EXHIBIT 4.2

                                   JUNE 2001

                        (1)   STRATUS SERVICES GROUP, INC

                        (2)   ARTISAN.COM LIMITED

                             SUBSCRIPTION AGREEMENT

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                                    CONTENTS

CLAUSE                                                                      PAGE

1.  DEFINITIONS AND INTERPRETATION                                             1

2.  CONDITIONS PRECEDENT                                                       2

3.  FIRST SUBSCRIPTION                                                         2

4.  SECOND SUBSCRIPTION                                                        3

5.  WARRANTIES                                                                 3

6.  APPLICATION                                                                3

7.  REGISTRATION RIGHTS                                                        3

8.  FURTHER ASSURANCE                                                          4

9.  ENTIRE AGREEMENT                                                           4

10. SEVERABILITY                                                               4

11. WAIVER                                                                     5

12. VARIATION                                                                  5

13. NO PARTNERSHIP                                                             5

14. CONFIDENTIALITY                                                            5

15. ANNOUNCEMENTS                                                              7

16. ASSIGNMENT                                                                 7

17. NOTICES                                                                    8

18. AGENT FOR SERVICE                                                          9

19. COSTS AND EXPENSES                                                        10

20. TIME OF THE ESSENCE                                                       10

21. RIGHTS OF THIRD PARTIES (EXCLUDING)                                       10

22. GOVERNING LAW AND JURISDICTION                                            10

SCHEDULE 1 - WARRANTIES                                                       12

SCHEDULE 2 - REGISTRATION RIGHTS                                              23

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THIS AGREEMENT is made on                          2001

BETWEEN:

(1)   STRATUS SERVICES GROUP, INC whose principal office is at 550 Craig Road,
      Suite 201 Manalapan, New Jersey 07726 ("Stratus");

(2)   ARTISAN.COM LIMITED whose registered office is at Dean House, Sovereign
      Court, Ermine Business Park, Huntington, Cambs PE28 6XU ("Artisan")

RECITALS:-

(A)   Stratus wishes to raise up to US$2.1 million of additional equity capital
      to finance the repayment of US$2.1 million nominal of its 6% Convertible
      Debenture dated December 4, 2000.

(B)   Artisan wishes to subscribe up to US$2.1 million for equity share capital
      of Stratus on the terms set out below.

IT IS AGREED as follows:-

1.    DEFINITIONS AND INTERPRETATION

1.1   In this agreement the following words and expressions shall respectively
      have the following meanings:-

      Market Value                  The average closing market price per Stratus
                                    share over the five trading days immediately
                                    preceding that on which the relevant Stratus
                                    shares are allotted and issued.

      Stratus Shares                Shares of common stock of Stratus of US$0.01
                                    par value.

1.2   References herein to the masculine gender, to an individual and to the
      singular number shall include references to the feminine gender, to a
      corporation and to the plural number respectively.

1.3   References to Clauses and Schedules are references respectively to Clauses
      of and Schedules to this Agreement. References to paragraphs are (unless
      otherwise stated) to paragraphs of the Clause in which the references
      appears.
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                                                                          PAGE 2


1.4   Words and phrases defined in the Companies Act 1985 shall (unless the
      context otherwise requires) have the same meanings herein.

1.5   The Schedules hereto shall form part of this Agreement as if the contents
      thereof were expressly set out herein.

1.6   The headings in this Agreement and the Schedules hereto have been inserted
      for convenience only and shall not affect its interpretation or
      construction in any way.

1.7   Where any provision of the Articles conflicts with the provisions hereof,
      the parties hereby agree that the provisions hereof shall prevail, to the
      intent that they shall if necessary in any case procure the amendment of
      the Articles to the extent required to enable the Company to be
      administered as provided herein

2.    CONDITIONS PRECEDENT

      This agreement is conditional on Stratus delivering to Artisan:

2.1   an opinion signed by Counsel satisfactory to Artisan and in a form
      satisfactory to Artisan as to the due incorporation, good standing and
      such other matters relating to Stratus and the due execution of this
      Agreement and the due authorisation and valid issue of the Stratus Shares
      as Artisan may require, including that registration under the 1933 Act is
      not required;

2.2   certified copies of the constitutional documents of Stratus and of the
      documents constituting its 6% Convertible Debenture dated December 4, 2000

2.3   a certified copy of the minutes of the meeting of the Board of Stratus
      approving this Agreement.

      If this condition shall not be satisfied on the date hereof (or such later
      date if any as the parties may agree) this agreement shall be void ab
      initio and neither party shall have any liability under it.

3.    FIRST SUBSCRIPTION

      Subject to the satisfaction of the condition precedent mentioned in clause
      2 above Stratus shall issue and deliver 900,000 Stratus Shares to Artisan
      at a subscription price of US$1.00 per share and shall procure the
      preparation and delivery to Artisan of a certificate in respect of such
      shares against payment by Artisan of the sum of US$900,000 by telegraphic
      transfer to Mellon Bank Pittsburgh, PA 15258-0001 ABA
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                                                                          PAGE 3


      Routing # 0430-00261; Credit to Merrill Lynch Denver Service Center
      Account # 1011730 FBO: Stratus Services Group, Inc. Account # 721-07H03.

4.    SECOND SUBSCRIPTION

      Subject to the satisfaction of the condition precedent referred to in
      clause 2 above on such date (if any) as Stratus and Artisan shall mutually
      determine (being not earlier than 15 August 2001 and not later than 31
      December 2001) Stratus, upon the mutual agreement of Stratus and Artisan,
      may elect to procure that a meeting of its board of directors shall be
      held at which there shall be allotted and issued to Artisan a number of
      Stratus Shares (mutually determined by Stratus and Artisan) for
      subscription at Market Value, the aggregate Market Value of all of such
      shares not exceeding US$1.2 million.

5.    WARRANTIES AND UNDERTAKINGS

5.1   In consideration of Artisan agreeing to subscribe for the Stratus Shares
      under this agreement, Stratus represents warrants and undertakes to
      Artisan, in the terms of the representations, warranties and undertakings
      set out in Part 2 of Schedule 1 to this agreement ("the Warranties") and
      so that the rights and remedies of Artisan in respect of the Warranties
      shall continue to subsist notwithstanding completion of the subscription
      for the Stratus Shares under this agreement.

5.2   Artisan makes the representations set out in Part 3 of Schedule 1.

5.3   Stratus shall give Artisan notice of each meeting of its Board of
      Directors, or any committee thereof, and shall provide copies of all
      materials provided to the directors in connection with such meetings; and
      Artisan shall be entitled to have one individual attend such meetings as
      an observer.

6.    APPLICATION

      Stratus hereby undertakes to Artisan that the majority of the subscription
      monies in respect of the Stratus Shares payable hereunder shall be applied
      in or towards the repayment of the "December 4, 2000 6% Convertible
      Debenture".

7.    REGISTRATION RIGHTS

      Artisan and it successors in title to the Stratus Shares subscribed by it
      under this Agreement shall be entitled to the registration rights set out
      in Schedule 2 to this Agreement.
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                                                                          PAGE 4


8.      FURTHER ASSURANCE

        Each party agrees to execute and deliver to the others or do as
        appropriate all such other documents, assurances and acts as may be
        reasonably necessary or desirable to fulfil the provisions of this
        Agreement or to carry into effect the intentions of the parties as
        expressed herein.

9.      ENTIRE AGREEMENT

        This Agreement constitutes the entire agreement between the parties with
        respect to its subject matter. It supersedes all previous agreements and
        understandings between the parties and each party acknowledges that, in
        entering into this Agreement, it does not do so on the basis of or in
        reliance upon any representations, promises, undertakings, warranties or
        other statements (whether written or oral) of any nature whatsoever
        except as expressly provided in this Agreement and accordingly all
        conditions, warranties or other terms implied by statute or common law
        are hereby excluded to the fullest extent permitted by law.

10.     SEVERABILITY

10.1    If at any time any provision of this Agreement is or becomes illegal,
        invalid or unenforceable in any respect under the law of any
        jurisdiction, that shall not affect or impair:-

10.1.1  the legality, validity or enforceability in that jurisdiction of any
        other provision of this Agreement; or

10.1.2  the legality, validity or enforceability under the law of any other
        jurisdiction of that or any other provision of this Agreement.

10.2    Without prejudice to Clause 10.1, should any competent authority or
        court indicate that this Agreement will only be exempt from, or fall
        outside the scope of, any applicable laws or regulations if it is
        amended in certain respects or any provision of this Agreement be
        discovered or declared (whether formally or informally) by any competent
        authority or court to be legally void or unenforceable in whole or in
        part, then the parties shall meet with a view to reaching agreement upon
        amendments that are acceptable to the competent authority or court and
        most nearly achieve the object of the objectionable, allegedly void or
        unenforceable provision and upon such other amendments as may be
        appropriate, having regard to the changed nature of the Agreement.
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                                                                          PAGE 5


11.   WAIVER

11.1  No delay, omission or forbearance by either party hereunder to exercise or
      enforce any right, power or remedy arising under or in connection with
      this Agreement shall operate as a waiver of that or any other right, power
      or remedy, and any single or partial exercise or enforcement thereof shall
      not preclude any other or further exercise or enforcement thereof or the
      exercise or enforcement of any right, power or other remedy.

11.2  A waiver of a breach of or default under any of the terms of this
      Agreement does not constitute a waiver of any other breach or default and
      shall not affect the other terms of this Agreement.

11.3  A waiver of a breach of or default under any of the terms of this
      Agreement will not prevent a party from subsequently requiring compliance
      with the waived obligation in respect of that breach or continued default.

11.4  The rights, powers and remedies provided in this Agreement are cumulative
      and (subject as otherwise provided in this Agreement) are not exclusive of
      any right, power or remedy provided by law or by any other agreement or
      document.

12.   VARIATION

      This Agreement may not be released, discharged, supplemented, amended,
      varied or modified except by an instrument in writing signed by a duly
      authorised representative of each of the parties hereto.

13.   NO PARTNERSHIP

      It is acknowledged and agreed by each of the parties that neither the
      entry into nor the performance of the terms of this Agreement constitutes
      or shall constitute a partnership or joint venture between the parties.

14.   CONFIDENTIALITY

14.1  Each party undertakes to the other to keep secret and confidential all
      information (whether written, pictorial, in machine readable form or oral)
      and in whatever form received during the continuance of this Agreement or
      obtained as a result of entering into or performing this Agreement
      concerning the business or affairs of the other party including without
      limitation:
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                                                                          PAGE 6


14.1.1  non-public information concerning the trade secrets, customers,
        suppliers or business associations of the other party; and

14.1.2  non-public information concerning the financial, operational, technical
        or commercial affairs of the other party

        all of which shall be the "Confidential Information".

14.2    Each party undertakes to the other not to use the Confidential
        Information of the other party except for the purposes of this Agreement
        and shall not (without the prior written consent of the other party)
        disclose the same to any person save to the extent necessary for the
        performance of this Agreement and except to the extent that such
        information:-

14.2.1  is required to be disclosed by the law of any relevant jurisdiction;

14.2.2  is required to be disclosed by any securities exchange or regulatory or
        governmental body to which either party is subject or submits, wherever
        situated, including (without limitation) the London Stock Exchange, the
        Financial Services Authority and the Panel on Takeovers and Mergers
        whether or not the requirement for information has the force of law, in
        which case the party concerned shall take all such steps as may be
        reasonable and practicable in the circumstances to agree the contents of
        such announcement with the other party before making such announcement
        provided that, in any event, any such announcement shall be made only
        after notice to the other party;

14.2.3  is trivial or obvious;

14.2.4  is already in the public domain at the time of disclosure or thereafter
        shall fall into the public domain other than as a result of breach of
        this clause; or

14.2.5  is already in the disclosing party's possession (as evidenced by written
        records) otherwise than as a result of a breach of this clause; or

14.2.6  becomes known to the disclosing party from a source other than the other
        party otherwise than as a result of a breach of this clause;

14.2.7  was disclosed after the express prior written approval of the party to
        whom such information belongs

        and in any event subject to the disclosing party having notified the
        other in writing prior to making such disclosure.
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                                                                          PAGE 7


14.3    Each of the parties undertakes to the other to take all such steps as
        shall from time to time be necessary to ensure compliance with the
        provisions of this clause 14 by its Group Companies, employees, agents
        and sub-contractors.

14.4    Notwithstanding anything contained elsewhere in this Agreement, the
        provisions of this clause 14 shall survive the termination or expiry of
        this Agreement.

15.     ANNOUNCEMENTS

15.1    Save as provided below, no public statement or announcement (or any
        statement or disclosure to any public or regulatory body or any other
        body which has an obligation to or which is likely to make public any
        such statement or disclosure) concerning the fact or subject matter of
        this Agreement or any ancillary matter shall be made by any party
        without the prior written approval of the other, such approval not to be
        unreasonably withheld or delayed.

15.2    Any party may make an announcement concerning the subject matter of this
        Agreement or any ancillary matter if required by:

15.2.1  the law of any relevant jurisdiction;

15.2.2  any securities, exchange or regulatory or governmental body to which
        that party is subject or submits, wherever situated, including (without
        limitation) NASDAQ, the London Stock Exchange, the Financial Services
        Authority and the Panel on Takeovers and Mergers, whether or not the
        requirement has the force of law, in which case the party concerned
        shall take all such steps as may be reasonable and practicable in the
        circumstances to agree the contents of such announcement with the other
        party before making such announcement provided that, in any event, any
        such announcement shall be made only after notice to the other party.

16.     ASSIGNMENT

16.1    Except as specifically provided in paragraph 7.4 of Schedule 2 to this
        Agreement Stratus may not without the prior written consent of Artisan
        assign or in any way dispose of to any third party its rights under this
        Agreement. Artisan may assign any of its rights to any person to whom or
        which it is transferring any of the Stratus Shares.

16.2    The assigning party shall promptly give notice to the other party of any
        permitted assignment under sub-clause 16.1 above and any purported
        assignment shall not
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                                                                          PAGE 8


        be valid unless the assignee agrees in writing to be bound by the
        provisions of this Agreement.

17.     NOTICES

17.1    Any notice to be given hereunder shall be in writing (other than writing
        on the screen of a visual display unit or other similar device which
        shall not be treated as writing for the purposes of this clause unless
        receipt of the relevant communication is acknowledged by the relevant
        party either by electronic mail or by other written means) and delivered
        by hand or by pre-paid first class post or by facsimile letter or by
        electronic mail letter (and notices sent by facsimile or by electronic
        mail shall be confirmed immediately by pre-paid first class post)
        addressed and sent to the party to be served at the addresses provided
        in sub-clause 17.3.

17.2    Notices addressed as provided in sub-clause 17.3 shall be deemed to have
        been duly served:-

17.2.1  if sent by personal delivery, upon delivery at the address of the
        relevant party;

17.2.2  if sent by first class post, two business days after the date of posting
        if posted in the country of destination otherwise after seven days;

17.2.3  if sent by facsimile, when despatched provided that if any such notice
        would otherwise be deemed to be served outside working hours, such
        notice shall be deemed to be served at the start of working hours on the
        next business day; and

17.2.4  if sent by electronic mail, when receipt of the notice is acknowledged
        in accordance with Clause 17.1.

17.3    The relevant addressee, address, electronic mail address and facsimile
        number of each party for the purpose of this Agreement are:-

<Table>
<Caption>
        NAME OF PARTY        ADDRESS AND E-MAIL ADDRESS         FACSIMILE NUMBER
        -------------        --------------------------         ----------------
        <S>                  <C>                                <C>
        Stratus Services     500 Craig Road,                    +1 732 294 1133
        Group, Inc.          Suite 201 Manalapan,
                             New Jersey,
                             USA 07726
                             Jtoddraymond@stratusservices.com;
                             joeraymond@stratusservices.com;
</Table>
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                                                                          PAGE 9


<Table>
        <S>                  <C>                              <C>
        Artisan.com Limited  Dean House                       +44(0)1480-436-231
                             Sovereign Court
                             Ermine Business Park
                             Huntington, Cambs
                             PE28 6XY
</Table>

      or such other address as any party may have previously notified to the
      other.

18.   AGENT FOR SERVICE

18.1  Stratus irrevocably agrees that any notice or process may be sufficiently
      and effectively served on it by service on its agent ___________________,
      if no replacement agent has been appointed and notified to the other party
      pursuant to Clause 18.5, or on the replacement agent if one has been
      appointed and notified to Artisan.

18.2  The relevant addressee, address, electronic mail address and facsimile
      number of _______________________ for the purpose of this Clause 18 are:-

      NAME OF PARTY        ADDRESS [AND E-MAIL ADDRESS]       FACSIMILE NUMBER

18.3  Any notice or process served on ___________________ in accordance with
      this Clause 18 shall be deemed to have been duly served on Stratus
      according to the same times as those specified in Clause 17.2 above.

18.4  A copy of any notice or process served on an agent pursuant to this Clause
      18 shall be sent by post to Stratus at its address for the time being for
      the service of notices under Clause 17, but no failure or delay in so
      doing shall prejudice the effectiveness of service of the relevant notice
      or process in accordance with Clause 18.1 above.

18.5  If the agent referred to in Clause 18.1 (or any replacement agent
      appointed pursuant to this Clause 18.5) at any time ceases for any reason
      to act as such, Stratus shall appoint a replacement agent to accept
      service having an address for service in England and Wales and shall
      notify Artisan of the name and address of the replacement agent. Failing
      any such appointment and notification, Artisan shall be
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                                                                         PAGE 10


      entitled by notice to Stratus to appoint such replacement agent to act on
      Stratus' behalf.

19.   COSTS AND EXPENSES

      Save as otherwise stated in any other provision of this Agreement, each
      party shall bear its own costs and expenses in relation to the
      negotiation, preparation, execution and carrying into effect of this
      Agreement and all other documents referred to in it.

20.   TIME OF THE ESSENCE

      It is agreed that time is of the essence of this Agreement with regard to
      the performance by Stratus of its obligations under this Agreement.

21.   RIGHTS OF THIRD PARTIES (EXCLUDING)

21.1  No person who is not a party to this Agreement shall have any right under
      the Contracts (Rights of Third Parties) Act 1999 to enforce any term of
      this Agreement.

21.2  Nothing contained in Clause 21.1 shall affect any right or remedy of any
      third party which exists or is available other than under the Contracts
      (Rights of Third Parties) Act 1999.

22.   GOVERNING LAW AND JURISDICTION

22.1  This Agreement is governed by and shall be construed in accordance with
      English law.

22.2  The courts of England have non-exclusive jurisdiction to hear and decide
      any suit, action or proceedings, and to settle any disputes, which may
      arise out of or in connection with this Agreement (respectively,
      "Proceedings" and "Disputes") and, for these purposes, each party hereby
      irrevocably submits to the jurisdiction of the courts of England.

22.3  Each party irrevocably waives any objection which it might at any time
      have to the courts of England being nominated as the forum to hear and
      decide any Proceedings and to settle any Disputes and agrees not to claim
      that the courts of England are not a convenient or appropriate forum.

22.4  Process by which any Proceedings are begun in England may be served in
      accordance with Clauses 17 and 18, provided that nothing contained in this
      sub-clause affects the right to serve process in another manner permitted
      by law.
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                                                                         PAGE 11


The common seal of                             )
STRATUS SERVICES GROUP, INC                    )
was hereunto affixed presence of               )

/s/ Joseph J. Raymond, Sr.
------------------------------------
Joseph J. Raymond, Sr.
Chairman and Chief Executive Officer

/s/ J. Todd Raymond, Esq.
------------------------------------
J. Todd Raymond, Esq.
Secretary and General Counsel


Executed and delivered as a deed by            )
ARTISAN PLC                      )
Acting by two directors/ a director and the    )
Secretary                                      )

/s/ Stephen Dean
------------------------------------
Director

/s/ Adrian Stecyk
------------------------------------
Witness
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                                                                         PAGE 12


                                   SCHEDULE 1

                                   WARRANTIES

                                     PART 1

1.    DEFINITIONS

      As used in this Schedule 1, all capitalized terms not otherwise defined in
      this Agreement shall have the following meanings:

      "Affiliate"                   means, as applied to any Person, (a) any
                                    other Person directly or indirectly
                                    controlling, controlled by or under common
                                    control with, that Person, (b) any other
                                    Person that owns or controls (i) 10% or more
                                    of any class of equity securities of that
                                    Person or any of its Affiliates or (ii) 10%
                                    or more of any class of equity securities
                                    (including any equity securities issuable
                                    upon the exercise of any option or
                                    convertible security) of that Person or any
                                    of its Affiliates, or (c) any director,
                                    partner, member, officer, manager, agent,
                                    employee or relative of such Person. For the
                                    purposes of this definition, "control"
                                    (including with correlative meanings, the
                                    terms "controlling", "controlled by", and
                                    "under common control with") as applied to
                                    any Person, means the possession, directly
                                    or indirectly, of the power to direct or
                                    cause the direction of the management and
                                    policies of that Person, whether through
                                    ownership of voting securities or by
                                    contract or otherwise.

      "Contract"                    means any agreement (including licenses with
                                    non-governmental Persons), lease, evidence
                                    of indebtedness, mortgage, indenture,
                                    security agreement or other instrument or
                                    contract, whether written or oral.
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                                                                         PAGE 13


      "Exchange Act"                means the Securities Exchange Act of 1934,
                                    as amended, and the rules and regulations of
                                    the SEC thereunder.

      "Encumbrance"                 means any security interest, lien, pledge,
                                    claim, charge, escrow, encumbrance, option,
                                    right of first offer, right of first
                                    refusal, preemptive right, mortgage,
                                    indenture, security agreement or other
                                    similar agreement, arrangement, contract,
                                    commitment, understanding or obligation,
                                    whether written or oral and whether or not
                                    relating in any way to credit or the
                                    borrowing of money.

      "Governmental or Regulatory   means any court, tribunal, arbitrator,
      Authority"                    authority, agency, commission, official or
                                    other instrumentality of the United States,
                                    any foreign country or any domestic or
                                    foreign state, county, city or other
                                    political subdivision.

      "Indebtedness"                means (a) all indebtedness of Stratus,
                                    including the principal of, and premium, if
                                    any, and interest (including interest
                                    accruing after the filing of a petition
                                    initiating any proceeding under any state,
                                    federal or foreign bankruptcy laws, whether
                                    or not allowable as a claim in such
                                    proceeding) on, all indebtedness, whether
                                    outstanding currently or hereafter created
                                    (i) for borrowed money, (ii) for money
                                    borrowed by others and guaranteed, directly
                                    or indirectly, by Stratus, (iii) for money
                                    borrowed by others for which Stratus
                                    provides security, (iv) constituting
                                    purchase money indebtedness the payment of
                                    which Stratus is directly or contingently
                                    liable, (v) constituting reimbursement
                                    obligations under bank letters of credit,
                                    (vi) under interest rate and currency swaps,
                                    caps, floors, collars or similar agreements
                                    or arrangements intended to protect Stratus
                                    against fluctuations in interest or currency
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                                                                         PAGE 14


                                    exchange rates, (vii) under any lease of any
                                    real or personal property, which obligations
                                    are capitalised on Stratus's books in
                                    accordance with generally accepted
                                    accounting principles, or (viii) under any
                                    other arrangement under which obligations
                                    are recorded as indebtedness on Stratus's
                                    books in accordance with generally accepted
                                    accounting principles, and (b) any
                                    modifications, refundings, deferrals,
                                    renewals or extensions of any such
                                    Indebtedness, or securities, notes or other
                                    evidences of indebtedness issued in exchange
                                    for such Indebtedness.

      "Law" or "Laws"               means all laws, statutes, rules,
                                    regulations, ordinances and other
                                    pronouncements having the effect of law of
                                    the United States, any foreign country or
                                    any domestic or foreign state, county, city
                                    or other political subdivision or of any
                                    Governmental or Regulatory Authority.

      "Material Adverse Effect"     means a material adverse effect on the
                                    business or financial position of a Person
                                    and such Person's subsidiaries, taken as a
                                    whole.

      "Nasdaq"                      means the Nasdaq SmallCap Market.

      "Person"                      means any natural person, corporation,
                                    general partnership, limited partnership,
                                    limited liability company or partnership,
                                    proprietorship, other business organisation,
                                    trust, union, association or Governmental or
                                    Regulatory Authority.

      "SEC"                         means the Securities and Exchange
                                    Commission.

      "Securities Act"              means the Securities Act of 1933, as
                                    amended, and the rules and regulations of
                                    the SEC thereunder.
<Page>
                                                                         PAGE 15


      "Transfer"                    means, directly or indirectly, any sale,
                                    transfer, assignment, hypothecation, pledge
                                    or other disposition of any securities of
                                    Stratus or any interests therein.

                                     PART 2

2.    REPRESENTATIONS AND WARRANTIES OF STRATUS

      Stratus hereby represents and warrants to Artisan that:

2.1   ORGANISATION AND QUALIFICATION.

      Stratus is a corporation duly organised, validly existing and in good
      standing under the Laws of the State of Delaware. Stratus is duly
      qualified and is authorised to do business and is in good standing as a
      foreign corporation in each state or jurisdiction where the nature of its
      business or the ownership of property make such qualification necessary,
      except where the failure of Stratus to be so qualified would not have a
      Material Adverse Effect on Stratus.

2.2   AUTHORITY.

      Stratus has full power and authority to execute and deliver this
      Agreement, to perform its obligations hereunder and to consummate the
      transactions contemplated hereby (including the issuance, sale and
      delivery of the Stratus Shares being sold hereunder). The execution,
      delivery and performance by Stratus of this Agreement and the consummation
      by it of the transactions contemplated hereby (including the issuance,
      sale and delivery of the Stratus Shares being sold hereunder) have been
      duly and validly authorised by all necessary action by its Board of
      Directors, and no other action is necessary to authorise the execution,
      delivery and performance of this Agreement and the consummation by Stratus
      of the transactions contemplated hereby (including the issuance, sale and
      delivery of the Stratus Shares being sold hereunder). This Agreement has
      been duly and validly executed and delivered by Stratus and constitutes a
      legal, valid and binding obligation of Stratus enforceable against Stratus
      in accordance with its terms, except as the enforceability thereof may be
      limited by bankruptcy, insolvency, reorganisation, moratorium or other
      similar laws relating to the enforcement of creditors' rights generally
      and by general principles of equity.

2.3   VALID ISSUANCE OF STRATUS SHARES; CAPITALISATION.
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                                                                         PAGE 16


      The Stratus Shares that are being purchased by Artisan hereunder, when
      issued, sold and delivered in accordance with the terms of this Agreement
      for the consideration expressed herein, will be duly and validly issued,
      fully paid, and nonassessable, and will be free of restrictions on
      transfer other than restrictions on transfer under this Agreement and
      under applicable federal and state securities laws. The Stratus Shares
      that are being purchased by Artisan hereunder will be quoted on Nasdaq or
      any other securities exchange that the Stratus Shares are then listed
      upon.

      The authorised capital stock of Stratus consists of 30,000,000 shares, par
      value $.01 per share, of which 25,000,000 shares are common stock and
      5,000,000 shares are preferred stock and may be issued from time to time
      in one or more series. As the date of this Agreement, 6,111,619 shares of
      common stock and no shares of preferred stock are issued and outstanding,
      and 4,101,206 shares of common stock are reserved for issuance upon the
      exercise of outstanding warrants and employee stock options and 5,096,180
      shares of Common Stock reserved for issuance upon the conversion of the
      December 4, 2000 6% Convertible Debenture. Except as designated in the
      prior sentence, there are no rights, subscriptions, warrants, options,
      conversion rights, calls or other agreements or commitments of any kind
      outstanding to purchase or otherwise acquire any shares of Stratus's
      stock, or any other interest or securities or obligations of any kind
      exchangeable for, or convertible into any shares of stock, of any class of
      or any other equity interest in Stratus or obligating Stratus to grant,
      extend or enter into any such agreement or commitment.

2.4   NO CONFLICTS.

      The execution and delivery by Stratus of this Agreement, the performance
      by Stratus of its obligations under this Agreement and the consummation of
      the transactions contemplated hereby (including the issuance, sale and
      delivery of the Stratus Shares being sold hereunder) do not and will not
      (i) conflict with, or constitute a default under, any Contract to which
      Stratus is a party, (ii) result in a violation of Stratus's organiSational
      documents, or any order, judgment or decree of any court or Governmental
      or Regulatory Authority having jurisdiction over Stratus or any of its
      assets or properties or (iii) result in, or require, the creation or
      imposition of any Encumbrance upon any of the assets or properties of
      Stratus.

2.5   BROKERS.
<Page>
                                                                         PAGE 17


      No agent, broker, finder, investment banker, financial advisor or other
      similar Person will be entitled to any fee, commission or other
      compensation in connection with the transactions contemplated by this
      Agreement on the basis of any act or statement made or alleged to have
      been made by Stratus or any of its Affiliates.

2.6   EXEMPTION FROM REGISTRATION.

      Assuming the accuracy on the date hereof and on any other date Artisan
      purchases Stratus Shares under this Agreement of the representations and
      warranties of the Purchaser set forth in Section 3 of this Schedule 1, the
      issuance and sale of the Stratus Shares will be exempt from the
      registration requirements of the Securities Act.

2.7   LITIGATION.

      There are no actions, suits, proceedings or investigations pending, or to
      the knowledge of Stratus, threatened, against or affecting Stratus, except
      for those that could not reasonably be expected to have either
      individually or in the aggregate a Material Adverse Effect on Stratus.
      Stratus is not in default with respect to any order, writ, injunction,
      judgment, decree or rule of any Governmental or Regulatory Authority,
      except for such defaults that could not reasonably be expected to have
      either individually or in the aggregate a Material Adverse Effect on
      Stratus.

2.8   NO DEFAULTS.

      Stratus is not in default, and no event has occurred and no condition
      exists which constitutes, or which with the passage of time or the giving
      of notice or both would constitute, a default in the payment of any
      material Indebtedness.

2.9   SEC REPORTS AND FINANCIAL STATEMENTS.

      (a)   Stratus has filed all forms, reports and documents required to be
            filed by it pursuant to Section 13 or Section 15(d) of the Exchange
            Act within the last 12 months on a timely basis or has received a
            valid extension of time for filing. Stratus has made available to
            the Purchaser Stratus's Annual Report on Form 10-K for the fiscal
            year ended September 30, 2000 and its Quarterly Reports on Form 10-Q
            for the quarters ended December 1, 2000, and March 31, 2001 (the
            "SEC Reports"). Each SEC Report complied as to form in all material
            respects with the rules and regulations of the SEC under the
            Exchange Act on the date of filing and as of such date (or if
            amended or superseded by a filing prior to the date
<Page>
                                                                         PAGE 18


            of this Agreement, on the date of such filing) did not contain any
            untrue statement of a material fact required to be stated therein or
            necessary to make the statements therein, in the light of the
            circumstances under which they were made, not misleading.

      (b)   Each of the consolidated financial statements (including, in each
            case, any related notes thereto) (the "Financial Statements")
            contained in the SEC Report (i) was prepared in accordance with
            generally accepted accounting principles ("GAAP") applied on a
            consistent basis throughout the periods involved (except as may be
            expressly described in the notes thereto) and (ii) fairly presents
            in all material respects the consolidated financial position of
            Stratus as at the respective dates thereof and the consolidated
            results of its operations and cash flows for the periods indicated.

2.10  EVENTS SUBSEQUENT TO THE DATE OF THE LAST FINANCIAL STATEMENT.

      Since March 31, 2001 (the "Financial Statements Date"), Stratus has not
      (i) sold, assigned, transferred or granted any exclusive license with
      respect to any patent, trademark, trade name, service mark, copyright,
      trade secret or other intangible asset necessary for the operation of
      Stratus's business substantially as now conducted, (ii) suffered any loss
      of property that had a Material Adverse Effect on Stratus or waived any
      right of substantial value to Stratus other than in the ordinary course of
      business or (iii) entered into any commitment, obligation, understanding
      or other arrangement, contingent or otherwise, to effect, directly or
      indirectly, any of the foregoing. Since the Financial Statements Date, no
      events have occurred which individually or collectively have had a
      Material Adverse Effect on Stratus.

2.11  ABSENCE OF UNDISCLOSED LIABILITIES.

      Since the Financial Statements Date, Stratus has not had any loss
      contingency (as defined in Statement of Financial Accounting Standards No.
      5), whether matured or unmatured, fixed or contingent, that could have a
      Material Adverse Effect on Stratus, except (i) obligations to perform
      under commitments or other obligations incurred in the ordinary course of
      business and (ii) tax and related liabilities.

2.12  TITLE TO ASSETS, PROPERTIES AND RIGHTS.

      Stratus has good and marketable title (or a valid leasehold interest) to
      all of the assets (whether real, personal or mixed) necessary for the
      conduct of Stratus's business substantially as now conducted, free and
      clear of all Encumbrances,
<Page>
                                                                         PAGE 19


      except for (i) liens for current taxes, assessments and other governmental
      charges not yet due and payable for which reserves have been established
      as required by generally accepted accounting principles; (ii) easements,
      covenants, conditions and restrictions (whether or not of record) as to
      which no material violation or encroachment exists or, if such violation
      or encroachment exists, as to which the cure of such violation or
      encroachment would not materially interfere with the conduct of Stratus's
      business; (iii) any Zoning or other governmentally established
      restrictions or encumbrances; (iv) workers or unemployment compensation
      liens arising in the ordinary course of business; or (v) mechanic's,
      materialman's, supplier's, vendor's or similar liens arising in the
      ordinary course of business securing amounts which are not delinquent.
      (The matters set forth in the foregoing clauses (i) through (v) being
      referred to herein as the "Permitted Encumbrances"). Such assets are in
      such operating condition and repair as is suitable for the uses for which
      they are used in Stratus's business, are not subject to any condition
      which materially interferes with the use thereof by Stratus, and
      constitute all assets, properties, interests in properties and rights
      necessary to permit Stratus to carry on its business after the date of
      this Agreement substantially as conducted by Stratus prior thereto.

2.13  PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES.

      Stratus (i) owns or possesses all the patents, trademarks, service marks,
      trade names, copyrights and licenses therefor necessary for the conduct of
      Stratus's business substantially as now conducted without any known
      conflict with the rights of others that are likely to have a Material
      Adverse Effect on Stratus and (ii) has allocated or licensed all such
      patents, trademarks, service marks, trade names, copyrights and licenses
      to Stratus for use by Stratus in its business. To the best knowledge of
      Stratus, Stratus has not interfered with, infringed upon or
      misappropriated any intellectual property rights of any Person or
      committed any acts of unfair competition with respect to the operation of
      Stratus's business, and Stratus has not received from any Person in the
      past five years (or since its inception, if shorter) any notice, charge,
      complaint, claim or assertion thereof, and no such claim is impliedly
      threatened by an offer to license from another Person under a claim of
      use. No activity, service or procedure currently conducted by Stratus
      violates in any material respect any Contract of Stratus with any third
      Person relating to any intellectual property rights.

2.14  GOVERNMENTAL CONSENTS.
<Page>
                                                                         PAGE 20


      Stratus has, and is in good standing with respect to, all governmental
      consents, approvals, licenses, authorisations, permits, certificates,
      inspections and franchises necessary to continue to conduct Stratus's
      business substantially as now conducted and to own or lease and operate
      the assets and properties necessary for the conduct by Stratus of its
      business substantially as now conducted except for such failures that
      could not reasonably be expected to have either individually or in the
      aggregate a Material Adverse Effect on Stratus.

2.15  NO CONSENT OR APPROVAL REQUIRED.

      No consent, approval or authoriSation of, or declaration to or filing
      with, any Person is required by Stratus for the valid authoriSation,
      execution and delivery by Stratus of this Agreement or its consummation of
      the transactions contemplated hereby (including the issuance, sale and
      delivery of the Stratus Shares being sold hereunder), other than those
      consents, approvals, authoriSations, declarations or filings which have
      been obtained or made, as the case may be, required filings with the SEC
      and Nasdaq, and that the failure to obtain or make would not have a
      Material Adverse Effect on Stratus.

2.16  COMPLIANCE WITH LAWS.

      Stratus has duly complied with, and the assets and properties, business
      operations and leaseholds used in connection with the business of Stratus
      are in compliance with, the provisions of all laws applicable to Stratus,
      its assets and properties or the conduct of its business and there have
      been no citations, notices or orders of non-compliance issued to Stratus
      under any such law, rule or regulation, except for such non-compliance
      which could not reasonably be expected to have either individually or in
      the aggregate a Material Adverse Effect on Stratus.

2.17  LABOUR RELATIONS.

      Stratus's employees are not subject to any collective bargaining
      agreement. There are no material grievances, disputes or controversies
      with any union or any other organisation of Stratus's employees, or
      threats of strikes, work stoppages or any asserted pending demands for
      collective bargaining by any union or organisation, that could have a
      Material Adverse Effect on Stratus.

                                     PART 3
<Page>
                                                                         PAGE 21


3.    REPRESENTATIONS AND WARRANTIES OF ARTISAN

      Artisan hereby represents and warrants to Stratus that:

3.1   Artisan is acquiring the Stratus Shares for its own account as principal,
      for investment purposes only, and not for or with a view to the resale,
      distribution or granting of a participation therein, in whole or in part,
      in violation of the Securities Act.

3.2   Artisan acknowledges its understanding that the offering and sale of the
      Stratus Shares has not been registered under the Securities Act, on the
      basis of the exemption in Section 4(2) thereof relating to transactions
      not involving a public offering, or any state securities laws. Artisan
      understands that Stratus's reliance on the Section 4(2) exemption is based
      on the representations herein made by Artisan. Artisan is an "Accredited
      Investor" as that term is defined in Regulation D under the Securities
      Act.

3.3   Artisan acknowledges that it is familiar with the limitations which are
      imposed by the Securities Act on any Transfer of an interest in the
      Stratus Shares. Artisan understands and acknowledges that it may have to
      bear the economic risk of its investment in the Stratus Shares for an
      indefinite period of time unless the Stratus Shares are subsequently
      registered under the Securities Act or an exemption therefrom is
      available. Artisan hereby agrees that the Stratus Shares will not be
      Transferred other than (i) pursuant to a registration under the Securities
      Act or pursuant to an exemption therefrom and (ii) in compliance with any
      applicable state securities laws.

3.4   Artisan has been given access to all information regarding Stratus and the
      business, condition and operations of Stratus that Artisan has requested
      in order to evaluate its investment in the Stratus Shares. Artisan has
      been given the opportunity to ask questions of, and to receive answers
      from, representatives of Stratus concerning the terms and conditions of
      the offering of the Stratus Shares and other matters pertaining to such
      Artisan's investment in the Stratus Shares.

3.5   Artisan understands that the Stratus Shares will initially bear the
      following legend:

      "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
      AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THIS SECURITY MAY NOT BE
      OFFERED, SOLD OR TRANSFERRED EXCEPT PURSUANT TO (i) AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND IN
      COMPLIANCE WITH
<Page>
                                                                         PAGE 22


      APPLICABLE STATE SECURITIES LAWS OR (ii) AN APPLICABLE EXEMPTION FROM
      REGISTRATION THEREUNDER AND UNDER APPLICABLE STATE SECURITIES LAWS AS TO
      WHICH AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY SHALL HAVE BEEN
      DELIVERED TO STRATUS."
<Page>
                                                                         PAGE 23


                                   SCHEDULE 2

                              REGISTRATION RIGHTS

1.    DEFINITIONS

      As used in this Schedule 2, the following terms shall have the following
      meanings:

      "Common Stock"                  shall mean the Company's Common Stock, par
                                      value $0.01 per share.

      "Company"                       shall mean Stratus Services Group, Inc.

      "Investors"                     shall mean Artisan and Griffin Securities
                                      Inc., and each of their affiliates or
                                      permitted transferees who is a subsequent
                                      holder of any Registrable Securities.

      "Prospectus"                    shall mean the prospectus included in any
                                      Registration Statement, as amended or
                                      supplemented by any prospectus supplement,
                                      with respect to the terms of the offering
                                      of any portion of the Registrable
                                      Securities or Additional Registrable
                                      Securities covered by such Registration
                                      Statement and by all other amendments and
                                      supplements to the prospectus, including
                                      post-effective amendments and all material
                                      incorporated by reference in such
                                      prospectus.

      "Register," "registered" and    refer to a registration made by preparing
      registration"                   and filing a registration statement or
                                      similar document in compliance with the
                                      1933 Act (as defined below), and the
                                      declaration or ordering of effectiveness
                                      of such registration statement or
                                      document.

      "Registrable Securities"        shall mean the Stratus Shares issued and
                                      issuable to the Investors pursuant to this
                                      agreement and shares issued to Artisan or
                                      Griffin Securities upon the conversion of
                                      Preferred
<Page>
                                                                         PAGE 24


                                      Shares held by them, and any other
                                      securities issued or issuable with respect
                                      to or in exchange for Registrable
                                      Securities.

       "Registration Statement"       shall mean any registration statement of
                                      the Company filed under the 1933 Act that
                                      covers the resale of any of the
                                      Registrable Securities, pursuant to the
                                      provisions of this agreement, amendments
                                      and supplements to such Registration
                                      Statement, including post-effective
                                      amendments, all exhibits and all material
                                      incorporated by reference in such
                                      Registration Statement.

       "SEC"                          means the U.S. Securities and Exchange
                                      Commission.

       "1933 Act"                     means the Securities Act of 1933, as
                                      amended, and the rules and regulations
                                      promulgated thereunder.

       "1934 Act"                     means the Securities Exchange Act of 1934,
                                      as amended, and the rules and regulations
                                      promulgated thereunder.

2.     REGISTRATION.

2.1    Registration Statements.

2.1.1  Registrable Securities.

       Promptly on request of either of the Investors (but no later than thirty
       (30) days after such request), the Company shall prepare and file with
       the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not
       then available to the Company, on such form of registration statement as
       is then available to effect a registration for resale of all of the
       Registrable Securities, subject to the Investors' consent), covering the
       resale of the Registrable Securities in an amount equal to the number of
       shares of Common Stock held by the Investors. A second Registration
       Statement will be filed by Stratus when, and if, necessary to register
       the maximum number of shares which might be issued pursuant to clause 4
       of this agreement. Such Registration Statements also shall cover, to the
       extent allowable under the 1933 Act
<Page>
                                                                         PAGE 25


       and the Rules promulgated thereunder (including Rule 416), such
       indeterminate number of additional shares of Common Stock resulting from
       stock splits, stock dividends or similar transactions with respect to the
       Registrable Securities. No securities held by a third party shall be
       included in the Registration Statement without the consent of each
       Investor. The Registration Statement (and each amendment or supplement
       thereto, and each request for acceleration of effectiveness thereof)
       shall be provided in accordance with Section 3(c) to the Investors and
       their counsel prior to its filing or other submission.

2.2    Expenses.

       The Company will pay all expenses associated with registration hereunder,
       including the Investors' reasonable expenses in connection with the
       registration but excluding discounts, commissions, fees of underwriters,
       selling brokers, dealer managers or similar securities industry
       professionals.

2.3    Effectiveness.

2.3.1  The Company shall use its best efforts to have each Registration
       Statement declared effective as soon as practicable. If (A) the
       Registration Statement covering Registrable Securities is not declared
       effective by the SEC within one hundred and twenty (120) days following a
       request (the "Registration Date"), (B) after a Registration Statement has
       been declared effective by the SEC, sales cannot be made pursuant to such
       Registration Statement for any reason (including without limitation by
       reason of a stop order, or the Company's failure to update the
       Registration Statement) but except as excused pursuant to subparagraph
       (ii) below, or (C) the Common Stock generally or the Registrable
       Securities specifically are not listed or included for quotation on the
       American Stock Exchange, the Nasdaq National Market System, the Nasdaq
       Small Cap Market, or the New York Stock Exchange then the Company will
       make pro rata payments to each Investor, as liquidated damages and not as
       a penalty, in an amount equal to 2% of the aggregate amount paid by such
       Investor to the Company for shares of Common Stock still held by such
       Investor for any month or pro rata for any portion thereof following the
       Registration Date during which any of the events described in (A) or (B)
       or (C) above occurs and is continuing (the "Blackout Period"). Each such
       payment shall be due and payable within five (5) days of the end of each
       month (or ending portion thereof) of the Blackout Period. Such payments
       shall be in partial compensation to the Investors, and shall not
       constitute the Investors' exclusive remedy for such events. The Blackout
       Period shall terminate upon (x) the effectiveness of the applicable
       Registration Statement (or in the case of (B), an
<Page>
                                                                         PAGE 26


       amendment) in the case of (A) and (B) above; (y) listing or inclusion of
       the Common Stock on the American Stock Exchange, the Nasdaq National
       Market System, the Nasdaq Small Cap Market or the New York Stock Exchange
       in the case of (C) above; and (z) in the case of the events described in
       (A) or (B) above, the earlier termination of the Registration Period (as
       defined in Section 3(a) below). The amounts payable as liquidated damages
       pursuant to this paragraph shall be payable, at the option of the
       Investors, in lawful money of the United States or in shares of Common
       Stock at the Market Value and amounts payable as liquidated damages shall
       be paid monthly within two (2) business days of the last day of each
       month following the commencement of the Blackout Period until the
       termination of the Blackout Period. Amounts payable as liquidated damages
       hereunder shall cease when an Investor no longer holds Registrable
       Securities.

2.3.2  For not more than ten (10) consecutive trading days or for a total of not
       more than twenty (20) trading days in any twelve (12) month period, the
       Company may delay updating the Registration Statement to disclose
       material non-public information concerning the Company, the disclosure of
       which at the time is not, in the good faith opinion of the Company, in
       the best interests of the Company (an "Allowed Delay"); provided, that
       the Company shall promptly (a) notify the Investors in writing of the
       existence of (but in no event, without the prior written consent of an
       Investor, shall the Company disclose to such Investor any of the facts or
       circumstances regarding) material non-public information giving rise to
       an Allowed Delay, and (b) advise the Investors in writing to cease all
       sales under the Registration Statement until the end of the Allowed
       Delay.

3.     COMPANY OBLIGATIONS

       The Company will use its best efforts to effect the registration of the
       Registrable Securities in accordance with the terms hereof, and pursuant
       thereto the Company will, as expeditiously as possible:

3.1    use its best efforts to cause such Registration Statement to become
       effective and to remain continuously effective for a period that will
       terminate upon the earlier of (i) the date on which all Registrable
       Securities covered by such Registration Statement, as amended from time
       to time, have been sold, and (ii) the date on which all Registrable
       Securities may be sold pursuant to Rule 144(k) (the "Registration
       Period");

3.2    prepare and file with the SEC such amendments and post-effective
       amendments to the Registration Statement and the Prospectus as may be
       necessary to keep the
<Page>
                                                                         PAGE 27


      Registration Statement effective for the period specified in Section 3(a)
      and to comply with the provisions of the 1933 Act and the 1934 Act with
      respect to the distribution of all Registrable Securities, Second Closing
      Registrable Securities and Additional Registrable Securities; provided
      that, at least five (5) business days prior to the filing of a
      Registration Statement or Prospectus, or any amendments or supplements
      thereto, the Company will furnish to the Investors copies of all documents
      proposed to be filed, which documents will be subject to the comments of
      the Investors, which must be received within such five (5) business day
      period;

3.3   permit counsel designated by the Investors to review each Registration
      Statement and all amendments and supplements thereto no fewer than seven
      (7) days prior to their filing with the SEC and not file any document to
      which such counsel reasonably objects;

3.4   furnish to the Investors and their legal counsel (i) promptly after the
      same is prepared and publicly distributed, filed with the SEC, or received
      by the Company, one copy of any Registration Statement and any amendment
      thereto, each preliminary prospectus and Prospectus and each amendment or
      supplement thereto, and each letter written by or on behalf of the Company
      to the SEC or the staff of the SEC, and each item of correspondence from
      the SEC or the staff of the SEC, in each case relating to such
      Registration Statement (other than any portion of any thereof which
      contains information for which the Company has sought confidential
      treatment), and (ii) such number of copies of a Prospectus, including a
      preliminary prospectus, and all amendments and supplements thereto and
      such other documents as each Investor may reasonably request in order to
      facilitate the disposition of the Registrable Securities owned by such
      Investor;

3.5   in the event the Company selects an underwriter for the offering, the
      Company shall enter into and perform its reasonable obligations under an
      underwriting agreement, in usual and customary form, including, without
      limitation, customary indemnification and contribution obligations, with
      the underwriter of such offering;

3.6   if required by the underwriter, or if any Investor is described in the
      Registration Statement as an underwriter, the Company shall furnish, on
      the effective date of the Registration Statement, on the date that
      Registrable Securities are delivered to an underwriter, if any, for sale
      in connection with the Registration Statement and at periodic intervals
      thereafter from time to time on request, (i) an opinion, dated as of such
      date, from independent legal counsel representing the Company for purposes
      of such Registration Statement, in form, scope and substance as is
      customarily given in an underwritten public offering, addressed to the
      underwriter and the
<Page>
                                                                         PAGE 28


      Investors and (ii) a letter, dated such date, from the Company's
      independent certified public accountants in form and substance as is
      customarily given by independent certified public accountants to
      underwriters in an underwritten public offering, addressed to the
      underwriter and the Investors;

3.7   make effort to prevent the issuance of any stop order or other suspension
      of effectiveness and, if such order is issued, obtain the withdrawal of
      any such order at the earliest possible moment;

3.8   furnish to each Investor at least five copies of the Registration
      Statement and any post-effective amendment thereto, including financial
      statements and schedules by air mail within two business days of the
      effective date thereof;

3.9   prior to any public offering of Registrable Securities use its reasonable
      best efforts to register or qualify or cooperate with the Investors and
      their counsel in connection with the registration or qualification of such
      Registrable Securities for offer and sale under the securities or blue sky
      laws of such jurisdictions requested by the Investor and do any and all
      other reasonable acts or things necessary or advisable to enable the
      distribution in such jurisdictions of the Registrable Securities covered
      by the Registration Statement;

3.10  cause all Registrable Securities covered by a Registration Statement to be
      listed on each securities exchange, interdealer quotation system or other
      market on which similar securities issued by the Company are then listed;

3.11  immediately notify the Investors, at any time when a Prospectus relating
      to the Registrable Securities is required to be delivered under the
      Securities Act, upon discovery that, or upon the happening of any event as
      a result of which, the Prospectus included in such Registration Statement,
      as then in effect, includes an untrue statement of a material fact or
      omits to state any material fact required to be stated therein or
      necessary to make the statements therein not misleading in the light of
      the circumstances then existing, and at the request of any such holder,
      promptly prepare and furnish to such holder a reasonable number of copies
      of a supplement to or an amendment of such Prospectus as may be necessary
      so that, as thereafter delivered to the purchasers of such Registrable
      Securities such Prospectus shall not include an untrue statement of a
      material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading in the
      light of the circumstances then existing; and
<Page>
                                                                         PAGE 29


3.12  otherwise use its best efforts to comply with all applicable rules and
      regulations of the SEC under the 1933 Act and the 1934 Act, take such
      other actions as may be reasonably necessary to facilitate the
      registration of the Registrable Securities hereunder; and make available
      to its security holders, as soon as reasonably practicable, but not later
      than the Availability Date (as defined below), an earnings statement
      covering a period of at least twelve months, beginning after the effective
      date of each Registration Statement, which earnings statement shall
      satisfy the provisions of Section 11(a) of the 1933 Act (for the purpose
      of this subsection 3(l), "Availability Date" means the 45th day following
      the end of the fourth fiscal quarter that includes the effective date of
      such Registration Statement, except that, if such fourth fiscal quarter is
      the last quarter of the Company's fiscal year, "Availability Date" means
      the 90th day after the end of such fourth fiscal quarter).

4.    DUE DILIGENCE REVIEW; INFORMATION

      The Company shall make available, during normal business hours, for
      inspection and review by the Investors, advisors to and representatives of
      the Investors (who may or may not be affiliated with the Investors and who
      are reasonably acceptable to the Company), any underwriter participating
      in any disposition of Common Stock on behalf of the Investors pursuant to
      the Registration Statement or amendments or supplements thereto or any
      blue sky, NASD or other filing, all financial and other records, all SEC
      Documents and other filings with the SEC, and all other corporate
      documents and properties of the Company as may be reasonably necessary for
      the purpose of such review, and cause the Company's officers, directors
      and employees, within a reasonable time period, to supply all such
      information reasonably requested by the Investors or any such
      representative, advisor or underwriter in connection with such
      Registration Statement (including, without limitation, in response to all
      questions and other inquiries reasonably made or submitted by any of
      them), prior to and from time to time after the filing and effectiveness
      of the Registration Statement for the sole purpose of enabling the
      Investors and such representatives, advisors and underwriters and their
      respective accountants and attorneys to conduct initial and ongoing due
      diligence with respect to the Company and the accuracy of the Registration
      Statement.

5.    OBLIGATIONS OF THE INVESTORS.

5.1   Each Investor shall furnish in writing to the Company such information
      regarding itself, the Registrable Securities held by it and the intended
      method of disposition of the Registrable Securities held by it, as shall
      be reasonably required to effect the registration of such Registrable
      Securities and shall execute such documents in
<Page>
                                                                         PAGE 30


      connection with such registration as the Company may reasonably request.
      At least fifteen (15) business days prior to the first anticipated filing
      date of any Registration Statement, the Company shall notify each Investor
      of the information the Company requires from such Investor if such
      Investor elects to have any of the Registrable Securities included in the
      Registration Statement. An Investor shall provide such information to the
      Company at least five (5) business days prior to the first anticipated
      filing date of such Registration Statement if such Investor elects to have
      any of the Registrable Securities included in the Registration Statement.

5.2   Each Investor, by its acceptance of the Registrable Securities, if any,
      agrees to cooperate with the Company as reasonably requested by the
      Company in connection with the preparation and filing of a Registration
      Statement hereunder, unless such Investor has notified the Company in
      writing of its election to exclude all of its Registrable Securities from
      the Registration Statement.

5.3   Each Investor agrees that, upon receipt of any notice from the Company of
      the happening of any event rendering a Registration Statement no longer
      effective, such Investor will immediately discontinue disposition of
      Registrable Securities, pursuant to the Registration Statement covering
      such Registrable Securities until the Investor's receipt of the copies of
      the supplemented or amended prospectus filed with the SEC and declared
      effective and, if so directed by the Company, the Investor shall deliver
      to the Company (at the expense of the Company) or destroy (and deliver to
      the Company a certificate of destruction) all copies in the Investor's
      possession of the prospectus covering the Registrable Securities current
      at the time of receipt of such notice.

6.    INDEMNIFICATION

6.1   Indemnification by Company.

      The Company agrees to indemnify and hold harmless, to the fullest extent
      permitted by law, the Investors, each of their officers, directors,
      partners and employees each person who controls the Investors and each
      underwriter for the Investors (within the meaning of the 1933 Act) against
      all losses, claims, damages, liabilities, costs (including, without
      limitation, reasonable attorney's fees) and expenses imposed on such
      person caused by (i) any untrue or alleged untrue statement of a material
      fact contained in any Registration Statement, Prospectus or any
      preliminary prospectus or any amendment or supplement thereto or any
      omission or alleged omission to state therein a material fact required to
      be stated therein or necessary to make the statements therein not
      misleading, except insofar as the same are based upon any
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      information furnished in writing to the Company by such Investors or such
      Underwriters as the case may be, expressly for use therein, or (ii) any
      violation by the Company of any federal, state or common law, rule or
      regulation applicable to the Company in connection with any Registration
      Statement, Prospectus or any preliminary prospectus, or any amendment or
      supplement thereto, and shall reimburse in accordance with subparagraph
      (c) below, each of the foregoing persons for any legal and any other
      expenses reasonably incurred in connection with investigating or defending
      any such claims. Indemnity under this Section 5(a) shall remain in full
      force and effect regardless of any investigation made by or on behalf of
      any indemnified party and shall survive the permitted transfer of the
      Registrable Securities.

6.2   Indemnification by Holder.

      In connection with any registration pursuant to the terms of this
      Agreement, each Investor will furnish to the Company in writing such
      information as the Company reasonably requests concerning the holders of
      Registrable Securities or the proposed manner of distribution for use in
      connection with any Registration Statement or Prospectus and agrees,
      severally but not jointly, to indemnify and hold harmless, to the fullest
      extent permitted by law, the Company, its directors, officers, employees,
      stockholders and each person who controls the Company (within the meaning
      of the 1933 Act) against any losses, claims, damages, liabilities and
      expense (including reasonable attorney's fees) resulting from any untrue
      statement of a material fact or any omission of a material fact required
      to be stated in the Registration Statement or Prospectus or preliminary
      prospectus or amendment or supplement thereto or necessary to make the
      statements therein not misleading, to the extent, but only to the extent
      that such untrue statement or omission is contained in any information
      furnished in writing by such Investor to the Company specifically for
      inclusion in such Registration Statement or Prospectus or amendment or
      supplement thereto and that such information was substantially relied upon
      by the Company in preparation of the Registration Statement or Prospectus
      or any amendment or supplement thereto. In no event shall the liability of
      an Investor be greater in amount than the dollar amount of the proceeds
      (net of all expense paid by such Investor and the amount of any damages
      such holder has otherwise been required to pay by reason of such untrue
      statement or omission) received by such Investor upon the sale of the
      Registrable Securities, Second Closing Registrable Securities or
      Additional Registrable Securities included in the Registration Statement
      giving rise to such indemnification obligation.
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                                                                         PAGE 32


6.3   Conduct of Indemnification Proceedings.

      Any person entitled to indemnification hereunder shall (i) give prompt
      notice to the indemnifying party of any claim with respect to which it
      seeks indemnification and (ii) permit such indemnifying party to assume
      the defense of such claim with counsel reasonably satisfactory to the
      indemnified party; PROVIDED that any person entitled to indemnification
      hereunder shall have the right to employ separate counsel and to
      participate in the defense of such claim, but the fees and expenses of
      such counsel shall be at the expense of such person unless (a) the
      indemnifying party has agreed to pay such fees or expenses, or (b) the
      indemnifying party shall have failed to assume the defense of such claim
      and employ counsel reasonably satisfactory to such person or (c) in the
      reasonable judgment of any such person, based upon written advice of its
      counsel, a conflict of interest exists between such person and the
      indemnifying party with respect to such claims (in which case, if the
      person notifies the indemnifying party in writing that such person elects
      to employ separate counsel at the expense of the indemnifying party, the
      indemnifying party shall not have the right to assume the defense of such
      claim on behalf of such person); and PROVIDED, FURTHER, that the failure
      of any indemnified party to give notice as provided herein shall not
      relieve the indemnifying party of its obligations hereunder, except to the
      extent that such failure to give notice shall materially adversely affect
      the indemnifying party in the defense of any such claim or litigation. It
      is understood that the indemnifying party shall not, in connection with
      any proceeding in the same jurisdiction, be liable for fees or expenses of
      more than one separate firm of attorneys at any time for all such
      indemnified parties. No indemnifying party will, except with the consent
      of the indemnified party, consent to entry of any judgment or enter into
      any settlement that does not include as an unconditional term thereof the
      giving by the claimant or plaintiff to such indemnified party of a release
      from all liability in respect of such claim or litigation.

6.4   Contribution.

      If for any reason the indemnification provided for in the preceding
      paragraphs (a) and (b) is unavailable to an indemnified party or
      insufficient to hold it harmless, other than as expressly specified
      therein, then the indemnifying party shall contribute to the amount paid
      or payable by the indemnified party as a result of such loss, claim,
      damage or liability in such proportion as is appropriate to reflect the
      relative fault of the indemnified party and the indemnifying party, as
      well as any other relevant equitable considerations. No person guilty of
      fraudulent misrepresentation within the meaning of Section 11(f) of the
      1933 Act shall be entitled to contribution from
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                                                                         PAGE 33


      any person not guilty of such fraudulent misrepresentation. In no event
      shall the contribution obligation of a holder of Registrable Securities be
      greater in amount than the dollar amount of the proceeds (net of all
      expenses paid by such holder and the amount of any damages such holder has
      otherwise been required to pay by reason of such untrue or alleged untrue
      statement or omission or alleged omission) received by it upon the sale of
      the Registrable Securities giving rise to such contribution obligation.

7.    MISCELLANEOUS.

7.1   Amendments and Waivers.

      This Agreement may be amended only by a writing signed by the parties
      hereto. The Company may take any action herein prohibited, or omit to
      perform any act herein required to be performed by it, only if the Company
      shall have obtained the written consent to such amendment, action or
      omission to act, of each Investor.

7.2   Notices.

      All notices and other communications provided for or permitted hereunder
      shall be made as set forth in Section 9.4 of the Purchase Agreement.

7.3   Assignments and Transfers by Investors.

      This Agreement and all the rights and obligations of the Investors
      hereunder may not be assigned or transferred to any transferee or assignee
      except to an affiliate or permitted transferee of an Investor who is a
      subsequent holder of any Registrable Securities, Second Closing
      Registrable Securities or Additional Registrable Securities.

7.4   Assignments and Transfers by the Company.

      This Agreement may not be assigned by the Company without the prior
      written consent of each Investor, except that without the prior written
      consent of the Investors, but after notice duly given, the Company shall
      assign its rights and delegate its duties hereunder to any
      successor-in-interest corporation, and such successor-in-interest shall
      assume such rights and duties, in the event of a merger or consolidation
      of the Company with or into another corporation or the sale of all or
      substantially all of the Company's assets.

7.5   Benefits of the Agreement.
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                                                                         PAGE 34


      The terms and conditions of this Agreement shall inure to the benefit of
      and be binding upon the respective permitted successors and assigns of the
      parties. Nothing in this Agreement, express or implied, is intended to
      confer upon any party other than the Company and the Investors or their
      respective successors and assigns any rights, remedies, obligations, or
      liabilities under or by reason of this Agreement, except for right to
      indemnify and as otherwise expressly provided in this Agreement.

7.6   Counterparts.

      This Agreement may be executed in two or more counterparts, each of which
      shall be deemed an original, but all of which together shall constitute
      one and the same instrument.

7.7   Titles and Subtitles.

      The titles and subtitles used in this Agreement are used for convenience
      only and are not to be considered in construing or interpreting this
      Agreement.

7.8   Severability.

      If one or more provisions of this Agreement are held to be unenforceable
      under applicable law, such provision shall be excluded from this Agreement
      and the balance of this Agreement shall be interpreted as if such
      provision were so excluded and shall be enforceable in accordance with its
      terms to the fullest extent permitted by law.

7.9   Further Assurances.

      The parties shall execute and deliver all such further instruments and
      documents and take all such other actions as may reasonably be required to
      carry out the transactions contemplated hereby and to evidence the
      fulfilment of the agreements herein contained.

7.10  Entire Agreement.

      This Agreement is intended by the parties as a final expression of their
      agreement and intended to be a complete and exclusive statement of the
      agreement and understanding of the parties hereto in respect of the
      subject matter contained herein. This Agreement supersedes all prior
      agreements and understandings between the parties with respect to such
      subject matter.
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                                                                         PAGE 35


7.11  Applicable Law.

      The provision of this schedule shall be governed by, and construed in
      accordance with, the laws of the State of New York without regard to
      principles of conflicts of law and the parties hereby submit to the
      non-exclusive jurisdiction of the courts of England and the courts of New
      York.