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                                                                   Exhibit 10.12

                   AGREEMENT TO CANCEL SECURED PROMISSORY NOTE
                              AND PLEDGE AGREEMENT
                                       AND
                    TO EXCHANGE SUCH SECURED PROMISSORY NOTE
                             AND CERTAIN DEBENTURES
                              FOR PREFERRED SHARES

         THIS AGREEMENT, dated as of March 11, 2002, is entered into by and
between STRATUS SERVICES GROUP, INC., a Delaware corporation, with headquarters
located at 500 Craig Road, Suite 201, Manalapan, New Jersey 07726 (the
"Company") and Pinnacle Investment Partners, L.P., a New York limited
partnership, with headquarters c/o Hornblower & Weeks, 110 Wall Street, 21st
Floor, New York, New York 10008 ("Pinnacle").

                                   WITNESSETH:

         WHEREAS, on January 2, 2002, the Company executed a Secured Promissory
Note (the "Note") in the amount of $400,000.00 in favor of Pinnacle; and

         WHEREAS, as security for such Note, the Company also granted Pinnacle a
security interest in certain Pledged Collateral as defined in a certain Pledge
and Security Agreement dated as of even date thereof; and

         WHEREAS, on that same date Pinnacle purchased from third parties
certain of the Company's 6% Convertible Debentures (the "Convertible
Debentures") in the aggregate principal amount of $643,501 and purchased from
the Company additional Convertible Debentures in the aggregate principal amount
of $456,499; and

         WHEREAS, Pinnacle has converted a portion of the Convertible Debentures
(those purchased from third parties) of the Company into 1,736,979 shares of
common stock; and

         WHEREAS, Pinnacle is desirous of exchanging the $400,000.00 Note and
the $456,499 remaining Convertible Debentures for a Series B preferred stock
equity interest in the Company, the terms of such preferred stock (the
"Preferred Stock") being substantially in the form of the Certificate of
Designation attached as Exhibit A hereto; and

         WHEREAS, in further consideration for the exchange of the Note and the
Convertible Debentures

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for Preferred Stock, Pinnacle has agreed to release the Company from the Pledge
and Security Agreement and to, in turn, release the Pledged Collateral
thereunder.

         NOW, THEREFORE, in consideration for the foregoing, the parties hereto
agree as follows:

1.  Pinnacle's Note in the principal amount of $400,000 will be exchanged on
    March 11, 2002 for 80,000 shares of Preferred Stock, $.01 par value per
    share and accrued interest thereon of $12,305 as of March 11, 2002 will be
    paid to Pinnacle in cash;

2.  Pinnacle's $456,499 remaining Convertible Debentures will be exchanged on
    March 11, 2002 for 91,300 shares of Preferred Stock, $.01 par value per
    share;

3.  The Pledge and Security Agreement will be cancelled and the Pledged
    Collateral released on March 11, 2002; and

4.  If Preferred Stock is to be issued in the name of an entity other than
    Pinnacle, Pinnacle will pay all transfer taxes payable with respect thereto.
    No fee will be charged to Pinnacle for the exchange except for such transfer
    taxes, if any.

5.  PINNACLE'S REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
    INDEPENDENT INVESTIGATION. Pinnacle represents and warrants to, and
    covenants and agrees with, the Company as follows:

         a. Pinnacle is exchanging the Note and Convertible Debentures for the
            Preferred Stock for its own account for investment only and not with
            a view towards the public sale or distribution thereof and not with
            a view to or for sale in connection with any distribution thereof.

         b. Pinnacle is (i) an "accredited investor" as that term is defined in
            Rule 501 of the General Rules and Regulations under the 1933 Act by
            reason of Rule 501(a)(3), and (ii) experienced in making investments
            of the kind described in this Agreement and the related documents,
            (iii) able, by reason of the business and financial experience of
            its officers (if an entity) and professional advisors (who are not
            affiliated with or compensated in any way by the Company or any of
            its affiliates or selling agents), to protect its own interests in
            connection with the transactions described in this Agreement, and
            the related documents, and (iv) able to afford the entire loss of
            its investment in the Preferred.

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         c. Pinnacle understands that the Note and Convertible Debentures are
            being exchanged for the Preferred Stock in reliance on specific
            exemptions from the registration requirements of United States
            federal and state securities laws and that the Company is relying
            upon the truth and accuracy of, and Pinnacle's compliance with, the
            representations, warranties, agreements, acknowledgements and
            understandings of Pinnacle set forth herein in order to determine
            the availability of such exemptions and the eligibility of Pinnacle
            to acquire the Preferred Stock.

         d. Pinnacle and its advisors, if any, have been furnished with all
            materials relating to the business, finances and operations of the
            Company and materials relating to the conversion of the Note and
            Convertible Debentures and the issuance of Preferred Stock which
            have been requested by Pinnacle. Pinnacle and its advisors, if any,
            have been afforded the opportunity to ask questions of the Company
            and have received complete and satisfactory answers to any such
            inquiries;

         e. Pinnacle understands that no United States federal or state agency
            or any other government or governmental agency has passed on or made
            any recommendation or endorsement of the Preferred Shares.

         f. This Agreement has been duly and validly authorized, executed and
            delivered on behalf of Pinnacle and is a valid and binding agreement
            of Pinnacle enforceable in accordance with its terms, subject as to
            enforceability to general principles of equity and to bankruptcy,
            insolvency, moratorium and other similar laws affecting the
            enforcement of creditors' rights generally.

6.       COMPANY REPRESENTATIONS, ETC. The Company represents and warrants to
         Pinnacle that:

         a. CONCERNING THE COMMON STOCK. There are no preemptive rights of any
            stockholder of the Company, as such, to acquire the Company's
            Preferred Stock. The shares of Common Stock issuable upon conversion
            of the Preferred Stock (the "Shares") within sixty (60) days of the
            date of this Agreement will be registered for resale under a
            currently effective registration statement filed under the
            Securities Act of 1933, as amended (the "1933 Act').

         b. REPORTING COMPANY STATUS. The Company is a corporation duly
            organized, validly existing and in good standing under the laws of
            the State of Delaware, and has the requisite corporate power to own
            its properties and to carry on its business as now being conducted.
            The Company is duly

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            qualified as a foreign corporation to do business and is in good
            standing in each jurisdiction where the nature of the business
            conducted or property owned by it makes such qualification necessary
            other than those jurisdictions in which the failure to so qualify
            would not have a material and adverse effect on the business,
            operations, properties, prospects or condition (financial or
            otherwise) of the Company. The Company has registered its Common
            Stock pursuant to Section 12 of the Securities Exchange Act of 1934,
            as amended (the "1934 Act"), and the Common Stock is listed and
            traded on the OTC Bulletin Board Market.

         c. AUTHORIZED SHARES. The shares of Preferred Stock to be issued
            pursuant to this Agreement and the Shares of Common Stock issuable
            upon conversion of the Preferred Stock have been duly authorized
            and, when issued to Pinnacle, will be duly and validly issued, fully
            paid and non-assessable and will not subject the holder thereof to
            personal liability by reason of being such holder.

         d. CONVERSION AGREEMENT. This Agreement and the transactions
            contemplated hereby, have been duly and validly authorized by the
            Company. This Agreement has been duly executed and delivered by the
            Company and is a valid and binding agreement of the Company
            enforceable in accordance with its terms, subject as to
            enforceability to general principles of equity and to bankruptcy,
            insolvency, moratorium, and other similar laws affecting the
            enforcement of creditors' rights generally.

         e. NON-CONTRAVENTION. The execution and delivery of this Agreement by
            the Company, the issuance of the Preferred Stock, and the
            consummation by the Company of the other transactions contemplated
            by this Agreement do not and will not conflict with or result in a
            breach by the Company of any of the terms or provisions of, or
            constitute a default under (i) the articles of incorporation or
            by-laws of the Company, (ii) any indenture, mortgage, deed of trust,
            or other material agreement or instrument to which the Company is a
            party or by which it or any of its properties or assets are bound,
            (iii) to its knowledge, any existing applicable law, rule, or
            regulation or any applicable decree, judgment, or (iv) to its
            knowledge, order of any court, United States federal or state
            regulatory body, administrative agency, or other governmental body
            having

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            jurisdiction over the Company or any of its properties or assets,
            except such conflict, breach or default which would not have a
            material adverse effect on the transactions contemplated herein. The
            Company is not in violation of any material laws, governmental
            orders, rules, regulations or ordinances to which its property,
            real, personal, mixed, tangible or intangible, or its businesses
            related to such properties, are subject.

         f. APPROVALS. No authorization, approval or consent of any court,
            governmental body, regulatory agency, self-regulatory organization,
            or stock exchange or market is required to be obtained by the
            Company for the issuance and sale of the Preferred Stock to Pinnacle
            as contemplated by this Agreement, except such authorizations,
            approvals and consents that have been obtained.

         g. SEC DOCUMENTS, FINANCIAL STATEMENTS. The Company has filed all
            reports, schedules, forms, statements and other documents required
            to be filed by it with the SEC pursuant to the reporting
            requirements of the Exchange Act, including material filed pursuant
            to Section 13(a) or 15(d), in addition to one or more registration
            statements and amendments thereto heretofore filed by the Company
            with the SEC under the Act (all of the foregoing including filings
            incorporated by reference therein being referred to herein as the
            "SEC Documents"). The Company, through its agent, has delivered to
            Pinnacle true and complete copies of the SEC Documents (except for
            exhibits and incorporated documents). The Company has not provided
            to Pinnacle any information which, according to applicable law, rule
            or regulation, should have been disclosed publicly by the Company
            but which has not been so disclosed, other than with respect to the
            transactions contemplated by this Agreement.

                As of their respective dates, the SEC Documents complied in all
            material respects with the requirements of the Act or the Exchange
            Act as the case may be and the rules and regulations of the SEC
            promulgated thereunder and other federal, state and local laws,
            rules and regulations applicable to such SEC Documents, and none of
            the SEC Documents contained any untrue statement of a material fact
            or omitted to state a material fact required to be stated therein or
            necessary in order to make the statements therein, in light of the
            circumstances under which they were made, not misleading. The
            financial statements of the Company included in the SEC

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            Documents comply as to form in all material respects with applicable
            accounting requirements and the published rules and regulations of
            the SEC or other applicable rules and regulations with respect
            thereto. Such financial statements have been prepared in accordance
            with generally accepted accounting principles applied on a
            consistent basis during the periods involved (except (i) as may be
            otherwise indicated in such financial statements or the notes
            thereto or (ii) in the case of unaudited interim statements, to the
            extent they may not include footnotes or may be condensed or summary
            statements) and fairly present in all material respects the
            financial position of the Company as of the dates thereof and the
            results of operations and cash flows for the periods then ended
            (subject, in the case of unaudited statements, to normal year-end
            audit adjustments).

         h. ABSENCE OF CERTAIN CHANGES. Since September 30, 2001, there has been
            no material adverse change and no material adverse development in
            the business, properties, operations, financial condition, or
            results of operations of the Company, other than the Nasdaq
            delisting as of February 27, 2002 of the Company's Common Stock, and
            other than as disclosed in the Company's Form 10-K/A filed with the
            Securities and Exchange Commission on March 5, 2002 and in the
            Company's Quarterly Report on Form 10-Q for the quarter ended
            December 31, 2001.

         i. FULL DISCLOSURE. Other than as set forth above, there is no fact
            known to the Company (other than general economic conditions known
            to the public generally) or as disclosed in the documents referred
            to in Section 2(g), that has not been disclosed in writing to
            Pinnacle that (i) would reasonably be expected to have a material
            adverse effect on the business or financial condition of the Company
            or (ii) would reasonably be expected to materially and adversely
            affect the ability of the Company to perform its obligations
            pursuant to this Agreement.

7.       CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

         a. FILINGS. The Company undertakes and agrees to make all necessary
            filings in connection with the exchange of the Shares to Pinnacle
            under any United States laws and regulations, or by any

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            domestic securities exchange or trading market, and to provide a
            copy thereof to Pinnacle promptly after such filing.

         b. REPORTING STATUS. So long as Pinnacle beneficially owns any of the
            Shares, the Company shall file all reports required to be filed with
            the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the
            Company shall not terminate its status as an issuer required to file
            reports under the 1934 Act even if the 1934 Act or the rules and
            regulations thereunder would permit such termination.

         c. SHAREHOLDER APPROVAL. If applicable (i.e., if the Company is
            reinstated for listing on the Nasdaq SmallCap Market), the Company
            agrees to seek shareholder approval in accordance with Nasdaq's
            corporate governance rules at a special meeting of its shareholders
            or, if permitted by Nasdaq, to solicit written consents to issuance
            of shares, upon conversion of all of the Company's Preferred Stock
            in excess of 19.99% of its outstanding shares of Common Stock. The
            Company will use its best efforts to cause its shareholders,
            including but not limited to, its officers, directors and 5%
            shareholders, to vote in favor of such proposal.

8.       SECURITIES ACT REGISTRATION.

         a. The Company shall use its best efforts to:

                i.   Prepare and file with the SEC a registration statement on
                     Form S-1 relating to the shares of Company common stock
                     issuable upon conversion of the Preferred Stock within
                     thirty (30) days of the date hereof naming Pinnacle as a
                     selling shareholder and keep such registration statement
                     effective for until Pinnacle can sell such shares without
                     restriction under Rule 144(k). In the event that the
                     registration statement is not declared effective within
                     sixty (60) days of the date hereof, the Company shall pay
                     Pinnacle within three (3) business days at the end of each
                     month a cash payment equal to two percent (2%) per month as
                     liquated damages and not as a penalty.

                ii.  Prepare and file with the SEC such amendments and
                     supplements to such registration statement and the
                     prospectus used in connection with such registration
                     statement as may be necessary to comply with the provisions
                     of the 1933 Act with respect to the

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                     disposition of all securities covered by such registration
                     statement and notify the holders of the filing and
                     effectiveness of such Registration statement and any
                     amendments or supplements;

                iii. Furnish to Pinnacle such numbers of copies of a current
                     prospectus, including a preliminary prospectus, conforming
                     with the requirements of the 1933 Act, copies of the
                     registration statement any amendment or supplement to any
                     thereof and any documents incorporated by reference
                     therein, and such other documents as Pinnacle may
                     reasonably require in order to facilitate the disposition
                     of the shares of Common Stock issuable under the Preferred
                     Stock;

                iv.  Use its best efforts to register and qualify the securities
                     covered by such registration statement under such other
                     securities or "Blue Sky" laws of such jurisdictions as
                     shall be reasonably requested by Pinnacle;

                v.   Notify Pinnacle immediately of 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 material fact or omits to state a
                     material fact required to be stated therein or necessary to
                     make the statements therein not misleading in light of the
                     circumstances then existing, and use its best efforts to
                     promptly update and/or correct such prospectus.

         b. Upon request of the Company, Pinnacle will furnish to the Company in
            connection with any registration under this Section such information
            regarding itself, the securities of the Company held by it, and the
            intended method of disposition of such securities as shall be
            reasonably required to affect the registration of the securities
            held by Pinnacle.

         c.     i.   To the fullest extent  permitted by law, the Company shall
                     indemnify, defend and hold harmless Pinnacle and each of
                     its officers, directors, employees, agents, partners or
                     controlling persons (within the meaning of the 1933 Act)
                     (each, an "indemnified party") from and against, and shall
                     reimburse such indemnified party with respect to, any and
                     all claims, suits, demands, causes of action, losses,
                     damages, liabilities, costs or expenses

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                     ("Liabilities") to which such indemnified party may become
                     subject under the 1933 Act or otherwise, arising from or
                     relating to (A) any untrue statement or alleged untrue
                     statement of any material fact contained in such
                     registration statement, any prospectus contained therein or
                     any amendment or supplement thereto, or (B) the omission or
                     alleged omission to state therein a material fact required
                     to be stated therein or necessary to make the statements
                     therein, in light of the circumstances in which they were
                     made, not misleading; PROVIDED, HOWEVER, that the Company
                     shall not be liable in any such case to the extent that any
                     such Liability arises out of or is based upon an untrue
                     statement or omission so made in strict conformity with
                     information furnished by such indemnified party in writing
                     specifically for use in the registration statement.

                ii.  Pinnacle agrees to indemnity, defend and hold harmless the
                     Company, and its officers, directors, employees, agents,
                     partners, or controlling persons (within the meaning of the
                     1933 Act) (each, an "indemnified party") from and against,
                     and shall reimburse such indemnified party with respect to,
                     any and all Liabilities to which such indemnified party may
                     become subject under the 1933 Act or otherwise, arising
                     from or relating to (A) any untrue statement or alleged
                     untrue statement of any material fact contained in such
                     registration statement, any prospectus contained therein or
                     any amendment or supplement thereto, or (B) the omission or
                     alleged omission to state therein a material fact required
                     to be stated therein or necessary to make the statements
                     therein, in light of the circumstances in which they were
                     made, not misleading; PROVIDED, THAT Pinnacle will be
                     liable in any such case to the extent and only to the
                     extent, that any such Liability arises out of or is based
                     upon an untrue statement or alleged untrue statement or
                     omission or alleged omission made in such registration
                     statement, prospectus or amendment or supplement thereto in
                     reliance upon and in conformity with written information
                     furnished by Pinnacle specifically for use in the
                     preparation thereof, and such Liability may in no event
                     exceed the value of the registrable securities so
                     registered.

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                iii. Promptly after receipt by any indemnified party of notice
                     of the commencement of any action, such indemnified party
                     shall, if a claim in respect thereof is to be made against
                     another party (the "indemnifying party") hereunder, notify
                     such party in writing thereof, but the omission so to
                     notify such party shall not relieve such party from any
                     Liability which it may have to the indemnified party other
                     than under this Section and shall only relieve it from any
                     Liability which it may have to the indemnified party under
                     this Section if and to the extent an indemnifying party is
                     materially prejudiced by such omission. In case any such
                     action shall be brought against any indemnified party and
                     such indemnified party shall notify an indemnifying party
                     of the commencement thereof, the indemnifying party shall
                     be entitled to participate in and, to the extent it shall
                     wish, to assume and undertake the defense thereof with
                     counsel reasonably satisfactory to such indemnified party,
                     and, after notice from the indemnifying party to the
                     indemnified party of its election so to assume and
                     undertake the defense thereof, the indemnifying party shall
                     not be liable to the indemnified party under this Section
                     for any legal expenses subsequently incurred by the
                     indemnified party in connection with the defense thereof
                     other than reasonable costs of investigation and of liaison
                     with counsel so selected; PROVIDED, HOWEVER, that if the
                     defendants in any such action include both parties and the
                     indemnified party shall have reasonably concluded that
                     there may be reasonable defenses available to them which
                     are different from or additional to those available to the
                     indemnifying party or if the interests of the indemnified
                     party reasonably may be deemed to conflict with the
                     interests of the indemnifying party, the indemnified party
                     shall have the right to select a separate counsel and to
                     assume such legal defenses and otherwise to participate in
                     the defense of such action, with the reasonable expenses
                     and fees of one such separate counsel and other reasonable
                     expenses related to such participation to be reimbursed by
                     the indemnifying party as incurred.

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         d. With respect to the above-referenced registration statement, all
            fees, costs and expenses of and incidental to such registration,
            inclusion and public offering shall be borne by the Company, except
            any underwriting discounts and commissions.

         e. The rights to cause the Company to register all or any portion of
            securities pursuant to this Section 8 may be assigned by Pinnacle to
            a proper transferee or assignee as described herein. Within a
            reasonable time after such transfer, Pinnacle shall notify the
            Company of the name and address of such transferee or assignee, and
            the securities with respect to which such registration rights are
            being assigned. Such assignment shall be effective only if, (i)
            Pinnacle agrees in writing with the transferee or assignee to assign
            such rights, and a copy of such agreement is furnished to the
            Company within a reasonable time after such transfer or assignment
            (subject to the purchase price of the shares being kept confidential
            by Pinnacle and such transferee or assignee, (ii) the Company is,
            within a reasonable time after such transfer or assignment,
            furnished with written notice of (A) the name and address of such
            transferee or assignee, (B) the securities with respect to which
            such registration rights are being assigned, (iii) following such
            transfer or assignment, the further disposition of the securities by
            the transferee or assignee is restricted under the 1933 Act and
            applicable state securities laws, (iv) at or before the time that
            the Company receives the written notice contemplated by clause (ii)
            of this sentence the transferee or assignee agrees in writing with
            the Company to be bound by all of the provisions contained herein,
            (v) such transfer shall have been made in accordance with the
            applicable requirements of the purchase agreement covering the
            transaction and (vi) such transferee shall be an "accredited
            investor", as that term is defined in Rule 501 of Regulation D,
            promulgated under the 1933 Act.

9.  GOVERNING LAW: MISCELLANEOUS. This Agreement shall be governed by and
    interpreted in accordance with the laws of the State of New York. A
    facsimile transmission of this signed Agreement shall be legal and binding
    on all parties hereto. This Agreement may be signed in one or more
    counterparts, each of which shall be deemed an original. The headings of
    this Agreement are for convenience of reference and shall not form part of,
    or affect the interpretation of, this Agreement. If any provision of this
    Agreement shall be invalid or unenforceable in any jurisdiction, such
    invalidity or unenforceability shall not affect the

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    validity or enforceability of the remainder of this Agreement or the
    validity or enforceability of this Agreement in any other jurisdiction. This
    Agreement may be amended only by an instrument in writing signed by the
    party to be charged with enforcement. This Agreement, and the related
    agreements referred to herein, contain the entire agreement of the parties
    with respect to the subject matter hereto, superceding all prior agreements,
    understandings or discussions.

10. NOTICES. Any notice required or permitted hereunder shall be given in
    writing (unless otherwise specified herein) and shall be deemed effectively
    given, (i) on the date delivered, (a) by personal delivery, or (b) if
    advance copy is given by fax, (ii) seven business days after deposit in the
    United States Postal Service by regular or certified mail, or (iii) three
    business days mailing by international express courier, with postage and
    fees prepaid, addressed to each of the other parties thereunto entitled at
    the following addresses, or at such other addresses as a party may designate
    by ten days advance written notice to each of the other parties hereto.

               COMPANY:   STRATUS SERVICES GROUP, INC.
                          500 Craig Road, Suite 201
                          Manalapan, NJ 07726
                          Attn: Mr. Michael Maltzman
                          Telecopier No.: (732)294-1133

               PINNACLE:  PINNACLE INVESTMENT PARTNERS, L.P.
                          110 Wall Street, 21st Flr.
                          New York, NY 10008
                          Attn: Mr. Chris Janish
                          Telecopier No.: (212) 361-2273

11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to
    the benefit of the parties hereto and their respective successors and
    permitted assigns.

    IN WITNESS WHEREOF, the Company and Pinnacle have caused this Agreement to
be executed by their duly authorized representatives on the date as first
written above.

STRATUS SERVICES GROUP, INC.           PINNACLE INVESTMENT PARTNERS, L.P.
                                       By: PIP Management, Inc., General Partner

By: /s/ Michael A. Maltzman            By: /s/ Chris Janish
   --------------------------             --------------------------------------
        Michael Maltzman, CFO                 Chris Janish, President

                                       12<Page>

                                                                   Exhibit 10.13

                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT, dated as of the 11th day of March
2002, is entered into by and between STRATUS SERVICES GROUP, INC., a Delaware
corporation, with headquarters located at 500 Craig Road, Suite 201, Manalapan,
New Jersey 07726 (the "Company"), and the undersigned (the "Buyer").

                                   WITNESSETH:

         WHEREAS, the Buyer wishes to purchase from the Company, upon the terms
and subject to the conditions of this Agreement, $300,000 (60,000 shares) of
Series B Preferred Stock, such Preferred Stock having terms substantially as are
set forth in the form of the Certificate of Designation attached hereto as
Exhibit "A" hereof (the "Preferred Stock"); and

         WHEREAS, in order to induce the Buyer to purchase the Preferred Stock,
the Company desires to enter into this Agreement and make the representations,
warranties and covenants contained herein.

         NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

     1.  AGREEMENT TO PURCHASE.

            a.  PURCHASE. The undersigned hereby agrees to purchase from the
                Company the Preferred Stock.

            b.  FORM OF PAYMENT. The Buyer shall pay the $300,000 purchase price
                for 60,000 shares of Preferred Stock by wiring immediately
                available funds in United States Dollars to the Company.

            c.  CLOSING. The closing of the transactions described above will
                take place on March 11, 2002.

     2.  BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
         INDEPENDENT INVESTIGATION.

         The Buyer represents and warrants to, and covenants and agrees with,
         the Company as follows:

            a.  The Buyer is purchasing the Preferred Stock for its own account
                for investment only and not with a view towards the public sale
                or distribution thereof and not with a view to or for sale in
                connection with any distribution thereof;

            b.  The Buyer is (i) an "accredited investor" as that term is
                defined in Rule 501 of the General

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                Rules and Regulations under the 1933 Act by reason of Rule
                501(a)(3), and (ii) experienced in making investments of the
                kind described in this Agreement and the related documents,
                (iii) able, by reason of the business and financial experience
                of its officers (if an entity) and professional advisors (who
                are not affiliated with or compensated in any way by the Company
                or any of its affiliates or selling agents), to protect its own
                interests in connection with the transactions described in this
                Agreement, and the related documents, and (iv) able to afford
                the entire loss of its investment in the Preferred Stock;

            c.  The Buyer understands that the Preferred Stock is being offered
                and sold to it in reliance on specific exemptions from the
                registration requirements of United States federal and state
                securities laws and that the Company is relying upon the truth
                and accuracy of, and the Buyer's compliance with, the
                representations, warranties, agreements, acknowledgements and
                understandings of the Buyer set forth herein in order to
                determine the availability of such exemptions and the
                eligibility of the Buyer to acquire the Preferred Stock;

            d.  The Buyer and its advisors, if any, have been furnished with all
                materials relating to the business, finances and operations of
                the Company and materials relating to the offer and sale of the
                Preferred Stock which have been requested by the Buyer. The
                Buyer and its advisors, if any, have been afforded the
                opportunity to ask questions of the Company and have received
                complete and satisfactory answers to any such inquiries.

            e.  The Buyer understands that no United States federal or state
                agency or any other government or governmental agency has passed
                on or made any recommendation or endorsement of the Preferred
                Stock;

            f.  This Agreement has been duly and validly authorized, executed
                and delivered on behalf of the Buyer and is a valid and binding
                agreement of the Buyer enforceable in accordance with its terms,
                subject as to enforceability to general principles of equity and
                to bankruptcy, insolvency, moratorium and other similar laws
                affecting the enforcement of creditors' rights generally.

                                        2
<Page>

     3.  COMPANY REPRESENTATIONS, ETC.

         The Company represents and warrants to the Buyer that:

            a.  CONCERNING THE COMMON STOCK. There are no preemptive rights of
                any stockholder of the Company, as such, to acquire the
                Company's Common Stock. The shares of Common Stock issuable upon
                conversion of the Preferred Stock (the "Shares") will be
                registered for resale within sixty (60) days from the date
                hereof, under a currently effective registration statement filed
                under the Securities Act of 1933, as amended (the "1933 Act').

            b.  REPORTING COMPANY STATUS. The Company is a corporation duly
                organized, validly existing and in good standing under the laws
                of the State of Delaware, and has the requisite corporate power
                to own its properties and to carry on its business as now being
                conducted. The Company is duly qualified as a foreign
                corporation to do business and is in good standing in each
                jurisdiction where the nature of the business conducted or
                property owned by it makes such qualification necessary other
                than those jurisdictions in which the failure to so qualify
                would not have a material and adverse effect on the business,
                operations, properties, prospects or condition (financial or
                otherwise) of the Company. The Company has registered its Common
                Stock pursuant to Section 12 of the Securities Exchange Act of
                1934, as amended (the "1934 Act"), and the Common Stock is
                listed and traded on the OTC Bulletin Board Market.

            c.  AUTHORIZED SHARES. The Shares of Preferred Stock to be issued
                pursuant to this Agreement and the Shares of Common Stock
                issuable upon conversion of the Preferred Stock have been duly
                authorized and, when issued to Buyer, will be duly and validly
                issued, fully paid and non-assessable and will not subject the
                holder thereof to personal liability by reason of being such
                holder.

            d.  SECURITIES PURCHASE AGREEMENT. This Agreement and the
                transactions contemplated hereby, have been duly and validly
                authorized by the Company, this Agreement has been duly executed
                and delivered by the Company and this Agreement, when executed
                and delivered by the Company, will be, and the Commission Letter
                dated of even date herewith, and the

                                        3
<Page>

                Preferred Stock are, valid and binding agreements of the Company
                enforceable in accordance with their terms, subject as to
                enforceability to general principles of equity and to
                bankruptcy, insolvency, moratorium, and other similar laws
                affecting the enforcement of creditors' rights generally.

            e.  NON-CONTRAVENTION. The execution and delivery of this Agreement
                by the Company, the issuance of the Preferred Stock, and the
                consummation by the Company of the other transactions
                contemplated by this Agreement do not and will not conflict with
                or result in a breach by the Company of any of the terms or
                provisions of, or constitute a default under (i) the articles of
                incorporation or by-laws of the Company, (ii) any indenture,
                mortgage, deed of trust, or other material agreement or
                instrument to which the Company is a party or by which it or any
                of its properties or assets are bound, (iii) to its knowledge,
                any existing applicable law, rule, or regulation or any
                applicable decree, judgment, or (iv) to its knowledge, order of
                any court, United States federal or state regulatory body,
                administrative agency, or other governmental body having
                jurisdiction over the Company or any of its properties or
                assets, except such conflict, breach or default which would not
                have a material adverse effect on the transactions contemplated
                herein. The Company is not in violation of any material laws,
                governmental orders, rules, regulations or ordinances to which
                its property, real, personal, mixed, tangible or intangible, or
                its businesses related to such properties, are subject.

            f.  APPROVALS. No authorization, approval or consent of any court,
                governmental body, regulatory agency, self-regulatory
                organization, or stock exchange or market is required to be
                obtained by the Company for the issuance and sale of the
                Preferred Stock to the Buyer as contemplated by this Agreement,
                except such authorizations, approvals and consents that have
                been obtained.

            g.  SEC DOCUMENTS, FINANCIAL STATEMENTS. The Company has filed all
                reports, schedules, forms, statements and other documents
                required to be filed by it with the SEC pursuant to the
                reporting requirements of the Exchange Act, including material
                filed pursuant to Section 13(a) or 15(d), in addition to one or
                more registration statements and amendments thereto

                                        4
<Page>

                heretofore filed by the Company with the SEC under the Act (all
                of the foregoing including filings incorporated by reference
                therein being referred to herein as the "SEC Documents"). The
                Company, through its agent, has delivered to the Buyer true and
                complete copies of the SEC Documents (except for exhibits and
                incorporated documents). The Company has not provided to the
                Buyer any information which, according to applicable law, rule
                or regulation, should have been disclosed publicly by the
                Company but which has not been so disclosed, other than with
                respect to the transactions contemplated by this Agreement.

                     As of their respective dates, the SEC Documents complied in
                all material respects with the requirements of the Act or the
                Exchange Act as the case may be and the rules and regulations of
                the SEC promulgated thereunder and other federal, state and
                local laws, rules and regulations applicable to such SEC
                Documents, and none of the SEC Documents contained any untrue
                statement of a material fact or omitted to state a material fact
                required to be stated therein or necessary in order to make the
                statements therein, in light of the circumstances under which
                they were made, not misleading. The financial statements of the
                Company included in the SEC Documents comply as to form in all
                material respects with applicable accounting requirements and
                the published rules and regulations of the SEC or other
                applicable rules and regulations with respect thereto. Such
                financial statements have been prepared in accordance with
                generally accepted accounting principles applied on a consistent
                basis during the periods involved (except (i) as may be
                otherwise indicated in such financial statements or the notes
                thereto or (ii) in the case of unaudited interim statements, to
                the extent they may not include footnotes or may be condensed or
                summary statements) and fairly present in all material respects
                the financial position of the Company as of the dates thereof
                and the results of operations and cash flows for the periods
                then ended (subject, in the case of unaudited statements, to
                normal year-end audit adjustments).

            h.  ABSENCE OF CERTAIN CHANGES. Since September 30, 2001, there has
                been no material adverse change and no material adverse
                development in the business, properties, operations, financial
                condition, or results of operations of the Company, other than
                the delisting of the Company's

                                        5
<Page>

                Stock from the Nasdaq SmallCap Market as of February 27 2002,
                and other than as disclosed in the Company's Form 10-K/A filed
                with the Securities and Exchange Commission on March 5, 2002 and
                in the Company's Quarterly Report on Form 10-Q for the quarter
                ended December 31, 2001.

            i.  FULL DISCLOSURE. Other than set forth above, there is no fact
                known to the Company (other than general economic conditions
                known to the public generally) or as disclosed in the documents
                referred to in Section 3(g), that has not been disclosed in
                writing to the Buyer that (i) would reasonably be expected to
                have a material adverse effect on the business or financial
                condition of the Company or (ii) would reasonably be expected to
                materially and adversely affect the ability of the Company to
                perform its obligations pursuant to this Agreement.

     4.  CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

            a.  FILINGS. The Company undertakes and agrees to make all necessary
                filings in connection with the sale of the Shares to the Buyer
                under any United States laws and regulations, or by any domestic
                securities exchange or trading market, and to provide a copy
                thereof to the Buyer promptly after such filing.

            b.  REPORTING STATUS. So long as the Buyer beneficially owns any of
                the Shares, the Company shall file all reports required to be
                filed with the SEC pursuant to Section 13 or 15(d) of the 1934
                Act, and the Company shall not terminate its status as an issuer
                required to file reports under the 1934 Act even if the 1934 Act
                or the rules and regulations thereunder would permit such
                termination.

            c.  SHAREHOLDER APPROVAL. If applicable (i.e., if the Company is
                reinstated for listing on the Nasdaq SmallCap Market), the
                Company agrees to seek shareholder approval in accordance with
                Nasdaq's corporate governance rules at a special meeting of its
                shareholders or if permitted by Nasdaq, to solicit written
                consents to issuance of shares, upon conversion of all of the
                Company's Preferred Stock in excess of 19.99% of its outstanding
                shares of Common Stock. The Company will use its best efforts to
                cause its shareholders, including but not limited to, its
                officers, directors and 5% shareholders, to vote in favor of
                such proposal.

                                        6
<Page>

     5.  SECURITIES ACT REGISTRATION.

            a.  The Company shall use its best efforts to:

                     i.   Prepare and file with the SEC a Form S-1 registration
                          statement relating to the shares of Company common
                          stock issuable upon conversion of the Preferred Stock
                          within thirty (30) days of the date hereof naming the
                          Buyer as a selling shareholder and keep such
                          registration statement effective until the Buyer can
                          sell such shares without registration under Rule
                          144(k). In the event that the registration statement
                          is not declared effective within sixty (60) days of
                          the date hereof, the Company shall pay Pinnacle within
                          three (3) business days at the end of each month a
                          cash payment equal to two percent (2%) per month as
                          liquidated damages and not as a penalty.

                     ii.  Prepare and file with the SEC such amendments and
                          supplements to such registration statement and the
                          prospectus used in connection with such registration
                          statement as may be necessary to comply with the
                          provisions of the 1933 Act with respect to the
                          disposition of all securities covered by such
                          registration statement and notify the holders of the
                          filing and effectiveness of such Registration
                          statement and any amendments or supplements;

                     iii. Furnish to Buyer such numbers of copies of a current
                          prospectus, including a preliminary prospectus,
                          conforming with the requirements of the 1933 Act,
                          copies of the registration statement any amendment or
                          supplement to any thereof and any documents
                          incorporated by reference therein, and such other
                          documents as Buyer may reasonably require in order to
                          facilitate the disposition of the shares of Common
                          Stock issuable under the Preferred Stock;

                     iv.  Use its best efforts to register and qualify the
                          securities covered by such registration statement
                          under such other securities or "Blue Sky" laws of such
                          jurisdictions as shall be reasonably requested by
                          Buyer;

                     v.   Notify Buyer immediately of the happening of any event
                          as a result of which the prospectus included in such
                          registration statement, as then in effect, includes an

                                        7
<Page>

                          untrue statement of material fact or omits to state a
                          material fact required to be stated therein or
                          necessary to make the statements therein not
                          misleading in light of the circumstances then
                          existing, and use its best efforts to promptly update
                          and/or correct such prospectus.

            b.  Upon request of the Company, Buyer will furnish to the Company
                in connection with any registration under this Section such
                information regarding itself, the securities of the Company held
                by it, and the intended method of disposition of such securities
                as shall be reasonably required to effect the registration of
                the securities held by Buyer.

            c.  i.   To the fullest extent permitted by law, the Company shall
                     indemnify, defend and hold harmless Buyer and each of its
                     officers, directors, employees, agents, partners or
                     controlling persons (within the meaning of the 1933 Act)
                     (each, an "indemnified party") from and against, and shall
                     reimburse such indemnified party with respect to, any and
                     all claims, suits, demands, causes of action, losses,
                     damages, liabilities, costs or expenses ("Liabilities") to
                     which such indemnified party may become subject under the
                     1933 Act or otherwise, arising from or relating to (A) any
                     untrue statement or alleged untrue statement of any
                     material fact contained in such registration statement, any
                     prospectus contained therein or any amendment or supplement
                     thereto, or (B) the omission or alleged omission to state
                     therein a material fact required to be stated therein or
                     necessary to make the statements therein, in light of the
                     circumstances in which they were made, not misleading;
                     PROVIDED, HOWEVER, that the Company shall not be liable in
                     any such case to the extent that any such Liability arises
                     out of or is based upon an untrue statement or omission so
                     made in strict conformity with information furnished by
                     such indemnified party in writing specifically for use in
                     the registration statement.

                ii.  Buyer agrees to indemnity, defend and hold harmless the
                     Company, and its officers, directors, employees, agents,
                     partners, or controlling persons (within the meaning of the
                     1933 Act) (each, an "indemnified party") from and against,
                     and shall reimburse such indemnified party with respect to,
                     any and all Liabilities to which such

                                        8
<Page>

                     indemnified party may become subject under the 1933 Act or
                     otherwise, arising from or relating to (A) any untrue
                     statement or alleged untrue statement of any material fact
                     contained in such registration statement, any prospectus
                     contained therein or any amendment or supplement thereto,
                     or (B) the omission or alleged omission to state therein a
                     material fact required to be stated therein or necessary to
                     make the statements therein, in light of the circumstances
                     in which they were made, not misleading; PROVIDED, THAT
                     Buyer will be liable in any such case to the extent and
                     only to the extent, that any such Liability arises out of
                     or is based upon an untrue statement or alleged untrue
                     statement or omission or alleged omission made in such
                     registration statement, prospectus or amendment or
                     supplement thereto in reliance upon and in conformity with
                     written information furnished by Buyer specifically for use
                     in the preparation thereof, and such Liability may in no
                     event exceed the value of the Registrable Securities so
                     registered.

                iii. Promptly after receipt by any indemnified party of notice
                     of the commencement of any action, such indemnified party
                     shall, if a claim in respect thereof is to be made against
                     another party (the "indemnifying party") hereunder, notify
                     such party in writing thereof, but the omission so to
                     notify such party shall not relieve such party from any
                     Liability which it may have to the indemnified party other
                     than under this Section and shall only relieve it from any
                     Liability which it may have to the indemnified party under
                     this Section if and to the extent an indemnifying party is
                     materially prejudiced by such omission. In case any such
                     action shall be brought against any indemnified party and
                     such indemnified party shall notify an indemnifying party
                     of the commencement thereof, the indemnifying party shall
                     be entitled to participate in and, to the extent it shall
                     wish, to assume and undertake the defense thereof with
                     counsel reasonably satisfactory to such indemnified party,
                     and, after notice from the indemnifying party to the
                     indemnified party of its election so to assume and
                     undertake the defense thereof, the indemnifying party shall
                     not be liable to the indemnified party under this Section
                     for any legal expenses subsequently incurred

                                        9
<Page>

                     by the indemnified party in connection with the defense
                     thereof other than reasonable costs of investigation and of
                     liaison with counsel so selected; PROVIDED, HOWEVER, that
                     if the defendants in any such action include both parties
                     and the indemnified party shall have reasonably concluded
                     that there may be reasonable defenses available to them
                     which are different from or additional to those available
                     to the indemnifying party or if the interests of the
                     indemnified party reasonably may be deemed to conflict with
                     the interests of the indemnifying party, the indemnified
                     party shall have the right to select a separate counsel and
                     to assume such legal defenses and otherwise to participate
                     in the defense of such action, with the reasonable expenses
                     and fees of one such separate counsel and other reasonable
                     expenses related to such participation to be reimbursed by
                     the indemnifying party as incurred.

            d.  With respect to the above-referenced registration statement, all
                fees, costs and expenses of and incidental to such registration,
                inclusion and public offering shall be borne by the Company,
                except any underwriting discounts and commissions.

            e.  The rights to cause the Company to register all or any portion
                of securities pursuant to this Section 5 may be assigned by
                Buyer to a proper transferee or assignee as described herein.
                Within a reasonable time after such transfer, the Buyer shall
                notify the Company of the name and address of such transferee or
                assignee, and the securities with respect to which such
                registration rights are being assigned. Such assignment shall be
                effective only if, (i) the Buyer agrees in writing with the
                transferee or assignee to assign such rights, and a copy of such
                agreement is furnished to the Company within a reasonable time
                after such transfer or assignment (subject to the purchase price
                of the shares being kept confidential by the Buyer and such
                transferee or assignee, (ii) the Company is, within a reasonable
                time after such transfer or assignment, furnished with written
                notice of (A) the name and address of such transferee or
                assignee, (B) the securities with respect to which such
                registration rights are being assigned, (iii) following such
                transfer or assignment, the further disposition of the
                securities by the transferee or assignee is restricted under the
                1933 Act and applicable state

                                       10
<Page>

                securities laws, (iv) at or before the time that the Company
                receives the written notice contemplated by clause (ii) of this
                sentence the transferee or assignee agrees in writing with the
                Company to be bound by all of the provisions contained herein,
                (v) such transfer shall have been made in accordance with the
                applicable requirements of the purchase agreement covering the
                transaction and (vi) such transferee shall be an "accredited
                investor", as that term is defined in Rule 501 of Regulation D,
                promulgated under the 1933 Act.

     6.  GOVERNING LAW: MISCELLANEOUS. This Agreement shall be governed by and
         interpreted in accordance with the laws of the State of New York. A
         facsimile transmission of this signed Agreement shall be legal and
         binding on all parties hereto. This Agreement may be signed in one or
         more counterparts, each of which shall be deemed an original. The
         headings of this Agreement are for convenience of reference and shall
         not form part of, or affect the interpretation of, this Agreement. If
         any provision of this Agreement shall be invalid or unenforceable in
         any jurisdiction, such invalidity or unenforceability shall not affect
         the validity or enforceability of the remainder of this Agreement or
         the validity or enforceability of this Agreement in any other
         jurisdiction. This Agreement may be amended only by an instrument in
         writing signed by the party to be charged with enforcement. This
         Agreement, and the related agreements referred to herein, contain the
         entire agreement of the parties with respect to the subject matter
         hereto, superceding all prior agreements, understandings or
         discussions.

     7.  NOTICES. Any notice required or permitted hereunder shall be given in
         writing (unless otherwise specified herein) and shall be deemed
         effectively given, (i) on the date delivered, (a) by personal delivery,
         or (b) if advance copy is given by fax, (ii) seven business days after
         deposit in the United States Postal Service by regular or certified
         mail, or (iii) three business days mailing by international express
         courier, with postage and fees prepaid, addressed to each of the other
         parties thereunto entitled at the following addresses, or at such other
         addresses as a party may designate by ten days advance written notice
         to each of the other parties hereto.

                 COMPANY:  STRATUS SERVICES GROUP, INC.
                           500 Craig Road, Suite 201
                           Manalapan, NJ 07726
                           Attn: Mr. Michael Maltzman
                           Telecopier No.: (732)294-1133

                                       11
<Page>

                 BUYER:    PINNACLE INVESTMENT PARTNERS, L.P.
                           110 Wall Street, 21st Flr.
                           New York, NY 10008
                           Attn: Mr. Chris Janish
                           Telecopier No.: (212) 361-2273

     8.  SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
         to the benefit of the parties hereto and their respective successors
         and permitted assigns.

         IN WITNESS WHEREOF, the Company and Buyer have caused this Agreement to
be executed by their duly authorized representatives on the date as first
written above.

STRATUS SERVICES GROUP, INC.           PINNACLE INVESTMENT PARTNERS, L.P.
                                       By: PIP Management, Inc., General Partner

By:/s/ Michael A. Maltzman             By:/s/Chris Janish
   ------------------------               --------------------------------------
       Michael Maltzman, CFO                 Chris Janish, President

                                       12

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