Document:

SECOND DEVIATION FROM PURCHASE AGREEMENT

      This Agreement ("Second Deviation Agreement") is entered into and
effective as of the date of January 31, 2001, and is between John Deere
Technologies International, Inc., ("Seller"), a Delaware Corporation having its
principal office in Moline, Illinois, and Rotary Power International, Inc.,
formerly known as Rotary Power Technologies International, Inc, ("Buyer"), a
Delaware Corporation. All capitalized terms used herein without definition shall
have the respective meaning assigned to them in the Agreement (as defined
below).

      WHEREAS, Seller and Buyer entered into a Purchase Agreement on November
15, 1991, as amended by the Addendum Agreement dated December 31, 1991, the
Second Addendum Agreement dated April 26,1993, and the Deviation Agreement dated
February 19, 1996 (as so amended the "Agreement"), which provided for the sale
by Seller and the purchase by Buyer of the assets of the rotary engine business
of Seller ("Business") on December 31,1991, (the "Acquisition");

      WHEREAS, Article IV and Article V of the Agreement require that Buyer pay
to Seller certain Earned Deferred Payments and certain Fixed Deferred Payments;

      WHEREAS, Buyer has been unable to make the Fixed Deferred Payments of Two
Hundred Twenty Five Thousand Dollars ($225,000) due by January 30, 1997 and Five
Hundred Thousand Dollars ($500,000) due each January 30th thereafter, which
payments are due until and including January 30, 2006;

      WHEREAS, Buyer has requested that Seller waive the Fixed Deferred
Payments; and

      WHEREAS, Seller is willing to waive the Fixed Deferred Payments on payment
of $350,000 in cash and modification of the Earned Deferred Payments;

      NOW, THEREFORE, in consideration of the premise, warrants, promises,
agreements and conditions herein contained, it is further agreed as follows:

      1. Seller agrees to waive all Fixed Deferred Payments required by Article
IV, Paragraph 6, on payment by Buyer to Seller of $350,000 in cash according to
the following schedule: $100,000 immediately upon the effective date of this
Second Deviation Agreement; $100,000 on the fifth month anniversary of the
effective date of this Second Deviation Agreement; and $150,000 on the tenth
month anniversary of the effective date of this Second Deviation Agreement.
Seller shall retain the security interest in the Secured Equipment granted by
Buyer to Seller under the Deviation Agreement dated February 19,1996. Upon
receipt of $350,000 Seller will execute any appropriate instruments and
documents reasonably requested by Buyer to terminate the security interest in
the Secured Equipment.

      2. Upon the filing of any voluntary bankruptcy petition, decree or order
with respect to the Buyer; the appointment of any receiver, liquidator,
assignee, custodian or similar official for any substantial part of the Buyer's
property; any general assignment

<PAGE>

for the benefit of creditors of Buyer; or a declaration of default in any
secured long-term debt owed by the Buyer, all amounts owing hereunder and under
the Agreement shall be immediately due and payable without notice or
presentment.

      3. Article IV, Paragraphs 1 & 2 shall be replaced in their entirety by the
following:

            1.a. An Earned Deferred Payment as set forth below for each "Earned
            Deferred Payment-bearing rotary engine" (as defined below) sold or
            invoiced by Buyer or a licensee of Buyer during the time period
            specified:

            a)    Three (3%) percent of the sales price of each Earned Deferred
                  Payment-bearing rotary engine, or part therefore, during the
                  first five (5) years following the effective date of this
                  Second Deviation Agreement;

            b)    Two and One Half (2.5%) percent of the sales price of each
                  Earned Deferred Payment-bearing rotary engine, or part
                  therefore, during years Six through Ten (6-10) following the
                  effective date of this Second Deviation Agreement;

            b)    Two (2%) percent of the sales price of each Earned Deferred
                  Payment-bearing rotary engine, or part therefore, during years
                  Eleven through Fifteen (11-15) following the effective date of
                  this Second Deviation Agreement.

            1.b. Should Buyer be required to pay a royalty to any third party
            (unrelated to Buyer) based on the sale by Buyer of any "Earned
            Deferred Payment-bearing rotary engine" which is not related to the
            any one of the 70,170 or 580 series families of engines, Buyer
            shall, subject to the conditions set forth in the immediately
            following paragraph 1.c., be entitled to a reduction in the Earned
            Deferred Payment for each such engine by an amount equal to the
            royalty paid to such third party, but in no event by an amount
            greater than the Earned Deferred Payment due to Seller for such
            engine.

            1.c. To be entitled to the credit specified in paragraph 1 .b.
            immediately above, Buyer shall submit to Seller, along with each
            Earned Deterred Payment, an explanatory statement setting forth

                  i.    the number of engines for which a credit is claimed;

                  ii    the credit claimed for each engine and the aggregate
                        credit claimed;

                  iii.  a brief description of each type of engine for which
                        credit is claimed;

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                  iv.   an explanation of why each type of engine for which
                        credit is claimed is not related to any one of the
                        70,170 and 580 series families of engines.

            In addition to the explanatory statement, Buyer shall also provide a
            reconciliation statement from its auditors evidencing the actual
            payments to a third party.

            2. "Earned Deferred Payment-bearing rotary engine" shall mean any
            and all rotary engines without regard to patents and whether or not
            it is based on technology that is the subject of the Agreement.

      4. Buyer warrants that it has not previously recovered the remaining One
Hundred Thousand Dollars ($100,000) deferred fee withheld on USMC Contract
Number N00024-89-C-3831 and hereby confirms its obligations to take those steps
necessary to promptly recover and pay the same to Seller immediately upon its
receipt in whole or part.

      5. Should Buyer fail to make any of the payments specified in paragraph 1
of this Second Deviation Agreement or any Earned Deferred Payment as required by
Article IV, Paragraph 1 as required and when required, this Second Deviation
Agreement shall be considered null and void and the Agreement, as it existed
prior to this Second Deviation Agreement, shall be considered in full force and
effect. In the event this Second Deviation Agreement is considered null and
void, any payments made hereunder shall be considered as partial payments of the
fixed deferred payments.

      6. This Second Deviation Agreement does not cancel, supersede, replace or
modify any of the terms of the Agreement except as specifically set forth
herein.

      7. To the extent not modified by this Second Deviation Agreement all
terms, conditions, and definitions set forth in the Agreement shall apply to
this Second Deviation Agreement and, specifically, all payments and deliveries
shall be considered made in accordance with Article XIX of the Agreement.

      IN WITNESS WHEREOF, the parties hereto have caused this Second Deviation
Agreement to be executed in duplicate originals as of the last date below.

                              JOHN DEERE TECHNOLOGIES INTERNATIONAL, INC.

                              by: /s/ R. Holbiter
                                  --------------------------------------
                                          Vice President

                              date:  9 January 2001
                                     ----------------------------------------

<PAGE>

                              ROTARY POWER INTERNATIONAL, INC.

                              by:  /s/ Conway Davis
                                   ------------------------------------------

                              title:  President & CEO
                                      ---------------------------------------

                              date:  9 January, 2001
                                     ----------------------------------------Exhibit 4.2.7

                                     WARRANT

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT.

                           STRATUS SERVICES GROUP INC.

                        WARRANT TO PURCHASE COMMON STOCK

Warrant No.: 001-PA                                     Number of Shares: 15,000

Date of Issuance: December 4, 2000

      Stratus Services Group Inc., , a Delaware corporation (the "Company"),
hereby certifies that, for Ten United States Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, May Davis Group, Inc., the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth below, to
purchase from the Company upon surrender of this Warrant, at any time or times
on or after the date hereof, but not after 11:59 P.M. Eastern Time on the
Expiration Date (as defined herein) Fifteen Thousand (15,000)fully paid and
nonassessable shares of Common Stock (as defined herein) of the Company (the
"Warrant Shares") at the purchase price per share provided in Section 1(b)
below; provided, however, that in no event shall the holder be entitled to
exercise this Warrant for a number of Warrant Shares in excess of that number of
Warrant Shares which, upon giving effect to such exercise, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and
its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within 60 days of the Expiration Date. For
purposes of the foregoing proviso, the aggregate number of shares of Common
Stock beneficially owned by the holder and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such proviso is being made, but shall
exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by the holder
and its affiliates (including, without limitation, any convertible notes or
preferred stock) subject to a limitation on conversion or exercise analogous to
the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this paragraph, beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended. For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock a holder may

<PAGE>

rely on the number of outstanding shares of Common Stock as reflected in (1) the
Company's most recent Form 10-Q or Form 10-K, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company
or its transfer agent setting forth the number of shares of Common Stock
outstanding. Upon the written request of any holder, the Company shall promptly,
but in no event later than one (1) Business Day following the receipt of such
notice, confirm in writing to any such holder the number of shares of Common
Stock then outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the exercise of Warrants (as
defined below) by such holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.

      Section 1.

            (a) Placement Agent Agreement. This Warrant is one of the common
stock purchase warrants (the "Warrants") issued pursuant to an understanding
between the Company and May Davis Group, Inc..

            (b) Definitions. The following words and terms as used in this
Warrant shall have the following meanings:

                  (i) "Business Day" means any day other than Saturday, Sunday
or other day on which commercial banks in the City of New York are authorized or
required by law to remain closed.

                  (ii) "Closing Bid Price" means the closing bid price of Common
Stock as quoted on the Principal Market (as reported by Bloomberg Financial
Markets ("Bloomberg") through its "Volume at Price" function).

                  (iii) "Common Stock" means (i) the Company's common stock, par
value $0.01 per share, and (ii) any capital stock into which such Common Stock
shall have been changed or any capital stock resulting from a reclassification
of such Common Stock.

                  (iv) "Purchase Agreement" means the Securities Purchase
Agreement dated as of December 1, 2000 between the Company and the Buyers named
therein for the purchase of 6% Convertible Debentures by the Buyer.

                  (v) "Expiration Date" means the date five (5) years from the
Issuance Date of this Warrant or, if such date falls on a Saturday, Sunday or
other day on which banks are required or authorized to be closed in the City of
New York or the State of New York or on which trading does not take place on the
Principal Exchange or automated quotation system on which the Common Stock is
traded (a "Holiday"), the next date that is not a Holiday.

                  (vi) "Issuance Date" means the date hereof.

                  (vii) "Options" means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities.

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<PAGE>

                  (viii) "Other Securities" means (i) those options and warrants
of the Company issued prior to, and outstanding on, the Issuance Date of this
Warrant, (ii) the shares of Common Stock issuable on exercise of such options
and warrants, provided such options and warrants are not amended after the
Issuance Date of this Warrant and (iii) the shares of Common Stock issuable upon
exercise of this Warrant.

                  (ix) "Person" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency
thereof.

                  (x) "Principal Market" means the New York Stock Exchange, the
American Stock Exchange, the Nasdaq National Market, the Nasdaq SmallCap Market,
whichever is at the time the principal trading exchange or market for such
security, or the over-the-counter market on the electronic bulletin board for
such security as reported by Bloomberg or, if no bid or sale information is
reported for such security by Bloomberg, then the average of the bid prices of
each of the market makers for such security as reported in the "pink sheets" by
the National Quotation Bureau, Inc.

                  (xi) (xiii) "Registration Rights Agreement" means the
Registration Rights Agreement dated as of December 4, 2000 between the Company,
May Davis, Hornblower & Weeks, Inc. and the other Warrantholders named therein
with respect to the registration rights pertaining to the Common Stock issuable
upon exercise of this Warrant.

                  (xii) "Securities Act" means the Securities Act of 1933, as
amended.

                  (xiii) "Warrant" means this Warrant and all Warrants issued in
exchange, transfer or replacement thereof.

                  (xiv) "Warrant Exercise Price" shall be $7.50.

                  (xv) "Warrant Shares" means the shares of Common Stock
issuable at any time upon exercise of this Warrant.

            (c) Other Definitional Provisions.

                  (i) Except as otherwise specified herein, all references
herein (A) to the Company shall be deemed to include the Company's successors
and (B) to any applicable law defined or referred to herein shall be deemed
references to such applicable law as the same may have been or may be amended or
supplemented from time to time.

                  (ii) When used in this Warrant, the words "herein", "hereof",
and "hereunder" and words of similar import, shall refer to this Warrant as a
whole and not to any provision of this Warrant, and the words "Section",
"Schedule", and "Exhibit" shall refer to Sections of, and Schedules and Exhibits
to, this Warrant unless otherwise specified.

                  (iii) Whenever the context so requires, the neuter gender
includes the masculine or feminine, and the singular number includes the plural,
and vice versa.

                                       3
<PAGE>

      Section 2. Exercise of Warrant.

            (a) Subject to the terms and conditions hereof, this Warrant may be
exercised by the holder hereof then registered on the books of the Company, pro
rata as hereinafter provided, at any time on any Business Day on or after the
opening of business on such Business Day, commencing with the April 29, 2001,
and prior to 11:59 P.M. Eastern Time on the Expiration Date, by (i) delivery of
a written notice, in the form of the subscription notice attached as Exhibit A
hereto (the "Exercise Notice"), of such holder's election to exercise this
Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) (A) payment to the Company of an amount equal to the Warrant
Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being exercised (plus any applicable issue or transfer
taxes) (the "Aggregate Exercise Price") in cash or wire transfer of immediately
available funds or (B) notification to the Company that this Warrant is being
exercised pursuant to a Cashless Exercise (as defined in Section 2(f)) and (iii)
the surrender of this Warrant (or an indemnification undertaking reasonably
acceptable to the Company with respect to this Warrant in the case of its loss,
theft or destruction) to a common carrier for overnight delivery to the Company
as soon as practicable following such date. In the event of any exercise of the
rights represented by this Warrant in compliance with this Section 2(a), the
Company shall on the second Business Day following the date of receipt of the
Exercise Notice, the Aggregate Exercise Price (or notice of a Cashless Exercise)
and this Warrant (or an indemnification undertaking reasonably acceptable to the
Company with respect to this Warrant in the case of its loss, theft or
destruction) and, except for a Cashless Exercise, the receipt of the
representations of the holder specified in Section 6 hereof, if requested by the
Company (the "Exercise Delivery Documents"), and if the Common Stock is DTC
eligible credit such aggregate number of shares of Common Stock to which the
holder shall be entitled to the holder's or its designee's balance account with
The Depository Trust Company; provided, however, if the holder who submitted the
Exercise Notice requested physical delivery of any or all of the Warrant Shares,
or, if the Common Stock is not DTC eligible then the Company shall, on or before
the second Business Day following receipt of the Exercise Delivery Documents,
issue and surrender to a common carrier for overnight delivery to the address
specified in the Exercise Notice, a certificate, registered in the name of the
holder, for the number of shares of Common Stock to which the holder shall be
entitled pursuant to such request. Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (ii)(A) above or notification to
the Company of a Cashless Exercise referred to in Section 2(e), the holder of
this Warrant shall be deemed for all corporate purposes to have become the
holder of record of the Warrant Shares with respect to which this Warrant has
been exercised. In the case of a dispute as to the determination of the Warrant
Exercise Price, the Closing Bid Price or the arithmetic calculation of the
Warrant Shares, the Company shall promptly issue to the holder the number of
Warrant Shares that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the holder via facsimile within one (1) Business
Day of receipt of the holder's Exercise Notice. If the holder and the Company
are unable to agree upon the determination of the Warrant Exercise Price or
arithmetic calculation of the Warrant Shares within one (1) day of such disputed
determination or arithmetic calculation being submitted to the holder, then the
Company shall immediately submit via facsimile (i) the disputed determination of
the Warrant Exercise Price or the Closing Bid Price to an independent, reputable
investment banking firm or (ii) the disputed arithmetic calculation of the
Warrant Shares to its independent, outside accountant The Company

                                       4
<PAGE>

shall cause the investment banking firm or the accountant, as the case may be,
to perform the determinations or calculations and notify the Company and the
holder of the results no later than forty-eight (48) hours from the time it
receives the disputed determinations or calculations. Such investment banking
firm's or accountant's determination or calculation, as the case may be, shall
be deemed conclusive absent manifest error.

            (b) Unless the rights represented by this Warrant shall have expired
or shall have been fully exercised, the Company shall, as soon as practicable
and in no event later than five (5) Business Days after any exercise and at its
own expense, issue a new Warrant identical in all respects to this Warrant
exercised except it shall represent rights to purchase the number of Warrant
Shares purchasable immediately prior to such exercise under this Warrant
exercised, less the number of Warrant Shares with respect to which such Warrant
is exercised.

            (c) No fractional Warrant Shares are to be issued upon any pro rata
exercise of this Warrant, but rather the number of Warrant Shares issued upon
such exercise of this Warrant shall be rounded up or down to the nearest whole
number.

            (d) If the Company or its Transfer Agent shall fail for any reason
or for no reason to issue to the holder within ten (10) Business Days of receipt
of the Exercise Delivery Documents, a certificate for the number of Warrant
Shares to which the holder is entitled or to credit the holder's balance account
with The Depository Trust Company for such number of Warrant Shares to which the
holder is entitled upon the holder's exercise of this Warrant, the Company
shall, in addition to any other remedies under this Warrant or otherwise
available to such holder, pay as additional damages in cash to such holder on
each day the issuance of such certificate for Warrant Shares is not timely
effected an amount equal to 0.5% of the product of (A) the sum of the number of
Warrant Shares not issued to the holder on a timely basis and to which the
holder is entitled, and (B) the Closing Bid Price of the Common Stock for the
trading day immediately preceding the last possible date which the Company could
have issued such Common Stock to the holder without violating this Section 2.

            (e) If within fifteen (10) Business Days after the Company's receipt
of the Exercise Delivery Documents, the Company fails to deliver a new Warrant
to the holder for the number of Warrant Shares to which such holder is entitled
pursuant to Section 2(b) hereof, then, in addition to any other available
remedies under this Warrant or the Placement Agent Agreement, or otherwise
available to such holder, the Company shall pay as additional damages in cash to
such holder on each day after such tenth (10th) Business Day that such delivery
of such new Warrant is not timely effected in an amount equal to 0.25% of the
product of (A) the number of Warrant Shares represented by the portion of this
Warrant which is not being exercised and (B) the Closing Bid Price of the Common
Stock for the trading day immediately preceding the last possible date which the
Company could have issued such Warrant to the holder without violating this
Section 2.

            (f) If the Warrant Shares are not covered by an effective
registration statement for the resale of the Warrant Shares, the holder of this
Warrant may, at its election exercised in its sole discretion, exercise this
Warrant to the extent then exercisable, in lieu of making payment of the
Aggregate Exercise Price in cash, elect instead to receive upon such exercise
the "Net Number" of shares of Common Stock determined according to the following
formula (a "Cashless Exercise"):

                                       5
<PAGE>

            Net Number = (A x B) - (A x C)
                         -----------------
                                 B

            For purposes of the foregoing formula:

                  A=    the total number of Warrant Shares with respect to which
                        this Warrant is then being exercised.

                  B=    the Closing Bid Price of the Common Stock on the date of
                        exercise of the Warrant.

                  C=    the Warrant Exercise Price then in effect for the
                        applicable Warrant Shares at the time of such exercise.

      Section 3. Covenants as to Common Stock. The Company hereby covenants and
agrees as follows:

            (a) This Warrant is, and any Warrants issued in substitution for or
replacement of this Warrant will upon issuance be, duly authorized and validly
issued.

            (b) All Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be validly issued, fully
paid and nonassessable and free from all taxes, liens and charges with respect
to the issue thereof.

            (c) During the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved at least 100% of the number of shares of Common Stock needed to provide
for the exercise of the rights then represented by this Warrant and the par
value of said shares will at all times be less than or equal to the applicable
Warrant Exercise Price.

            (d) The Company shall promptly file a registration statement with
the Securities and Exchange Commission to secure the listing of the Warrant
Shares on the Principal Market in accordance with the terms and conditions
regarding the registration rights of holders of Warrants set forth in the
Registration Rights Agreement and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Warrant Shares from time to
time issuable upon the exercise of this Warrant; and the Company shall so list
on each national securities exchange or automated quotation system, as the case
may be, and shall maintain such listing of, any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities exchange or
automated quotation system.

            (e) The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist

                                       6
<PAGE>

in the carrying out of all the provisions of this Warrant and in the taking of
all such action as may reasonably be requested by the holder of this Warrant in
order to protect the exercise privilege of the holder of this Warrant against
dilution or other impairment, consistent with the tenor and purpose of this
Warrant. The Company will take all such actions as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock upon the exercise of this Warrant.

            (f) This Warrant will be binding upon any entity succeeding to the
Company by merger, consolidation or acquisition of all or substantially all of
the Company's assets.

      Section 4. Taxes. The Company shall pay any and all taxes, except any
applicable withholding, which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant.

      Section 5. Warrant Holder Not Deemed a Stockholder. Except as otherwise
specifically provided herein, no holder, as such, of this Warrant shall be
entitled to vote or receive dividends or be deemed the holder of shares of
capital stock of the Company for any purpose, nor shall anything contained in
this Warrant be construed to confer upon the holder hereof, as such, any of the
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the holder of this Warrant of the Warrant
Shares which he or she is then entitled to receive upon the due exercise of this
Warrant. In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on such holder to purchase any securities (upon
exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders.

      Section 6. Representations of Holder. The holder of this Warrant, by the
acceptance hereof, represents that it is acquiring this Warrant and the Warrant
Shares for its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution of this Warrant
or the Warrant Shares, except pursuant to sales registered or exempted under the
Securities Act; provided, however, that by making the representations herein,
the holder does not agree to hold this Warrant or any of the Warrant Shares for
any minimum or other specific term and reserves the right to dispose of this
Warrant and the Warrant Shares at any time in accordance with or pursuant to a
registration statement or an exemption under the Securities Act. The holder of
this Warrant further represents, by acceptance hereof, that, as of this date,
such holder is an "accredited investor" as such term is defined in Rule
501(a)(1) of Regulation D promulgated by the Securities and Exchange Commission
under the Securities Act (an "Accredited Investor"). Upon exercise of this
Warrant, other than pursuant to a Cashless Exercise, the holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares so purchased are being acquired solely for the
holder's own account and not as a nominee for any other party, for investment,
and not with a view toward distribution or resale and that such holder is an
Accredited Investor. If such holder cannot make such representations because

                                       7
<PAGE>

they would be factually incorrect, it shall be a condition to such holder's
exercise of this Warrant, other than pursuant to a Cashless Exercise, that the
Company receive such other representations as the Company considers reasonably
necessary to assure the Company that the issuance of its securities upon
exercise of this Warrant shall not violate any United States or state securities
laws.

      Section 7. Ownership and Transfer.

            (a) The Company shall maintain at its principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the holder hereof), a register for this Warrant, in which the Company shall
record the name and address of the person in whose name this Warrant has been
issued, as well as the name and address of each transferee. The Company may
treat the person in whose name any Warrant is registered on the register as the
owner and holder thereof for all purposes, notwithstanding any notice to the
contrary, but in all events recognizing any transfers made in accordance with
the terms of this Warrant.

            (b) The Company is obligated to register the Warrant Shares for
resale under the Securities Act pursuant to the Registration Rights Agreement
and the initial holder of this Warrant (and certain assignees thereof) is
entitled to the registration rights in respect of the Warrant Shares as set
forth in the Registration Rights Agreement.

      Section 8. Adjustment of Warrant Exercise Price and Number of Shares. The
Warrant Exercise Price and the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted from time to time as follows:

            (a) Adjustment of Warrant Exercise Price upon Subdivision or
Combination of Common Stock. If the Company at any time after the date of
issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, any Warrant Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced and
the number of shares of Common Stock obtainable upon exercise of this Warrant
will be proportionately increased. If the Company at any time after the date of
issuance of this Warrant combines (by combination, reverse stock split or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, any Warrant Exercise Price in effect immediately prior
to such combination will be proportionately increased and the number of Warrant
Shares issuable upon exercise of this Warrant will be proportionately decreased.
Any adjustment under this Section 8(d) shall become effective at the close of
business on the date the subdivision or combination becomes effective.

            (b) Notices.

                  (i) Immediately upon any adjustment of the Warrant Exercise
Price, the Company will give written notice thereof to the holder of this
Warrant, setting forth in reasonable detail, and certifying, the calculation of
such adjustment.

                  (ii) The Company will give written notice to the holder of
this Warrant at least ten (10) days prior to the date on which the Company
closes its books or takes a record

                                       8
<PAGE>

(A) with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change (as defined
below), dissolution or liquidation, provided that such information shall be made
known to the public prior to or in conjunction with such notice being provided
to such holder.

                  (iii) The Company will also give written notice to the holder
of this Warrant at least ten (10) days prior to the date on which any Organic
Change, dissolution or liquidation will take place, provided that such
information shall be made known to the public prior to or in conjunction with
such notice being provided to such holder.

      Section 9. Purchase Rights; Reorganization, Reclassification,
Consolidation, Merger or Sale.

            (a) In case of any (1) merger or consolidation of the Company with
or into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on a book value basis) in one or a series of related
transactions, the holder of this Warrant shall have the right thereafter to (A)
exercise this Warrant for the shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger, consolidation or sale, and the holder shall be entitled
upon such event or series of related events to receive such amount of
securities, cash and property as the Common Stock for which this Warrant could
have been exercised immediately prior to such merger, consolidation or sales
would have been entitled to or (B) in the case of a merger or consolidation, (x)
require the surviving entity to issue common stock purchase warrants equal to
the number Warrant Shares to which this Warrant then permits, which newly
warrant shall be identical to this Warrant, and (y) simultaneously with the
issuance of such warrant, the holder of such warrant shall have the right to
exercise such warrant only into shares of stock and other securities, cash and
property receivable upon or deemed to be held by holders of Common Stock
following such merger or consolidation. In the case of clause (B), the exercise
price for such new warrant shall be based upon the amount of securities, cash
and property that each share of Common Stock would receive in such transaction
and the Exercise Price of this Warrant immediately prior to the effectiveness or
closing date for such transaction. The terms of any such merger, sale or
consolidation shall include such terms so as to continue to give the holder the
right to receive the securities, cash and property set forth in this Section
upon any conversion or redemption following such event. This provision shall
similarly apply to successive such events.

      Section 10. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated or destroyed, the Company shall promptly, on receipt
of an indemnification undertaking (or, in the case of a mutilated Warrant, the
Warrant), issue a new Warrant of like denomination and tenor as this Warrant so
lost, stolen, mutilated or destroyed.

      Section 11. Notice. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of receipt is received by the sending party transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit

                                       9
<PAGE>

with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:

                  If to the Holder:

                           May Davis Group, Inc.
                           1 World Trade Center, Suite 8735
                           New York, NY 10048
                           Telephone: (212) 775-7400
                           Facsimile: (212) 775-8166

                  With Copy to:

                           Butler Gonzalez LLP
                           1000 Stuyvesant Avenue
                           Suite# 6
                           Union, NJ 07083
                           Telephone: (908) 810-8588
                           Facsimile: (908) 810-0873
                           Attention: David Gonzalez, Esq.

                  If to the Company:

                           Stratus Services Group Inc.
                           500 Craig Road, 2nd Floor
                           Manalapan, NJ 07726
                           Attention: J. Todd Raymond

                  With a copy to:

                           Giordano, Halleran & Ciesla, P.C.
                           125 Half Mile Road, P.O. Box 190
                           Middletown, NJ 07748
                           Attention: Philip D. Forlenza

If to a holder of this Warrant, to it at the address and facsimile number set
forth in the Purchase Agreement, with copies to such holder's representatives as
set forth in such Purchase Agreement, or at such other address and facsimile as
shall be delivered to the Company upon the issuance or transfer of this Warrant.
Each party shall provide five days' prior written notice to the other party of
any change in address or facsimile number. Written confirmation of receipt (A)
given by the recipient of such notice, consent, facsimile ,waiver or other
communication, (or (B) provided by a nationally recognized overnight delivery
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

      Section 12. Date. The date of this Warrant is December 4, 2000. This
Warrant, in all events, shall be wholly void and of no effect after the close of
business on the Expiration Date,

                                       10
<PAGE>

except that notwithstanding any other provisions hereof, the provisions of
Section 8(b) shall continue in full force and effect after such date as to any
Warrant Shares or other securities issued upon the exercise of this Warrant.

      Section 13. Amendment and Waiver. Except as otherwise provided herein, the
provisions of the Warrants may be amended and 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 has obtained the written consent of the holders of
Warrants representing at least two-thirds of the Warrant Shares issuable upon
exercise of the Warrants then outstanding; provided that, except for Section
8(d),no such action may increase the Warrant Exercise Price or decrease the
number of shares or class of stock obtainable upon exercise of any Warrant
without the written consent of the holder of such Warrant.

      Section 14. Descriptive Headings; Governing Law. The descriptive headings
of the several sections and paragraphs of this Warrant are inserted for
convenience only and do not constitute a part of this Warrant. The corporate
laws of the State of Delaware shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the
construction, validity, enforcement and interpretation of this Warrant shall be
governed by the internal laws of the State of New York, without giving effect to
any choice of law or conflict of law provision or rule (whether of the State of
New York, or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of New York.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11
<PAGE>

      IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
Joseph J. Raymond, its President and Chief Executive Officer, as of the 4th day
of December, 2000.

                                        STRATUS SERVICES GROUP INC.

                                        By: ____________________________________
                                            Name: Joseph J. Raymond
                                            Title: President and Chief
                                                   Executive Officer

                                       12
<PAGE>

                              EXHIBIT A TO WARRANT

                                SUBSCRIPTION FORM

        TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS WARRANT

                          STRATUS SERVICES GROUP INC.,

      The undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of Stratus
Services Group Inc., a Delaware corporation (the "Company"), evidenced by the
attached Warrant (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

      1. Form of Warrant Exercise Price. The Holder intends that payment of the
Warrant Exercise Price shall be made as:

          ____________  a "Cash Exercise" with respect to _________________
                        Warrant Shares; and/or

          ____________  a "Cashless Exercise" with respect to _______________
                        Warrant Shares (to the extent permitted by the terms of
                        the Warrant).

      2. Payment of Warrant Exercise Price. In the event that the holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the holder shall pay the sum of $___________________ to
the Company in accordance with the terms of the Warrant.

      3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______

   Name of Registered Holder

By: ____________________________

    Name:

    Title:

                                       13
<PAGE>

                              EXHIBIT B TO WARRANT

                              FORM OF WARRANT POWER

      FOR VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Stratus Services Group Inc., a
Delaware corporation, represented by warrant certificate no. _____, standing in
the name of the undersigned on the books of said corporation. The undersigned
does hereby irrevocably constitute and appoint ______________, attorney to
transfer the warrants of said corporation, with full power of substitution in
the premises.

Dated: _________, ____

                                        ________________________________________

                                        By:  ___________________________________
                                        Its: ___________________________________

                                       14

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