Exhibit 10.49


    

      EXHIBIT
        10.49

      


      


      


      


      


      


      


      


      


      


      


      
        WRITER'S
          DIRECT DIAL: 813-227-8473

        WRITER'S
          E-MAIL: mbrundage@hwhlaw.com

      

      


      


      


      October
        12, 2005

      


      


      Michael
        A. Maltzman, CFO

      Stratus
        Services Group, Inc.

      500
        Craig
        Road

      Suite
        201

      Manalapan,
        New Jersey 07726

      


      


      


      
        	 	
                Re:

              	
                Continued
                  forbearance regarding default under outsourcing agreement dated
                  August 13,
                  2004, by and between ALS, LLC and Stratus Services Group, Inc.,
                  as amended
                   (the
                  “Agreement”)

              


      

      


      Dear
        Mr.
        Maltzman:

      


      As
        you
        know, this law firm represents ALS, LLC (“Advantage”) in connection with the
        Agreement and Advantage’s business relationships with Stratus Services Group,
        Inc. (“Stratus”). Capital TempFunds (“CTF”) is Stratus’ secured lender under the
        terms and conditions of a loan and security agreement dated as of December
        8,
        2000 as amended and modified (the “Secured Loan”). By letters dated July 29,
        2005, and August 5, 2005, Advantage has provided Stratus with written notices
        of
        its defaults and material breaches of payment obligations due under the
        Agreement. Stratus has failed to cure the material breaches of payment
        obligations within two business days of notice and therefore, pursuant to
        paragraph 3 of the Agreement, Advantage currently has the right to terminate
        the
        Agreement. Additionally, as a result of the defaults, Stratus owes to Advantage
        $1,000.00 per day of payment obligation breach or 24% annual interest on
        the
        outstanding amount, compounded daily, or a maximum allowed by law, whichever
        is
        higher. We understand that CTF has declared defaults under the Secured Loan,
        but
        has entered into a forbearance agreement with Stratus through at least October
        21, 2005.

      


      This
        letter sets forth the terms by which the parties agree to a forbearance of
        enforcement of existing defaults that have been declared by Advantage as
        to the
        Agreement and CTF as to the Secured Loan. Due to the time urgency in getting
        this letter agreement prepared and executed, the parties agree to enter a
        more
        formal agreement if reasonably necessary.

      


      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      Advantage
        will forbear from enforcing current defaults under the Agreement, unless
        a
        default occurs hereunder, on the following terms and conditions:

      


      	1.  	
              On
                Stratus’ direction which is given hereby, CTF shall wire transfer to
                Advantage by 4 p.m. Eastern on October 13, 2005 the sum of $2,139,868.33
                less amounts previously wired from October 7th
                2005 through October 12, 2005 of the $2,389,868.33 presently owed
                by
                Stratus to Advantage pursuant to the terms of the Agreement (which
                excludes the $600,000 subordinated receivable, which will remain
                due and
                owing). The remaining $250,000 shall be paid by wire transfer no
                later
                than October 20th
                2005.

            


       

      	2.  	
              Conditioned
                upon timely receipt of the payments required in paragraph 1 above,
                and as
                long as payments continue to be made in accordance with paragraph
                4 below,
                Advantage will release and fund the current payroll associated with
                the
                Agreement. 

            


       

      	3.  	
              Provided
                that Stratus complies with all the terms of this forbearance agreement,
                Advantage will continue to perform under the Agreement through October
                20,
                2005.

            


       

      	4.  	
              Advantage
                shall invoice to Stratus as to the payroll paid under paragraph 2
                above
                consistent with the Agreement except that such invoices shall have
                two
                components: (a) invoices totaling the amount of $1,100,000 shall
                be due
                and payable on or before October 20, 2005 (the “Deferred Amount”); and (b)
                the remaining amount due under invoices after deducting $1,100,000
                shall
                be due and payable immediately (the “Immediately Due
                Amount”).

            


       

      	5.  	
              Stratus
                shall repay the Immediately Due Amount by directing CTF, on a daily
                basis
                starting Friday October 14, 2005, to advance and wire transfer to
                Advantage from available funds under the Secured Loan. Stratus shall
                provide Advantage with an exact copy of the loan status provided
                by
                CTF.

            


       

      	6.  	
              Stratus
                shall be in default hereunder unless the Immediately Due Amount is
                paid in
                full by October 19, 2005. The Deferred Amount shall be due in full
                without
                further notice or demand at 12:00 p.m. Eastern on October 20, 2005.
                

            


       

      	7.  	
              Stratus
                confirms that Advantage is entitled to a $50,000 Forbearance Fee
                through
                August 25, 2005, as previously memorialized in the August 12, 2005
                letter
                agreement between Stratus and Advantage. Thereafter, as set forth
                in the
                preamble to this letter above, Stratus confirms that Advantage is
                entitled
                to $1,000 per day of payment obligation breach or 24% annual interest
                on
                the outstanding amount, compounded daily, or a maximum obligation
                allowed
                by law, whichever is higher. Amounts for fees and or interest due
                from
                Stratus to Advantage are in addition to the balance due listed above.
                

            


       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      	8.  	
              Any
                further default under the Agreement or the Secured Loan shall be
                a default
                hereunder, unless specifically stated other wise herein. A default
                hereunder or under the Agreement shall entitle Advantage to immediately
                terminate the Agreement and immediately seek all available remedies.
                For
                the term hereof, CTF agrees to give Advantage and Stratus immediate
                and
                simultaneous notice of any default by Stratus hereunder or under
                the
                Secured Loan. For the term hereof, Advantage agrees to give CTF and
                Stratus immediate and simultaneous notice of any default by Stratus
                hereunder or under the Agreement.

            


       

      	9.  	
              CTF
                shall forbear from exercising its rights under the Secured Loan during
                the
                Forbearance Period pursuant to the separate forbearance agreement,
                an
                executed copy of which will be immediately provided to Advantage.
                Stratus
                shall provide Advantage with copies of the executed forbearance agreement
                with CTF. Advantage’s obligation to forbear hereunder shall cease if CTF
                ceases to forbear under its forbearance agreement and Advantage’s right to
                cease forbearing hereunder shall constitute Advantages sole remedy
                against
                CTF. 

            


       

      


      HILL,
        WARD & HENDERSON, P.A.

      s/ 

      Michael
        P. Brundage

      


      


      
        	
                ALS,
                  LLC

                 

                 

                By: s/
                  Jay Wolin    

                 

                Its: CFO     

                 

                        

              	
                Stratus
                  Services Group, Inc.

                 

                 

                By: s/
                  Joseph J. Raymond  

                 

                Its: CEO     

              
	
                 

                Acknowledged
                  and consented to by 

                 

                Capital
                  TempFunds, Inc.

                 

                 

                By: s/
                  Gerard Gabriele   

                 

                Its: Senior
                  Vice President   

              	 


      

       

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