof shall be aggregated for purposes of
determining  whether  the  conversion  would  result  in  the  issuance  of  any
fractional   share  or  fractional   Warrant.   If,  after  the   aforementioned
aggregation,  the  conversion  would  result in the  issuance of a fraction of a
share of Common Stock or fractional  Warrant,  the Corporation shall, in lieu of
issuing any such fraction,  pay the holder otherwise entitled to such fraction a
sum in cash  equal to the fair  market  value  of such  fraction  on the date of
conversion (as determined in good faith by the Board of Directors).

         (h) No  Impairment.  The  Corporation  will not, by  amendment  of this
Statement  or through any  reorganization,  transfer  of assets,  consolidation,
merger,  dissolution,  issue or sale of securities or any other voluntary action
(other than actions taken in good faith), avoid the observance or performance of
any of the terms to be observed or performed  hereunder by the  Corporation  but
will at all times in good faith  assist in carrying  out all the  provisions  of
this Section 6 and in taking all such action as may be necessary or  appropriate
in order to  protect  the  conversion  rights  of the  holders  of the  Series I
Preferred Stock against impairment.

         (i)  Certificates  as to  Adjustments.  Upon  the  occurrence  of  each
adjustment or readjustment pursuant to this Section 6 of the number of shares of
Common Stock and Warrants  issuable  upon  conversion,  the  Corporation  at its
expense shall promptly  compute such  adjustment or  readjustment  in accordance
with the  terms  hereof  and  prepare  and  furnish  to each  holder of Series I
Preferred Stock a certificate  setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The  Corporation  shall,  upon the written  request at any time of any holder of
Series I Preferred Stock, furnish or cause to be furnished to such holder a like
certificate  setting forth (i) such adjustments and readjustments,  and (ii) the
number of shares of Common Stock and Warrants,  and the amount, if any, of other
property, that at the time would be received upon the conversion of the Series I
Preferred Stock.

         (j)  Notices  of  Record  Date.  In  the  event  of any  taking  by the
Corporation  of a record  of the  holders  of any  class of  securities  for the
purpose or  determining  the  holders  thereof  who are  entitled to receive any
dividend  or other  distribution,  any  security  or right  convertible  into or
entitling the holder thereof to receive  additional  shares of Common Stock,  or
any right to subscribe for, purchase or otherwise acquire any shares of stock of

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<PAGE>

any class or any other  securities  or property,  or to receive any other right,
the Corporation  shall mail to each holder of Series I Preferred Stock, at least
10 days prior to the date  specified  therein,  a notice  specifying the date on
which any such record is to be taken for the purpose of such dividend.

         (k) Reservation of Common Stock.  The  Corporation  shall, at all times
when the  Series  I  Preferred  Stock  shall be  outstanding,  reserve  and keep
available out of its authorized but unissued stock, for the purpose of effecting
the  conversion  of the  Series  I  Preferred  Stock,  such  number  of its duly
authorized  shares of Common Stock as shall from time to time be  sufficient  to
effect the conversion of all  outstanding  Series I Preferred  Stock,  including
Common Stock  issuable upon exercise of the Warrants.  No shares of Common Stock
shall be issued upon the conversion of the Series I Preferred Stock or otherwise
under this Certificate of Designations, Preferences and Rights unless the number
of authorized  but unissued  shares of Common Stock is sufficient to permit such
issuance.  If at any time the number of authorized but unissued shares of Common
Stock shall not be  sufficient  to permit an issuance of Common Stock  otherwise
required  hereunder,  the Corporation shall take such action as may be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be  sufficient  for such  purpose,  including  engaging  in best
efforts to obtain the requisite stockholder  approval.  Before taking any action
which would cause the effective  purchase price for the Series I Preferred Stock
to be less than the par value of the  shares of Series I  Preferred  Stock,  the
Corporation  shall take any  corporate  action  which may, in the opinion of its
counsel,  be  necessary  in order that the  Corporation  may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such effective
purchase price.

      7.  Protective  Provisions.  So long as any  shares of Series I  Preferred
Stock are  outstanding,  the  Corporation  shall not without first obtaining the
approval (by vote or written  consent,  as provided by law) of the holders of at
least a majority of the  then-outstanding  shares of Series I Preferred Stock do
any of the following:

         (a) alter the rights,  qualifications,  limitations, or restrictions of
the  shares of  Series I  Preferred  Stock in a manner  than  affects  adversely
holders of shares of Series I Preferred Stock;

         (b) increase or decrease  (other than by redemption or conversion)  the
total number of authorized shares of Series I Preferred Stock;

         (c)  authorize  or issue,  or  obligate  itself to  issue,  any  equity
security,  or any  security  convertible  into or  exercisable  for  any  equity
security,  having a preference over, or on a parity with, the Series I Preferred
Stock with respect to dividends or upon liquidation; or

         (d) redeem, purchase or otherwise acquire (or pay into or set aside for
a sinking fund for such purpose) any shares of capital stock of the  Corporation
other than  shares of Class A Common  Stock or shares of the Series I  Preferred
Stock as  contemplated  in this  Certificate of  Designations,  Preferences  and
Rights.

      8. Retirement of Shares.  Any shares of Series I Preferred Stock redeemed,
purchased or otherwise  acquired by the Corporation  shall be deemed retired and

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<PAGE>

shall be cancelled and may not under any circumstances thereafter be reissued or
otherwise disposed of by the Corporation.

      IN WITNESS  WHEREOF,  the  Corporation  has  caused  this  Certificate  of
Designations,  Preferences  and  Rights to be signed by  Michael  Maltzman,  its
Executive Vice President and Chief  Financial  Officer,  this 3rd day of August,
2004.

                                     Stratus Services Group, Inc.


                               By:    /s/ Michael Maltzman
                                      ----------------------------
                               Name:  Michael Maltzman
                               Title: Executive Vice President and
                                      Chief Financial Officer


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