**Exhibit 10.21**

 

 
|   | January 16, 2004 |
|--------|-----------------------|

 

 
| ***Via Fax:  212-480-9933***  |
|------------------------------------|
|                               |
| Mr. Christopher Janish             |
| Pinnacle Investment Partners, L.P. |
| The Trump Building                 |
| 40 Wall Street, 33rd Floor         |
| New York, NY  10005           |

 

 

**Re:****                             SeriesE Registration Penalties; Stratus Services Group, Inc. (“Stratus”)**

 

Dear Mr. Janish:

 

As the authorized representative of Pinnacle Investment Partners, L.P.(“Pinnacle”), the majority holder of the Series E Preferred Stock, you advisedStratus that, in consideration for Stratus continuing to pursue the filing ofan S-1 Registration Statement for a continuous offering of securities on a“best efforts” basis, and for also pursuing an S-4 Exchange Offer to the SeriesE holders, in conjunction with same, you would defer any penalties for failureto register until January 31, 2004.

 

Specifically you advised that the Series E shareholders were willing todefer certain penalties, pursuant to Paragraph 5(b) of the Stock PurchaseAgreement (“the “SPA”) executed by an among Stratus and each of the respectiveSeries E investors, for failing to timely register certain shares.

 

The holders of 14,362 shares of Series E shares in the aggregate, whichwere issued July 15, 2003, had previously agreed to defer the next penaltymeasurement date which is the basis for calculation of any penalties due tothem for the Company’s failure to register such shares within 120 days of thedate thereof, i.e., November 12, 2003, and now further agree to defer sameuntil January 31, 2004.

 

Additionally those holders ofthe remaining 22,145 shares of Series E, in the aggregate, which representthose Series E shares still outstanding as of January 15, 2004, for whichthe holders, on July 22, 2003, had received compensation throughJuly 22, 2003 for any penalty previously accrued, had also previouslyagreed to defer the next penalty measurement date which is the basis ofcalculation of any penalties due to them for the Company’s failure to registersuch shares within 120 days of the date thereof, i.e., November 22, 2003,and now further agree to defer same until January 31, 2004.

 

Moreover, Pinnacle has agreed that the Series E holders will receiveany deferred penalty monies, when and if due, as additional shares of Series EPreferred Stock.

 

----

 

By signing below, you acknowledge on behalf of the Series Eshareholders deferral of any penalties accruing until January 31, 2004,and the payment of such penalties, if any, in Series E Preferred Stock.

 
|                               | Very truly yours,                      |
|------------------------------------|----------------------------------------|
|                               |                                   |
|                               |                                   |
|                               | s/   Joseph J. Raymond  |   |
|                               | Joseph J. Raymond                      |
|                               | Chief Executive Officer                |
|                               |                                   |
|                               |                                   |
| **AGREED TO AND ACCEPTED BY:**     |                                   |
|                               |                                   |
| Pinnacle Investment Partners, L.P. |                                   |
|                               |                                   |
|                               |                                   |
| By:                                | s/   Christopher Janish |   |   |
|                               |                                   | Christopher Janish |   |
|                               |                                   | Fund Manager |   |
|                               |                                   |   |   |
|                               |                                   |   |   |
|                               |                                   |   |   |
|                               |                                   |   |   |
| cc:                                |                                   | Mr. Michael A. Maltzman |   |
|                               |                                   | Mr. Jeffrey Raymond |   |
|                               |                                   | Mr. Joseph J. Raymond, Jr. |   |
|                               |                                   | Suzette Nanovic Berrios, Esq. |   |
|                                    |                                        |  |  |  |  |

 

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